India, Nuclear Proliferation, and Moral Hazard

President Bush is in India today to finalize an agreement that allows India access to the international nuclear regime in exchange for India allowing international inspections of its nuclear program. Since India has been outside of the Nuclear Non-Proliferation Treaty, it had been denied international assistance, expertise, and fuel as punishment. However, that also meant that India's nuclear program was not under the watchful eye of the International Atomic Energy Agency, or any other inspection regime. Now, both situations will change.

It's not entirely clear that Congress will agree to this deal, as there is concern that allowing India into the international nuclear consortium is a reward for illegal proliferation. That is, the NPT and IAEA, and all of the nuclear technology-sharing programs exist to deter countries from proliferating with the incentive of assistance for a peaceful nuclear program. If India is allowed to proliferate, and then is allowed in "the club" regardless, what incentive is there not to proliferate in the first place? To avoid the problem of moral hazard (encouraging risky behavior by guarding against the negative consequences of that action in the first place; an example: How fast would you drive if you had no auto or health insurance?), the US must not reward India for its proliferation.

The problem is that evaluating this case solely in the light of moral hazard ignores the more important political considerations. Is there any evidence that states that want nuclear weapons can be induced to forgo them to receive the benefits of NPT or IAEA membership? Not really. The countries that have disarmed (South Africa and former SSRs) or have chosen to avoid proliferating (Taiwan, Brazil, Argentina) have done so not out of fear of international sanction but for their own policy reasons. Does either Iran or North Korea seem likely to step back from the proliferation threshold so as to get access to peaceful nuclear technology? Will any country that doesn't have a policy-based interest in NW develop them because India was allowed to get away with it? Nukes are pricey, risky, dangerous, and bring all kinds of other opprobrium with them (it took India 10 years to shake the stigma of its decision to proliferate). Furthermore, India, unlike Iran or North Korea, never signed the NPT. Punishing India only increases the likelihood of a nuclear accident and undermines the burgeoning deterrent relationship between India and Pakistan. Congress should without hesitation approve this deal.

UPDATE: The IAEA has endorsed this deal, saying that "it would be a milestone, timely for ongoing efforts to consolidate the non-proliferation regime, combat nuclear terrorism and strengthen nuclear safety." Normally, this would be the strongest recommendation to run the other way, but in this case, the IAEA is right and the deal should be accepted and ratified. Note that it was the US and not the IAEA that was able to induce India to accept international safeguards. More grist for my mill!