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Reuters July 23, 2005

With Bush's help, GE courts Indian PM, nuke sector

By Adam Entous

WASHINGTON (Reuters) - Just over an hour after the White House's surprise pledge to help India develop its civilian nuclear power sector, the head of General Electric, the American company that could benefit most from the policy change, sat down for a celebratory dinner.

The host was President George W. Bush; a few feet away was India's prime minister, Manmohan Singh, and his top aides. GE Chief Executive Jeff Immelt, a contributor to Bush's presidential campaigns, had a coveted seat at the president's table.

Bush's announcement on nuclear trade with India -- followed by a formal dinner in the State dining room -- was not just a victory for Singh. For GE, the only U.S.-owned company still in the nuclear business, it marked a possible turning point in a years-long push to re-enter the Indian nuclear power market, which it was forced to leave in 1974 when India conducted its first nuclear test.

"In the short term, it's really business as usual. ... But if things unfold the way it looks they may, then clearly it is a significant opportunity for us," said Peter Wells, general manager of marketing for GE Energy's nuclear business.

While the policy change may benefit GE and other companies in the long term, critics contend Bush's move closer to accepting the world's largest democracy as a nuclear weapons state could weaken decades-old prohibitions against atomic arms.

"This administration's rogue, shoot-from-the-hip move to launch nuclear cooperation with India puts the interests of industry ahead of our national security," said Democratic Rep. Edward Markey of Massachusetts, an arms control advocate.

GE was not mentioned in the joint statement issued by Bush and Singh, but Bush specifically pledged "expeditious consideration of fuel supplies for safeguarded nuclear reactors at Tarapur."

GE built Tarapur and one of its immediate goals in India would be resuming fuel sales to the reactors, Wells said.

Immelt -- who said in May that "all conditions are right to invest in India" and predicted that GE revenues from there could jump to $5 billion by 2010 -- was not the only American executive at Monday's dinner with a reason to court Singh.

Bush also invited Lockheed Martin Corp. chief Bob Stevens and Boeing Co.'s new chief executive, James McNerney. Bush cleared the way in March for the two defense contractors to compete for a potential $9 billion market selling combat planes to India. GE makes jet engines for Lockheed and Boeing.

GE spokesman Peter O'Toole said "tying GE's attending a State Dinner to a political contribution is misleading. We support officials in both parties and have done so for years."

"Jeff (Immelt) wants GE products picked to help solve India's challenges; who better to make the case with than the prime minister?" O'Toole added.

BUSH'S NOD TO GENERAL ELECTRIC

Washington actively promoted nuclear energy cooperation with India from the mid-1950s until the nuclear test in 1974. U.S. nuclear cooperation and exports were later halted, freezing out GE, which built the Tarapur reactor in 1963 and supplied it with low-enriched uranium as fuel.

India has since become the second-largest growth market behind China. In a sign of its growing importance to Washington, Bush on Monday promised India full cooperation in developing its civilian nuclear power program in exchange for New Delhi's commitment to adhere to international regimes aimed at curbing arms proliferation.

Provided the Indians move quickly to fulfill their obligations, congressional sources said, it was Bush's intention to seek congressional approval to implement the agreement on civil nuclear cooperation this year.

"It's the jewel in the crown," GlobalSecurity.org's John Pike said of the Indian market. "We're the world's two largest English-speaking countries. We're the two largest democracies and we're joined at the hip economically."

Henry Sokolski of the Nonproliferation Policy Education Center said Bush's decision was unlikely to benefit GE any time soon. "This may be cream but it's certainly not gravy train, certainly not for a while." Sokolski said, adding that GE will face stiff competition from non-U.S. suppliers.

GE'S ROLE

In the runup to Singh's visit, GE held a series of meetings at the departments of State, Commerce and Energy, but Wells said the company did not explicitly lobby the White House to change longstanding policy.

"It maybe sounds a little subtle, but we try not to tell the U.S. government what we think their foreign policy should be," Wells said.

At a recent State Department meeting, Wells said, "We wanted to better understand what the U.S. government's view was of the situation and also to put an offer out there to them that was to say, 'We understand you've got a lot of considerations to go through here when you make a policy decision, and if there's anything we can do to help, then let us know.'"

In addition to resuming fuel sales to Tarapur, Wells said GE could move quickly to offer technical and maintenance services for Indian nuclear plants, and eventually bid to build new reactors. If Bush succeeds in pushing through the policy changes, "clearly we would look for U.S. government support to advocate on behalf of GE," Wells said.

That support could take the form of government-to-government lobbying or Export-Import Bank loans for future GE projects in India, experts said.

Earlier this year, the Export-Import Bank gave preliminary approval for $5 billion in loans to help British-owned Westinghouse Electric Co. and other U.S. suppliers win contracts to build four nuclear power plants in China.


Copyright 2005, Reuters