Source: War on the Rocks
In December 1953, President Dwight Eisenhower announced that Washington would begin sharing nuclear materials and technology with other nations for peaceful purposes—what became known as the Atoms for Peace program. Although there were multiple motivations for this decision, U.S. officials believed sharing nuclear technology would strengthen bonds with allies and help America compete with the Soviets for the allegiance of nonaligned countries. This geopolitical competition persisted throughout the Cold War, as Washington and Moscow sought to expand their political influence through nuclear exports.
With the end of the Cold War, these strategic incentives lost much of their pull. But today, with America’s “unipolar moment” eroding, they may be poised for a comeback. The 2017 National Security Strategy heralded the return of a competitive world that pits the United States against Russia and especially China. Much ink has been spilled over Moscow’s and Beijing’s efforts to establish beachheads around the world, and how U.S. grand strategy should evolve in response. Despite their historical importance, nuclear energy exports are often overlooked in this debate, which is problematic because Russia and China use trade in civil nuclear technology to gain influence in regions of strategic value, notably Eastern Europe, South Asia, and the Middle East.
As Western nuclear vendors lose market share and declare bankruptcy, Chinese and Russian state-owned enterprises are rushing in to fill the nuclear supply vacuum with competitive bids and alluring capital investments. Saudi Arabia is their next target. In 2016, China inked a deal to “invest $2.43 billion to build a nuclear manufacturing equipment industrial cluster in Saudi Arabia,” underscoring the importance of the Kingdom’s position at the western crossroads of the One Belt, One Road initiative. Russia wants to expand its limited footprint in the region with an attractive offer to build nuclear reactors in Saudi Arabia.
If Washington cedes the nuclear supply game at this early stage of development in Saudi Arabia, Moscow or Beijing will become the primary stewards of Riyadh’s nuclear ambitions. Both prioritize what Mark Hibbs calls “geostrategic nuclear exports”—the use of nuclear trade to build political relations and acquire leverage over key countries. In the pursuit of this transactional approach, Moscow or Beijing often turn a blind eye to lax nuclear industry standards and weak nonproliferation assurances in recipient countries.
Fortunately, the United States is taking steps to counter the Russian and Chinese nuclear export strategy. Last year, U.S. Energy Secretary Rick Perry met with Saudi leadership to prepare for negotiations over a nuclear cooperation agreement, which is required by U.S. law in order to transfer nuclear materials, equipment, or components. Some nonproliferation advocates argue that U.S. officials should use these talks to pressure the Saudis into forswearing acquiring a uranium enrichment or reprocessing capability—the so-called “Gold Standard” agreement. But this position ignores the hard reality that Saudi Arabia is being courted by state-owned enterprises eager to engage in nuclear trade without pushing for the Gold Standard.
Instead, the United States should push for a standard nuclear cooperation agreement that would still give it veto power over many—though not all—forms of enrichment and reprocessing in Saudi Arabia. Such an agreement would enhance U.S. access to and influence over Saudi nuclear activities, lower the risk of clandestine proliferation, and potentially position Riyadh to use its nuclear program to keep the lid on Iranian enrichment in the future. By laying the foundation to manage Saudi Arabia’s burgeoning nuclear aspirations, the United States will put itself in a strong position to counterbalance Russia and China while restoring its sway over global nonproliferation policy.
Back to the Future of Nuclear Supply
During the Cold War, the United States was a dominant force in the nuclear marketplace, building dozens of power reactors in countries like West Germany, Brazil, Japan, South Korea, India, and Taiwan. As a crucial supplier, Washington had powerful leverage to set the rules of the game, cooperating with the Soviet Union—the primary supplier to the Eastern Bloc—to establish the International Atomic Energy Agency (IAEA) and its safeguards system, the Nuclear Nonproliferation Treaty (NPT), and Nuclear Suppliers Group. Collectively, these institutions created a framework through which countries could access peaceful nuclear technology while proliferation risks were managed. Indeed, the United States has consciously used the promise of peaceful nuclear exports—and the threat of cutting these exports off—as an element of its strategy for preventing proliferation, helping to steer countries like South Korea, Taiwan, Japan, and Sweden away from nuclear weapons.
Now, the American nuclear industry is in precipitous decline as demand for nuclear reactors largely stagnated after the Fukushima nuclear accident, while the cost of nuclear energy has become increasingly uncompetitive against alternative energy sources like natural gas. The result has been multiple countries canceling nuclear projects, scaling back nuclear energy, or even going so far as to phase out nuclear power reactors. To make matters worse, the onetime global leader in nuclear energy development, Westinghouse Electric, filed for bankruptcy last year and “all but completely pulled out of the nuclear business overseas” when problems with its manufacturing supply chain led to massive cost overruns at nuclear reactor projects in the American South. As former Deputy Secretary of Energy Daniel Poneman observed in 2016, “of the 60 reactors under construction around the world today, US vendors have won only four export sales. Reactors aside, our global position as a nuclear fuel supplier is weaker still.”
