Assurances of Nuclear Supply and Nuclear Non-Proliferation: the outcome of the IAEA Special Event (19-21 September 2006)

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By Fiona Simpson

In September 2006, the International Atomic Energy Agency (IAEA) held a Special Event to discuss and assess various proposals for assuring the supply of nuclear fuel for civilian energy programs.  This meeting note summarizes the key proposals under discussion and suggests several questions that will need to be addressed if these proposals move forward.
 
Background 

Concerns regarding nuclear weapons proliferation, which have existed since 1945, continue to increase, and do so against the backdrop of the expansion of nuclear energy around the world.  Many States now see the unchecked spread of proliferation-sensitive technology as raising the risk of further nuclear proliferation to unacceptable levels. Others, however, fear that efforts to address this issue might infringe upon the rights of States to develop research, produce and use nuclear energy, as guaranteed under Article IV of the nuclear Non-Proliferation Treaty (NPT).

The idea of a multilateral approach to the nuclear fuel cycle – finding a multinational alternative to nationally based fuel production and the storage of spent nuclear fuel – was explored widely in the 1970s, without reaching resolution.  The idea was revived more recently by IAEA Director General Mohamed ElBaradei. In February 2005, an Expert Group established by the Director General issued a report that identified issues, options related to “multilateral nuclear approaches,” listed the pros, and cons associated with each, and suggested approaches for future consideration.

Since that time, additional proposals have been put forward by individual States, groups of States, and by one non-governmental organization. Like the studies that were carried out in the 1970s, all assume that a feasible multilateral approach to the fuel cycle dilemma requires an assured supply of nuclear fuel. The difficulty in establishing this, however, is evidenced by the failure to establish any such mechanism. This is perhaps best demonstrated by the IAEA’s Committee on Assurances of Supply (CAS) that, after seven years of discussion (1980-1987), failed to reach any sort of agreement on the subject and lapsed into formal abeyance.

The context and concerns of a post-Cold War, post 9-11, and post-Iraq/DPRK/Libya world, however, have hinted that agreements on assurances of supply mechanisms may now be possible. As a result, in September 2006, the IAEA held a Special Event during its 50th General Conference in order to bring together – for the first time since the wave of proposals began a year earlier – nuclear experts and representatives of industry, as well as delegates from its Member States, in order to consider those proposals.

The Proposals

The proposals themselves vary in several ways. Thus far, however, all focus on the front end of the fuel cycle (uranium enrichment) and accept that the existing commercial market in the supply of enrichment services is working well; they therefore assume that an assurance of supply mechanism would function as a last resort, to be invoked in the event of disruptions of supply for political reasons not related to non-proliferation concerns. Several explicitly require that recipients of the supply would have to have agreed not to pursue the indigenous development of certain proliferation-sensitive technologies.

As noted above, the IAEA Director General’s Expert Group issued a report that looked at both the front and back ends of the fuel cycle, put forward three scenarios for multinational options,(i) identified the pros and cons associated with each and suggested five possible approaches for further study. These included the development of international supply guarantees with IAEA participation, with the possibility of the IAEA acting a guarantor of service supplies by, for example, serving as the administrator of a fuel bank.(ii)

In January 2006, Russian President Vladmir Putin announced the creation of a Global Nuclear Power Infrastructure (GNPI),(iii) which would establish a network of international nuclear fuel cycle centers, including enrichment services, under IAEA safeguards. Specifically, the proposal anticipates the establishment of an International Uranium Enrichment Center at the current enrichment plant in Angarsk. The proposal identifies certain key principles, including equal, non-discriminatory membership (for all interested countries who choose not to pursue indigenous proliferation-sensitive technologies and who meet established non-proliferation requirements); membership “advantages” (political, economic, scientific and technical); transparency in the Centre’s commercial activities; and conclusion of intergovernmental agreements with interested States. The initiative also notes the intention to “black box” Russian enrichment technology (giving members no access to it).

