Joshua PollackFuel Swaps v Escrow: Compromise Possible?

The Iran-IAEA LEU-for-TRR-fuel deal is running out of time, President Obama says. And as the LEUTRR deal goes, it’s pretty safe to say, so goes the West’s preferred strategy of engagement and de-escalation of tensions.

This is just the latest episode in the month-long miniseries, “Negotiating over the Airwaves.”

Matters are actually looking up a bit since the low point of early November (see LEUTRR: Dialogue of the Deaf, November 3, 2009). Around that time, IAEA DG ElBaradei went public with his role, telling Roger Cohen of the International Herald Tribune that Presidents Obama and Ahmadinejad “are talking through me,” but “total distrust” had led Iran to insist on “guarantees” and simultaneous swaps of LEU and TRR fuel. The latter change would eliminate the benefits of the deal from the perspective of the P5+1, especially the Western parties, since Iran would retain enough LEU for breakout.


One way out of the impasse, ElBaradei suggested to Cohen, was an escrow proposal:

“There are a lot of ideas,” ElBaradei told me. “One is to send the material” — Iran’s uranium — “to a third country, which could be a friendly country to Iran, and it stays there. Park it in another state, then later bring in the fuel. The issue is to get it out, and so create the time and space to start building trust.”

ElBaradei elaborated further during a November 6 appearance on Charlie Rose, suggesting that Turkey could play the escrow role:

[The] IAEA will take custody of the material when it goes back until it comes back to Iran. So there is a lot of built-in guarantees. But the Iranians still would like to see the material stay in Iran until they get the fuel.

Well, that will not diffuse the crisis, because to get the material out of Iran will diffuse this perception that Iran has material that could be used for nuclear weapon. It will give Barack Obama the space, you know, to negotiate in a calmer environment.

I have been proposing — and everybody has been trying to be creative — I have been proposing to get the material into a third country. Turkey, for example, a country where Iran has full trust, you know, and keep it there until they get the fuel.

Shortly afterward, unnamed U.S. officials told the New York Times that they had “all but lost hope” that Iran would accept this idea.

Fuel Swaps

On November 9, the Iranian media took Tehran’s position public. It consists of two simultaneous swaps of LEU and fuel involving 400 kg LEU each, something well short of the Geneva agreement-in-principle or the Vienna compromise draft:

Sources close to nuclear negotiations told Press TV on Sunday that the proposal would envisage a two-staged, simultaneous exchange under which the UN nuclear watchdog, for each phase, seals 400 kg of Tehran’s low enriched uranium (LEU) inside the Iranian territory until the 20 percent enriched uranium required by the research reactor is delivered to the exchange site.

According to an anonymous Iranian source quoted by ISNA, by unveiling the escrow idea, ElBaradei was trying to “take advantage” of an upcoming visit by President Ahmadinejad to Turkey in hopes of reviving a compromise proposal that Tehran had already rejected, and would not revisit.

Glimmers of Light

If you are inclined to think that the LEUTRR agreement is a good idea, the good news is that fuel-swap and escrow are compatible, providing both sides with an additional measure of reassurance. Just for example, instead of sending its LEU straight to Russia all at once, Iran can park it on Turkish soil, where a friendly government will be in power for the foreseeable future. Once fresh TRR fuel arrives, the Iranian LEU would move on to Russia, where it would be reflagged. Exchanging the TRR fuel for the LEU in phases ought to be possible — in Turkey. That’s one idea, anyway. (I’m not claiming that this proposal has been discussed.)

Optimists can take heart, too, from small signs of movement. During the Ahmadinejad visit to Ankara, the Turkish Foreign Minister told Bloomberg that the escrow idea was under discussion. In a November 9 press conference in Turkey that aired on national TV in Iran, Ahmadinejad made positive comments about Turkish involvement, comparing it to existing arrangements for natural gas exports. He added that Iran was now in a position to export “surplus” nuclear fuel.

The next day, a newspaper considered close to the office of the Supreme Leader reasserted the Iranian position, but then allowed that even if 1,200 kg LEU were to leave Iran, over 500 kg would remain.

In a televised address on November 11, Ahmadinejad added a new rationale for LEU export, telling Iranians that “Iran’s nuclear conditions are stabilized and we’ve entered the phase of nuclear interaction and cooperation,” extending even to “Iran’s contribution to a world fuel bank.”