This decline of the Western nuclear industry comes at a time when Russia and China are competing with the United States for influence, especially in the nuclear energy sector. To be sure, Russia and China oppose nuclear proliferation, and neither wants to be responsible for fueling an arms race in the Middle East. But as the American nuclear industry continues to lose market share, it is becoming increasingly difficult for Washington to regulate access to nuclear technology around the world. Technology denial and the threat of coercive sanctions have dissuaded many countries from pursuing illicit nuclear-weapons programs. But these nonproliferation policy levers are less credible against an ally that pursues nuclear technology in full compliance with international safeguards, and less effective when the country can turn to many alternative suppliers.
The Saudi Question
Saudi Arabia could exploit the lax approach preferred by Russia and China, especially since it appears to be playing a long game against Iran that banks on the development of nuclear capabilities under the guise of an ostensibly peaceful energy program. Indeed, Saudi officials have hinted at an interest in developing enrichment technology, a crucial step toward the bomb that could be taken without running afoul of the global nonproliferation regime. In December, Energy Minister Khalid al-Falih implicitly justified the development of enrichment technology by emphasizing, “we have large resources of uranium,” and “we will not deprive ourselves of accessing our natural resources.”
Despite America’s diminished leverage, prominent arms control advocates argue that the United States should demand the Gold Standard as a condition for peaceful nuclear cooperation with Saudi Arabia, implying that if Saudi Arabia will not agree to foreswear enrichment and reprocessing, the United States should refrain from nuclear trade with Riyadh entirely. But there are three problems with this prescription.
First, the Gold Standard is unlikely to be acceptable to Saudi Arabia. Out of more than twenty nuclear cooperation agreements in force, only two contain the Gold Standard provision—pacts with the United Arab Emirates and Taiwan, two countries over whom the United States holds unique bilateral leverage. Expecting Riyadh to accept stricter requirements now than Washington has generally asked for in the past—at a time of diminished U.S. influence—defies diplomatic logic. Indeed, Saudi Arabia has argued that a legal pledge to forgo enrichment and reprocessing represents “an unacceptable infringement on its national sovereignty.” When formal discussions began in 2012 over the terms of a nuclear cooperation agreement, Saudi officials flatly refused to “sign an agreement with Washington that would deprive it of enriching uranium.”
Second, if Saudi Arabia refuses to accept the Gold Standard, the likely result is no nuclear cooperation with the United States whatsoever. Many other willing nuclear suppliers, including France, Russia, China, and South Korea, are in negotiations with Saudi Arabia and are unlikely to require it to forswear enrichment and reprocessing. This is likely why the United States signed a nuclear cooperation agreement with Vietnam without the Gold Standard — American officials understood that Vietnam could turn to Russia and Japan if cooperation with the United States was not forthcoming. In the absence of an agreement with the United States, Saudi Arabia could eventually turn to Pakistan for nuclear supplies, a country with a troubling history of dangerous export behavior.
Third, even if it were possible to strong-arm Saudi Arabia into agreeing to the Gold Standard, this could have the unintended consequence of pushing it to pursue enrichment in secret, particularly if and when the sunset provisions in the Iran nuclear agreement kick in and Iran ramps up its enrichment program to pre-2015 levels. As former Saudi Director of General Intelligence Prince Turki al Faisal put it in January 2016, Saudi Arabia wants to be “in full stride in terms of human capacity for our own development of peaceful uses of nuclear energy” by the time the constraints on Iran’s nuclear program expire. While initiating a covert enrichment program would certainly be risky—jeopardizing nuclear cooperation and broader relations with the United States—Saudi Arabia may feel compelled to take that step if it felt its national security was severely threatened.
The Case for Nuclear Cooperation with Riyadh
A more attractive alternative is a standard nuclear cooperation agreement, which would provide the United States with access to and influence over the Saudi nuclear program, including its decision to pursue enrichment or reprocessing.
Although the Saudis have balked at the Gold Standard restrictions in the past, they appear to be interested in resuming talks over an agreement that should be broadly acceptable to the United States and its nonproliferation interests. Such an agreement would likely require Riyadh to adopt a set of mechanisms to inhibit proliferation that are standard in U.S. cooperation agreements, including a peaceful uses pledge and a promise to refrain from enriching or reprocessing using U.S.-origin nuclear material or technology without prior consent from Washington. These nonproliferation conditions could prove to have three major stabilizing effects on Riyadh’s nuclear ambitions and regional security dynamics with Iran.
First, nuclear cooperation would provide the United States with enhanced insight into the evolution of the Saudi nuclear energy program. By virtue of ratifying the NPT, Saudi Arabia must accept IAEA safeguards on all nuclear facilities, regardless of who built them. Direct involvement in the Saudi nuclear energy program would give Washington additional information, especially if U.S. officials push the Saudis to accept an Additional Protocol as well, thereby granting the IAEA “further inspection authority … about both declared and possible undeclared activities to gain a more complete picture” of Saudi Arabia’s overall nuclear program. An Additional Protocol would not bar Saudi Arabia from enriching or reprocessing, so long as it were under safeguards, but it would make it easier for the international community to be assured that Riyadh was not engaging in covert nuclear activities.
