Mark HibbsRiyadh Redux

Six months ago I aired here some initial thinking aloud which was ongoing inside the US Executive Branch about whether to go forward with a bilateral nuclear cooperation agreement (a so-called 123 agreement) with Saudi Arabia. Since then, there has been some further internal discussion of this issue.

In the above post, I wrote that Saudi officials had made known to US counterparts they were not inclined to follow the UAE, which in 2009 negotiated a 123 agreement committing the UAE to forego uranium enrichment and reprocessing (E&R) of power reactor spent fuel. We weren’t exactly supposed to know that half a year ago, but it hasn’t been denied since, and I have even more reason to believe now that this was the case.

In the months that have since transpired, Riyadh’s apparent recalcitrance has raised concern at the Department of Energy and the State Department that, if the US wants for both commercial and diplomatic reasons to negotiate a bilateral nuclear cooperation agreement with Saudi Arabia, it may get no nuclear cooperation agreement with Saudi Arabia so long as the US insists that Saudi Arabia must forego its option—assured under Article IV of the NPT, to which Saudi Arabia is a party—to enrich uranium and separate plutonium.

At the political level, however, things have taken a whole different course, and the US nonproliferation-minded in droves have asserted that the terms for E&R expressed in the US-UAE agreement should be the yardstick for all future bilateral nuclear cooperation agreements. This view has in these circles become in effect politically correct. Few of us will dispute the virtue of nuclear newcomer countries taking a decision not to embark upon indigenous uranium enrichment programs, but it is also my experience that some people on the nonproliferation circuit can get hmmm… a little testy about this if you suggest that the matter may not be quite so simple. (And if you propose that there might be a serious NPT equity issue with some newcomers should the US try to enforce a no-E&R policy with its counterparts by leveraging its own nuclear weapons/security relationships–oh boy!)

Before there can be any negotiation with Saudi Arabia, the Executive Branch has to establish what its marching route will be. A half-year after my last post introducing this issue, DOE and State are nowhere near solving this dilemma, however, and reaching an interagency consensus on an initial negotiation position will take a while—largely in view of the political risks which I have already outlined.

Jordan First

To begin with, I wagered six months ago that there would probably be no initiation of a negotiation of a bilateral nuclear cooperation agreement with Saudi Arabia until there was closure on a 123 agreement negotiation between the US and Jordan. That deal was held up last year because key players in Jordan—in particular Khalid Toukan, head of the country’s Atomic Energy Commission—wouldn’t go along with a US proposal that Jordan formally commit itself not to do E&R.

You might recall that I advised that in due time there would be more to tell, and I hinted back then that the outlook for a favorable compromise with Jordan was far from bleak.

Now is now. I’m pretty confident that I called this right, and that a resolution on the Jordan deal may be getting nearer or even imminent. Why? During the second half of 2010, it made no sense for the US to press the issue with Jordan, because a final draft 123 agreement, if reached by Jordan and the US, would have to be put before the Congress for its consideration for 90 days—which lawmakers’ schedule through the end of the year would not permit. That state of affairs permitted Washington and Amman to spend some time last fall and to chew the cud of the agreement, take the discussion to a higher level politically, and try to overcome the impasse.

I hear in some quarters that the two sides may have done that, in fact. I haven’t seen the current version of the draft agreement, and I don’t profess to know exactly what’s in there, but over the last several months it did occur to me that a little creative thinking could resolve this conundrum. Jordan might, for example, make a political statement in the preamble or in an annex of the agreement—it wouldn’t have to be in the operative language—spelling out that it would not enrich uranium or reprocess for a certain period of time, say, for X number of years, and that Jordan and the US would at that time revisit the issue and discuss whether it would make sense for Jordan at that time to get into uranium enrichment or reprocessing. (There is even a precedent for doing it this way: a US-South Korean 123 agreement in which this kind of decision making is called a “joint determination”). If Jordan and the US do something like this, It might be the case that both King Abdullah and nonproliferation-minded people in Congress could be satisfied. Jordan would retain its NPT Article IV rights, it would get nuclear cooperation from the US, and the US would get a political commitment from Jordan not to enrich or reprocess at least until they have enough power reactors on the ground in the country (right now they have none) to justify Jordan initiating a project to enrich uranium.

The UAE in 2009 had agreed not to enrich and reprocess indefinitely. And because the UAE—following on the example of an earlier 123 agreement with Egypt—has most-favored nation status vis-à-vis the US, there’s the theoretical possibility that, if Jordan limits its commitment not to enrich and reprocess, the UAE might then request that the US amend its 123 agreement to give the UAE the same more-advantageous conditions as Jordan would obtain. So do I think that the UAE would insist on such a renegotiation? No. Why not? Among other reasons because it was the UAE in the first place—and not the US—which initially proposed to commit itself to no E&R as a part of its bid to get nuclear cooperation from Washington. That’s not the case for the other agreements that Washington wants to negotiate with its trading partners.

