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Establishing the International Framework to Deter Development of Weapons Technology Amidst the Global Nuclear Renaissance

Mary Alice Hayward, Deputy Assistant Secretary, Nuclear Nonproliferation Policy and Negotiations
Remarks at ExchangeMonitor Conference
Washington, DC
December 3, 2008

We know that an international nuclear renaissance is coming. We know that nuclear energy will spread because millions of people in the developing world demand a better way of life, and electric generating capacity must expand to meet this demand. We know it because worldwide concern over climate change requires the expansion of energy sources that do not emit greenhouse gasses. We know it because the United States and other nations want to increase their energy security by reducing their dependence on imported fossil fuels.

The nuclear renaissance will present challenges as well as benefits. If it is to endure over the long term, the expansion of nuclear power must meet the highest standards for safety and security, while at the same time discouraging the proliferation of nuclear weapons. Today I will focus on the last of these challenges and the international framework we rely on to meet the proliferation challenge.

I will begin by examining the current status of the international nuclear nonproliferation framework, and then look at what tasks need to be completed to strengthen it further. Among the most important of these tasks will be following through on measures to discourage the spread of enrichment and reprocessing technology.

Our current institutions provide a robust foundation for our participation in, and efforts to strengthen, the nuclear nonproliferation regime. Nuclear commerce is already carried on within a web of interlocking restraints designed to impede the abuse and misapplication of peaceful nuclear programs.

For nuclear commerce involving the United States, these interlocking restraints begin with our network of peaceful nuclear cooperation agreements. Section 123 of the Atomic Energy Act requires that we have an agreement for peaceful nuclear cooperation in force with the recipient before the United States can export nuclear material, reactors or reactor components. We now have such agreements in place with nineteen nations, while our agreement with EURATOM reaches twenty five more. These agreements give the United States an important degree of control over the ultimate disposition of U.S.-origin nuclear material, including spent nuclear reactor fuel.

Another important restraint in the Atomic Energy Act regulates production, outside the United States, of special nuclear material, that is material that can be used to make a bomb. This provision requires any U.S person or company to obtain an authorization from the Secretary of Energy, with the concurrence of the Secretary of State, before directly or indirectly helping to create special nuclear material in another country. These authorizations are known as “Part 810”authorizations because they are granted or denied under rules in Part 810 of title 10 of the Code of Federal Regulations. As this audience is well aware, plutonium, a special nuclear material, is produced every time any nuclear reactor operates. The Part 810 process therefore gives us a unique ability to control the export of nuclear technology and know-how from this country.

At the international level, the Non-Proliferation Treaty lies at the center of the nonproliferation framework. Article III of the Treaty obligates all non-nuclear-weapon State Parties "to accept safeguards, as set forth in an agreement" with the International Atomic Energy Agency (IAEA) for the "purpose of verification of the fulfillment of its obligations assumed under this Treaty with a view to preventing diversion of nuclear energy from peaceful uses to nuclear weapons or other nuclear explosive devices." U.S. support for safeguards includes political support for increased adherence to comprehensive safeguards agreements and the Additional Protocol (AP), as well as financial support for the safeguards system.

In response to the challenges that emerged in the 1990s with respect to detecting undeclared nuclear activity, the international community developed the Additional Protocol to the comprehensive safeguards agreement. Implementation of the Protocol provides critical information on a State's fuel cycle activities and enhances the likelihood that a State in noncompliance with its nonproliferation obligations will be caught.

In addition to political support, the safeguards system requires strong financial and technical support. The IAEA is responding today to unprecedented demands, including increased safeguards costs associated with upgrading its information management system and analytical laboratory, and meeting new or increasing safeguards obligations at plutonium facilities, enrichment plants, and heavy water reactors.

The United States has strongly supported adequate IAEA safeguards funding. We initiated and helped win support for a 20 percent increase in the IAEA's regular safeguards budget. Though the Agency can be expected to achieve some efficiencies from its program of "integrated safeguards," it has identified further funding increases necessary to fulfill the growing safeguards obligations being placed on it.

