The recent attention given to a U.S. Congressional report, and especially its allegations of secrecy and potentially illegal actions concerning individuals close to President Donald Trump, raises the question whether advisers to the President could engineer the export of nuclear power reactors to the Kingdom of Saudi Arabia (KSA) or another foreign destination outside the requirements of U.S. statutes and behind the backs of lawmakers.
Based on information brought to light in this affair so far, the answer in my view is almost certainly no. Individuals advocating exporting nuclear items to the KSA, whose activities are the focus of the Congressional report, could not have escaped the obligations of the U.S. Atomic Energy Act (AEA). Moreover, they appear to have been outliers, having no business relationship with, or endorsement from, the private industry firms whose know-how would have to be the basis of any U.S. nuclear power plant export to the KSA or elsewhere.
Two months ago Democrats on the U.S. House of Representatives “Committee on Oversight and Reform” released an “interim report” documenting efforts by individuals close to the President to sell “sensitive nuclear technology” to the KSA. Having suggested that the activities it described were secret and may have been illegal, upon release the document captured the attention of the U.S. major media. Thereafter, the report’s contents were boiled down in social media and the international press, where in some cases it was suggested that the United States was about to embark upon clandestine and unlawful foreign nuclear cooperation.
The backbone of the Congressional narrative was not news; for two years it had already been established that two firms, ACU and IP3, had successively made proposals to U.S. officials and industry executives for exporting nuclear power plants to the Middle East. According to the linked ProPublica report, in both cases General Michael Flynn was involved. “IP3’s idea was a variation of ACU’s,” it said; “IP3 swapped out” Russia as an international partner for China, and “then later shifted to an all-American approach.”
Under U.S. law, a foreign country that is the intended destination of a nuclear power plant exported by a commercial entity in the United States needs, as a prerequisite, an “agreement of cooperation,” a so-called “123 Agreement” with the U.S. At issue is Section 123 of the U.S. Atomic Energy Act, (AEA) as amended in 1954, pertaining to “Cooperation with Other Nations.” Section 123 sets forth that such an agreement includes nine nonproliferation conditions that a foreign country must meet. Whether a country satisfies these is a judgment based on an internal U.S. government assessment. So far, the KSA does not have such an agreement with the U.S.
Congress and Technology
The House report in several instances refers to the export of “nuclear technology” in a manner that inaccurately describes the scope of possible U.S. nuclear exports to the KSA and, in light of information revealed after the release of the report, might also mislead lay readers about the extent of Congressional oversight concerning what U.S. firms and U.S. government agencies may and may not do in pursuit of nuclear trade opportunities with a foreign nuclear program.
In its attention-grabbing mise en scène, the House report repeatedly refers to U.S. entities possibly supplying “sensitive nuclear technology” to the KSA. That would be truly an alarming development because “sensitive nuclear technology” (SNT) in official US nuclear trade and nonproliferation parlance specifically refers to technology for uranium enrichment and separation of plutonium that can be used for the production of nuclear weapons. Deeper into the document, it becomes clear that what’s at issue here is not assistance provided for enrichment or reprocessing but the sale of nuclear power plants to the KSA by U.S. industry. That prospect has been under consideration by vendor firms and government agencies for several years including under the Obama Administration.
The House report in one instance does concern itself with sensitive nuclear technology (in fact without specifically referring to it as such), in the context of a possible future determination by the U.S. government “permitting Saudi Arabia to enrich and reprocess as part of a deal that would allow Westinghouse Electric Co. (WEC) and other American companies to build nuclear reactors” in the KSA. That formulation left out the critical distinction that a determination by the U.S., pursuant to a 123 Agreement, not to compel the KSA to forego its future options to enrich or reprocess would, under terms routinely governing U.S. bilateral nuclear cooperation with foreign countries, for sure obligate the KSA to obtain the prior consent of the United States to enrich or reprocess any U.S.-obligated nuclear materials (essentially, any nuclear fuel supplied by U.S. entities or used in a nuclear installation supplied under U.S. government licenses). The language “permitting Saudi Arabia to enrich and reprocess” may suggest erroneously to lay readers that the U.S. would be complicit in any future enrichment or reprocessing by the KSA. Beyond this and separately, it remains an open question whether Washington would impose upon the KSA additional conditions for nuclear cooperation concerning Riyadh’s future nuclear fuel cycle options.
KSA and Part 810
In the wake of the release of the House document, it has become known through media reports that U.S. companies pursuing nuclear power plant business in the KSA have been awarded seven authorizations by the U.S. Department of Energy (DOE) under so-called 10 C.F.R. Part 810 regulations. These rules specifically govern export and re-export of unclassified nuclear technology and assistance to foreign countries. It is usual practice for companies embarking upon negotiations with a foreign nuclear program to request such authorizations to be able to share restricted information concerning the items that may be transferred.
