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58–431PDF 2010

NUCLEAR COOPERATION AND

NON–PROLIFERATION AFTER KHAN AND

IRAN: ARE WE ASKING ENOUGH OF

CURRENT AND FUTURE AGREEMENTS?

HEARING

BEFORE THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

SECOND SESSION

SEPTEMBER 24, 2010

Serial No. 111–124

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

HOWARD L. BERMAN, California, Chairman 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

BRAD SHERMAN, California 

ELIOT L. ENGEL, New York 

BILL DELAHUNT, Massachusetts 

GREGORY W. MEEKS, New York 

DIANE E. WATSON, California 

RUSS CARNAHAN, Missouri 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

MICHAEL E. MCMAHON, New York 

THEODORE E. DEUTCH, Florida 

JOHN S. TANNER, Tennessee 

GENE GREEN, Texas 

LYNN WOOLSEY, California 

SHEILA JACKSON LEE, Texas 

BARBARA LEE, California 

SHELLEY BERKLEY, Nevada 

JOSEPH CROWLEY, New York 

MIKE ROSS, Arkansas 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

JIM COSTA, California 

KEITH ELLISON, Minnesota 

GABRIELLE GIFFORDS, Arizona 

RON KLEIN, Florida 

ILEANA ROS-LEHTINEN, Florida 

CHRISTOPHER H. SMITH, New Jersey 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

DANA ROHRABACHER, California 

DONALD A. MANZULLO, Illinois 

EDWARD R. ROYCE, California 

RON PAUL, Texas 

JEFF FLAKE, Arizona 

MIKE PENCE, Indiana 

JOE WILSON, South Carolina 

JOHN BOOZMAN, Arkansas 

J. GRESHAM BARRETT, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

BOB INGLIS, South Carolina 

GUS BILIRAKIS, Florida 

RICHARD J. KESSLER, Staff Director 

YLEEM POBLETE, Republican Staff Director 

(III)

C O N T E N T S 

Page

WITNESSES 

The Honorable Thomas Graham, Jr., Executive Chairman of the Board, 

Lightbridge Corporation (Former Special Representative to the President 

for Arms Control, Non-Proliferation, and Disarmament) ................................. 13

Ms. Sharon Squassoni, Director and Senior Fellow, Proliferation Prevention 

Program, Center for Strategic and International Studies ................................ 23

Mr. Jamie M. Fly, Executive Director, The Foreign Policy Initiative ................. 36

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Howard L. Berman, a Representative in Congress from the 

State of California, and Chairman, Committee on Foreign Affairs: Prepared 

statement .............................................................................................................. 4

The Honorable Ileana Ros-Lehtinen, a Representative in Congress from the 

State of Florida: Prepared statement ................................................................. 8

The Honorable Thomas Graham, Jr.: Prepared statement .................................. 16

Ms. Sharon Squassoni: Prepared statement .......................................................... 25

Mr. Jamie M. Fly: Prepared statement ................................................................. 39

APPENDIX 

Hearing notice .......................................................................................................... 60

Hearing minutes ...................................................................................................... 61

The Honorable Russ Carnahan, a Representative in Congress from the State 

of Missouri: Prepared statement ......................................................................... 62

The Honorable Gerald E. Connolly, a Representative in Congress from the 

Commonwealth of Virginia: Prepared statement .............................................. 63

The Honorable Gene Green, a Representative in Congress from the State 

of Texas: Prepared statement ............................................................................. 65

The Honorable Ileana Ros-Lehtinen: Material submitted for the record ............ 67

Ms. Sharon Squassoni: Material submitted for the record .................................. 73

Written responses from the Honorable Thomas Graham, Jr., to questions 

submitted for the record by the Honorable Russ Carnahan ............................. 78

Written responses from Ms. Sharon Squassoni to questions submitted for 

the record by the Honorable Russ Carnahan .................................................... 79

Written responses from the Honorable Thomas Graham, Jr., to questions 

submitted for the record by the Honorable Barbara Lee, a Representative 

in Congress from the State of California ........................................................... 83

Written responses from Ms. Sharon Squassoni to questions submitted for 

the record by the Honorable Barbara Lee .......................................................... 86

(1)

NUCLEAR COOPERATION AND NON–PROLIFERATION AFTER KHAN AND IRAN: ARE 

WE ASKING ENOUGH OF CURRENT AND FUTURE AGREEMENTS? 

FRIDAY, SEPTEMBER 24, 2010

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON FOREIGN AFFAIRS, 

Washington, DC. 

The committee met, pursuant to notice, at 10:10 a.m., in room 

2172, Rayburn House Office Building, Hon. Howard L. Berman 

(chairman of the committee) presiding. 

Chairman BERMAN. The committee will come to order. There is 

no particular reason why you would know, since I didn’t know until 

this morning, but the House recessed for the week last night. So 

your testimony is greatly valued, but there will only be a few of us 

here to value it. But we will get the word out to everybody because 

a number of members have gone back to their districts. 

The committee will come to order. In a moment I will recognize 

myself and the ranking member for up to 7 minutes each for the 

purposes of making an opening statement. I will then, if they are 

here, recognize the chair and ranking members of the Terrorism, 

Nonproliferation and Trade Subcommittee for 3 minutes each to 

make their opening statements. We have to end today’s hearing by 

noon because of another matter that members of the committee 

who are here will be participating in. 

