U.S. supports India's nuclear program

March 4, 2006

On March 2, President Bush formally agreed to overturn decades of American law and defy the Nuclear Non-Proliferation Treaty by allowing full civil nuclear cooperation. India violated the treaty by exploding nuclear devices and not putting their program under the IAEA’s safeguards.

What It Means:
India wants to be treated like the official five nuclear powers: U.S., Russia, Britain, France and China. The U.S. wants India to cap its production of fissile material (highly-enriched uranium and plutonium) - but India has refused. India plans to increase its warheads from the current 50 to 300 - 400 by 2010. This winking at the rules for India looks bad to ally countries that the U.S. has convinced to refrain from building nuclear capacity: South Korea, Taiwan, Brazil, Argentina, South Africa, Ukraine, Kazakhstan and Japan.

The agreement was part of an overall increase in the business relationship between American companies and India. It could yet be overturned by Congress, and by the IAEA.

Action Steps:
Whatever happens, this formal recognition of India’s growth (already at 8%) and power by a U.S. President can only be good for India’s economy. Check your portfolio to see how much stock you have in Indian companies...and consider upping that percentage.