Just yesterday, Turkey’s Energy Minister told journalists that his country is ready to store Iran’s LEU. That’s where matters stand for now, with Iran’s leaders seemingly negotiating with public opinion or with each other to find their way to a deal. The IAEA Board of Governors, which must approve the deal, meets for the last time this year on November 26. That’s the last stop before this train enters a long, dark tunnel.

Update: Edited for clarity.


  1. Anthony (History)

    It’s worth noting Iran’s military involvement with regards to the deal:

    Iran armed forces chief backs nuclear deal

  2. Arnold Evans (History)

    Of course we also have France’s prime minister, speaking from Israel

    “We demanded to take a large quantity of (LEU) because we do not want them, while we are enriching uranium on their behalf, to continue themselves enriching uranium which could one day be used for military purposes,” he told Yedioth Ahronoth daily.

    Strongly implying that France intends that Iran stop enrichment for the deal to go forward.

    It seems to me that the purpose of the statement – the word “demand”; the reference to Iran not continuing to enrich which is a known Iranian red line; the issuance of the statement from Israel to an Israeli publication – is aimed at making the deal unacceptable to Iran.

    It’s certain that there are elements of the deal that have not been publicly released and we have no way of knowing what they are. It is also likely that those details are under discussion now.

    For example, I consider it likely that in this deal is an agreement on how much enrichment is to go on during later talks in 2010, with France hinting that the Western position is that it is to be none or close to none. If Iran says no to the deal, it is rejecting both the public and non-public aspects of it.

    If the end of year deadline is missed, I think there is still plenty of time in early 2010 to come to an agreement before any sanctions can be agreed upon and applied. If sanctions do happen, I think the West, especially France, may overestimate how afraid Iran is of that possibility.

    Swapping or escrow are only an issue if Iran believes the West intends to use the return of the fuel as a bargaining chip. This is a matter of reaching agreement on some of the undisclosed details of the deal, if agreement is reached, maybe Turkey can be involved in a face-saving gesture for each side. If no agreement is reached, sending the fuel to Turkey would not make an unacceptable deal acceptable.

  3. Josh (History)


    I consider it unlikely that the deal contains the provisions that you imagine. The Iranian side would not agree.

  4. Major Lemon (History)

    The Iranians are not interested in compromise. Just an example: In the UN last week the Iranian ambassador accused all Israelis of being pirates (because of the Francop incident). The Secretary General asked what evidence the Iranians had that all Israelis were pirates, the Iranian ambassador suddenly pulled out of his attache case a picture of…Moshe Dayan.

  5. Bahram Chubin (History)

    The evidence suggests that Ahmadinejad was for the original deal to begin with; but the deal was shot down by other Iranian leaders. He’s now trying to convince colleagues that compromise on this matter is not capitulation. Hence the spin he has been putting on the matter. Unfortunately, however, ultimately the decision is not his to make.

  6. Steve Hynd (History)

    It’s also worth noting that the IAEA says Iran has pretty much halted expansion of its enrichment program. That could be technical difficulties, but may be a signal of good faith.

    Regards, Steve

  7. Arnold Evans (History)

    The problem the Iranians pointed to, that once Iran’s LEU has left, Iran has no way to force the West to actually deliver reactor fuel, is a valid problem – especially if the West is continuing to publicly say it expects Iran to stop enrichment.

    The initial agreement “in principle” to a trade was surely contingent on concerns such as this one being resolved.

    The West, hardening its position that this concern cannot be resolved has turned the deal into one Ahmadinejad does not accept.

  8. Alan (History)

    Can’t this be organised in such a way that no escrow period in Turkey is necessary? Can’t Iran send the Turks their LEU, and the West send the Turks the TRR fuel rods at the same time?

    For example, a deal could schedule three separate 400kg exchanges in Turkey over a short space of time. Iran would then only risk losing 25% of their LEU if the West reneges.

    Assuming the West complies, and the reactor fuel is readily available, the West gets the 1200kg of Iranian LEU very quickly, while Iran gets their fuel rods very quickly.

  9. Josh (History)


    Unfortunately, it’s probably not the case that TRR fuel assemblies — made from plates, not rods, in this instance — can be fabricated quickly enough for a prompt swap. If the deal is to create a stretch of several months, perhaps up to a year, in which Natanz does not pose a “breakout” threat, that will require Iran to “go first.” (If Iran’s LEU leaves the country only gradually, in installments that can be replaced more or less “in real time,” there would not be a meaningful change in the situation.)

