With reference to an interview with Ernie.

Nuclear deal would allow AECL to renew Indian business ties

HAWN MCCARTHY

>From Friday's Globe and Mail

November 14, 2008 at 4:25 AM EST

OTTAWA - Federally owned AECL Ltd. is looking to re-enter the Indian market
some 35 years after the south Asian giant shocked the world and brought
about its own nuclear isolation by using Candu technology to build a bomb.

The federal government is currently negotiating a nuclear co-operation
agreement with India that would allow AECL to re-establish business ties,
despite concerns that India has not signed the international nuclear
Non-Proliferation Treaty.

The negotiations come after Canada backed a decision by the international
Nuclear Suppliers Group to provide an exemption for India that would allow
it to develop civilian nuclear power even as it maintains its right to
develop weapons without international scrutiny.

The United States lobbied hard to exempt India from the kinds of sanctions
it imposes on Iran and North Korea, and has concluded its own nuclear
co-operation agreement with India. France has also completed a nuclear
co-operation agreement, and both countries are now openly competing with
Russia to sell reactors there.

Critics complain that the West's special treatment of India will spark a new
arms race with Pakistan and undermine the Non-Proliferation Treaty, and
argue Canada should hold out for stringent conditions in any bilateral
accord.

In an interview from India, AECL chief executive Hugh MacDiarmid said the
Crown-owned company is hopeful of getting major service work on the
country's aging fleet of heavy-water reactors, and potentially even the sale
of a new reactor.

The AECL group met with senior officials from India's Department of Atomic
Energy, and from the Nuclear Power Corporation of India Ltd., which has said
it intends to build or buy up to 20 reactors over the next 12 years.

"We've been greeted very warmly," Mr. MacDiarmid said, concluding a six-day
visit to India and China. He said Indian heavy-water reactor technology has
not kept pace with Western companies, and AECL - one of the few companies
that also deal in heavy-water reactors - could help modernize it.

"They feel there is a mutual benefit to be had. We do believe there is
potential for us to be marketing our reactor technology in this country," he
said.

AECL's own future remains very much in doubt as the federal government is
reviewing its ownership and considering selling off the 60-year-old Crown
corporation, either entirely or to a minority partner. Yesterday, Finance
Minister Jim Flaherty said the government is looking at selling some Crown
corporations - without mentioning names - in order to balance the federal
books.

Whether it sells AECL or keeps it, Ottawa is keen to put the company on a
stronger commercial footing, and that means ensuring it has access to
growing emerging markets such as India's.

In addition to AECL's interest, Canada's broader nuclear industry is eager
to see the Indian market open up to them, as is Cameco Corp., the
Saskatchewan-based uranium producer that has been prevented from selling
fuel to India.

Activist Ernie Regehr of Project Ploughshares said the Indian exemptions
undermine the international Non-Proliferation Treaty by sending the message
that countries can flout the rules and still co-operate on civilian nuclear
uses. He worries the decision by the Nuclear Suppliers Group in September
may reignite an arms race with Pakistan, which has reacted angrily to the
move.

A spokeswoman for Foreign Affairs confirmed the two sides had "informal"
discussions last month and expect to schedule formal sessions soon. She said
Canada signalled its support for India's re-engagement with the broader
nuclear-energy community when it backed the suppliers' group decision.

"India is a responsible democracy that shares with Canada the fundamental
values of freedom, democracy, human rights and respect for the rule of law,"
government spokesman Lisa Monette said. "India has made substantial
non-proliferation and disarmament commitments to achieve the trust of the
Nuclear Suppliers Group, which were reiterated in a political statement on
Sept. 5."

Mr. Regehr said India has made political commitments, such as agreeing not
to test nuclear weapons, but has refused to sign the Comprehensive Nuclear
Test Ban Treaty. It has also insisted on the right to stockpile uranium,
which Mr. Regehr says would provide it with an assured fuel supply should it
again run afoul of the international suppliers group.

Australia, which along with Canada is one of the world's major uranium
miners, is refusing to sell the fuel to India unless it signs the
Non-Proliferation Treaty. Mr. Regehr said Canada should do likewise.

Jessica West

Program Associate

Project Ploughshares

57 Erb Street

Waterloo, ON N2L 6C2

Tel: 519-888-6541 x708

Fax: 519-888-0018

jwest@ploughshares.ca

www.ploughshares.ca

Project Ploughshares is an ecumenical peace centre of the Canadian Council
of Churches and affiliated with the Institute of Peace and Conflict
Studies,Conrad Grebel University College, University of Waterloo.