U.S.-Russian Civilian Nuclear Cooperation Agreement

Introduction

Speaking at a press conference during the G8 summit in St. Petersburg on July 15, 2006, Russian President Vladimir Putin and U.S. President George W. Bush announced their two countries would shortly open negotiations on a formal agreement permitting cooperation in the peaceful uses of nuclear energy.[1] The announcement reflected the reversal of long-standing U.S. opposition to concluding such an agreement with Russia, a new stance that was adopted earlier in 2006 and was highlighted in a White House statement on July 7, 2006.[2] If concluded, the agreement would allow cooperation on a wide range of issues, including the development of advanced reactor technologies, production of mixed-oxide (MOX, a mix of plutonium and uranium oxides) fuel, and storage and possible reprocessing of U.S.-origin spent nuclear fuel in Russia. The Bush administration also hopes the agreement will advance the Global Nuclear Energy Partnership, a U.S. initiative announced in February 2006 to promote the use of nuclear energy as a clean alternative to fossil fuels, while limiting the spread of certain types of nuclear facilities that pose significant proliferation risks.

Negotiations

The prospect of concluding a formal nuclear cooperation agreement has been the subject of talks between the United States and Russia since the 1990s. U.S. concerns regarding Russian assistance to the Iranian nuclear program stymied progress, however. The United States has, until recently, for example, opposed Russian construction of a nuclear power plant in Iran, at Bushehr. Washington has accused Russia of providing assistance to Iranian activities that could contribute to its development of nuclear weapons and introduced sanctions against several Russian institutes and companies suspected of assisting Iran in acquiring nuclear and missile technology and expertise. Washington has also faulted Russia for opposing tougher measures to persuade Tehran to stop its uranium enrichment activities, work that could ultimately provide Iran with the material needed to manufacture nuclear weapons.[3] Since 2002, however, as the scope of Iran's nuclear program and its ambitions have become clearer as a result of International Atomic Energy Agency (IAEA) inspections, Russia has become more inclined to exert pressure on Iran to curtail its nuclear program development.

In fall 2005, for example, Russia proposed an arrangement under which Iran would end its uranium enrichment activities in return for a Russian guarantee to enrich, in Russia, all uranium needed for Iranian nuclear power plants. Although Iran rejected the Russian proposal, in January 2006, President Putin put forward a broader nonproliferation initiative, also implicitly aimed at Iran, envisioning the establishment of International Nuclear Centers, and offered to host the first such center in Russia. The proposed Centers would provide participating nations with full "nuclear fuel cycle services," including uranium enrichment, the fabrication of fresh nuclear fuel, and the storage and reprocessing of spent nuclear fuel.[4] In addition to these efforts to persuade Iran to refrain from pursuing uranium enrichment, Russia also joined the United States at the IAEA Board of Governors in voting in February 2006 to report Iranian noncompliance with the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) to the UN Security Council.

As Russian and U.S. policies toward the Iranian nuclear program began to converge, the U.S. official position towards Russia's nuclear relations with Iran shifted, and the White House came to view Russia's role in addressing the on-going Iranian nuclear crisis as more constructive.[5]

Against this background, during a May 2006 visit to Washington by Sergey Kiriyenko, head of the Russian Federal Nuclear Agency (Rosatom), the United States and Russia agreed in principle to open talks on a bilateral nuclear cooperation pact. However, Washington's support for the agreement appears to remain qualified, and the progress of upcoming negotiations is very likely to be contingent on Russia's stance at the U.N. Security Council concerning the Iranian nuclear program.

Some U.S. officials believe that the prospects for the negotiations will also hinge on Moscow's response to anti-dumping sanctions imposed on Russian uranium exports into the United States. U.S. officials say it might be difficult for Washington to conclude an agreement expanding bilateral nuclear trade if Russia directly challenges the sanctions.[6] This conclusion appears unwarranted, however, because Kiriyenko has voiced his disagreement with the sanctions on several occasions and discussed the issue with the U.S. Secretary of Commerce during his May visit to Washington. Moreover, Tekhsnabeksport (Tenex), the Russian nuclear fuel exporter, already filed a suit against the U.S. Department of Commerce in the U.S. Court of International Trade, before the two countries announced the decision to start negotiations on a nuclear cooperation pact.[7]

Even with a strong support for the cooperation agreement, the actual negotiations will take months if not years. In previous cases, the negotiation of such agreements between the United States and other countries took between nine months and several years. Experts estimate that the negotiation of the U.S.-Russian cooperation agreement will take one to two years. Once the agreement is finalized, it will also be subject to review by the U.S. Congress. Although the procedure for approving a nuclear cooperation agreement with another nuclear-weapon state is simpler than in the case of an agreement with a non-nuclear-weapon state, some experts say Congressional review and approval could take at least another six months.[8]