    On the other hand, if the LEU could be parked with an agent trusted by both sides, Iran could reclaim it if the fuel assemblies failed to arrive on schedule.

    Let’s also keep the bigger picture in mind: Iran’s LEU doesn’t have a clearly established role in Iran’s nuclear fuel cycle at this time — or for the foreseeable future. (The Darkhovin LWR is years away in the best case, and will probably never get built without significant foreign assistance, something that won’t be forthcoming in the present atmosphere.) So the LEU is only useful for bomb-building or diplomatic horse-trading. And bargaining chips are of no value unless they can be cashed in. They should not be mistaken for “precious bodily fluids.”

  10. Arnold Evans (History)

    The problem is that nobody seriously believes Iran is going to rush to build a weapon next year. Unless something changes, meaning the West knows something it isn’t saying that would give Iran a reason to build a weapon quickly.

    If Iran is not going to build a weapon next year, and Iran continues to enrich, as it plans to as a non-negotiable red line, then Iran will have the same amount of uranium at the end of 2010 whether or not there is a period in which it has dipped below one ton of LEU domestically at some point.

    So the way this deal is structured, there is only an advantage to the West if somehow Iran is forced to stop enriching after the LEU has been exported. Otherwise, it makes no difference how Iran’s export is sequenced.

    If once the LEU is gone, Obama says technical difficulties will likely continue to prevent the delivery of fuel rods until Iran meets its international obligations by suspending enrichment, Iran has just given a ton of LEU, several years in production, away for free.

    A good deal for the West, a poor deal for Iran.

    Iran never agreed to give its uranium away for free, even in principle. Iran assumed this hole could and would be filled.

    Obama’s, Clinton’s and France’s public statements since the deal was first announced have had the effect of widening, not closing the hole.

    The important discussions are being held behind closed doors. However given that Iran seems publicly to be rejecting the deal, there is no valid argument that it is unlikely the West would have unacceptable conditions attached to the deal using as evidence the fact that Iran would reject unacceptable conditions.

    We are likely watching Iran reject unacceptable conditions as we speak.

  11. Alan (History)

    Josh – thanks for response.

    Couple of points: if the fuel plates are not available for some time, then it seems to me the deal should be an international treaty with Iran whereby they agree to exchange their LEU for the fuel plates, when the fuel plates are available. The West can then dictate the pace by making these plates as fast as they can.

    As far as the bigger picture is concerned, wouldn’t Iran have needed the LEU for the TRR some time in or after 2010?

    Also, what about the fuel rods for Bushehr? I know there is a deal with the Russians in place, but that was a painful thing to get off the ground, and they are not going to want to be dependent on the Russians for long.

    I can’t see anything in the IAEA reports that indicates to me that Iran is remotely close to having a nuclear weapon, so for them to breakout any time soon would be tantamount to national suicide.

  12. Josh (History)


    It’s not clear that Iran is able to make fuel assemblies for either Bushehr or TRR. Both involve proprietary designs that are not necessarily easy to duplicate, at least not overnight. And while we don’t know the particulars of the agreement between Russia and Iran, since it does involve fuel supply and takeback, it’s possible that Iran would be voiding the agreement if it sought to fuel Bushehr itself. But this last point remains unclear.

    TRR, incidentally, is an aging facility that is due to be shut down before too much longer; indeed, the Arak HWR has been justified as a replacement for TRR, and until very recently, I cannot recall seeing any claim that Iran’s enrichment program was related to it. To the contrary, the Iranian side has been (until recently) insistent that it will not enrich beyond 5%. TRR’s fuel is 19.75% enriched.

    Iran’s proposal for refueling TRR appears to have sprung from a desire to find some path to cooperation and de-escalation of tensions over the nuclear issue, more than the actual need to keep the reactor operational.

    Breakout is indeed a risky and fraught proposition. But it remains difficult for the international community to ignore. Certainly, it would be a shame if the parties missed a unique opportunity to make a mutual goodwill gesture, at a time when it’s much needed.

  13. Alan (History)


    Fair point over the TRR, although the Iranians would have known the difficulties they would face refueling it from international sources well in advance of the construction of Natanz. Soltanieh was quoted as saying they had the technology to fuel the TRR, but it was unclear whether he meant enrichment to 19.75%, or fuel plate manufacture, or both.

