UNDER SECRETARY BURNS: Good morning. As you know, President Bush just issued a statement commending the work done to complete the U.S.-India Civil Nuclear Accord, the so-called 123 Agreement. And as you also know, about 90 minutes ago, Secretary of State Rice and the Indian Minister of External Affairs Pranab Mukherjee issued a joint statement attesting to the fact that the United States and India have completed successful negotiations on this bilateral agreement. This is also known as the 123 Agreement.

I'd like to say a few words today about the agreement. I'd like to try to put it into context for you, as to why it's important in the development of our relationship, and then try to sketch out the outlines of that relationship.

In my view, this is perhaps the single most important initiative that India and the United States have agreed to in the 60 years of our relationship. It is indeed historic. It's already become the symbolic centerpiece of a growing global partnership between our two countries. And it reaffirms the commitment to cooperate in civil nuclear trade that was first agreed by President Bush and Prime Minister Singh on July 18th, 2005, here in Washington, and then reaffirmed by them at their summit in New Delhi on March 2nd of 2006.

I'd like to commend our counterparts on the Indian side. The Foreign Secretary of India Shiv Shanker Menon and his very able predecessor, Ambassador Shyam Saran. I made eight trips to India over the last two years. It was two years and two days of negotiations. They are exemplary professionals and I think that in building this partnership through a civ-nuke accord we've also built a relationship of trust between the United States and India.

On the U.S. side, our superb team of expert negotiators was led by Dick Stratford, who is a great resource for our government. He is someone with an unparalleled expertise on this issue for over 20 years, and I want to thank Dick and his team for all of their efforts.

In this agreement, the United States commits to full civil nuclear cooperation with India. And that includes research and development, nuclear safety, commercial trade in nuclear reactors, in technology and in fuel. And the agreement essentially provides a legal basis for the two countries to cooperate in this fashion.

We have also reaffirmed in this agreement the fuel supply assurances that President Bush and Prime Minister Singh agree to in March of last year. And we do so by supporting the creation of an Indian strategic fuel reserve and for committing to help India gain access to the international fuel market. Both of us -- the United States and India -- have granted each other consent to reprocess spent fuel. To bring this reprocessing into effect requires that India would first establish a new national facility under IAEA safeguards dedicated to reprocessing safeguarded nuclear material.

Our two countries will also subsequently agree on a set of arrangements and procedures under which reprocessing will take place. And for those of you who are steeped in this, you know that that's called for by Section 131 of the Atomic Energy Act of 1954.

In this agreement, India has committed to safeguard in perpetuity all civil nuclear material and equipment and also committed that all items under this agreement will only be used for peaceful purposes.

Those are the major features of what we have agreed upon, and it represents a tremendous and historic step forward for both of us. If we look back at the past decades of our relations with India, we know that our differences over nuclear issues have constituted the most significant divisive element in this relationship. The agreement that we announced today removes that fundamental roadblock and will bring us much closer together as two countries as a result.

And that is something that we Americans see as vital to our national interest, not only today but for the decades to come. And that is the first and most important strategic benefit of this agreement.

There are four other related benefits to this agreement as well. The first concerns nonproliferation. Some critics have said that this arrangement undermines the international nonproliferation regime and the NPT. We think that is absolutely incorrect. We think that the U.S.-India agreement strengthens the international nonproliferation regime. For 30 years, India has been on the outside of that system. It has been sanctioned and prevented from taking part in civil energy trade. With this agreement, India will open up its system to international inspection and it puts the majority of its civilian reactors under IAEA safeguards. This deal now brings India, soon to be the world's largest country, back into the nonproliferation mainstream in a way it was not before. And that is a tangible gain for India, as well as the United States and the rest of the world.

The agreement also sends an important message to nuclear outlaw regimes such as Iran. It sends a message that if you behave responsibly in regards to nonproliferation and you play by the rules, you will not be penalized, but will be invited to participate more fully in international nuclear trade. India has not proliferated, unlike North Korea in the past. India is willing to subject itself to full IAEA safeguards, unlike Iran today. And India has not violated its nuclear obligations, as Iran has and continues to do. Iran, of course, has reneged on its most important international commitments.

An additional related benefit is something we're all growing more concerned about everyday, and that is clean energy. We need to find alternatives to the polluting fossil fuel sources that the world has become so dependent upon. And India looks poised to continue its very substantial economic growth. It will require energy to sustain that growth. And with this deal, India will be in a greater position to increase the percentage of its energy sources and energy mix coming from clean nuclear power. That will help in the fight against global climate change.