Without objection, all other members can submit opening statements for the record. 

The Atomic Energy Act requires that this committee hold hearings on pending U.S. nuclear cooperation agreements with other 

nations. Today’s hearing fulfills that requirement for the Australia 

and Russia agreements, which were submitted to the Congress in 

May. 

However, this hearing is really intended to serve a larger purpose—to consider changes that might be made in future nuclear cooperation agreements, and to the Atomic Energy Act itself. 

The global non-proliferation regime has received two major jolts 

in the last 6 years. The first was the revelation that Pakistani scientist A.Q. Khan had been running a clandestine nuclear black 

market, which accelerated the spread of sensitive nuclear facilities 

and nuclear weapon designs around the world. The second has 

come from one of Khan’s clients, Iran, where centrifuges obtained 

from the Khan network continue to spin, making enriched uranium 

that could be refined into fuel for nuclear bombs. 

2

U.S. non-proliferation policies are adapting to counter these 

shocks to the global system. Congress has played a role in this effort by passing legislation, including the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010. This law is already helping to ratchet up the economic pressure on Tehran, raising the cost for its defiance of the world’s demand that it cease its 

illicit and dangerous nuclear activities. 

Regrettably, U.S. law and policy regarding civil nuclear cooperation with other countries has not undergone a similar evolution. 

The Atomic Energy Act was last amended in 1978 when Congress 

added the current set of nine conditions that any nuclear cooperation agreement—also known as 123 agreements—must satisfy. 

Many argue—and I believe with great justification—that the law is 

now sorely out of date. 

Many suggestions have been offered to update the Atomic Energy 

Act for the post-Khan, post-Iran environment. Some of these include: A requirement for the foreign government to have agreed to 

and implemented the IAEA’S additional protocol for safeguards, 

which gives the IAEA more authority to inspect the country’s nuclear-related activities and facilities; another suggestion is that the 

recipient country be willing to accept near-real-time video monitoring of its IAEA safeguarded facilities and activities, if the agency thinks it would be useful to verify that no diversion of nuclear 

material from civil purposes has occurred; if the recipient is a state 

that supplies civil nuclear technology to other countries, that its 

policies, practices, and regulations are comparable to, or at least do 

not undermine, U.S. law and policy; and if the recipient country, 

if it doesn’t already possess uranium enrichment and/or spent-fuel 

reprocessing facilities, undertake a legally-binding commitment not 

to engage in such activities or develop such facilities. 

We have had five new or renewed nuclear cooperation agreements submitted to Congress in the last 4 years—and one before 

us today, Russia, twice. We will be seeing a raft of new or renewed 

nuclear cooperation agreements in the next 4. Nine existing agreements will expire between 2012 and 2015, including the U.S. agreement with China; presumably, all those will be renegotiated and 

submitted to Congress for review. We may see new agreements 

with Jordan and Vietnam in the next Congress. That makes at 

least 11 new or renewed agreements. In addition, the U.S. has concluded Memorandums of Understanding with Saudi Arabia and 

Kuwait, and we could eventually see nuclear cooperation agreements with them, as well. 

Given all this, it is clearly time to review whether U.S. nuclear 

cooperation agreements are fully serving U.S. and global non-proliferation objectives. This hearing continues a process begun by Mr. 

Sherman and the Terrorism, Nonproliferation and Trade Subcommittee at their hearing in May on the future of nuclear cooperation agreements. 

The linkage between civil and military nuclear applications has 

never been clearer, or more pressing. The key linchpins are uranium enrichment and spent fuel reprocessing facilities. 

For the majority of nuclear power reactors, natural uranium 

needs to be ‘‘enriched.’’ This is usually accomplished through the 

use of highly-sophisticated centrifuges—exactly what Iran, by way 

3

of Khan, is using. Unfortunately, the same basic process can be 

used to produce highly enriched uranium that can be used in a 

bomb. Another process—called ‘‘reprocessing’’—allows weaponsgrade plutonium to be extracted from spent reactor fuel. 

The Khan network trafficked in the technology and hardware of 

enrichment to Iran, Libya, North Korea, and possibly elsewhere. In 

2004, 2 months after the network was exposed, President Bush announced that the U.S. would seek to prevent the spread of enrichment or reprocessing facilities to any state that did not already 

possess such technologies. 

Regrettably, this approach ran into an immediate wall of opposition from many developing countries, which viewed it as an effort 

to deny their ‘‘inalienable right’’ to the benefits of peaceful nuclear 

energy under the NPT. The Bush effort was soon abandoned, and 

replaced by a drive to convince other members of the Nuclear Suppliers Group to institute more-restrictive criteria when deciding 

whether to transfer enrichment and reprocessing technology to others. 

In this context, it is worth highlighting the importance of the recent U.S. nuclear cooperation agreement with the UAE. On its 

own, the UAE decided to forswear enrichment and processing, and 

agreed to make that a legally-binding commitment in the nuclear 

cooperation agreement itself. 

Even though the UAE ultimately decided to purchase nuclear reactors from a Korean vendor, the commitment in the U.S.–UAE 

agreement applies unconditionally, regardless of who provides 

equipment and material to the UAE. 