Requirements and Opportunities

Section 123 of the U.S. Atomic Energy Act requires that the United States conclude a formal agreement with another country before bilateral civilian nuclear cooperation can take place. Although some U.S.-Russian projects in the nuclear sphere can operate under various exceptions, cooperation that involves the transfer of most nuclear materials or equipment requires a "Section 123 Agreement" detailing the particular terms under which they will be provided.[9] These terms include pledges by the recipient government that material and equipment transferred under the agreement will be used exclusively for peaceful purposes, that the United States will have the right to approve the retransfer to third countries of any items transferred under the agreement, and that the United States will have the right to approve any enrichment or reprocessing involving U.S.-origin material or equipment transferred under the agreement.

Washington and Moscow see the new agreement as facilitating collaborative activities in a number of areas. One particular field of interest is research and development of advanced reactors, where Russia has considerably more operating experience than the United States, but where Russia, according to some experts, desires U.S. "endorsement and cooperation" in order to bring new reactor concepts to the international market. [10] The new agreement would also encourage Russian collaboration in this area as part of the U.S.-led Global Nuclear Energy Partnership (GNEP). Announced by U.S. Energy Secretary Samuel Bodman in February 2006, the GNEP initiative aims to promote the use of nuclear energy, while limiting its potential to contribute to proliferation. One goal of GNEP is the development of proliferation-resistant technologies, including advanced "burner" reactors, which would utilize spent nuclear fuel from traditional reactors. This would reduce the amount of plutonium remaining in spent reactor fuel and, it is hoped, not only reduce proliferation risks but also the amount of radioactive waste needing long-term management.

A U.S.-Russian agreement should also facilitate Russia's participation in the development of a new-generation reactor within the Generation IV International Forum (GIF). The forum's Policy Group voted in June 2006 to admit Russia as a member.

The agreement will provide a legal basis for the United States to arrange for the enrichment of U.S. uranium at Russian facilities, if new enrichment capacity in the United States does not come on line quickly enough to meet anticipated demand. The United States currently operates only one uranium enrichment facility, at Paducah, Kentucky, and while there are plans to build new facilities, construction has not started yet.

In addition, the agreement would create the legal framework for the United States to authorize the transfer to Russia of spent nuclear power plant fuel that originated in the United States and was then used in third countries for the generation of electricity.[11] Russia has been considering importing spent fuel for storage and reprocessing for over a decade and, in 2001, enacted a law permitting the importation of foreign spent fuel.[12] Russian authorities estimate that providing spent fuel management services could generate up to $20 billion in storage fees from South Korea, Taiwan, and other possible customers lacking permanent nuclear waste repositories. However, the disposition of most spent fuel in the possession of potential customers – perhaps as much as 95 percent – is under the control of the United States.[13] A U.S.-Russia agreement would open up this market for Russia, and revenues from storing and treating foreign spent fuel could help advance the ambitious plans of nuclear industry reform recently endorsed by President Putin.[14]

The United States is interested in the possible storage of spent nuclear fuel in Russia because the arrangement could support GNEP. One important goal of that initiative is to discourage states that do not currently possess enrichment or reprocessing facilities from acquiring such capabilities. Instead, under this component of the GNEP initiative, these states would receive enriched uranium fuel produced in countries already possessing enrichment plants and would transfer the spent fuel to another state already possessing reprocessing facilities, such as France, Japan, or Russia. Russia would be an important element of this program, since the Bush administration does not anticipate that the storage of foreign spent fuel in the United States would be politically acceptable. [15]

Russia stands to gain large potential revenues from spent fuel management, which has long been viewed as the basis of the long-standing Russian interest in storing foreign spent fuel. As a result, the sudden declarations by Rosatom officials in July 2006 that Russia would never import foreign spent fuel came as a surprise. These statements raised questions about the benefits of a U.S.-Russian nuclear cooperation agreement, particularly for GNEP. While Rosatom spokesman said Russia had changed its position and is no longer interested in either reprocessing or storing spent fuel, such statements may be an attempt to temporarily appease groups opposed to the proposal on environmental grounds within Russia.[16] Furthermore, given the U.S. interest in Russian technologies and the importance of spent fuel storage for GNEP, Rosatom might be using the spent fuel management issue as a bargaining chip to press for more favorable conditions for Russia in the forthcoming negotiations.