The IAEA continues to rely heavily upon voluntary, or "extrabudgetary," resources to meet safeguards requirements for many activities, particularly research and development and equipment. In 2007, the IAEA received cash contributions of almost $57 million in extrabudgetary funds for safeguards work, almost forty percent of the safeguards regular program fund. The United States donated over $22 million, or about three-fourths, of these extrabudgetary funds, an important part of our annual voluntary contribution. We encourage other NPT parties to help ensure that the Agency has the resources necessary to continue to help monitor NPT compliance.

The new administration must prepare for the next NPT Review Conference in 2010. A meeting of the Preparatory Committee will take place this spring. The role of the Preparatory Committee is to adopt the necessary procedural arrangements for the Review Conference, including selection of a chairman, and to make substantive recommendations for the conference in 2010. Among our policy priorities, the United States will continue to emphasize the need for compliance with the Treaty, the growing value of international peaceful nuclear cooperation as called for in its Article IV, and our considerable record of accomplishment in reducing nuclear weapons. We will seek an outcome to the Preparatory Committee that lays the foundation for a Review Conference that strengthens the Treaty.

In addition to requiring safeguards in non-nuclear weapon state parties, under Article III of the NPT, nuclear supplier states must require their customers to accept IAEA safeguards over imported nuclear material and nuclear material located in imported equipment and material especially designed and prepared for processing, use or production of special nuclear material. NPT Article III does not cover exports of technology or dual-use equipment or material. To close this loophole, the Nuclear Suppliers Group, or NSG, was formed in the 1970s.

Today the NSG has 45 members, and its export guidelines are the industry standard for international nuclear commerce. Along with NPT and IAEA safeguards, the NSG guidelines are a key component of the international nuclear nonproliferation framework. One of the most important of the NSG guidelines requires exporting states to “exercise restraint” in the transfer of sensitive nuclear technologies, in particular enrichment and reprocessing technologies. Limiting the spread of enrichment and reprocessing technologies to new states has become one of the main battlefields in the struggle to forestall nuclear proliferation. Since 2004, the United States has taken the lead in the NSG to negotiate new restraints on transfer of these technologies. As might be expected in a 45-member organization that decides issues by consensus, these negotiations have been lengthy and complex. There were positive developments in the most recent talks this November, and I will return to the NSG later when discussing where we need to go in the future.

The NPT, the safeguards system, and the NSG export guidelines are aimed primarily at the threat of diversion by states of technology or nuclear material from peaceful to weapons use. Since September 11, we have all been acutely aware of another threat, the threat of nuclear material or sensitive technology falling into the hands of a terrorist group. The primary institutional response to this threat has been to develop international standards for the physical protection of nuclear material, as codified in an IAEA document known as INFCIRC 225, and in the Convention on Physical Protection of Nuclear Material. The protection measures in INFCIRC 225 are nonbinding recommendations, although our Section 123 nuclear cooperation agreements require countries to meet the INFCIRC 225 standards for nuclear material and equipment imported from the United States. These standards link the level of security for nuclear material to the risk of proliferation. Thus the highest levels of security should be used with unirradiated plutonium metal, while a lower standard applies to spent reactor fuel.

The Convention on Physical Protection is legally binding, although in its original form it only applied to nuclear material in international commerce. The United States took a leadership role in negotiating amendments to strengthen the Convention, and these negotiations were brought to a successful conclusion in 2005. The amended Convention now establishes legally binding physical protection obligations for nuclear material used for peaceful purposes in domestic use, storage and transport, as well as for peaceful nuclear facilities. In essence the amendments universalize the United States physical protection standards and practices for peaceful nuclear material and facilities.

The amended Convention also strengthened the obligations of the parties to cooperate against those who threaten peaceful nuclear activities. Parties are now obligated to make sabotage of a nuclear facility or smuggling of nuclear material a serious criminal offense and to cooperate in prosecuting or extraditing persons who commit these offenses in any state party.

As we face the challenges of the nuclear renaissance, it is good to know that many key components of the nonproliferation framework are already in place. However, the expected expansion of nuclear energy worldwide will place unprecedented strain on the present framework. This is why we must continue to develop, reinforce and strengthen the nuclear nonproliferation framework.