A month later, the USA announced the creation of a Global Nuclear Energy Partnership (GNEP), which it anticipated would – along with other nations having secure, advanced nuclear capabilities – provide fuel services (fresh fuel and recovery of used fuel) to other nations that agree to employ nuclear energy for power generation purposes only.(iv)

An attempt to consolidate the view of the nuclear industry was undertaken with the creation of a World Nuclear Association (WNA) working group.(v) Their report, issued in May 2006, was predicated on the assumption of the effectiveness of the current market and asserted that assurances of supply should only be internationally-administered (for instance, by the IAEA) as an emergency back-up, triggered in the event of a political disruption of the normal market for reasons other than those related to non-proliferation.

In June 2006, France, Germany, the Netherlands, the Russian Federation, the United Kingdom and the United States circulated a proposal on a concept for a multilateral mechanism for reliable access to nuclear fuel.(vi) This so-called “six-country proposal” called for a standing multilateral mechanism at the IAEA.  This mechanism could only be only be used in the event of a disruption in services that (1) occurred for other than non-proliferation reasons; and (2) could not be restored through normal market processes.  The prospective recipient would need to be in good standing with its safeguards agreements, have adhered to nuclear safety standards and the Convention on the Physical Protection of Nuclear Material (CPPNM) and, crucially, have chosen not to pursue sensitive fuel cycle activities.

In September 2006, shortly before the IAEA Special Event took place, Japan circulated a proposal that it promoted as being complementary to the six-nation proposal of June 2006.(vii) Japan proposed a system called the “IAEA Standby Arrangements System for the Assurance of Fuel Supply.”  Potential supplier States could register their nuclear fuel supply capacity in terms of uranium ore capacity; uranium reserve capacity; uranium conversion capacity; uranium enrichment capacity; and fuel fabrication capacity.  Thus the proposal would cover not only uranium enrichment services, but also all important activities of the front-end of the nuclear fuel cycle.

During the Special Event itself, former Senator Sam Nunn, now of the Nuclear Threat Initiative (NTI), announced that NTI would contribute $50 million to the IAEA for a fuel reserve.  The fuel would be derived from Russian down-blended uranium and stored in a third country.  The offer is contingent on two conditions, to be met in the next two years: that the IAEA takes the necessary actions to approve the establishment of this reserve (i.e. through the Board of Governors), and that that one or more Member States contribute an additional $100 million in funding or an equivalent value of low enriched uranium.(viii) Like others, the NTI proposal envisioned the stockpile as a last-resort fuel reserve for nations that have no indigenous enrichment facilities.

Also during the Special Event, German Foreign Minister Frank-Walter Steinmeier – in an interview with a German newspaper – suggested that enrichment centres, under direct control of the IAEA, could be set up.(ix) The proposal remains under development and, as yet, it is unclear what conditions would be placed on recipient countries. It is likely, however, that conditions would be similar – if not identical – to those in the six-country proposal (in which Germany is one of the six): i.e. compliance with IAEA safeguards agreements; adherence to nuclear safety standards and the CPPNM and, once again, no possession of indigenous proliferation-sensitive fuel cycle capabilities.

IAEA Special Event on Assurances of Nuclear Supply and Non-proliferation

The Event comprised three sessions, spanning two and a half days and focusing on the current proposals; institutional, technical and legal perspectives; and closing with a discussion of the findings and possible future directions. The presentations were followed by an exchange of views, which revealed differing opinions on the structure, and even the utility, of such a mechanism. Such discussions incorporated the perspectives of industry as well as of States and focused exclusively on enrichment, although references were made to the back end of the fuel cycle. Although no consensus emerged on the precise nature of the way forward, there appeared to be a shared acceptance of the need for continuing efforts and attention to the subject by the international community and the IAEA Director General.

Presenters and speakers from the floor came primarily – though not exclusively – from States already possessing advanced fuel cycle capabilities, and particularly from those who are already suppliers of enrichment services. Thus, the views of the “market” for such a mechanism – the recipient States – was somewhat underrepresented, something that was pointed out by several participants during the meeting itself.

