Neww Diplomacy Initiative
Ini ive

JUNE
UNE 2018
018

ND Policy Brief

JUNE 2018
018

Vol.

A U.S. Government Perspective:
Trends in Bilateral Nuclear Cooperation Agreements
Atsuki Hirano
Researcher, Energy Project TeamNew Diplomacy Initiative

The U.S.-Japan Nuclear Cooperation Agreement has come under the spotlight as we are approaching its
expiration date in July 2018. Following President Eisenhower’s advocacy for the peaceful use of nuclear
energy in 1953, the U.S. formed bilateral nuclear cooperation agreements with various countries and has
established an international support system in the field of nuclear energy. These nuclear cooperationagreements are closely related to security since they can lead partner nations to possess nuclear weapons,
and debates continue in the country over the nature of such agreements as well as their impact on
non-proliferation efforts. How did the U.S. government go about making these rules while promoting thepeaceful use of nuclear energy around the world? This report will uncover the trends of the U.S.
government in relation to bilateral nuclear cooperation agreements.

The history of 123 Agreements in the U.S.
Currently, the U.S. has bilateral nuclear cooperation agreements (commonly known as 123 Agreements)
with over 20 countries. The conditions for such agreements, including the import and export of nuclear
materials as well as the equipment and technology necessary for the operation of nuclear power plants,
are prescribed under section 123 (Cooperation with Other Nations) of the U.S. Atomic Energy Act of1954. Upon enactment of this law, 123 Agreements called for the peaceful use of nuclear energy aimed tostrengthen alliances with partner nations, while the issue of nuclear security and non-proliferation wasseen as a secondary factor. Nonetheless, following India’s nuclear tests in May 1974, the U.S. feared thatits partnering countries may modify their nuclear energy into military use. This led the country toestablish the Nuclear Suppliers Group in 1975, which developed a control system for the export of nuclear
materials in the international community.
Furthermore, the U.S. Atomic Energy Act was significantly revised in 1978, and nine clauses wereestablished to standardize nuclear non-proliferation requirements. Accordingly, partner nations must now

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conclude 123 Agreements with the U.S. even when they are exporting U.S.-produced nuclear materials orrelated equipment. Uranium enrichment and reprocessing of spent nuclear fuel in each country are also
forbidden without Washington’s consent. In this way, 123 Agreements have become an importantframework for the U.S. to promote non-proliferation principles while cooperating with other nations.

The Bush Administration’s “Golden Standard”
and a Promise Towards Non-Proliferation
In 2005, the Bush administration announced that it would engage in nuclear cooperation with India,
whose economy had achieved high growth at that time. According to the U.S. Atomic Energy Act, theexport of nuclear-related equipment and technology to India, which was not a member of the Nuclear
Non-Proliferation Treaty (NPT), was prohibited. Nonetheless, the Bush administration established theHenry Hyde U.S.-India Peaceful Atomic Energy Cooperation Act in December 2006, and a special
nuclear cooperation agreement was created between the U.S. and India. India consequently made aconcession that placed nuclear facilities, intended for peaceful use, under International Atomic Energy
Agency (IAEA) safeguards (which applied to 14 out of 22 nuclear power plants that were operational orunder construction). Eight plants, however, remained with the potential for military use. Furthermore, theU.S.-Indian Nuclear Cooperation Agreement, agreed upon in July 2017, permitted the reprocessing ofspent nuclear fuel, which resulted in the international community criticizing the U.S. for giving
precedence to economic benefit over its non-proliferation policy.
However, in the 123 Agreement concluded in 2009 between the U.S. and the United Arab Emirates(UAE), the renunciation of uranium enrichment and reprocessing in the UAE was stipulated as a legal
obligation, and the conditions changed significantly. The Bush administration that proceeded with thenegotiations called this clause “the golden standard” and declared it to be the new standard for bilateral
nuclear cooperation agreements. This was in stark contrast to the relatively lenient agreement with India,
as well as to the cooperation efforts with Japan and the European Atomic Energy Community(EURATOM), that permitted uranium enrichment and reprocessing under certain conditions. In pastagreements, if countries wanted to engage in enrichment and reprocessing, all they needed was a consent
from the U.S. Besides, the requirements set by the golden standard were not included in the U.S. Atomic
Energy Act. The application of the new clause was therefore regarded as a ground-breaking step forward
for those who had sought non-proliferation.Influential members of the U.S. Congress andnon-proliferation experts supported the golden standard and appealed to the government to make therenunciation of enrichment and reprocessing a condition in negotiating future agreements.

