January 26, 2012

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

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.

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
,” 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
” if the United States continued to push the nuclear-cooperation
agreement requirement.

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
reported that:

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

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

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.