Sources:

[1] President Bush and Russian President Putin Participate in Press Availability," July 15, 2006, Office of the Press Secretary, The White House, www.whitehouse.gov.
[2] Peter Baker, "U.S. and Russia to Enter Civilian Nuclear Pact," Washington Post, July 8, 2006, p. A01.
[3] Uranium enrichment is the process by which U-235, the primary fissile isotope of uranium, is concentrated above its naturally occurring rate of 0.7 percent. Low-enriched uranium (LEU), enriched to between three and five percent U-235, is used as fuel for most modern nuclear power reactors, but uranium enrichment technology can also be used to produce highly enriched uranium (HEU) containing 80-90 percent U-235, suitable for nuclear weapons.
[4] In states not possessing nuclear weapons, uranium enrichment and spent fuel reprocessing are considered to pose significant proliferation risks because they can provide access to weapons-usable nuclear material. The Russian Nuclear Center proposal would concentrate such activities in a state already possessing nuclear weapons and thus limit the introduction of enrichment and reprocessing facilities in other, non-nuclear weapon states.
Spent fuel reprocessing is also known as plutonium separation, because it is a process of recovering plutonium that was produced in reactor fuel as a by-product of reactor operations. Plutonium can be used in MOX fuel in nuclear power plants, but like highly enriched uranium, it can also be used for the core of a nuclear weapon. Spent fuel can be stored indefinitely or reprocessed.
[5] "U.S. and Russia to Enter Civilian Nuclear Pact"; Judith Ingram, "Russia, U.S. Expected to Move Forward on Civilian Nuclear Cooperation," AP, July 8, 2006.
[6] CNS interview with U.S. government official (name withheld by request), Washington, D.C., July 2006.
The United States imposed anti-dumping sanctions against Russia in the 1990s, when Russia and other former Soviet Republics started supplying cheap uranium to the world market. Antidumping duties now apply to nuclear materials exported by Russia to the United States, as the production of enriched uranium is subsidized in Russia, and the U.S. Department of Commerce considers its price below the fair market value. Russia can currently sell natural uranium and LEU in the United States without import duty only through the U.S. Enrichment Corporation (USEC), within the HEU-LEU Program (see note [9]).
U.S. officials believe that Russia would like to sell enriched uranium for nuclear power plant fuel on the open market, which it believes would be more lucrative than the sales to USEC under the HEU-LEU Program, but from which it is barred because of the Commerce Department antidumping sanctions. Russia has argued, however, that the most valuable component of the product is the enrichment work (separative work units or SWU's) that went into the product, which in international commerce is treated as distinct from the uranium itself. Russia believes that enrichment is a service, not a commodity, and that U.S. anti-dumping laws do not apply to such services.
[7] "Tekhsnabeksport podal isk v amerikanskiy sud na Mintorg SShA po voprosu antidempingovyh poshlin na rossiyskuyu uranovuyu produktsiyu [Tekhsnabeksport Filed a Lawsuit in U.S. Court Against the U.S. Department of Commerce Concerning Anti-Dumping Duties on Russian Uranium]," RIA, July 13, 2006.
[8] "U.S., Russia to Pursue Nuclear Cooperation, Effect on GNEP Mixed," Nuclear Fuel Cycle Monitor, July 17, 2006, Special Edition.
[9] The Russia-U.S. HEU-LEU Program, also known as the Megatons to Megawatts program, is one case in which an exception from the requirements of Section 123 is being used to allow the return of natural uranium to Russia as compensation for the uranium it uses in downblending HEU from dismantled nuclear warheads and producing LEU. HEU-LEU Program is the first nonproliferation initiative with a commercial basis. Under the agreement, Russia is converting 500 metric tons of HEU formerly used in nuclear warheads, into LEU. LEU is then sold in the United States by a commercial firm, USEC, Inc., which serves as agent for the U.S. government and resells the material for further fuel fabrication. For details of the HEU-LEU Program, "Russia: Overview of the US-Russian HEU-LEU Program", www.nti.org.
Other activities that might be carried out without a comprehensive agreement are transfers of technology–blueprints, computer simulations, and manuals. See "Momentum Builds for Start of Talks on U.S.-Russian Nuclear Cooperation Pact," Nuclear Fuel, June 5, 2006, vol. 31, # 12.
[10] "Russia, U.S. Expected to Move Forward on Civilian Nuclear Cooperation."
[11] U.S. Atomic Energy Act, Section 123. Cooperation with Other Nations, (5).
[12] Philipp Bleek, "Russian Duma Passes Bill Allowing Import of Spent Fuel," Arms Control Today 31 (July/August 2001) www.armscontrol.org.
[13] "U.S. and Russia to Enter Civilian Nuclear Pact."
[14] For information on the reform of Russia's nuclear industry, please see "Reform of Russian Nuclear Industry Takes Shape," WMD Insights, April 2006, www.wmdinsights.com.
[15] CNS interview with U.S. official (name withheld by request), Washington, D.C., July 2006.
[16] "U.S., Russia to Pursue Nuclear Cooperation, Effect on GNEP mixed."