There is an interagency process for the award of these authorizations, whereby DOE must consult with the Department of Commerce, the Department of Defense, and the Nuclear Regulatory Commission, and concur with the Department of State. It would appear that, contrary to hasty media reporting suggesting that DOE may not have consulted one or more of these agencies prior to the award of Part 810 authorizations to the KSA, in these cases the interagency consultative process was in fact followed.
Tracking headlines in media reports, some lawmakers accused DOE of having made “secret” authorizations and withholding cooperation with Congress. Lay readers of the House report may well have drawn that conclusion, having read that “Under Section 123 [of the AEA] the U.S. may not transfer nuclear technology to a foreign country without the approval of the U.S. Congress.” With regard to DOE’s actions, this statement does not apply and is potentially misleading because neither a 123 Agreement nor Congressional approval are prerequisites for the award of a Part 810 authorization by DOE. Independently of these facts, on April 10, U.S. lawmakers introduced legislation to amend the AEA to compel the Executive Branch to divulge to Congress details of Part 810 authorizations for transfers to foreign countries.
What’s the danger?
In December 2017, Mieke Eoyang and Laura Holgate, a former U.S. ambassador to the IAEA and an Obama appointee, published this blog post
to explain “Why Flynn’s Nuclear Advocacy was so Dangerous.” They gave three reasons: 1.) General Flynn, as former National Security Adviser, may have persuaded Trump to tilt U.S. policy toward Russia in support of their private business interests; 2.) Flynn was advocating on behalf of foreign nuclear power industries; and 3.) While advocating nuclear trade with the KSA, Flynn was urging Trump to walk away from the JCPOA, a decision that would contribute to destabilizing the Middle East. These are all serious objections. It is notable that Eoyang and Holgate did not include in their list of “dangers” that Trump might open the road for nuclear commerce with the KSA by short-circuiting U.S. law including the requirements under AEA Section 123.
Indeed, for anyone seeking to enlist the U.S. President to export power reactors anywhere, Section 123 looks like a solid firewall. Whether or not the KSA’s lobbyists and lawyers convince Trump and the Congress to conclude an agreement for peaceful nuclear cooperation with the KSA that would not deprive Riyadh of its future option to deploy reprocessing and enrichment technology, the result of bilateral atomic diplomacy will not be a “secret nuclear deal” between Trump and the KSA, since a negotiated 123 Agreement must be put before the Congress for its consideration.
That said, Trump could elect to suspend any of the nine nonproliferation conditions specified for 123 Agreements by the AEA, and/or include unique provisions. To date, with the singular exception of India discussed below, the U.S. has never concluded a 123 Agreement in which any of the nine nonproliferation conditions were suspended by the President. Were Trump to do this in the case of the KSA, the Congress would have to affirmatively approve it for the agreement to go into effect. With this in mind, lawmakers are currently considering increasing Congressional authority governing future approval of proposed 123 Agreements.
IP3-Industry Disconnect
In addition to a 123 Agreement, for a company like IP3 to make headway and participate in a nuclear power project in the KSA or elsewhere, it would also need the cooperation of U.S. private industry exporting nuclear power plants.
Long before Trump’s election, personalities that set up ACU, the forerunner of IP3, first flogged the idea in Washington that nuclear power vendor companies build scores of power reactors in the Middle East and take back the spent fuel. In the U.S. they generated some interest from firms selling engineering, enrichment, and nuclear fuel-related services, but they got very limited traction in U.S. government circles. After Trump’s election, IP3 reached out to U.S. industry concerning its ambition to sell American-design nuclear power plants to the KSA. Some nuclear firms in early 2017 told Saudi Crown Prince Mohammad Bin Salman they were interested in an IP3 scheme for a Middle East “Marshall Plan.”
But what did IP3 and its advisers have to contribute to a nuclear power plant export project?
The main focus in U.S. industry for potential nuclear sales to the KSA is WEC, working with a consortium of dozens of firms. According to sources, WEC was enlisted by IP3 in late 2017 to include IP3 in its projects, but WEC management never endorsed IP3’s nuclear export scheme and it never included IP3 in its business plans. IP3 persisted, and in February 2019 set up a meeting—referred to in the House report—between Trump and nuclear power companies. According to sources, IP3 also offered to prepare a report after that meeting and then convene a follow-up meeting in about three months, assuring that it would remain in the picture for U.S. industry doing nuclear business in the KSA.