The comprehensive safeguards agreement required by the NPT has been the minimum basis for modern safeguards. While most NPT Parties have concluded such an agreement with the IAEA, 30 have still failed to do so. This number is shrinking, but progress has been too slow and remains unsatisfactory.[*} There is no evidence that any of these 30 Parties harbor a secret nuclear program, but without a comprehensive safeguards agreement in place, confidence in this judgment is limited. We should continue to press all NPT parties to fulfill this most basic obligation as soon as possible.

The new administration will need to press the parties to the NPT to recognize the Additional Protocol, in combination with a comprehensive safeguards agreement, as the new minimum standard for effective safeguards. Progress on bringing Additional Protocols into force has accelerated, but is still not satisfactory. One hundred and eighteen States have signed Additional Protocols, and 88 have brought them into force. We should continue such efforts until the Additional Protocol is universally applied.

We should also seek universal acceptance of the 2005 amendments to the Convention on Physical Protection of Nuclear Material. As I mentioned earlier, these amendments strengthen the Convention as a weapon against terrorism and extend its coverage to all peaceful nuclear activities of the parties. However, of the approximately 140 parties to the Convention, so far only 19 have accepted the amendments. We should begin by completing the ratification process for the United States, and then press for acceptance of the amendments as widely as possible.

In reinforcing the international nonproliferation framework, the most important task facing the next administration will be discouraging the spread of enrichment and reprocessing technologies. The nuclear renaissance will not require the spread of these sensitive technologies to new countries. A country’s successful development or expansion of nuclear energy does not depend on acquiring these technologies any more than a country needs its own petroleum refinery before it can use trucks, automobiles and airplanes.

Nevertheless, as more and more nations seek the benefits of peaceful nuclear energy, some will be tempted to seek enrichment and reprocessing capabilities out of a misguided belief that these capabilities will increase their international prestige or out of concern for energy security. A few, like Iran, may insist on exercising the so-called “right” to these technologies with the clandestine purpose of acquiring nuclear weapons or creating an option to do so.

We are taking measures to discourage the spread of these technologies through the Nuclear Suppliers Group, the International Atomic Energy Agency and in our bilateral relations with states considering nuclear energy.

In the Nuclear Suppliers Group we have been negotiating specific criteria that exporting states could use to limit the transfer of sensitive technologies, and the limit the form that the exported commodity should take. For example, in some circumstances a “Black Box” approach to exporting enrichment facilities might be appropriate. Under this proposal, an enrichment facility might be transferred to another country without transferring enrichment technology.

We may be close to agreement on a criteria-based approach to the export of sensitive technologies. The November meeting of the NSG in Vienna produced an un-bracketed text that is now being considered in the capitals of the NSG members. We are working to finalize these changes and it will be up to the next administration to ensure these changes in the NSG export guidelines are followed.

In the IAEA and in our bilateral relations we are encouraging states to rely on the international market for reactor fuel. It is generally agreed that the market is working well, and is likely to continue to work well for the foreseeable future.

In the past year and a half we have signed Memorandums of Understanding, or MOUs, on peaceful nuclear energy with several states in the Middle East who are seriously considering nuclear energy programs, including Bahrain, Jordan, Saudi Arabia and the United Arab Emirates. These MOUs are non-legally binding statements of policies shared by both countries. In each case, the MOUs affirm the intent of the country concerned to rely on the international fuel market rather seeking enrichment or reprocessing capabilities. When implementing the MOUs, we plan to help these countries develop the necessary infrastructure for the safe and secure deployment of nuclear energy. We believe that, within the region, they can serve as powerful counter-examples to Iran’s irresponsible enrichment program. Additional MOUs are under consideration with other countries in the Middle East and elsewhere.

Energy security is one of the most frequently cited reasons why a state might pursue enrichment of reprocessing technologies. While the international market for nuclear fuel is working well overall, some states have expressed concern that bilateral supply arrangements might be unexpectedly cut for political reasons. To minimize this concern, the United States has supported the establishment of mechanisms for reliable access to nuclear fuel.

