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Administration Letter Promises “Case-by-Case” Approach to Nuclear Trade Deals

By Elaine M. Grossman

Global Security Newswire

U.S. Undersecretary of State Ellen Tauscher, shown in October, and Deputy Energy Secretary Daniel Poneman recently told lawmakers that future nuclear trade negotiations would address possible nonproliferation measures on a "case-by-case" basis (U.S. Embassy in Bucharest photo). U.S. Undersecretary of State Ellen Tauscher, shown in October, and Deputy Energy Secretary Daniel Poneman recently told lawmakers that future nuclear trade negotiations would address possible nonproliferation measures on a "case-by-case" basis (U.S. Embassy in Bucharest photo).

WASHINGTON -- A letter that two senior Obama administration officials sent to Capitol Hill earlier this month confirms that a recent internal policy review has concluded Washington should take a “case-by-case” approach to integrating nonproliferation objectives into future nuclear trade pacts (see GSN, Jan. 12).

Whether or not a proliferation-resistant accord is realistically “negotiable” with prospective trade partners is a central concern as U.S. trade envoys seek to “promote our shared objective of peaceful nuclear power without increasing the risks of proliferation,” according to the Jan. 11 missive, obtained last week by Global Security Newswire.

GSN on Jan. 11 first reported that Ellen Tauscher, undersecretary of State for arms control and international security, and Daniel Poneman, deputy Energy secretary, had quietly informed lawmakers they would not seek from every future nuclear trade partner a promise to adopt the highest nonproliferation standards (see GSN, Jan. 11).

This was seen as a policy setback by U.S. nonproliferation advocates, who have pushed Washington to make nuclear cooperation agreements contingent on a nation’s pledge not to domestically enrich uranium or reprocess plutonium, sometimes called “ENR” for short.

These activities can be used for peaceful energy production, but can also heighten the risk that sensitive materials are illicitly diverted for the development of nuclear arms. Iran is widely accused of launching a clandestine atomic weapons program in this way, though Tehran has long insisted that its efforts have solely a peaceful purpose.

International trade partners typically covet agreements with Washington as a means of not only winning access to U.S. reactor technologies, sensitive materials and expertise, but also for the cache that a State Department “seal of approval” can bring a foreign capital in dealing with other supplier nations, according to issue experts.

Washington has signed agreements of this kind with more than two dozen countries around the world, including allies Australia and Canada, as well as China, India, Russia and other economic competitors.

In 2010, the Obama administration opted not to seek a “no-ENR” pledge in early talks with Vietnam and Jordan.  However, State and Energy officials faced enormous pushback from both sides of the aisle, and agreed to launch an internal policy review. 

At issue: Whether pursuing a so-called nonproliferation “gold standard” -- like the no-ENR pledge enshrined in a 2009 pact with the United Arab Emirates -- would heighten or weaken the ability to implement Obama’s 2009 Prague commitment to help end worldwide production of fissile material.

That review has just concluded.  According to the Tauscher-Poneman letter -- sent to the chairmen and ranking members of the House and Senate foreign affairs committees -- administration leaders have decided not to urge every nuclear trade counterpart to accept a no-ENR provision.

“We need to negotiate agreements that our partners can accept and that open doors to U.S. industry,” according to the document.  “We are concerned that other options could have the opposite effect, by reducing the number of future U.S. partners, minimizing our nonproliferation influence, and raising questions about our reliability as a supplier.”

The senior officials singled out France and Russia as two international competitors for trade in nuclear reactor technologies that are “very aggressive” and “offer favorable terms.”  Neither of the two countries “imposes ENR conditions in their agreements,” the letter states.

Trade accords represent just “one of many ways to address ENR proliferation concerns,” the Tauscher-Poneman message reads.  Others include assuring that a partner would have unfettered access to nuclear fuel via fuel reserves and “nuclear fuel leasing arrangements when they become available,” the officials stated.