Independent of IP3’s own interests in getting involved in a nuclear power project in the KSA, executives from vendors in the power reactor sector accepted IP3’s offer to convene a meeting with the President. In light of dim global prospects for nuclear power plant sales–and especially in the teeth of competition from state-owned vendors in China and Russia—CEOs acted on wishful thinking that if they were to put their case for nuclear power sales to Trump in person, as one industry executive said, “they would get results.” Ultimately, U.S. private industry firms would have to carefully consider their shareholder obligations and potential liability in any case where impropriety allegations might be raised. Given that White House staffers had in this instance warned about potential conflicts of interest under U.S. law, industry executives may have been deterred by risk considerations from including IP3 in their plans. WEC did not conclude that IP3 could add value to WEC’s own efforts to sell power reactors to the KSA and according to sources, sometime after the February meeting, the IP3 effort was put to rest.
The Example of India
Executive Branch personnel in this case also expressly informed inexperienced would-be nuclear exporters about the requirements for a 123 Agreement. Similar advice was given by the State Department in a previous case. Not long after the November 2000 U.S. election, aides of President-Elect George W. Bush prepared to set the stage for a plan to upgrade U.S.-India relations by exporting nuclear power plants to India. To move this project forward on short order, advocates briefed officials in the Department of State about their aims. According to sources, U.S. diplomats explained right off the bat that because the U.S. was a party to the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), U.S. industry could not export nuclear power plants to India, an NPT non-party, without first changing U.S. law. Until then, according to sources, some leading personalities in the Bush transition team were unaware that the NPT stood in the way of making a snap change of U.S. policy in India’s favor.
“Friends of India” in the incoming Bush administration had no choice but to comply with the requirements of U.S. statutes in order to permit U.S. industry to export nuclear equipment to India. After seven long years, they succeeded, having concluded a unique 123 Agreement with India, and having obtained the consent of world’s nuclear exporters to make an exception to rules of the Nuclear Suppliers Group that virtually ban nuclear exports to the Subcontinent.
If there is to be nuclear cooperation between the United States and Saudi Arabia, it will likewise not come about as a consequence of a fast-track arrangement secured behind the scenes by people who claim to have access to President Trump. There will be a process that looks like what industry and government have followed in past cases. There will be Congressional involvement and interagency consultation. There will be requirements concerning U.S. national security and nonproliferation. And in the case of the KSA to date, the deliberations of IP3 and its advisers, documented in the House report and elsewhere, appear rudimentary and unconnected with actions undertaken on a separate and parallel track by U.S. technology holders in industry to organize a bona fide nuclear power plant export project.
Excellent piece, Mark. It corrects a lot of the misinformation and hyperbole surrounding this issue. It would also be useful to point out that the State Department obtains formal assurances from the recipient government that the technology will not be used for military or explosive purposes and not re-transferred to a third country without U.S. consent.
Absolutely agree, Fred, re the quality of Mark’s piece, and the inclusion of peaceful use assurances and non-transfer commitments in the text of 123 Agreements. I do have concerns, however, about KSA’s intent to follow such commitments when they are set alongside similar commitments made regarding US conventional weapons sold to KSA and ending up with KSA’s clients in Yemen. https://www.cnn.com/interactive/2019/02/middleeast/yemen-lost-us-arms/
KSA’s leader’s unabashed pledge to gain nuclear weapons if Iran does so suggest that they may not take multilateral or bilateral treaty arrangements seriously.
I agree that a lot of this- such as pushing back on the panic over IP3– is right on point. I would take issue though with Mark implying that it was improper for the media to label the Part 810s as secret when the Executive Branch has refused to allow Members of Congress or staffers with the highest levels of clearance to view them. If staffers in the committee of jurisdiction with TS/SCI clearances can’t view something what is a better descriptor than secret? And this is not something that was brought up out of nowhere as Mark knows Congress has been asking for these Part 810s for 6 months and was finally told flat no by NNSA and that’s why it was made public.
And I share Laura’s skepticism about thinking Saudi Arabia will live up to its commitments especially when it won’t sign an Additional Protocol. Besides the Yemen episodes I would point to Saudi Arabia secretly building a ballistic missile production facility as Jeffrey et. al recently exposed.
Finally, I would ask everyone who thinks having real concerns about Saudi Arabia’s intentions here is overblown to step back and try to apply the facts of the case to a non-partner ally. Let’s say for example Iran’s leaders threatened to build nuclear weapons; had China build a ballistic missile production facility on its territory, demanded that it had the right to enrich, and refused to accept the additional protocol. Would you also not be concerned if a U.S. administration was seeking a 123 agreement with Iran that didn’t include strident safeguards under those circumstances? Obviously Iran did most of those things (one exception possibly being publicly threatening to build nuclear weapons) and all of us wanted the U.S. to adopt coercive measures to stop Iran.
So the question becomes how damaging do we think Saudi nuclear weapons would be given that they are currently our allies compared with Iran who is an adversary? Despite Saudi Arabia currently being a partner (like the Shah used to be) I would contend the KSA getting nuclear weapons would be immensely damaging to U.S. interests. Even if the current regime survives and continues to be a U.S. partner in the ensuing decades (neither of which is a sure thing) a lot of our jobs would have been much easier if Pakistan never got nuclear weapons, for example.