The State Department has since described this agreement as the 

‘‘Gold Standard’’ for such agreements, and I agree. The U.S. should 

seek the same commitment for every nuclear cooperation agreement that it negotiates in all regions of the world. We should also 

consider making this an additional statutory requirement in the 

Atomic Energy Act. 

I am going to put the rest of my opening statement into the 

record because my time has expired, and yield to the ranking member. 

[The prepared statement of Chairman Berman follows:]

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Ms. ROS-LEHTINEN. Let me begin by expressing my great disappointment regarding the missing subject of today’s hearing; 

namely, the proposed nuclear cooperation agreement with Russia. 

As we understand it, the administration, despite being informed of 

this hearing weeks in advance, has refused to provide a witness. 

The result? The Russia and Australia agreements will not be addressed. Apparently, it is as simple as that. As a result, this committee is in danger of violating the statutory requirements in section 123(d) of the Atomic Energy Act which states that during the 

current period of congressional review, ‘‘the Committee on Foreign 

Affairs of the House of Representatives and the Committee on Foreign Relations of the Senate shall each hold hearings on the proposed agreements for cooperation and submit a report to the respective bodies recommending whether it should be approved or 

disapproved.’’

Mr. Chairman, this hearing does not fulfill the statutory requirement to hold a hearing on the Russia 123 and Australia 123 Agreements. You can call it whatever you wish, but it does not fulfill the 

requirement. 

We can understand why the executive branch wanted to kill a 

hearing on the Russia 123 Agreement. Certainly, none of us who 

have been following the overtures to the Russian Government, including the removal of sanctions on Russian entities assisting 

Iran’s nuclear missile program, are surprised. After all, it is abundantly clear that the Russia 123 Agreement is a political payoff to 

the Russians, pure and simple, and cannot be defended on its merits. 

The administration has as much admitted this by promoting the 

nuclear deal as part of the ‘‘reset’’ of our relationship. But the U.S. 

has no business engaging in nuclear cooperation with any country 

with a record like Russia’s, especially one that continues to provide 

assistance to Iran’s nuclear program. 

From the outset, there has been strong opposition by many Members in both Chambers to the Russia 123 Agreement, even prior to 

its first submission to Congress by President Bush in May 2008. 

The principal objection has been the inability of the previous and 

the current administrations to certify that the Russian Government, businesses, and individuals were no longer assisting Iran’s 

nuclear and missile program and that the Russian Government 

was fully cooperating with the U.S. in our efforts to stop Iran from 

acquiring a nuclear weapon. 

Does that not sound reasonable? Are these not the types of requirements that should be met before a country is rewarded with 

a nuclear cooperation agreement with the United States? 

Faced with the reality that both administrations were determined to push through this agreement regardless of Russian behavior, and to say nothing about similarly troubling agreements 

such as the one with the United Arab Emirates, it has fallen to 

Congress to shore up U.S. non-proliferation policy. Even before 

President Obama resubmitted the Russia 123 Agreement to Congress in May of this year, Chairman Berman and I, along with several other members of the committee, introduced H.R. 2194, the 

Iran Refined Petroleum Sanctions Act, subsequently known as the 

Comprehensive Iran Sanctions, Accountability, and Divestment 

7

Act, or CISADA, which was signed into law, as we know, on July 

1. The House-passed legislation included a prohibition on the entry 

into force of any 123 agreement with any country that was assisting Iran’s nuclear missile and other weapons program. 

Now, while the administration requested that this be removed 

and while the provision was weakened as the bill proceeded 

through the House and the Senate conference discussions, some 

limitations did survive. A key provision of the act prohibits the 

issuance of export licenses or approval of transfers under a 123 

agreement for any country whose nationals have engaged in assisting Iran’s nuclear weapons and missiles program, among others. 

Nevertheless, the Russia 123 Agreement is moving forward. The 

political pressure driving the agreement was underscored by the 

latest report from GAO, the Government Accountability Office, regarding the Nuclear Proliferation Assessment Statement, or NPAS, 

that is required of all 123 agreements. The GAO had found in its 

previous report on the Russia 123 Agreement submitted in 2008 by 

President Bush that the original NPAS had been rushed through 

the vetting process and that the intelligence agencies in particular 

had not been given sufficient time or opportunity to thoroughly review the final assessment. Then, in the report released last week 

on the most recent NPAS submitted by the Obama administration, 

GAO found that its recommendations to prevent a repeat of this 

flawed preview had not been fully implemented and that once 

again the process had been rushed to meet a suddenly urgent political deadline. It’s de ́ja` vu all over again. 

So just what has the reset gotten us? Well, the nuclear fuel is 

being loaded into the Bushehr reactor, which certainly makes the 

Iranians very happy. And Russia has reiterated that it wants to 

build several more reactors for Iran. 

But the problem is far broader than simply Iran’s nuclear program, as disturbing as that might be. Just last week, Russia announced it would proceed with the delivery of anti-ship missiles 

and other weapons to Syria, despite U.S. protests that these destabilizing weapons are a threat to the region and especially to our 

ally, Israel. Brushing U.S. concerns aside, Russia has said it will 

likely sell even more advanced weapons to Syria even though that 

country continues to arm Hezbollah and pursue chemical, biological, and nuclear weapons. 