    With regard to Bushehr, wasn’t the deal with the Russians actually put together as part of the deal for the Iranians to suspend enrichment in 2005/06? I’m sure it was in response to Iranian complaints that if they suspended, they would not be able to fuel Bushehr.

    It seems extremely unlikely to me that, given Iran’s experience with foreign sourced LEU, they would have undertaken to restart their nuclear power programme without an indigenous enrichment plant, or would be happy to rely on foreign sourced fuel rods for long.

    I agree this is a unique opportunity, and my feeling is that a deal will be done here somehow. The Argentinians made the last batch of fuel plates for the TRR, so there must be a way to get them made outside Iran quite quickly.

    I think there is more time than people think with this. Obama in particular wants a deal, and it appears the Iranians do too. After all, they were the original proposers of the fuel rods idea in 2006.

  14. Josh (History)


    You may be conflating Russia’s fuel-guarantee offer(s) of recent years with the Bushehr agreement, which goes back to the 1990s. I don’t believe that the recent proposals ever led anywhere. That’s a different story.

    As an aside, it is tempting to see in the sudden slowdown before the Bushehr startup an expression of Moscow’s displeasure about the delay in the finalization of the Geneva (LEU-TRR) agreement.

    As for Argentina’s role in refueling TRR, I don’t know how long that took, but suspect it wasn’t an overnight operation. TRR was converted from HEU fuel to LEU fuel at this point, so it was probably fairly involved. And producing a load of enriched reactor fuel is, generally speaking, a non-trivial endeavor.

    It’s true that Iran had a dispute with Eurodif in the 1980s and did not receive the nuclear fuel it had paid for; then again, thanks to the Iraqi Air Force, they didn’t have reactors to put fuel in by that point. (Iran received its money back with interest in a 1991 settlement.)

    Having said all that, building fuel-cycle facilities in secret — something never done for peaceful purposes before — is probably not the best way to avoid problems of this sort in the future.

    After all, Iran’s plans for nuclear power are pretty ambitious. Judging by the data provided by the Iranian government, realizing its vision will require uranium imports; there simply isn’t enough in the ground in Iran to sustain the 20 or so power reactors that Iran anticipates. So — unless these ambitions are dramatically scaled back — foreign supply can’t be avoided.

  15. Alan (History)


    Yes, I am conflating the two! Sorry. Iran certainly suspended enrichment while negotiating with the EU3 but it was unrelated to the Russian fuel deal for Bushehr. The enrichment restarted following the EU3 rejection of the Iranian offer in August 2006 to convert all LEU to fuel rods.

    The point about domestic enrichment and fuel production is valid though I think. There seems to me a cast iron argument for Iran to have these facilities, given the strenuous US attempts over many years to block the transfer of any nuclear material or technology from anywhere to Iran, including the Bushehr deal. Yes, the French paid a proportion of the investment back (I believe Iran still gets dividends from Eurodif?) but I believe the deal was that Iran would get 10% of the LEU produced in the future. The French refused to comply, so Iran couldn’t get any, then or ever.

    The Argentinian fuel did take a while (years), but I had the impression this was down to external interference. I don’t doubt that making the fuel is non-trivial, but surely we have enough clever people about to get this done in a matter of months. I don’t think that’s too long to wait, because the actual agreement can be reached immediately. If Iran signed up to exchange their LEU (all of which is under IAEA containment in Iran anyway), when the plates were ready, I don’t think that’s unreasonable. It could also form the basis of a comprehensive agreement, whereby they exchange or convert all LEU in the future to fuel plates or rods. There is time to get this right I think.

    I agree building the new Fordow plant in secret doesn’t help dialogue, but if you have a comprehensive offer rejected in August 2006 amid all sorts of threats to be bombed, you are likely to take steps to protect your technology. We can’t have it both ways.

    I agree foreign supply of nuclear material in the future is unavoidable, unless they have some stunning mine there we don’t know about. But strategically, once they are up and running and doing all these things for themselves, it opens the door for them again because there is no point in us keeping it closed.

  16. Alan (History)

    Corrections to my above posts – the Iranian offer was made in March 2005 and rejected by the EU3 in August 2005, not August 2006.

    The fuel deal with Russia over Bushehr expires in 2015.

    Part of the agreement (Paris Agreement) to get Iran to suspend enrichment between November 2004 and January 2006 was to guarantee an international supply of fuel, but this as Josh says was unrelated to the Feb 2005 Russian fuel deal for Bushehr.

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