Zach, to be clear: In the post I never entered into the debate concerning claims by lawmakers, supported by the media, that actions by DOE violated an understanding or obligation that it should provide the Congress information on awarded Part 810 authorizations. In the post I did come down in support of the view that the award of these authorizations by DOE was not “secret,” that it apparently followed interagency procedures, and did not require Congressional approval. In this case the use of the word “secret” might incorrectly imply that Congress was illegally circumvented in the process of providing the authorizations. Now, the rights of the Congress to access information about the awarded Part 810s is a separate matter. I wrote that lawmakers, “independently” of the question of what procedures were necessary for awarding the authorizations, had on April 10 introduced legislation to require that the Executive Branch provide information on the awarded authorizations to Congress. I have no dog in this fight about Congressional access; in principle I would welcome it, especially if that would provide the outside, non-classified world that most of us live in more transparency about preparations by commercial entities in the U.S. to negotiate sale of nuclear power plants to the KSA. We have an interest in this beyond the infighting that currently divides members of Congress from the Trump White House. I would in this regard refer to my remarks to Paul Dickman’s comment below, in which I propose that the Executive Branch directly inform the Congress, especially on the critical issue of whether IP3 was awarded Part 810 authorizations, given the questions that the House report raises concerning the propriety of third party efforts to press the President to support their scheme to export nuclear power plants to the KSA.
This is really well done and I have shared this several times.
The thing that continues to bug me is this IP3 construct and why anyone would believe this could gain traction. There are several very credible former high-ranking military officers and national security figures that have associated themselves with IP3; so I would like to believe there is something here other than a privatized version of GNEP. But I never have figured out where they get their financial support and without that transparency, it is hard to view their activities with any credibility.
Paul, in writing this post, I intentionally did not discuss the emerging debate over the Congress’s right to access of information concerning DOE’s award of Part 810 authorizations (see my remarks above to Zach K. I did treat the issue which had arisen previous to this, whether the Congress has any legally mandated function in DOE’s decision making in issuing these authorizations). At the time of writing and research, debate on Congressional access to information on awarded Part 810 authorizations was spearheaded by lawmakers- and media-led allegations of “secrecy;” clarification seemed needed and outstanding regarding 1.) what Congress’ rights are to information on Part 810 authorizations following from U.S. law, and 2.) how the Congress in the past and up to now has considered its access to information on Part 810 authorizations. I understand that there will be a report on Part 810 authorizations soon from the Congressional Research Service; it should provide answers to these questions. In advance of clarification, and in the spirit of your questions about who is behind IP3 financially and what they are doing, I would submit that it may be helpful if the Executive Branch were to inform Congress whether IP3 was the recipient of Part 810 authorizations for the KSA. My unconfirmed information for this blog post was that IP3 is currently not pursuing participation in a possible nuclear power plant export project led by U.S. industry.
Mark, excellent article as always. You and others may be interested in our most recent commentary:
https://partnershipforglobalsecurity.org/disentangling-saudi-reactor-reality/
I take strong issue with Mark Hibbs and Laura Holgate. My quarrel stems from Mark’s false characterizations of the ACU international nuclear consortium and architecture – characterizations which Laura appears to endorse.
Mark falsely describes the ACU project, then proceeds to attack it for having the same high proliferation risks as the IP3 proposal and other business-as-usual efforts to sell American nuclear technology in the Middle East. From a nonproliferation standpoint, the ACU architecture is, in fact, far preferable to the deal the United States struck in 2009 with the UAE — which allowed spent nuclear fuel to accumulate in the region pursuant to a 123 Agreement from which the UAE can opt out if future 123 Agreements with other countries in the region are less restrictive. Laura presented a similar false narrative in a LawFare blog she co-authored in December 2017. She was alerted to her mistakes but refused to correct them; and now Mark cites her erroneous analysis.
ACU has always vehemently opposed the efforts of IP3, which was created in the spring of 2016 by people who previously worked with ACU. They found burdensome and unprofitable the high nonproliferation standards of the ACU project and its adherence to the nonproliferation legacy of the bipartisan Nunn-Lugar program. They abandoned the essential nonproliferation requirements of the ACU project for the Middle East and marketed IP3 as “Team America.” Yet they failed to alert their audience that the IP3 concept: 1) offered no solution for the long-term disposition of spent nuclear fuel in the region; and 2) relied exclusively on Asian suppliers to manufacture all the high-value heavy components for building the Westinghouse reactors they promoted.
Contrary to false claims in Mark’s article, ACU never worked with General Michael Flynn when he was a Trump adviser and ACU never tried “to convince the White House it should back a scheme to sell nuclear power plants—first Russian, then Chinese, and then finally American reactors—to the KSA and to other states in the Middle East.” General Flynn’s main interface with ACU occurred in June 2015 when he traveled to Egypt and Israel to explain the major benefits for Middle East countries to rely on nuclear power from an international consortium that includes a fuel in and out service, rather than depending on a single commercial vendor.