I wish we had the opportunity today to have the administration 

explain Russia’s behavior, give us assurances that Congress will be 

provided with the information members have repeatedly sought on 

Russia’s cooperation regarding Iran and other adversaries, and reassure us that the provisions of CISADA and Iran non-proliferation 

sanctions laws will be faithfully implemented and enforced. But it 

appears that this committee’s responsibilities are to be determined 

by the Department of State, and members will simply have to accept that. 

I hope that our constituents will let us know how well they think 

we are carrying out our oath of office. 

Turning to the expert witnesses before us today, we look forward 

to receiving your recommendations on this vital subject. And I have 

the rest of my opening statement to be placed into the record. 

8

Mr. Chairman, I ask unanimous consent, if you please, to enter 

into the record written testimony and two short articles by Henry 

Sokolski on the subject of today’s hearing. Mr. Sokolski is not able 

to be here today, but is well known to this committee both as a valuable witness and a trusted resource. I look forward to working 

with him on revising the Atomic Energy Act and other measures 

to strengthen U.S. non-proliferation policy. 

I thank the chair. 

[The prepared statement of Ms. Ros-Lehtinen follows:]


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Chairman BERMAN. As to the Sokolski statements, without objection, they will be introduced and included in the record of this 

hearing. 

Now I am pleased to recognize the ranking member of the Terrorism, Nonproliferation and Trade Subcommittee, Mr. Royce of 

California. 

Mr. ROYCE. Thank you, Mr. Chairman. I am going to make three 

quick points. 

First, I would just join the ranking member in her observation 

and her concerns over the administration’s absence today. The administration really should be here to discuss and debate the pending nuclear agreements, especially with Russia. This is a very difficult time for nuclear non-proliferation. The blurry line between 

commercial and military use of nuclear technology makes it possible to run right up in having that capability to manufacture nuclear fuel and then you are just one step away from having a nuclear weapon. And that is because the NPT has been distorted, 

really, to allow that practice. 

I am glad that Mr. Henry Sokolski’s testimony is being put in the 

record. There are many out there in think tanks that have looked 

at this that have urged the U.S. and the international communities 

to address this issue in the past because that is the game that Iran 

is playing here. 

It is very unfortunate that the past administrations and that the 

Obama administration has done nothing to challenge this very critical weakness. I am not sure it is a weakness of the NPT. It is the 

way in which it is being interpreted. Right? It is the assertion. 

Congress needs to be more involved in nuclear export policy. 

We should pass legislation to reclaim powers surrendered to the 

executive back when the world was a much simpler place. And we 

should be made to positively, not passively, okay a 123 agreement. 

The administration has embarked on striking a nuclear agreement with Vietnam. It is reported that we would allow Vietnam to 

manufacture nuclear fuel and that there would be no requirement 

that it beef up IAEA nuclear inspections; in other words, the additional protocol. That would be far from a model agreement if we 

do that that way. 

Vietnam’s human rights record is abysmal. I have a resolution 

calling on the State Department to designate that country as a 

country of particular concern for its religious persecution, and I 

think the State Department so far has resisted this. I would suggest to our diplomats that they can press human rights aggresVerDate 0ct 09 2002 12:14 Nov 30, 2010 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 F:\WORK\FULL\092410\58431 HFA PsN: SHIRL

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sively and still deal with nuclear issues. It is called using leverage 

and standing up for human dignity. 

Lastly, the title of this hearing, which is ‘‘Nuclear Cooperation 

and Non-Proliferation after Khan and Iran,’’ that is basically a 

focus on the notorious Pakistani proliferator, A.Q. Khan. Pakistan 

greatly damaged global security by allowing this rogue free rein in 

that country. China’s plan to build another two nuclear reactors in 

Pakistan violates Nuclear Suppliers Group rules. It should be 

stopped. 

I remember years ago raising the issue of the ring magnets that 

China was transferring to Pakistan to develop a nuclear weapon. 

That was obviously what was intended on the part of Pakistan. 

And now we know that yes, China’s responsibility in proliferation, 

and that gave rise to the capability of Pakistan, which subsequently trumped China’s irresponsibility with its own because that 

knew no limits in terms of A.Q. Khan’s ability to proliferate. 

So the fact that A.Q. Khan, supposedly Pakistan’s most popular 

man, 2 weeks ago went on Pakistani television and spoke about his 

future as the nation’s President—as the nation’s President—that 

should be more than troubling to us in terms of Pakistan and the 

future. The government there just is not a responsible nuclear 

power. That needs to be addressed. 

Thank you, Mr. Chairman. 

Chairman BERMAN. The time of the gentleman has expired. I 

think regular order would require me now to introduce the witnesses rather than respond to all the things that are said, and so 

I think I will do that. 

Ambassador Thomas Graham, Jr. is executive chairman of the 

board of the Lightbridge Corporation and is a former special representative for arms control, non-proliferation, and disarmament to 

President Clinton. He was general counsel of the Arms Control and 

Disarmament Agency for 15 years. He has advised five U.S. Presidents on these issues and led the U.S. delegation in 1995 that 

achieved the permanent extension of the Treaty on the NonProliferation of Nuclear Weapons. 

Sharon Squassoni is a senior fellow and director of the Proliferation Prevention Program at the Center for Strategic and International Studies. Prior to joining CSIS, Ms. Squassoni was a senior 

associate at the Carnegie Endowment for National Peace. Ms. 

