U.S. Policy Shift on Nuclear Energy and the Impact on Proliferation Concerns

Yesterday,The Wall Street Journal reported that the Obama administration has decided to withdraw its demand for countries pursuing nuclear energy development to relinquish their right to produce nuclear fuel domestically. This is a significant shift from a 2009 agreement between the United States and the United Arab Emirates (UAE) that prohibits the UAE from enriching uranium domestically or reprocessing spent nuclear fuel.

According to The Wall Street Journal report, administration officials cited concerns that U.S. nuclear plant developers could lose a share of the market with a stringent requirement attached to nuclear-cooperation agreements that bound countries from developing domestic sources of nuclear fuel. “U.S. companies once controlled at least 50% of the world market for building nuclear reactors,” The Wall Street Journal reported. “This share has dwindled to around 20%, U.S. officials say, with Russian, French and South Korean companies gaining dominance,” and officials have cautioned that “Washington risked losing business for American companies seeking to build nuclear reactors overseas” if the United States continued to push the nuclear-cooperation agreement requirement.

Moreover, U.S. officials cited concerns that losing nuclear plant development to non-U.S. developers could weaken U.S. efforts to encourage countries to promote stronger nonproliferation safeguards and policies. “To the extent we lose market share, we lose nonproliferation controls and hurt national security,” a senior U.S. official told The Wall Street Journal.

As a result, the United States will pursue other avenues to encourage aspiring countries to purchase nuclear fuel from foreign suppliers like the United States and Russia. The Wall Street Journal reported that:

These tools include supporting a United Nations-backed nuclear-fuel bank; cooperating with Russia to increase the international supply of the low-enriched uranium that is useful for energy but not weapons production; and tightening the rules governing the nuclear trade at the Nuclear Suppliers Group, the informal body that regulates the industry.

The U.S. policy shift has already drawn criticism from the nonproliferation community and is likely to face opposition in Congress, which must approve nuclear-cooperation agreements. Senator Richard Lugar, a staunch supporter of nonproliferation regimes and policies, has openly expressed concerns that the U.S. policy shift could have a cascading affect across the Middle East, where Jordan is pursuing nuclear energy development, and elsewhere. In a letter to the Department of Energy earlier this month, Senator Lugar wrote that “Such a policy could cause the United Arab Emirates to reconsider its enrichment and reprocessing commitments if Jordan or any other country in the Middle East does not agree to similar terms and conditions.”

Proponents of nuclear energy development have in part relied on the fact that most nuclear energy states purchase fuel from external suppliers to dampen down concerns that the deployment of nuclear energy technology to developing countries could lead to greater nuclear weapons proliferation. Dr. Charles Ferguson, President of the Federation of American Scientists, wrote in the November 2011 issue of Foreign Policy Magazine that “The only countries with enrichment facilities that don't have nuclear weapons as well are Argentina, Brazil, Germany, Iran, Japan, and the Netherlands -- and only one of those six keeps nonproliferation hawks up at night.”  Adding Jordan, Vietnam and South Korea – and even the UAE – to the list of countries with enrichment facilities is not likely to upend the list because these countries are relatively stable and rather benign. Nevertheless, proponents of the U.S. policy shift will likely face greater opposition from the nonproliferation community due to concerns that greater technological diffusion could increase the chances of the dual-use technology falling into the wrong hands – despite IAEA safeguards and other nonproliferation efforts.

This will be an interesting debate to follow, both on Capitol Hill and outside of Washington. In particular, it will be interesting to watch how the policy change will affect nuclear-cooperation agreements already in the works, as well as other countries’ decisions to pursue nuclear energy development. As I’ve written here previously, despite last year’s Fukushima crisis, the share of global nuclear energy development is likely to grow in the years ahead as countries look for opportunities to manage their dependence on conventional fossil fuels. Will the U.S. policy shift spur greater interest in nuclear energy abroad? Will other U.S. efforts to curb domestic nuclear enrichment be successful and keep proliferation concerns in check? Time will tell.