When India became independent 60 years ago next Wednesday, its nationalist leaders were greatly impressed by supposed Soviet economic and industrial achievements, distrustful of unbridled capitalism, disdainful of U.S. consumerism, and prone to lecture Western countries on neo-imperialism while tilting the nonaligned group toward Moscow. Americans found India's implied moral equivalence deeply offensive and hypocritical.

The end of the Cold War and the triple triumph of U.S, power, liberal ideology and market economy caused a painful reappraisal of some basic assumptions guiding both domestic and foreign policy. The loss of the Soviet patronage left India strategically exposed; the implosion of the Soviet Union underlined the vulnerability of the state-directed model of economic management; the extraordinary economic rise of China and the rapid modernization of its military caused grave national security disquiet; and the indefinite extension of the international Non-Proliferation Treaty (NPT) and the negotiation of a comprehensive test-ban treaty raised fears of a de facto foreclosure of the nuclear option.

In 1998, India broke out of the closing nuclear trap by conducting a series of nuclear tests that Pakistan quickly mimicked. A shocked international community responded by imposing sanctions that were ineffectual and mostly softened or withdrawn as strategic imperatives and the nature of the enemy changed after 9/11.

The danger of rogue states or terrorist groups acquiring nuclear weapons became a more critical security threat than responsible states having them. The discovery of the scale and depth of the global nuclear bazaar run clandestinely by A.Q. Khan, the hero of Pakistan's nuclear bomb, broke the de facto moral equivalence within which the subcontinent's nuclear programs had been viewed in Washington.

Against this backdrop, an agreement was signed for sharing U.S. civilian nuclear technology with India in return for India's agreeing not to export weapons technology, to maintain the moratorium on testing, to separate military and civilian nuclear programs and to subject those parts of the latter receiving international assistance to a rigorous inspection regime. The deal was consummated during U.S. President George W. Bush's visit to India in March 2006 and received overwhelming but qualified endorsements in both houses of Congress within the year.

Intensive negotiations followed to address remaining areas of domestic concern in both countries. The resulting final text was released on Aug. 3. It seems to meet most of India's concerns but may yet run afoul of the nonproliferation constituency in Congress and the world. India must first negotiate agreements -- with U.S. help and support -- with the International Atomic Energy Agency and the Nuclear Suppliers Group that includes Canada and Australia.

There is much to commend it. Politically, it consolidates the burgeoning relationship between the world's most powerful and populous democracies.

Strategically, it establishes a powerful South Asian beachhead as a potential flanking option should relations with China deteriorate for either country.

Economically, it will lead to many contracts for Western firms hoping to operate in the world's second most vibrant large economy, open and expand the Indian energy market, and consolidate India's market-friendly policies while integrating it more firmly into the international economy.

But the most momentous consequence will likely be on the energy front. The dynamic growths of China and India have fed their voracious appetites for energy. The phenomenal rise in global energy consumption has coincided with rising oil prices, which has greatly increased the attraction of nuclear energy. India has 14 nuclear reactors in commercial operation and another eight under construction. The share of India's electricity sourced in nuclear power is expected to climb from three per cent to 25 per cent by 2050. It has limited coal and uranium reserves but about 25 per cent of the world's thorium reserves. While this will fuel its nuclear power growth in the long term, it needs large uranium supplies in the meantime from countries such as Australia (which has given positive signals already) and Canada (which has yet to commit itself one way or the other).

The India-U.S. deal seeks to make the best of an increasingly untenable status quo. Of India's 22 reactors, 14 will come under IAEA inspection (compared to none today) while eight will be designated military reactors. All nuclear material and equipment transferred to India by the U.S. will be subject to international safeguards in perpetuity. Thus the effective, practical choice is not between 100 per cent and 64 per cent coverage, but between zero and 64 per cent coverage.

Similarly, under the rigid terms of the NPT, the strategic reality of three non-NPT countries actually having the bomb just cannot be acknowledged. No one has produced a credible roadmap of how India, Israel and Pakistan can be made to give up their weapons while five others keep them.

The new deal seeks to move beyond three decades of futile lecturing to India with a verifiable set of bilateral commitments that will bring it inside the nonproliferation tent.

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