US-Saudi civil nuclear negotiations: finding a practical compromise

Saudi Arabia's King Salman bin Abdulaziz Al Saud meets with U.S. Energy Secretary Rick Perry in Riyadh
US Energy Secretary Rick Perry in Saudi Arabia (Reuters)

“Previous negotiations stalemated over the treatment of uranium enrichment, with the United States insisting that Saudi Arabia accept a legally binding commitment not to engage in enrichment or plutonium reprocessing and the Saudis refusing to foreclose what they regard as their sovereign right to pursue nuclear technologies of their choosing for peaceful purposes.” How confusing. Is this fundamentally different from what Iran wants? JP

12 Jan 2018 |Robert Einhorn | Bulletin of the Atomic Scientists

“After a lengthy hiatus, negotiations will soon resume between the United States and Saudi Arabia on an agreement for civil nuclear cooperation. Concluding a bilateral civil nuclear agreement (often called a “123 agreement,” after the section of the Atomic Energy Act mandating such agreements for nuclear cooperation with other countries) would enable US companies to participate in the Saudi Kingdom’s ambitious plans to build a fleet of nuclear power reactors to meet its growing electricity requirements.

Previous negotiations stalemated over the treatment of uranium enrichment, with the United States insisting that Saudi Arabia accept a legally binding commitment not to engage in enrichment or plutonium reprocessing and the Saudis refusing to foreclose what they regard as their sovereign right to pursue nuclear technologies of their choosing for peaceful purposes.

Given strong domestic pressures in both countries to adhere to the positions that produced the current stalemate, the outlook for resumed negotiations is uncertain. But with some flexibility by both sides, it may be possible to craft a compromise that serves US interests, including its nonproliferation objectives, without undermining the Kingdom’s ability to meet the practical needs of its civil nuclear energy program.

Possible US participation in the Saudi civil nuclear program. In recent months, the Saudi government has reached out to nuclear reactor vendors to encourage them to bid on a project to construct two nuclear power reactors in the Kingdom, an initial phase in a multibillion-dollar program intended eventually to consist of about 16 large reactors. Saudi Energy Minister Khalid al-Falih said he expected to sign contracts for the two reactors by the end of 2018 and hoped that American companies will compete for the projects.

Westinghouse and other US-based companies are reportedly discussing the formation of a consortium to bid on the project. US Energy Secretary Rick Perry, who sees American participation in the potentially lucrative Saudi nuclear energy market as a way to help revitalize the moribund US nuclear industry, visited Riyadh in December and indicated that he expected US-Saudi negotiations on a 123 agreement to get underway shortly.

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To overcome the impasse that has stalled completion of the 123 agreement in the last few years, the two sides will have to find common ground on how to deal with uranium enrichment and plutonium reprocessing, two dual-use “fuel cycle” technologies that can be used to produce fuel for nuclear reactors but can also be used to produce the highly enriched uranium or separated plutonium needed for nuclear weapons.

The “gold standard.” All US agreements for civil nuclear cooperation with foreign countries require that US partners obtain the consent of the United States government if they wish to enrich or reprocess nuclear material supplied by the United States or produced in US-supplied reactors.

In most agreements, that consent must be requested by the foreign partner on a case-by-case basis, and, given the long-standing US policy to discourage the spread of fuel cycle capabilities, US partners know that, in practice, that consent will not be granted. In a small number of agreements, including with Japan, EURATOM (the multinational European nuclear agency), China, and India, the United States has agreed to advanced consent, allowing its partner to proceed with enrichment or reprocessing at its own discretion without having to request consent on a case-by-case basis.

In just two cases, the United Arab Emirates (UAE) and Taiwan, the 123 agreements contain legally binding commitments by US partners not to engage in any enrichment or reprocessing, not just of US-supplied nuclear material or nuclear material used in or produced in a US-supplied reactor, but also of their own nuclear material or material acquired from non-US suppliers.

By barring fuel cycle activities altogether and thereby virtually eliminating the possibility of those partners developing nuclear weapons indigenously, these agreements were widely seen as establishing a valuable new nonproliferation standard, a “gold standard,” viewed by many supporters of nonproliferation as setting a precedent for future US 123 agreements.

Since the entry into force of the UAE agreement in 2009, the United States has sought the gold standard in negotiations of new 123 agreements. In addition to making the case for a legally binding renunciation of fuel cycle capabilities on nonproliferation grounds, US officials pointed out that building indigenous enrichment or reprocessing facilities made little economic or programmatic sense, especially for relatively small nuclear power programs just getting under way.

They noted that, with the well-supplied international market in enriched uranium fuels, it was far more advantageous to purchase enriched fuels from highly efficient, relatively low-cost foreign suppliers than to embark on an indigenous fuel cycle program that would be expensive, time-consuming, and probably unsuccessful, given recently tightened restrictions by nuclear supplier governments on the transfer of enrichment and reprocessing equipment and technology.