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The Obama Administration’s Dilemma “A Realistic Approach” to 123 Agreements
Meanwhile in the Obama administration, the Department of Energy Deputy Secretary of Energy, Daniel
Poneman, and the State Department Deputy Secretary of State, Ellen Tauscher, issued a letter dated 10January 2012 to the House and Senate committees on foreign relations advocating a case-by-case policyin negotiating nuclear cooperation agreements. Such policy would consider the partner nation’s legal,
political, and economic background, as well as proliferation concerns, when negotiating cooperationagreements. As the Obama administration supported the application of the golden standard in its nuclear
cooperation with the Middle East, the U.S. set the U.S.-UAE cooperation as a model case uponconcluding 123 Agreements with other Middle Eastern countries. After three years of internal debate,
however, the Obama administration in the end chose a case-by-case approach as a practical and realistic
policy in negotiating nuclear cooperation with other countries.
The U.S. nuclear industry opposed the application of the golden standard fearing the decline of its
competitiveness in the international nuclear market. On the other hand, many lawmakers and experts
harshly criticized the Obama administration’s policy. The New York Times and the National magazine
condemned the administration’s approach in editorials, and on 14 February 2012, 20 non-proliferation
experts submitted a letter to President Obama suggesting the prohibition of uranium enrichment andreprocessing in all future agreements with non-nuclear powers. Conservative John Bolton, who served in
the Bush administration as Secretary of State (Arms Control and International Security), and ananti-nuclear liberal, Edward Markey (Democratic Party, State of Massachusetts), co-authored an editorialin The Christian Science Monitor magazine, warning that the Obama administration’s policy sacrificed
U.S. and international security in exchange of profits for the nuclear industry. They also urged tointroduce a bill for more strict congressional reviews for 123 Agreements that fall outside of the golden
standard.
In response to this criticism, Thomas Countryman, who served in the Obama administration as U.S.
Assistant Secretary of State (Security and Non-Proliferation), stated in 2012 that the U.S. would continue
to thoroughly address nuclear non-proliferation, but the implementation of the golden standard was not
the only option. As another countermeasure against nuclear proliferation, he mentioned the Nuclear
Suppliers Group’s 2011 amendment of its guidelines related to the exportation of enrichment andreprocessing. The Obama administration perceived two disadvantages in being the only country
endorsing the golden standard. One was the possibility of new agreements fading, when the U.S. nuclear
industry was already being driven into a predicament due to its losing competitiveness to Russia andChina. Another disadvantage that concerned the administration was the dwindling influence that the U.S.
held over non-proliferation. Based on these points, the Obama administration chose a more flexible
case-by-case policy, despite being criticized by the U.S. Congress and other experts.

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The Trump Administration Disruption of Non-Proliferation Effort
Efforts —Negotiating a Nuclear Agreement with Saudi Arabia
Since emerging in 2017, the Trump administration has attracted attention from around the world
regarding its nuclear cooperation with other countries. The administration in February 2018 began
formal 123 Agreement negotiations with Saudi Arabia and there were varying opinions on whether or not
to apply the golden standard to the new agreement. In the meantime, Saudi Arabia has explored the useof nuclear energy in diversifying its energy sources instead of depending on oil alone. The kingdom hadpromised to rely on international markets for nuclear fuel and not pursue nuclear technologies in the May
2008 U.S.-Saudi Arabia Memorandum of Understanding on Nuclear Energy Cooperation. Yet a reportissued by the World Nuclear Association in May 2018 revealed that Saudi Arabia was planning to build
16 nuclear power reactors over the next 20–25 years at a cost of more than $80 billion.
The U.S. government is hoping for Saudi Arabia to purchase its nuclear technology, and accordingly,
Secretary of Energy Rick Perry visited the kingdom early in December 2017. This led to the official
negotiation of the 123 Agreement in February 2018, where Secretary Perry claimed that if the U.S. does
not cooperate, Saudi Arabia will choose Russia and China as their partners in the field of nuclear energy.
Since Saudi Arabia had already procured French and Russian commercial nuclear power plants withrelatively lenient non-proliferation requirements, the U.S. nuclear industry wanted to work with Saudi
Arabia to protect its dominance in the international market.
From a non-proliferation standpoint, however, if Saudi-opposing Iran manufactures nuclear weapons,
there is a possibility of Saudi Arabia proceeding with nuclear development for military use. For thatreason, the new agreement must be based on the principle of non-proliferation. In fact, Saudi Arabia has
expressed interest in uranium enrichment and reprocessing, and in March 2013, Prince Mohammad
claimed that, “if Iran develops nuclear weapons, Saudi Arabia will follow suit as soon as possible.”
Concerns were raised in the U.S., and the aforementioned Senator Markey issued a statement saying that
the Prince’s remarks confirm suspicions that Saudi Arabia is seeking nuclear energy not only for electricalpower, but also for geopolitical power.
Unsurprisingly, the U.S. government also wanted to incorporate the golden standard into the agreement.
In November 2017 before official negotiations began, Christopher Ford, then Special Assistant to thePresident and Senior Director for Weapons of Mass Destruction and Counter-Proliferation on the WhiteHouse National Security Council, stated that from a non-proliferation standpoint, it was desirable toapply the golden standard in the U.S. nuclear cooperation with Saudi Arabia. Saudi Arabia was still
reluctant to implement the clause, leading many experts to worry that the Trump administration, in needof Saudi oil money, would be rushing the conclusion of the agreement and consequently alleviate
non-proliferation requirements.

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The nuclear cooperation negotiations between the U.S. and Saudi Arabi have resulted in unanticipatedconsequences for Japan. In April 2018, a U.S. energy policy official expressed fears over Japan’s nuclear
fuel cycle and claimed that the country must seek proper management of plutonium in order to explain its
unique position to Saudi Arabia, Iran, and China. Just as South Korea did during the negotiations that
ended in the conclusion of the 2015 U.S.-South Korea Nuclear Cooperation Agreement, Saudi Arabia
may question the U.S. in solely permitting Japan to reprocess its nuclear fuels, and the kingdom may evendemand its rights to reprocessing.
Aiming to revitalize the nuclear industry in the U.S., President Trump is currently reviewing the country’s
civil nuclear policies. As negotiations continue, experts have raised concerns over how these negotiations
may have adverse effects on a nuclear arms race in the Middle East. The outcome of such negotiation will
indicate the Trump administration’s direction on the problem of international nuclear security.
Furthermore, how will the U.S. go about creating a framework for nuclear cooperation agreements withother countries, while the circumstances of international nuclear proliferation change, as in the case of theNorth Korea? We will continue to follow the trends of the U.S. in bilateral nuclear cooperationagreements, as the country casts significant influence on the nuclear policies of many countries including
Japan.

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