The ACU international consortium and architecture gives Congress, the administration and Israel a formidable and reliable capability to effect an historic change in the nuclear trajectory of the Middle East, fully funded by the states of the Gulf Cooperation Council (GCC). The high nonproliferation standards and unique capabilities of the ACU consortium and architecture ensure that the region will never be burdened with responsibility to secure and dispose of spent nuclear fuel and that the GCC states, especially Saudi Arabia, will never feel compelled to develop or obtain nuclear weapon systems.
The ACU project is modeled on the Tennessee Valley Authority for application in the Middle East, continues the nonproliferation efforts of the Nunn-Lugar program and builds upon the January 2011 U.S.-Russia 123 Agreement – supported by both the George W. Bush and Obama administrations and approved by Congress – that makes it U.S. Government policy for the U.S. and Russia to pursue civil nuclear cooperation to further mutual nonproliferation objectives. We believe that enforcing high nonproliferation standards in the Middle East requires Russian collaboration in areas that advance U.S. and Israeli interests.
This approach is fully consistent with recent warnings by Senator Nunn that the threat of nuclear war between the U.S. and Russia has risen to “dangerous levels” and that “we’re not talking to Russia like we did even during the Cold War and into the 1990s.” Senator Nunn specifically warned in late January that “we’re in a race between cooperation and catastrophe.” Finally, any nuclear cooperation in the Middle East must take into account the possibility of regime change (for example, as occurred in Iran in 1979), regime failure, unrest such as the Arab Spring in Egypt, and warfare, as is currently occurring in Yemen.
So how does the ACU architecture differ fundamentally from the IP3 concept and other proposals?
The ACU architecture provides the Gulf Arab States with the security guarantees they need vis-a-vis Iran, so that the Gulf States, especially Saudi Arabia, do not feel compelled to seek nuclear weapons. The ACU architecture eliminates the serious proliferation risks embodied in the UAE 123 agreement and in the subsequent IP3 and Westinghouse proposals. It does this by removing spent fuel from the region through a unique fuel in/spent fuel out system and by relying on a U.S.-based international consortium, subject to U.S. law including the Atomic Energy Act, for the construction, ownership and operation of all the reactors. The ACU architecture is also able to play a key role in the eventual reconstruction of post-mullah Iran.
Core members of the consortium will include nuclear power companies from the United States, Britain, France and Russia, with the U.S., Britain and France forming a nuclear manufacturing bridge to revitalize their failing nuclear industries. The consortium will own all nuclear fuel, which will come under U.S. consent rights and by upfront agreement will never be reprocessed. The ACU architecture also gives Israel a significant role in maintaining the security of the reactors and the fuel.
The claim by Mark, Laura and others that ACU proposed to sell Russian nuclear reactors in the Middle East is grossly misleading. ACU has considered using the GE ABWR, Westinghouse and Russian VVER reactor designs as the basis for creating a new internationally recognized reactor that utilizes the best elements of all three designs. The actual design will be selected by members of the ACU consortium after intensive consultation and collaboration among nuclear engineers and experts from the participating nuclear power companies, ACU and other organizations with valuable expertise.
As importantly, the manufacture of the heavy nuclear components for the new international reactor will be shared equally by the leading consortium members – the U.S., France, Britain and Russia. Unlike the IP3 concept and other proposals, the ACU project includes building a heavy nuclear component fabrication facility in the United States instead of relying on Asian companies in Japan or South Korea to fabricate these components, as Westinghouse and GE Hitachi now do under business-as-usual commercial practices. The U.S. lost this fabrication capability for heavy reactor components in the downturn experienced by the nuclear industry after the Three Mile Island accident in 1979. ACU reverses this situation and returns jobs, industrial capabilities and export revenues to the U.S.
Like the U.S.-UAE 123 Agreement, the ACU architecture allows nuclear power development to go forward in the Middle East. Some have argued the United States should not sell nuclear reactors to the Saudis because nuclear power does not make economic sense and Saudi’s real motive is acquiring nuclear weapons. [See Murphy and Ramana, Bulletin of the Atomic Scientists, April 16, 2019]. We would be sympathetic to this view if the only nuclear power option was business-as-usual, as exemplified by the recent proposals of IP3 and Westinghouse (supported by the Department of Energy). However, by pulling out altogether from the ongoing competition to build nuclear reactors in the Middle East, the U.S. will not and cannot stop Russia, China, France, Japan or South Korea from selling reactors to the Saudis, or, for that matter, to Egypt, Jordan, the UAE and others in the region.