Despite these arguments, prospective partner governments refused to accept legally binding commitments to forgo fuel cycle capabilities. While indicating that they had no current plans or intentions to acquire those capabilities, they maintained that, as a matter of principle, they were unwilling to give up their sovereign right to pursue enrichment or reprocessing programs.

Their pushback against the gold standard reflected the longstanding position of many non-nuclear weapon states that efforts to prevent them from acquiring fuel cycle technologies were unwarranted and contrary to what they regarded as the Non-Proliferation Treaty’s guarantee of access to such technologies for peaceful purposes.

In the case of its 123 agreement with Vietnam, the United States was prepared to settle for less than the gold standard, specifically, a non-binding statement of intent in the agreement’s preamble that Vietnam had no intention to pursue fuel cycle capabilities. Despite some concerns on Capitol Hill about the failure to achieve the gold standard, Congress did not pursue a joint resolution of disapproval that could have blocked the agreement with Vietnam, and it entered into force in 2014.

However, given heightened US concerns about proliferation risks in the Middle East, the United States has not been willing, in negotiations with Jordan and Saudi Arabia, to settle for less than a legally binding renunciation of fuel cycle capabilities. As a result, talks bogged down with both countries a few years ago.

Continued Saudi resistance to the gold standard. With the resumption of US-Saudi 123 negotiations and the Trump administration’s interest in US companies participating in the Saudi nuclear power program, the question of how to deal with fuel cycle capabilities has once again come to the fore, and the Kingdom remains committed to keeping its future fuel cycle options open, especially in the case of enrichment.

In a May 2008 US-Saudi memorandum of understanding in which the United States agreed to assist the Kingdom to develop nuclear energy for use in medicine, industry, and power generation, Saudi Arabia stated “its intention to rely on international markets for nuclear fuel and to not pursue sensitive nuclear technologies, which stands in direct contrast to the actions of Iran.” Notwithstanding this earlier statement of intent, the Saudis have resisted a legally binding commitment to forgo fuel cycle technologies.

In an interview with Reuters in December 2017, Saudi Energy Minister Falih suggested that, while the Kingdom is determined to use nuclear energy strictly for peaceful purposes, it is seriously considering an eventual enrichment capability.

He said he was encouraged by studies indicating that Saudi Arabia has large domestic uranium resources and maintained, in an apparent allusion to indigenous enrichment, that “we will not deprive ourselves of accessing our natural resources and localizing an industry that we intend to be with us for the long term.”

Senior officials of the King Abdullah City for Atomic and Renewable Energy (KACARE), which has the lead for the Saudi civil nuclear program, believe that the need to fuel a large fleet of 16 or more reactors provides a much stronger justification for an indigenous enrichment capability than the much smaller nuclear power program pursued by the UAE.

Saudi nuclear hedging. Saudi interest in enrichment is not motivated exclusively (or many observers would say primarily) by the Kingdom’s ambitious civil nuclear energy plans. There is clearly also a security dimension, based largely on Saudi Arabia’s grave concern about the future acquisition of nuclear weapons by its arch-rival Iran and the conviction of many Saudis that they need to have the nuclear infrastructure in place to match the Iranians if necessary.

The Saudis have had strong misgivings about the Iran nuclear deal (the Joint Comprehensive Plan of Action, or JCPOA), largely because it failed to address Iran’s expansionist regional designs and because the sanctions relief it provided gave Tehran additional resources to pursue those designs.

Saudi officials recognize that, at least for the time being, the JCPOA effectively prevents Iran from building the enrichment capacity it would need to produce nuclear weapons. But they have strong reservations about the JCPOA’s so-called “sunset” provisions–the expiration after eight, 10, and 15 years of key restrictions on Iran’s enrichment activities that will enable Iran legally to build up to an “industrial scale” enrichment capability and thereby decrease the amount of time it would need to produce enough highly enriched uranium for a single nuclear bomb from the current 12 months to a matter of days.

Moreover, the Saudis fear that the JCPOA only delays and does not eliminate Iran’s nuclear weapons ambitions. They are convinced that, once Iran is free to build up its nuclear capacity, it will achieve a “threshold” nuclear weapons capability and later break out of its nonproliferation obligations to produce nuclear weapons at a time of its choosing.

From time to time, influential Saudis have hinted, usually unofficially and privately, that a Saudi enrichment program would enable the Kingdom to prepare for and respond to such a scenario. In defending Saudi Arabia’s right to pursue enrichment, Prince Turki al-Faisal, the former Saudi intelligence chief and ambassador in Washington and an advocate of matching Iranian capabilities, notes that the JCPOA allows Iran to have an enrichment program and argues that the Kingdom should be allowed to do so as well.

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