Squassoni served as an adviser to Congress from 2002 to 2007 as 

a senior specialist in weapons of mass destruction at the Congressional Research Service and was director of policy coordination for 

the Nonproliferation Bureau at State. 

Did I pronounce your name right? Okay. 

Jamie Fly is executive director of the Foreign Policy Initiative, a 

nonprofit, nonpartisan organization to promote U.S. international 

engagement. Prior to joining the FPI, Mr. Fly served in the Bush 

administration at the National Security Council as the director for 

counterproliferation strategy and in the Office of the Secretary of 

Defense. He was an assistant for transnational threats policy. 

It is really an excellent panel on a very important subject. 

Ambassador Graham, why don’t you begin with your testimony. 

Your entire statements will be included in the record. So feel free 

to summarize as you choose. 

13

STATEMENT OF THE HONORABLE THOMAS GRAHAM, JR., EXECUTIVE CHAIRMAN OF THE BOARD, LIGHTBRIDGE CORPORATION (FORMER SPECIAL REPRESENTATIVE TO THE 

PRESIDENT FOR ARMS CONTROL, NON–PROLIFERATION, 

AND DISARMAMENT) 

Ambassador GRAHAM. Thank you, Mr. Chairman. I just want to 

say to you, Mr. Chairman, and to Ms. Ros-Lehtinen and other 

members of the committee how pleased and happy I am to be here. 

I have been coming to this committee off and on for many, many 

years, back into the eighties, and it is always a pleasure. I have 

known your staff assistant, David Fite, for many years and it has 

been a pleasure working with him. 

Today’s subject, principal subject, is the 123 agreement concept 

in the context of non-proliferation. So I am going to talk a little bit 

about non-proliferation first and then move into the way I see the 

123 agreement issue and then perhaps at the end a few comments 

on Russia and Australia. 

John F. Kennedy, when he was President, in a press interview 

in 1963, said that he was haunted by the concern that by 1970 

there would be 10 nuclear weapon states in the world and by 1975, 

15 or 20. He said he regarded that as the ‘‘greatest possible danger 

and hazard.’’ I think those words are ones that are worth remembering. 

Later on, Mohamed ElBaradei, the distinguished Director General of the IAEA, opined that more than 40 countries have the capability to build nuclear weapons. If nuclear weapons had spread 

that widely, every conflict would have run the risk of escalation 

into nuclear weapons and it would have been very difficult to keep 

nuclear weapons out of the hands of terrorists they would be so 

widespread. It would have created a security situation that would 

have made today’s world seem like paradise to have nuclear weapons all over the world, such as President Kennedy feared. 

But the principal reason that this didn’t happen—and it didn’t 

happen, as we all know—was the 1970 entry into force of the Nuclear Non-Proliferation Treaty, accompanied by the extended deterrence policies of the U.S. and the Soviet Union. Really, only two 

countries have acquired nuclear weapons since that date. Israel already had a nascent capability in 1970, as did India, and you can 

add Pakistan and North Korea to that list—far from what President Kennedy feared. 

But the NPT is based on a central bargain: Non-proliferation for 

most of the world in exchange for nuclear disarmament and peaceful nuclear cooperation by the NPT nuclear weapon states. There 

has been a lot of difficulty in implementing the commitment by the 

nuclear weapon states to effectively pursue disarmament. The 

number one disarmament issue that the nonnuclear weapon states 

wanted was the comprehensive test ban. It goes back to 1968. We 

still don’t have it today. There was fissile material cutoff. We still 

don’t have that today. Much of the disarmament agenda that was 

the quid pro quo for preventing nuclear weapons from spreading all 

over the world has not been realized. 

The other half of the obligations of the nuclear weapon states—

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tant to support that process, not only for its own sake but for the 

health of the NPT bargain. 

We now are concerned as a society, as a world community, about 

climate change. As a result, it is quite possible that nuclear power 

will spread more widely than before. This is consistent with the 

NPT, as I just indicated. But if this is to happen, it is very important that we safeguard the non-proliferation norm. 

The standard 123 agreement that the U.S. uses follows closely 

NPT obligations and thus doesn’t have things in it such as a prohibition on uranium enrichment. But while this has worked well for 

years, perhaps it is in today’s world no longer sufficient. 

The United Arab Emirates has embarked on a very significant 

nuclear program. They are in the business of selling oil and they 

import gas. In a few years they will face a great energy shortfall. 

They didn’t want to use coal. They looked at all technologies and 

settled on nuclear energy as the soundest and best choice for them 

to make on economic grounds. But they wanted to make their anticipated quite large program a model. I have heard that from 

many UAE officials, beginning with the Crown Prince. 

Working with Lightbridge Corporation, my company, the UAE 

forswore, first on a nationally legally binding basis, and then on an 

internationally legally binding basis uranium enrichment and plutonium reprocessing. That obligation, as was stated a few moments 

ago, is in the U.S.–UAE 123 Agreement, but it is not yet a model 

as had been anticipated. 

The NPT is the centerpiece of world security. Article VI, even 

with President Obama’s strong commitment, remains uncertain. It 

is important that Article IV remain strong to help the NPT. We 

need nuclear power now more than ever, but proliferation remains 

a serious threat. 

With respect to the specific issues, certainly a requirement that 

the IAEA additional protocol added to the 123 agreement could be 

a useful addition. The United Arab Emirates made it clear that it 

hoped its program, including the non-proliferation commitments 

that they have made, which are enshrined in the U.S.–UAE 123 

Agreement, would be a model for others. Thus far it has not been. 