To create a reserve of low enriched uranium for this purpose, the Department of Energy is currently down-blending 17.4 metric tons of highly enriched uranium that was excess to our defense needs. The down-blending should be completed by 2010. Enough low enriched uranium should be produced for six to eight reactor core loads.

We are also supporting the creation of a reliable nuclear fuel mechanism to be administered by the IAEA. On May 31, 2006, the United States and five other nuclear supplier states unveiled a concept for such a mechanism. Under this concept, the IAEA would facilitate new commercial arrangements if a country should find its fuel supply interrupted for reasons other than failure to comply with safeguards obligations. IAEA would determine eligibility based on a country’s compliance with IAEA safeguards, acceptance of nuclear safety standards, as well as reliance on the international market rather than on indigenous fuel cycle activities. As a further backup, reserves of nuclear fuel, held nationally or perhaps by the IAEA, could provide fuel as a last resort.

In September 2006, the IAEA held a “Special Event on Assurances of Supply and Nonproliferation” during its annual General Conference. At the Special Event a number of ideas for fuel supply assurances were put forward, including the U.S.-backed “six country approach.” At this event Senator Sam Nunn announced that the Nuclear Threat Initiative, a nongovernmental organization, would provide a $50 million grant to the IAEA to set up a supply mechanism, if two conditions were met by September 2008. The first condition was that $100 million in matching funds be raised from other sources. The second condition was that the IAEA Board of Governors flesh out and approve the details of the mechanism.

By last September, Norway, the United States and the United Arab Emirates had donated or pledged $65 million of the matching funds, leaving $35 million still to be raised. In light of this progress the Nuclear Threat Initiative extended its deadline to the end of September 2009. The new administration will be faced with the tasks of working out the details of the reliable fuel mechanism within the Board of Governors, while at the same time encouraging others to donate the remaining $35 million in matching grants before the end of next September.

While the focus of this summit is on the purpose and role of a nuclear arsenal as a deterrent, we should also consider the implementation of the mechanisms I have mentioned, as well as many other diplomatic initiatives, as essential to deterrence against the spread of nuclear weapons and countering terrorism against peaceful nuclear activities. The more obvious, thorough, and far-reaching our international cooperation toward this end, the more difficult it becomes for the system to be interrupted or abused by those who would inflict harm.

This review of the international nuclear nonproliferation framework shows that the next administration will have plenty of work ahead of it. The existing institutions are sound, but need to be strengthened continuously to ensure that the nuclear renaissance does not contribute to the proliferation of nuclear weapons. In this regard, among the most important challenges facing the next administration will be discouraging the spread of enrichment and reprocessing technology. At a minimum, this will require ensuring that the NSG’s adoption of a criteria-based approach to transfer of sensitive technologies are followed and supported, and the creation of a mechanism at the IAEA for reliable access to nuclear fuel.

In addition to our efforts to discourage the spread of sensitive technologies, preparing the nuclear nonproliferation framework to meet the challenges of the nuclear renaissance will also require a sustained diplomatic effort to have the Additional Protocol recognized as the new minimum standard for NPT safeguards and to universalize the amendments to the convention on Physical Protection.

The nuclear renaissance holds great promise for the future of humanity. We owe it to the future of humanity to ensure that this promise will not be abused. The nuclear renaissance must not be followed by a new dark age of weapons proliferation.

[*] Thirteen (13) have not negotiated NPT safeguards agreements: Angola, Republic of the Congo, Djibouti, Eritrea, Guinea, Guinea Bissau, Kenya, Liberia, Micronesia, Rwanda, Sao Tome & Principe, Somalia and Vanuatu. Six (6) have negotiated a safeguards agreement but not yet signed it: Central African Republic, Chad, Equatorial Guinea, Mozambique, Qatar, and Timor-Leste. Eleven (11) have signed a safeguards agreement but have not completed their internal processes to bring it into force: Andorra, Bahrain, Benin, Cape Verde, Comoros, Gabon, Mauritania, Montenegro, Saudi Arabia, and Togo.

Released on December 8, 2008

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