The bottom line is that the ACU international consortium and architecture closes the two critical pathways to weaponization in civil nuclear programs while reinforcing and extending the reach of the US 123 nonproliferation “gold standard.” It generates and secures far more highly-skilled U.S. jobs than the U.S. nuclear industry in its existing state can possibly achieve, particularly with its current focus on the Saudi nuclear power program while ignoring larger nuclear nonproliferation issues in the region. Importantly, the ACU project creates an enormous amount of work for GE and preserves a significant commercial role for Westinghouse.
At this time, it’s also particularly important to focus on integrating the four UAE reactors that are now close to completion into the ACU consortium’s proliferation-proof architecture to underscore the U.S. commitment to the highest nuclear nonproliferation standards in the Middle East and to set a clear example for all countries in the region. The unmatched credibility of the ACU international consortium makes this integration both feasible and necessary.
Let me conclude by expressing the hope that members of the nonproliferation community will recognize the benefits of the ACU project and provide sound advice to improve on any of its shortcomings without resorting to false accusations which only play into the hands of those ready to sacrifice critical nonproliferation standards for the sake of continuing business-as-usual in the nuclear industry.
Tom Cochran’s intervention is almost in its entirety a plea for his ideas about nuclear power. I am pleased that Tom volunteered that information. But in bringing to my attention an editing error I committed in one sentence in this post, the tenor of Tom’s narrative suggests or implies that I am complicit in an effort to grossly discredit or misrepresent his project. That is not true and I want to make sure that this point is understood.
My primary interest in writing this post was, as I have stated, to answer the question whether people with access to the U.S. President could circumvent the law in exporting a nuclear power plant to a foreign destination. To focus on this question, just before publication I deleted half of the draft text, including carefully footnoted and linked details in the chronology of events mentioned in the House report. I eliminated or truncated most of the information in the introductory paragraphs; by hastily condensing this material, in one sentence in paragraph four I inaccurately conflated what ACU and IP3 aimed to do concerning intended partnerships with Russian, Chinese, and U.S. industry.
Tom addressed to me two specific objections. Both arose from my editing of one sentence of that one paragraph, and I have corrected the text in that paragraph.
Tom suggests however that I am part of a wider campaign to spoil his mission to square the circle on the Middle East’s nuclear dilemmas, whereupon having “falsely described” ACU I thereafter “procede to attack it” for having “high proliferation risks” associated with projects proposed by IP3 and Westinghouse.
That is an inaccurate, even ludicrous representation of what I did in this post, including concerning ACU.
Tom did not detract from my description of ACU in the main text. I wrote that persons who participated in setting up ACU later helped set up IP3; that ACU was active well before Trump’s election; that before Trump’s election ACU in Washington was pushing the idea of the world’s nuclear power plant vendors supplying power reactors in the Middle East under a scheme for taking back the spent fuel; that ACU attracted support from some firms in the nuclear industry; and that ACU’s ideas did not gain the support of the Obama Administration.
I believe that my representation of ACU is correct and conforms to the known facts.
Nor, contrary to Tom’s assertion, do I “attack” ACU as a nuclear proliferation threat. If Tom has issues with Laura Holgate’s published LawFare article from 2017 that I cited from, these were not made available in any way before I published my post and I am not guilty by association. I cited her article not in an attempt to discredit ACU (which in fact I didn’t mention) but to underscore that Laura and her co-author did not conclude that activities by Flynn and others to engage in nuclear power plant sales to the KSA or elsewhere would pose the threat that AEA Section 123 would be evaded or violated.
Based on what Tom says in his intervention, in my view the challenges in this project are not about proliferation. His project probably won’t fly for other reasons. This is discussed below.
In his comment Tom does not directly identify himself as being affiliated with ACU. In one instance in explaining ACU he uses the word “we.” Media reports say that Tom Cochran works for ACU. In any case I’m glad Tom presented the detailed explanation on ACU’s project, because for two years media have been reporting that people and entities aiming to deploy nuclear power in the Middle East have in some cases–including concerning ACU–not been forthcoming and as a matter of course have declined to return reporters’ phone calls and e-mails.
Media reports have raised questions about the relationship between ACU and Michael Flynn beyond Tom’s assertions that “ACU never worked with General Michael Flynn when he was a Trump adviser,” and that Flynn had a “main interface with” ACU concerning a trip to Israel and Egypt in 2015. (“Interface with” seems to imply that he was not “working for” ACU, and Tom’s description of Flynn’s activities in the 2015 case he cites—“to explain the benefits for Middle East countries to rely on nuclear power from an international nuclear consortium”—might suggest that Flynn’s advocacy was not expressly on ACU’s behalf.) Some media accounts do assert that Flynn worked for ACU, before IP3 was founded and including with regard to the trip mentioned by Tom, and that Flynn’s affiliations with ACU and Trump may have overlapped. A chronology presented by the Guardian newspaper in December 2018 stated that Flynn joined Trump’s election campaign as adviser in February 2016 https://www.theguardian.com/us-news/2018/dec/04/michael-flynn-timeline-former-national-security-adviser-trump while a Reuters report from December 2017 claimed that Flynn “had worked as an adviser to the firm [ACU] as late as mid-2016.”