There are no indications that U.S. 123 agreements with other countries will follow this model. But they should. While, of course, recognizing in some cases there are difficulties. 

It is not desirable that enrichment and reprocessing technology 

spread more widely, as Mr. Royce said in his comments. This is an 

issue on which both President Bush and President Obama agree. 

Other efforts, such as the nuclear fuel bank at the International 

Atomic Energy Agency, have been pursued to reduce the incentive 

for additional countries to acquire the full fuel cycle. Legislation requiring that the UAE model be followed in future 123 agreements, 

perhaps absent Presidential waiver, could help further to inhibit 

the spread of fuel cycle technology. In my judgment, it is a good 

idea. In today’s interdependent world, such a change would make 

sense and new technology can work with a non-proliferation system 

to make nuclear power even more available to serve humanity, as 

envisioned by the NPT. 

So I applaud very much the committee’s interest in this subject 

and urge you to pursue it. 

15

With respect to the Russian agreement, in my judgment, the 

adoption of the U.S.-Russia 123 Agreement will correct an historical anomaly. I understand the politics and the difficulties we had 

2 years ago and at other times. But nevertheless, we traditionally 

over many years have done more nuclear trade, more nuclear work 

with Russia than any other country, both trade and cooperation. 

There was a program nearly 20 years ago now called Megatons 

to Megawatts. It has resulted in some 15,000 Russian nuclear 

weapons being dismantled, the HEU and the weapons blended 

down, which now provides about 50 percent of the nuclear fuel in 

U.S. nuclear reactors. I was part of the delegation that negotiated 

that agreement. But there were many other examples. And Russia 

is our number one non-proliferation partner. 

I have heard from many serious analysts of the situation, such 

as former Secretary Defense Bill Perry, that we could be on the 

verge of a whole new wave of proliferation. As has been mentioned 

earlier, we have everything that A.Q. Khan did. We have the Iranian situation, we have the North Korean situation, and the possibility that those countries could trigger wider proliferation throughout the Middle East or Northeast Asia. 

Chairman BERMAN. Ambassador Graham, if you could just bring 

it to a conclusion. 

Ambassador GRAHAM. 1 minute. In my judgment, we can’t succeed with our non-proliferation program without the help of Russia. 

They are indispensable, and I think it is important to have this 

agreement with them. 

Australia has always had an outstanding non-proliferation 

record, and they have a significant nuclear industry that serves 

themselves and many other countries. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Graham follows:]

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Chairman BERMAN. Thank you, Ambassador. 

Ms. Squassoni. 

STATEMENT OF MS. SHARON SQUASSONI, DIRECTOR AND SENIOR FELLOW, PROLIFERATION PREVENTION PROGRAM, 

CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES 

Ms. SQUASSONI. Thank you, Mr. Chairman, Ranking Member 

Ros-Lehtinen, and members of the committee, for inviting me to 

speak today about nuclear cooperation and non-proliferation. I have 

a prepared statement that I would like to submit for the record. 

Chairman BERMAN. It will be included in its entirely in the 

record. 

Ms. SQUASSONI. Thank you. May I also submit for the record an 

article from the Arms Control Today on the impact of the U.S.-

India nuclear cooperation agreement. 

Chairman BERMAN. Without objection, that will be included. 

Ms. SQUASSONI. Thank you. 

I focus my remarks today on the challenges of restricting transfers of uranium enrichment and reprocessing. We have been working on this for decades, but the task is more urgent today, as you 

have noted, because of A.Q. Khan and Iran and because more 

states are interested in acquiring nuclear power and less interested 

in restricting their fuel cycle options. 

One exception to this is the United Arab Emirates, which agreed 

to rely on the international fuel market and not to develop domestic enrichment or reprocessing. I say it is an exception because 

other countries don’t appear to be following its lead. 

As the path-breaker for nuclear energy in the Middle East, the 

UAE had much to gain. Other STATES that follow have less to 

gain, and all have other nuclear supply options. Jordan has signed 

nine nuclear cooperation agreements, but none yet with the United 

States. It is considering reactors offered by Canada, Russia, and 

Japan, and none of those suppliers will be seeking commitments to 

forego enrichment and reprocessing by Jordan. 

This U.S. bilateral approach appears to be losing momentum 

elsewhere. Turkey and Vietnam apparently do not intend to give 

up their fuel cycle rights, which Turkey made very clear in a most 

recent Nuclear Suppliers Group plenary meeting in June. 

Well, if the U.S. can’t do this alone, how does it seek to persuade 

other suppliers to join it? The International Framework for Nuclear 

Energy Cooperation—it is a funny acronym, IFNEC, which is the 

successor to the Global Energy Nuclear Partnership, that is one approach, and the other approach is the Nuclear Suppliers Group. 

IFNEC, like its predecessor, does not require partners to give up 

any rights. Unless IFNEC promotes cradle-to-grave fuel supply, 

that is, where countries are provided incentives to rely on the 

international market, its value in this area will be extremely limited. 

As for the Nuclear Suppliers Group, 6 years of discussion on new 

criteria for sensitive transfers have yielded no consensus. At this 

point, the new criteria appear less helpful than the old policy of restraint. 