When exactly the US and Jordan will finally close on all this I don’t profess to know. But if it happens soon—say, in a few weeks or small number of months—that will then raise the prospects that the US will get cracking on how to proceed with Saudi Arabia.

On to Saudi Arabia

Since my last post, the Saudis have somewhat intensified their message that they want to deploy nuclear power reactors, underscoring what I had reported at Carnegie in mid-2010—both concerning the country’s energy policy prerogatives and its relationship with Iran. US vendor companies and Japan’s Ministry of Economy, Trade, and Industry have taken some steps to position themselves when and if Saudi Arabia takes its nuclear ambitions to the next level.

Last week, Elaine Grossman at GSN/National Journal put out this noteworthy piece, which reported that there is apparently a peppery discussion getting underway between the Executive Branch, on the one hand, and Congress, on the other, over how to play this.

Based on the internal reactions her article provoked last week (as well as the external disclaimer which DOE sent over to GSN, and which it published as a footnote to the article on its website), the reporter put her finger in a hornet’s nest.

One significant detail in Elaine’s contribution is that she helpfully identified one of the sources for it as a “senior Republican Congressional aide.”  There are a couple of those I know who come to mind and I won’t tip my hand, but keep in perspective that it was staffers from the right side of the aisle who objected last summer that State was prepared to launch a 123 negotiation with Vietnam without restrictive E&R terms. I acknowledge that I found a little humor in this bit of inside-beltway heatwave histrionics in my August post, in consideration of the fact that the UAE agreement specifically identified Middle Eastern states as those where the US would aim to negotiate new agreements including restrictive E&R terms.

There are, I dunno, maybe 20-30 specific individuals at State, DOE, other agencies, and in Congress who will weigh in on this Saudi 123 issue in coming weeks and months.

In addition to friction reported out by GSN between un-identified Congressional personalities and the Executive Branch last week, there’s the separate issue of how the matter will be handled internally by officials at DOE and State. Regardless of what DOE Deputy Secretary Dan Poneman thinks about this or doesn’t think about it—this was a contentious point raised by the GSN article—as of right now, so far only a single interagency staff meeting has been held to discuss how State and DOE will tread onto this mine field. There is a lot of ground yet to cover. And, believe me, there’s  more than meets the eye.

At the outset, there are about as many views as there are participants in the discussion about how to go about it.

There are people who feel strongly that (if I may put it a tad too dramatically:)

  • the US hasn’t built a nuclear power plant in decades, its enrichment industry is in decline, it is hostile to commercial reprocessing, and on international fuel cycle issues has little to bring to the table to persuade most foreign countries to forego their Article IV fuel cycle rights
  • in the meantime other countries have taken the leadership in nuclear power development, especially in the fuel cycle, and have more credibility than the US does
  • US efforts to force a no-E&R policy on its trade partners will damage US bilateral relations with these countries
  • The UAE agreement was oversold as a “gold standard” by people in the Bush administration in the light of the above developments

I would strongly recommend a read of this recent thought piece by Fred McGoldrick, a former State Department official who, in my not so humble opinion, is the institutional memory of nearly all current US 123 agreements. To say the least, not everyone in this debate will agree entirely with Fred but I think it would be fair to say that if you talk to some people at State and DOE who are players in this issue you will certainly hear some of these arguments being expressed.

Which Republicans?

But let me return to the Republicans in the Congress.

One of these, House Foreign Relations Committee chairwoman Ileana Ros-Lehtinen has vowed—in the words of DOE staffers—to “re-write the US Atomic Energy Act” to do two things. These were described to me in briefings last week as, first, changing the legislative process for 123 agreements to require formal US Congressional approval, and, second, changing the substance of the act by requiring the UAE “gold standard” including no-E&R provisions for all future 123 agreements.

But there are other Republican interests, and these interests would not likely be innately compatible with what Ros-Lehtinen has in mind. I was on the receiving end of concerns about these Republican preoccupations in the wake of the GSN article. Don’t forget, some observers bent my ear, that the Republicans (far more than Democrats) represent the interests of petroleum multinationals and defense firms which might see a 123 agreement as a sweetener or a vehicle for doing a lot of fresh business in Saudi Arabia. These interests might be more unabashedly represented in the aftermath of Congressional mid-term elections.  I’m also informed in this regard that Israel’s biggest interest group in the US—AIPAC—is already thinking about this very prospect.

Not only. I can tell you that a few people in the Executive Branch are also anticipating that AIPAC will throw its weight into the debate even before President Obama decides on what kind of terms the US will offer the Saudis. And they fully expect that the target will be Congress. If that happens, the political line-ups and the interests at stake suggest that we may see some bloodletting during the second half of Obama’s term should the US bite the bullet and launch a negotiation with Riyadh. That’s the background of why I told Elaine Grossman—who cited me correctly—that I would be very surprised if State and DOE would initiate a negotiation with Saudi Arabia in which they would throw E&R restrictions to the winds.