Apart from Tom’s incorrect characterization of my work, several points in his comments concerning ACU’s project for nuclear power are noteworthy, in my view including these:
ACU, IP3, and WEC: Tom confirmed what I had been told by sources for this post that personalities who had originally formed ACU went off to set up IP3, and he says that ACU is “vehemently opposed” to IP3 because it does not support ACU’s non-proliferation rationale but instead the “business-as-usual” approach to nuclear power by Westinghouse (WEC), whose reactors IP3 has “promoted.” I am informed for this post however that WEC never included IP3 in its scope of work for selling nuclear power plants abroad.
Supply Chain: What Tom proposes would certainly depart from and probably fatally challenge the longstanding nuclear supply chain strategy and investment record of both leading U.S. nuclear power plant vendors General Electric and WEC. These two companies for many years have made major investments, respectively, in the nuclear industries of Japan and, especially, South Korea. South Korean industry is critical to WEC’s supply chain for its third-generation AP1000 PWR model. Japan makes components for PWR and BWR worldwide. Moreover, these industrial arrangements operate in parallel with longstanding U.S. bilateral diplomatic commitments to both these countries. It isn’t clear why either U.S. firm would take on the expense of adding to, or shifting their investments and/or manufacturing loci away from, the Asia-Pacific and toward the U.S. (where there is currently no expertise for heavy component manufacture) or elsewhere unless they were confident that the global market for nuclear power would support that investment.
According to the Reuters report linked below, ACU, for explicitly and questionable political reasons, has considered Ukraine as yet another location for major nuclear equipment manufacturing for his project besides the U.S., the U.K., France, and Russia. But at the end of the day, capacity has to match demand in order for vendor companies to justify the billions of dollars in investment required.
Industrial Development: In my view, the notion that the basis of nuclear power deployment in the KSA and elsewhere in coming years might be a hybrid reactor based on elements from the GE ABWR, from a Westinghouse design (I assume that means AP 1000 PWR), and the advanced Russian VVER PWR design, is simply–to put it mildly–breathtaking. This, Tom writes, might be “the basis for creating a new internationally recognized reactor that uses the best elements of all three designs.”
There is one modern nuclear power plant design that came about through such a cooperative project (in fact, a project that was far less ambitious than what Tom proposes). That’s EPR, a Franco-German so-called “common product.” I’m not confident that the lessons learned from this project would today encourage industry in the U.S. and Russia to try to replicate it. And I would argue that the facts on the ground concerning the current and future market for nuclear power plants would deter these companies from launching such a risk-laden and expensive scheme.
Germany and France began work on a third-generation PWR in 1992, and the EPR project was formally inaugurated in 1995. It has taken over 25 years for the first EPR unit to commercially operate. The first two units under construction, in France and in Finland, are still not finished after 12 and 15 years, with costs projected at about EUR 10 billion each, respectively; cost overruns follow from a host of regulatory and manufacturing issues. During the quarter century required for these two European countries to bring this effort to fruition, the global market for nuclear power technology has continued to evolve. EPR was designed on the expectations that there would be great demand for large nuclear power plants in Europe. Today that is less certain. The international market for nuclear power plants may be more modest than assessed a generation ago. There may also be a future shift toward small and medium-size units; what happens will depend on many factors.
The financial, market and political risks for U.S. and Russian industry to go this route would be considerable, as the timeline for U.S. and Russian firms to merge their activities industrially may be longer than that needed for Germany and France—countries that were already tightly politically integrated at the time the EPR venture began. Russia is subject to U.S. and international sanctions. Rosatom and WEC have already invested billions of dollars in their current nuclear power plant designs, having reached the point where these are expected to begin to earn profits after decades of R&D expenditure and investment in a supply chain. Are they willing to commit more resources now to a brand new reactor project in these circumstances? It isn’t clear how private shareholders of GE and WEC would support the commitment necessary to realize such a project. The future direction of the West’s relations with Russia is a further unknown, and a current obstacle. President Putin’s comportment vis-a-vis Western countries, and the negative reaction to these developments by Russia’s neighbors, does not encourage the conclusion that a strategic state-owned Russian enterprise may cooperate with competing and privately-owned U.S. nuclear vendor companies on the basis of likemindedness. Reuters in December 2017 claimed to know that ACU personnel proposed that Ukraine lift sanctions on Russia in exchange for a contract to make equipment for nuclear power plants built in the Middle East: https://www.reuters.com/article/us-usa-trump-flynn-nuclear-exclusive/exclusive-mideast-nuclear-plan-backers-bragged-of-support-of-top-trump-aide-flynn-idUSKBN1DV5Z6https://www.reuters.com/article/us-usa-trump-flynn-nuclear-exclusive/exclusive-mideast-nuclear-plan-backers-bragged-of-support-of-top-trump-aide-flynn-idUSKBN1DV5Z6
I don’t oppose Tom’s project but I don’t think it is viable as he describes it. His expressed “hope” that the “nonproliferation community recognizes the benefits of the ACU project” might be realized, as the project is designed to address proliferation challenges. But the overwhelming task will be to convince the people who design, regulate, construct, finance, and operate nuclear power plants (what he calls nuclear power “business-as-usual”) that this idea is credible and that the risk is acceptable. In both the U.S. and Russia, the decision makers on nuclear power plant deployment operate in an environment in which nonproliferation is only one of a number of critical considerations. In view of this, what Tom proposes is, in my view, a very heavy lift, and it might require two decades or more of legal, diplomatic, regulatory, R&D, and design engineering work; massive capital investment; and political risk management to make it happen, even under more propitious conditions than those that prevail today.