The Chair of the Event, Mr. Charles Curtis (NTI), drafted a report that summarized the discussions and identified issues that needed further elaboration. The Report was presented to the General Conference on 22 September. It suggested that a multilateral framework could best be achieved in two phases: near-term (focusing on the establishment of an assurance of supply mechanism) and mid-to-longer term (focusing on a more comprehensive multilateral system, encompassing the full fuel cycle and ultimately culminating in the conversion of existing enrichment and reprocessing facilities from national to multinational operations).(x) The report highlighted several issues for further consideration: the question of what materials will be assured under such a mechanism; the release criteria that would be applied to recipients; the role of the IAEA; and the role of industry. The Report further noted that recommendations are needed on policy, legal and technical issues, and that this could be undertaken by the IAEA Secretariat, with the input of Member States, industry and other appropriate experts.  It was suggested that such proposals should be ready for Board of Governors consideration in 2007.

Next Steps and Outstanding Questions

The issue is now in the hands of the IAEA Director General.  If the Secretariat is to bring proposals to the Board by the end of 2007, efforts to consult with Member States and develop proposals must begin soon. To this end, it is likely that the Director General will indicate initial plans by the November meeting of the Board of Governors. It would be practicable to create working groups on each of these issues (policy/legal/technical) with the aim of answering the questions raised in the Special Event and of reporting conclusions to the Director General in time for the suggested 2007 deadline.

Nonetheless, some overarching questions remain unanswered but require attention. These include:  

• The apparent lack of dialogue between suppliers/recipients. Will there be a market for such a mechanism, once it is established?
• What would be the effect of requirements, in many of the proposals thus far, to forego indigenous sensitive fuel cycle activities?  Would this appeal to the “target market” of such a mechanism? How do the proposals reconcile this with the fact that the IAEA cannot be discriminatory in the application of such a mechanism (beyond requiring compliance with IAEA safeguards); and that the IAEA Director General has stated his determination not to involve the IAEA in the abridgement of the NPT Article IV rights enjoyed by NPT signatories?
• For how long will working groups and studies be convened? What are risks that the issues and proposals will simply bounce from the Board to the Secretariat and back again, resulting in the eventual marginalization of the role of the IAEA in the external proposals of States or groups of States, as they move ahead with their own plans? Is there – or indeed can there be – a back-up plan, in the event of this scenario, so as to avoid a sequel to the ill-fated Committee on Assurances of Supply?
• What, in any case, should the level of Agency involvement be? What are the new requirements and what potential dangers might exist when an international organization involves itself in a commercial market venture (even if, or especially if, only as a back-up to the normal market function)?
• The case of the proposed international nuclear fuel cycle centre in the Russian Federation – a nuclear-weapon State – raises broader questions regarding IAEA safeguards. Currently, since it is a nuclear-weapon State, safeguards activities in the Russian Federation are limited to the evaluation of accounting reports on the export and import of nuclear material. An enrichment facility of this type, including all interested (non-nuclear-weapon) countries, might necessitate IAEA safeguards (indeed, IAEA safeguards were envisioned as a “key element” of such an infrastructure.(xi))  The extent of a possible increase in the IAEA’s safeguards budget, as well as the staff resources that would be required in order to carry out such inspections, would have to be discussed, as would the question of how the costs of safeguarding such a facility would be paid.(xii) Moreover, the Russian proposal also envisions possible IAEA involvement in the management of the fuel cycle centers.(xiii) Would this lead to the IAEA overseeing the implementation of safeguards on a facility that is also has a role in managing?  Could and should the Agency play both roles? If not, is there a manner in which participating non-nuclear-weapon States might be involved the fuel cycle centre such that the direct application of safeguards to the facility might continue to be unnessary from a proliferation point of view?
• Given that non-proliferation is a primary motivation for such a mechanism by supplier states, would it be helpful to identify the characteristics of States that are, or that will be, the focus of such efforts? What kinds of scenarios can be envisioned under which this new supply mechanism would come into play?
• Finally if an alternative mechanism is established and administered directly by the IAEA (which could not preclude the development of indigenous capabilities by recipient States), is there a risk that countries of proliferation concern would simply make use of that mechanism (rather than one which would require they forego indigenous enrichment/reprocessing capabilities)?Would the establishment of such a mechanism truly address the political debate over non-proliferation, or merely postponing it?
• Agreement reached on the details of release criteria, the type of material to be assured, budget requirements and others will be meaningless if these, and other overarching issues go unresolved. It is crucial, therefore, that future efforts proceed on both a “macro” and “micro” level of study if an assurance of supply mechanism is to be successfully applied.