On a separate path, some people directly concerned with the Saudi Arabian nuclear issue think that it may be possible to get at the problem from a different angle. As is well known, the Nuclear Suppliers Group (NSG) is currently negotiating terms for new guidelines for E&R transfers, expressed in paragraphs 6 and 7 of its Part 1 guidelines, Infcirc-254. If all 46 NSG states were to agree in new guidelines not to transfer E&R technology to nuclear newcomers, so the argument goes, then we’re nearly there, since—as Fred McGoldrick points out—none of the current technology holders have transferred technology to newcomers since the 1970s, and, with the A.Q. Khan affair behind us, they’re not likely to start doing it now. Even if the NSG doesn’t close on this matter—and that will depend on Turkey and South Africa significantly backing off principled positions about nuclear equity—the G-8 are implementing new E&R guidelines and would likely continue to do that.

But even if that happens, and existing technology holders formally commit to restrain themselves, Saudi Arabia could still launch an enrichment program, should it obtain a technology blueprint—from friends in Pakistan or on the black market, for instance. For that reason, some reasonable minds in Executive Branch agencies feel that it would be most desirable to go forward with a negotiation with Saudi Arabia aiming to persuade Riyadh not to enrich and reprocess.

In any event, regardless of the flurry of finger-pointing that the GSN article unleashed internally last week, don’t expect quick action by President Obama on this issue. He has made known that he wants to see E&R trade restricted, and US officials have underscored during their discussions of the Saudi matter that Riyadh has no Additional Protocol with the IAEA—for Washington an absolute must for any new 123 agreement. It took years for Saudi Arabia to bring into force a safeguards agreement with the IAEA. Who knows–the gestation of an AP might be just as long.


  1. Cheryl Rofer (History)

    Mark, thanks for another of your outstanding analyses.

    But with the unrest in Egypt and reports of demonstrations in other Arab countries, it looks like any agreements are likely to be put on hold until things settle down.

    • mark (History)

      Cheryl, I think it would be fair to say that it would take awhile for any deal with Saudi Arabia to happen–maybe a lot longer than either UAE or Jordan, for political reasons both in Riyadh and in Washington. I saw some BBC coverage today from Jordan that indicated that things were a little dicey in Amman following up what is happening in Tunesia and Egypt. As long as little cash on the barrel has been plunked down by vendors (including in the form of bidding preparations, which can cost three-figure $ millions) there will be little preventing foregin actors from pulling out. The cooperation agreements could stand and weather most storms (don’t forget that Iran after the revolution also tried to force foreigners to abide by their pre-revolutionary cooperation agreements with that country), but you are absolutely correct that what is happening on the Arab street today is a very powerful argument for restraint in negotiating these agreements.

  2. Dan Yurman (History)

    First of all thanks for an excellent analysis. However, I disagree with your view the U.S. enrichment industry is in decline. Urenco opened a 3M SWU plant in NM last June and Areva is on track for its NRC license for the 3M SWU ID plant later this year. It is still a toss up whether USEC will revive its plans to build 3.5M SWU OH plant. As for GE in NC, that’s still an imponderable. However, in summary, this is not a picture of an industry “in decline.”

  3. Dan Joyner (History)

    Thanks for this extremely useful article, Mark.
    Dan Joyner

  4. mark (History)

    Dan, the judgment on the US uranium industry you make reference to is attributed in the post not to me but to people in the decision making process who certainly have this perspective. That clarified, you must know that the two projects you offer as exhibit A and B to demonstrate that the US uranium industry is not in decline are projects where the technology is in fact not American. In both cases, two European companies, Urenco and Areva are the investors with the keys to the technology. The proprietary technology itself is owned by another European company, ETC, in which Areva and Urenco directly participate as shareholders. No US entity has any ownership or even access to the proprietary uranium enrichment technology for either of these two projects. That leaves the “American Centrifuge” project, about which question marks have loomed for years, reinforced by delays in implementation, and the GE laser project, which as you say may or may not prove commercially viable. The US was the biggest rule maker in the nuclear fuel world after the end of World War II when it had something like a monopoly on nuclear fuel production, including enrichment, outside the USSR. That’s now far from the case. The centrifuge has replaced the gaseous diffusion technology which was the backbone of the US enrichment empire for decades after the war. It is possible that the technology holders in the GE project know something the rest of us don’t, but a lot of countries and firms–including Urenco–abandoned laser enrichment because they made a business decision that the laser could not compete with the gas centrifuge for the forseeable future.

  5. Jonathan Scherck (History)

    Saudi Arabia with an enrichment capability? Say it ain’t so. We really do have to assume that Riyadh would only then be tempted to step up with a nuclear weapons arsenal of its own. And then those CSS-2 MRBM’s from China that have been sitting in the Saudi desert for the past 20+ years–well then we’d really have something to worry about. E&R..God forbid.