Moreover, it should be politically easier for Saudi Arabia to accept. Unlike the Gold Standard, the Additional Protocol is internationally ubiquitous, with more than 130 countries having signed on. Indeed, Iran recently began provisional implementation of the protocol as part of its commitments under the Joint Comprehensive Plan of Action (JCPOA).
Beyond enhanced access and information, the United States stands to gain greater leverage over the future direction of the Saudi program if it builds nuclear reactors with American-supplied technology under lifetime contracts for fuel, rather than ceding control to suppliers from Russia or China. This would lock Saudi Arabia into a nuclear program largely dependent on U.S.-supplied technology and materials, thereby requiring Saudi officials to seek prior consent over most uranium enrichment activities. Washington would effectively gain a veto on whether Riyadh could develop its own gas centrifuge program or produce weapons-usable material using U.S.-supplied inputs. Moreover, the United States could threaten to cut off nuclear supplies if Saudi Arabia violates its nonproliferation commitments.
Second, Iran may be deterred from expanding its enrichment program if it fears a reciprocal response from the Saudis. Under the standard nuclear cooperation agreement, Washington could grant Riyadh prior consent to pursue commercial fuel enrichment if Tehran decides to ramp up its enrichment capabilities after key constraints in the nuclear deal expire. If Saudi Arabia publicly signals its intentions in this way, Iran may proceed more cautiously for fear of setting off an escalation that results in mutually assured enrichment. Indeed, recent research demonstrates that nations have leveraged the threat of proliferation to deter aggression or bargain for concessions from adversaries.
To be clear, we are not arguing that the United States should encourage or even ultimately grant Saudi Arabia advance consent to enrich. However, it may be in the U.S. interest to keep this option open—as the United States does in the vast majority of its nuclear cooperation agreements—to facilitate public Saudi signaling on enrichment rather than clandestine development.
Third, by tolerating Saudi Arabia’s nuclear desires within clear aboveboard limits, the standard nuclear cooperation agreement reduces the overall incentives for the Saudis to cheat on their nonproliferation obligations. Saudi officials are far less likely to act out of desperation if they feel the Kingdom is secure with some baseline capacity to balance against Iran. The nuclear cooperation framework provides the United States with an effective set of tools to manage how the Saudis invest in this realpolitik insurance policy.
Managing Mutually Assured Enrichment
Of course, in an ideal world, the United States would be able to convince Saudi Arabia and Iran to forego sensitive nuclear technology entirely. But as Jessica Varnum points out, U.S. officials consistently tailor nuclear cooperation agreements to recognize limited leverage and hard facts on the ground.
Nevertheless, there are potential downsides to a standard U.S. nuclear cooperation agreement with Saudi Arabia. The framework leaves open pathways for Saudi Arabia to pursue enrichment technology without U.S. consent so long as it does not use U.S. supplied technology or materials. Most problematically, it gives the UAE the legal right to seek revision to the terms of its own agreement to remove the Gold Standard provisions. Indeed, Yousef al Otaiba, UAE’s ambassador to the United States, indicated in 2015 that his country might want to renegotiate the agreement because Iran had “achieved this right to enrich” under the JCPOA. This could eventually put Washington in the tenuous position of fielding requests from Riyadh and Abu Dhabi to pursue indigenous enrichment programs. Others argue that leaving open the option of Saudi enrichment could undermine Trump administration attempts to convince Iran to accept more stringent restrictions than those already required under the JCPOA. Instead of inhibiting an arms race, the threat of mutually assured enrichment by multiple actors in the Middle East could spiral out of control.
To manage these serious risks, Washington should push foremost for Riyadh to adopt an Additional Protocol with the IAEA during the nuclear cooperation negotiations. The protocol would go a long way toward convincing the international community of Saudi Arabia’s intent to pursue licit peaceful nuclear activities in lieu of clandestine pathways to enrichment.
Furthermore, U.S. and Saudi officials may be able to find common ground by considering modifications of the standard nuclear cooperation agreement that avoid the sticky Gold Standard. For instance, the Saudis could declare their intent (rather than make a political commitment) to refrain from enrichment or reprocessing for a certain period of time. Or the countries could establish a joint commission, as in the U.S.-South Korea agreement, to study the implications of enrichment or reprocessing in Saudi Arabia before granting Washington’s approval to utilize U.S. technology or materials to that end. Robert Einhorn has recently suggested other possible modifications, such as a shorter duration for the agreement or a shorter-term legal commitment not to enrich or reprocess. Combined with an Additional Protocol, such modifications would substantially reduce the risks of a regional enrichment race without requiring Saudi Arabia to foreswear enrichment and reprocessing over the long term.
As Russia, China, and others rapidly supplant the United States as dominant suppliers of nuclear technology, Washington must engage with countries like Saudi Arabia to maintain its nonproliferation influence. Signing a nuclear cooperation agreement without the Gold Standard would not only be consistent with decades of U.S. policy; it would put the United States in the most advantageous position to influence the future of the Saudi nuclear program in the shadow of Iranian enrichment.