The agreement also gives India greater control and security over its energy supplies, making it less reliant on imports from countries in the future, like Iran. That's currently a major problem for India; the fact that it needs these external supplies. And so India wants to find a way to resolve this problem, and so do we. And we believe this agreement can contribute to that cause.

The final benefit will be that American firms will be, for the first time in three decades, able to invest in India's nuclear industry. American companies have the finest nuclear technology in the world, and we are looking forward to American firms having the opportunity to bring their latest technology to the Indian market. We are confident that American companies will have equal access to this huge market and that they will succeed there.

So in all respects, we believe this agreement is in the unquestioned national interest of the United States. To put it into effect, there are three remaining steps that need to be taken: first, India will now have to negotiate an IAEA safeguards agreement, and we hope that can happen as soon as possible; second, we will work together, along with many other countries in the Nuclear Suppliers Group, to help India gain access to civil nuclear trade with all the countries of the world; and third, when we have finished those two steps, President Bush will send this agreement to Congress, as he has promised to do, for a final vote by the United States Congress.

We hope that this can happen in the next several months. We are looking forward to it and we spent the greater part of this week briefing the leaders of the Congress and their staffs about the details of all this arrangement. We believe this great, historic civil nuclear agreement will become part of a new strategic partnership between our countries. We are ready to build that relationship with India. And by removing the real barrier that had separated us for more than 30 years, we're about to liberate our two countries for a new engagement.

Now, I would anticipate a series of high-level meetings between the Indian and American leaderships over the next several months. And I think now that we've consummated the civil nuclear trade between us, if we look down the road in the future, we're going to see far greater defense cooperation between the United States and India: training; exercises; we hope, defense sales of American military technology to the Indian armed forces.

Second, we know that both of us are victims of terrorism, and unfortunately we'll continue to be victims of terrorism, and so expanding our counterterrorism cooperation is a high priority for both of our governments.

Third, we want to work together to have a greater measure of global cooperation between us. We already are working together with India in South Asia on Bangladesh, on Sri Lanka, on Nepal, in trying to form a better functioning relationship between India and Pakistan. We're working together in a way we never have before.

This can become a global partnership where we work together in East Asia, in Africa, as the two -- well, as the largest democracy in the world and the oldest democracy in the world. So we think this agreement today unlocks the promise that we've known for 60 years is in the India-U.S. relationship, and now we can make that promise a reality.

. . .

QUESTION: Could you just explain in kind of layman's terms how this strengthens the nonproliferation regime because this really has only to do with civil nuclear power, not to do with the kind of issue of India as a nuclear -- as a nuclear -- military nuclear power?

UNDER SECRETARY BURNS: Well, the United States is a strong supporter of the Nonproliferation Treaty and of the international nonproliferation regime, the agreements that make up that regime. And, you know, it's -- as you know, there are a lot of inconsistencies that have now developed in that regime. You have countries inside the regime, like Iran, that are cheating. They have been cheating for the better part of the last 20 years.

In the case of Iran, they withheld information from the IAEA for 18 years. In the case of Iran, they haven't -- if you look at Mohamed ElBaradei's report to the Security Council of May 24th, they haven't answered major questions about what they're doing at Natanz, what they're doing with the Arak heavy reactor. So you've got this inconsistency of some countries inside cheating and of soon-to-be the largest country in the world, one of the largest energy consumers in the world -- India --on the outside, but not cheating.

And so we felt when Secretary Rice went to New Delhi in March of 2005, she talked to the Prime Minister, Prime Minister Singh. And she said we felt that over the long term, this nonproliferation system would be strengthened if India were brought into it, and if India would commit to inspection of the majority of its nuclear reactors by the IAEA for the first time. And that's essentially what we've worked out over the last two and a half years since her visit.

We are bringing India into the system. It's going to strengthen it in that respect. And I do think that the message to countries like Iran is, if you're not willing to answer questions from the IAEA, if you're not willing to be transparent about exactly what's happening at Natanz at that enrichment facility, then there's no chance whatsoever that the international community is going to treat Iran and give it the kind of benefits that we're certainly willing to give the Indian Government. So I think that's the fundamental lesson for the nonproliferation regime.

And on separation, we have been clear from the beginning, and we were after July '05, that we could not go forward -- we, the United States -- unless there was a clear separation between how we would work with India on the civil nuclear side and then separate that completely from what India does on the strategic side. And it was the separation plan written by the Indian Government, agreed upon on March 2, '06, that it is a fundamental basis of the entire project.

. . .