A lease deal, for example, might involve a provider nation promising to take back spent fuel for processing or storage, according to experts.  Such arrangements might make it more difficult for nations to establish their own fuel capabilities that could be used to produce nuclear-weapon material.

The case-by-case approach has been promoted by the U.S. nuclear industry and ties into Obama’s interest in helping create jobs and expand the economy -- a particular concern during this election year.  A full briefing on the matter for key lawmakers and staff, delayed when the House and Senate were on recess, has not yet taken place, according to Capitol Hill sources.

The Tauscher-Poneman letter also served to notify Congress that the Obama administration was about to commence talks with Vietnam toward sealing a potential nuclear trade pact, as GSN first reported on Jan. 12. 

In this instance, the administration planned to “lay out a spectrum of options for addressing enrichment and reprocessing in a 123 agreement,” the letter states, referring to accords governed by Section 123 of the U.S. Atomic Energy Act.  It remained unclear how hard the administration would press Vietnam to adopt a no-ENR pledge in any forthcoming pact.

The text of the letter, which the administration has not released publicly, follows.

“January 10, 2012

“We are writing to apprise you of our approach to negotiating 123 agreements for nuclear cooperation before our negotiators meet with representatives of the government of Vietnam in Hanoi this week.  We would be happy to meet with you in Washington at your convenience to discuss this subject further.

“The administration has completed a review of our approach to enrichment and reprocessing (ENR) in future 123 agreements.  Our goal is to promote our shared objective of peaceful nuclear power without increasing the risks of proliferation.  Our conclusion is that the best way to achieve this end is to pursue 123 agreement negotiations on the basis of a case-by-case review.

“Nuclear trade carries with it a critical nonproliferation advantage in the form of consent rights, along with other opportunities to influence the nuclear policies of our partners.  To obtain this advantage, we need to negotiate agreements that our partners can accept and that open doors to U.S. industry.  We are concerned that other options could have the opposite effect, by reducing the number of future U.S. partners, minimizing our nonproliferation influence, and raising questions about our reliability as a supplier.

“Our competitors are not standing still.  France and Russia in particular are very aggressive in pursuing nuclear business worldwide, and offer favorable terms.  Neither imposes ENR conditions in their agreements.  Each billion dollars of American nuclear exports supports 10,000 jobs, and provides the U.S. with access and influence over the direction of nuclear programs, ensuring they meet the highest standards for nonproliferation, security, and safety.

“123 agreements provide one of many ways to address ENR proliferation concerns.  Others include actions by the Nuclear Suppliers Group (such as strengthened ENR guidelines agreed to in 2010) as well as providing assurance of reliable fuel services through tools such as fuel reserves, and nuclear fuel leasing arrangements when they become available.  We have had success in establishing fuel banks and strengthening NSG guidelines, and we are committed to taking further steps in this regard.

“Going forward, we think it best to judge how to deal with ENR in each 123 agreement based on its merits, taking into account a partner’s domestic policies and laws, proliferation concerns, and negotiability.

“We plan to have an interagency team led by Deputy Assistant Secretary [of State] Eliot Kang in Vietnam for talks beginning Wednesday [Jan. 11].  Our team will explain to Vietnam the procedures in the United States for congressional review, and lay out a spectrum of options for addressing enrichment and reprocessing in a 123 agreement.  This discussion will lay the groundwork for proceeding with negotiations.

“We feel that this approach best serves our shared interest in access to peaceful nuclear energy without increasing the risks of proliferation, enhances the strong tradition of U.S. leadership on these issues, and helps promote American jobs, exports and prosperity.

“We look forward to discussing our approach to 123 agreements further and would be happy to provide greater detail to you and your staff upon your return to Washington.

“Sincerely,

“Daniel B. Poneman, Deputy Secretary, Department of Energy

“Ellen O. Tauscher, Undersecretary for Arms Control and International Security, Department of State”

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