I would like to make one other point about the UAE agreement 

as a model. This agreement included advance consent for storage 

24

and/or reprocessing the UAE’s spent fuel abroad, and this is a 

unique feature in an agreement for a state like the UAE. It would 

be unfortunate if other states concluded from this that even modest 

reliance on nuclear power could require reprocessing for spent fuel 

management. Reprocessing is costly, creates more and different radioactive waste streams, and is unnecessary. 

Before my recommendations, I would like to briefly comment on 

the Russian and Australia 123 Agreements. The Russian agreement is critical to several U.S. objectives, especially pursuing this 

kind of cradle-to-grave fuel supply system. It is necessary but not 

sufficient. Russia and other states will need to be persuaded to become such full service suppliers. 

The Australian agreement is vital for another reason. As Ambassador Graham pointed out, the U.S. procures significant uranium 

supplies from Australia. 

I have a longer list of recommendations in my prepared statement, but I will summarize them here. 

The additional protocol is a critical component of the non-proliferation regime. All U.S. 123 agreements should require it, and so 

should the Nuclear Suppliers Group. Congress should amend the 

Atomic Energy Act to include the additional protocol as a requirement in Section 123. To get agreement at the Nuclear Suppliers 

Group, the U.S. should abandon current discussions on enrichment 

and reprocessing criteria, which have gotten in the way of NSG 

consensus on the additional protocol. 

My second recommendation is that we should focus internationally on the full nuclear fuel cycle and on multilateral solutions. It 

is not enough to suggest that cradle-to-grave fuel cycle assurances 

would be a good thing. We need to create opportunities in this 

country and abroad. And if you were listening to the Blue Ribbon 

Commission on America’s Nuclear Future this week, we heard 

some of these recommendations to that group. 

The U.S. should explore paths to ending national ownership of 

uranium enrichment and reprocessing facilities. It is not enough to 

require new facilities to be multinational, since this would be 

viewed as discriminatory. An agreement that ensured that all facilities would be required to be multinational would reduce the 

risks of states developing latent nuclear weapons capabilities and 

then breaking out of the Non-Proliferation Treaty. 

A fissile material production cutoff treaty could include such a 

provision. So structured, the FMCT could fulfill both its disarmament and non-proliferation missions, level the playing field, and 

help ease the tension within the NPT about perceived rights to fuel 

cycle capabilities. 

And lastly, Congress and the executive branch need to implement current legislation and close some gaps. Funding, implementing, and monitoring Title V of the 1978 Nuclear Non-Proliferation Act, which requires the U.S. to conduct nonnuclear energy cooperation and energy assessment assistance with developing states, 

could provide incentives for developing countries to focus on nonnuclear solutions to their electricity needs, and this would take the 

pressure off somewhat the non-proliferation regime. 

Finally, there is a provision in the Arms Export Control Act, the 

so-called Symington Amendment, that restricts foreign military 

25

and export assistance to countries that deliver or receive enrichment equipment, materials, or technology unless the recipient has 

full-scope safeguards and unless the supplier and recipient have 

agreed to place all such items under multilateral auspices and 

management when available. This provision could be tightened by 

deleting the phrase ‘‘when available.’’ If we are serious about multinationalizing the fuel cycle, this could help. 

Thank you very much, and I look forward to your questions. 

[The prepared statement of Ms. Squassoni follows:]


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Chairman BERMAN. Thank you. 

Mr. Fly. 

STATEMENT OF MR. JAMIE M. FLY, EXECUTIVE DIRECTOR, 

THE FOREIGN POLICY INITIATIVE 

Mr. FLY. Thank you. I would like to begin by thanking Chairman 

Berman, Ranking Member Ros-Lehtinen, and other members of the 

committee for the invitation to appear today at this very important 

hearing. 

I am going to summarize key points from my written testimony. 

The main point I want to convey today is that I increasingly fear 

that we are on the precipice of proliferation of nuclear weapons unlike anything we have witnessed since the development of the 

atomic bomb. Ambassador Graham went into some of the historical 

points about this issue, and others have noted the jolt to the nonproliferation regime that we have witnessed in recent years. 

In addition to those that have already been mentioned, I would 

like to add to that North Korea’s actions over the last decade. We 

have seen North Korea withdraw from the NPT, develop nuclear 

weapons, transfer sensitive nuclear technology to Syria, a state 

sponsor of terrorism, and now possibly do the same thing with 

Burma, according to press reports. This action by North Korea has 

added to the concerns that we should currently have because of the 

actions of A.Q. Khan and Iran’s continued illicit nuclear weapons 

program. 

Administrations of both political parties have failed to prevent 

this proliferation, so this should not be a partisan issue. My fear 

going forward is that in addition to just failing to prevent this proliferation, we are contributing to the problem by failing to refute 

the notion that all states have the right to sensitive nuclear technology and processes, and this will result in an additional cascade 

of proliferation, especially if Iran develops nuclear weapons. 

That is why it is so important for this committee and this Congress to engage in a serious debate about our nuclear cooperation 

policy. 

The fact that we are meeting today to in part discuss the Australia and Russia 123 Agreements without anyone from the executive branch present, I believe says much about what is wrong with 

the current state of affairs with the Atomic Energy Act. 