QUESTION: Nick, you have portrayed this deal as a savvy decision and as worth undertaking, basically on, it seems to me, on two premises: one, that India has never represented a proliferation risk with respect to nuclear technology; and secondly, that it helps draw a useful distinction with a country like Iran. And yet I would like to introduce into the record of this briefing three facts which might tend to challenge those premises and have you respond to them.

First is that over the last two and a half years, the State Department has issued at least -- sanctions on at least seven separate Indian entities for transferring strategic weapons-related technology or goods to Iran, specifically. One of those entities was sanctioned last year for selling Iran chemicals critical to manufacturing rocket fuel. And finally, no less a figure in India than the former chairman of its state-run civilian nuclear program remains under State Department sanction for visiting Iran's nuclear establishment several times and reportedly transferring technology to extract tritium, which, as you probably know, is a material necessary to make smaller, more efficient missile-deliverable nuclear warheads.

And that -- all of what I've just said -- ignores the burgeoning military-to-military ties between India and Iran. So why should anyone view this deal as one that is savvy for the United States to make when, in fact, India under -- or entities in India remain under State Department sanction for sharing nuclear technology with Iran, and is, in fact, also expanding its military cooperation with Iran?

UNDER SECRETARY BURNS: Well, as you know, there is an American law that speaks to the prohibition on trade by any company or any government around the world with the Iranians. We apply that law. And it is true that some Indian firms have become subject to that law and we intend to apply the law, and there'll be no exceptions to it. And so we'll go forward on that basis.

But there's no indication that I am aware of that the Indian Government has been involved in any illicit activity and trade of nuclear materials with India. These are Indian firms that we've sanctioned. But we will apply the law and make no exceptions. That is our obligation.

I would disagree with you that somehow there's a burgeoning military relationship. Now, India -- like most of its neighbors, like all of our European allies, like all of our Asian allies, and like the Gulf states -- has a diplomatic relationship with Iran, has a commercial and trade relationship with Iran. Our advice to the Indian Government has been the same advice that we give to Japan or to France or to the United Arab Emirates. We think Iran is an outlaw state. We think the international community should sanction Iran through the Security Council, as we've done twice over the last nine months, and also through independent sanctions taken by individual companies -- countries, excuse me. We don't want to see a strong relationship between any country and Iran because we think the signal to Iran should be one of isolation. So our message to India is very much consistent with our message to all of our other friends and allies around the world.

Now, I know there is some connection between India and Iran militarily, as there is between other -- some of the other countries that I mentioned. We would obviously -- our advice, consistent with the Security Council sanctions, would be to diminish a country's military relationship with Iran. But I'm not sure, as an objective observer, I would say that there's a burgeoning relationship.

I remember when Secretary Rice testified before the Senate on behalf of the India civ-nuke deal, in the spring of 2006, and there was a flurry of stories in the press about an Iranian ship visit to India and that it was an example of burgeoning defense ties. And it turned out it was a ship -- you know, one of these mast -- one of these clipper ships with 16- and 17-year-old cadets learning how to sail.

I think, actually, the direction that India is turning into is to closer military cooperation with the United States. And as I said in my prepared statement, I think that is going to be one of the very significant horizons of this relationship.

QUESTION: May I follow up, please? First on the military ties, India has helped Iran complete a major naval facility and has conducted joint exercises with the Iranian navy. Whether you want to characterize that as burgeoning or not is your decision, but the follow-up question I wish to ask is: even if one is prepared to assume, charitably, that the Indian Government had no idea about the transfer of those technologies to Iran on the part of, for example, the former head of its civilian state-run nuclear program, what does it say for Indian end-use or export controls that those exchanges took place, and how trustworthy a partner does it make them for the kind of benefits that you're proposing?

UNDER SECRETARY BURNS: Well, two points. First, we have sanctioned, as you know, a number of firms from a number of countries around the world for illicit, and we believe prohibitive, transactions with Iran in the nuclear field. Second, when we approached the Indians in the spring of 2005 with this -- Secretary Rice did -- with this big idea to break through three decades of separation and to make this big strategic move to engage in civ-nuke cooperation, we did say to the Indians, you know, every country that's in the mainstream has to have a significant set of export control laws. And so you saw the Indian parliament pass such laws, I believe in June/July, if I'm not mistaken, of 2005, before Prime Minister Singh came to Washington.

And in part, we urged India to do that -- its government and parliament -- because we did perceive some weaknesses in their export control regime. But we believe that India has a counter for that. We believe India is committed to it. India has been a responsible country for a very long time, and if there are problems in the system, we believe the Indian Government will feel compelled to fix those problems.

QUESTION: Thank you.

UNDER SECRETARY BURNS: Thank you.

. . .