Fascinating discussion, and I, too, welcome Tom’s comments and descriptions. It’s nothing new that the media and industry itself has hyped nuclear deals, and Mark does a nice job of deflating that hype. I’m more concerned about Tom’s description of a “proliferation-proof architecture,” which pricks up my ears. Yes, providing and taking away fuel could be an improvement over the current system, if only to give earlier and clearer warning of clandestine activities. But nothing is proliferation-proof. In the early years of nuclear cooperation, when the US had more clout, the US thought that supplying everything to our allies would suffice. If we had taken back South Korea’s SNF then, would they not have embarked on a nuclear weapons program? You can argue that the South Koreans’ nuclear weapons program was triggered by planned withdrawals of U.S. troops, and ACU’s project does, according to Tom, seek to provide security guarantees (“The ACU architecture provides the Gulf Arab States with the security guarantees they need vis-a-vis Iran, so that the Gulf States, especially Saudi Arabia, do not feel compelled to seek nuclear weapons.”) And that’s why, presumably, the presence of generals in the deal was attractive. Even so, this taxpayer doesn’t like important decisions regarding U.S. and allied military assets protecting countries in the Middle East, to be engineered by an international consortium. Does the ACU project explain how that happens? This also assumes the security guarantees are conventional, but if they are nuclear, then the ACU project starts to cross some even more uncomfortable lines for an international consortium, let alone a single government.
Tom’s focus is on the back end of the fuel cycle, and that’s why Russia has to be an integral part of this approach. But I’m guessing that the Russians wouldn’t limit their participation to just the back end (even though they don’t consider irradiated fuel to be waste, it still looks bad and that’s not where the money is) so that’s probably why the new multinational reactor is part of the project. I agree with Mark that this aspect is truly breathtaking, but I confess to being even more pessimistic than Mark that it will ever become a reality. The scraps from the nuclear table are so meager that it’s hard to imagine the competitors politely dividing them up. If we assume that is possible, and a new, multinational reactor is born (and licensed where?), I think Mark is correct that two decades will be required — a nice head start for China or others to capture whatever is left of foreign sales of reactors.
Sharon,
It is not just spent fuel removal from the region that makes the ACU architecture “proliferation-proof.” Another key factor is that the reactors are not owned or operated by the countries where the reactors are located. And these countries do not provide or own the fuel. Consequently, there is no legitimate or acceptable basis for the host countries to claim a need for enrichment or reprocessing.
The ACU international consortium would be fully responsible for and fully capable of providing complete fissile material security and reactor security, inclusive of a viable shut-down mechanism in the event of regime change or collapse. Moreover, the ACU consortium gives Israel a significant role in providing for the security of the reactors and fuel.
As for the timing, an issue also raised by Mark, ACU does not have to design a whole new reactor. As you know U.S. vendors supply components to the Korean-designed U.A.E. reactors. Similarly, the ACU consortium would select a design, perhaps modify it to a limited extent to permit alternative component suppliers, and decide which vendors will supply which components. A significant difference is that ACU would build a heavy nuclear component plant in the United States so that the U.S. can supply its fair share of the heavy nuclear components.
Finally, regarding spent fuel, we also suggest closing a major proliferation loophole in the UAE reactor program by bringing the four UAE reactors that are close to completion under the ACU architecture – in which case the UAE will be relieved of having to dispose of its own spent fuel. This could be done rather quickly, and it would be a great precedent for the Middle East.
Best,
Tom Cochran
ACU Strategic Partners
Mark,
Thanks for this. We still have disagreements regarding historical relationships, and going forward, I submit you have greatly overestimated the time it will take to mobilize the ACU international consortium and architecture.
I look forward to discussing this with you further.
Best,
Tom Cochran
ACU Strategic Partners