In my written testimony I go into greater detail about concerns 

that I have with the timing of the Russia 123 Agreement. Some of 

the facts are that Russia still occupies Georgian territory and continues to threaten its neighbors, including our NATO allies. Despite the positive step this week, where Russia announced that for 

now it will not fulfill its contract to deliver the advanced S–300 air 

defense system to Iran, other Russian officials have announced 

they will still maintain their extensive military relationship with 

Iran, and as others have noted, Russia recently announced that 

they would send advanced cruise missiles to Syria. 

There are ongoing questions about past Russian assistance to 

Iran’s nuclear program and, as others have already noted, its cooperation with the nuclear reactor at Bushehr. 

In recent weeks, on the human rights front, we have witnessed 

a series of crackdowns on the Russian political opposition. Prime 

37

Minister Putin, who is widely rumored to be on his way back to the 

presidency in 2012, was quoted as saying that peaceful protesters 

would ‘‘be beaten upside the head with a truncheon, and that’s it.’’

I believe all of this should give us pause and should mean that 

we have a serious debate, including administration officials explaining how the U.S.-Russia 123 Agreement fits into our overall 

strategy toward Russia and why it is in our interest to conclude it 

now. 

Moving beyond Russia, I have four recommendations about how 

this committee and Congress can ensure that we have a more fulsome debate about future 123 agreements as well as actions Congress could take to move away from the nuclear precipice I described at the outset. 

My first recommendation has already been mentioned by others. 

It is to modify the Atomic Energy Act to allow greater congressional scrutiny of future 123 agreements. As Congress did with the 

U.S.-India agreement, I would suggest that Congress require an 

up-or-down vote on all agreements that do not conform to the UAE 

model, and as others again have noted, I believe that this is especially important given press reports about the agreement in the 

works with Vietnam. 

My second recommendation is that we as a country need to get 

serious about stopping proliferation. I, unfortunately, believe that 

administrations of both parties have become fundamentally 

unserious about punishing proliferators. The current administration’s focus on disarmament and nuclear security is only one aspect 

of the problem. We must punish proliferators severely. I think that 

we as a country have failed to use the case of Syria as a teachable 

moment. To this date, under my understanding, there have been no 

Syrian entities designated by the U.S. Government for their construction of an illicit nuclear reactor. North Korean entities have 

been designated, but some of them only years after the fact. 

I would suggest that the committee explore ways to make sanctions automatic in such cases or require the executive branch to 

designate certain entities and individuals involved in proliferation 

or to justify to the Congress why they are unable to do so. 

My third recommendation is to restore the balance between proliferation concerns and promotion of the U.S. Nuclear industry. I 

do not think that we should be chasing after the latest exotic market just because other countries’ nuclear industries are entering. 

We also need to work with countries expressing an interest in nuclear energy to determine if it is truly in their best interest, and 

I would suggest the committee explore options for using international companies’ interest in operating in the United States to 

hold them to certain standards. 

I also would suggest to the U.S. Nuclear industry that they first 

focus on existing markets before expanding. I was recently on a 

trip through Central Europe where two of our allies have bids out 

for nuclear reactors, and I heard frequent complaints that U.S. 

companies are not doing enough to compete for their business. 

My fourth and final recommendation is that we should take all 

actions necessary to prevent Iran from developing nuclear weapons. 

If Iran goes nuclear, others in the region will follow, including several U.S. allies currently interested in civilian nuclear cooperation. 

38

The only way to avoid this scenario is to prevent Iran from reaching that point. 

The committee has passed significant legislation invoking sanctions on Iran, but to date we have not been successful in altering 

Tehran’s calculus. I would thus advocate a serious exploration by 

the Obama administration and this Congress of all available remaining options, including the use of military force, because the 

consequences of a nuclear Iran are truly unthinkable. 

Mr. Chairman, the challenges we face in this area are truly unprecedented, but by recognizing that we need a serious bipartisan 

examination of the pros and cons of future nuclear cooperation 

agreements, I believe we can take a small step toward a more sensible U.S. non-proliferation policy. 

Thank you. 

[The prepared statement of Mr. Fly follows:]

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Chairman BERMAN. Well, thank you, and thank all of you very 

much. There are a lot of suggestions in all of that. 

I will yield myself 5 minutes to begin the questioning. 

I want to focus on a point that Ms. Squassoni referred to, and 

her written testimony lays it out a little more fully, but I think it 

is good to get all of you commenting on it. 

Mr. Fly’s testimony perhaps was a little broader, but I think all 

of you seem to think that—well, let me ask you. Do you buy, as 

a legal matter, the notion that the rights under the NPT and the 

right to peaceful nuclear energy demands there be a right to incountry enrichment and reprocessing? 

I know one individual who has been mentioned here, Henry 

Sokolski, has argued for a long time that that is not a right within 

the meaning of the treaty. I am curious about your opinions on 

that. 

Ambassador Graham. 

Ambassador GRAHAM. Well, I regret differing with Henry 

Sokolski, but the negotiating record of the NPT makes it abundantly clear in spades over and over and over again that many 

countries, such as Germany, Spain, Switzerland, would not have 

joined the NPT if the Article IV inalienable right and other inalienable right language and other provisions did not give them access 

to that. 

Chairman BERMAN. Access to? 

Ambassador GRAHAM. To sensitive nuclear technology, among 

other things, not just that. But then after the NPT, the Zangger 

Committee was created to provide some limitation on such access, 

and then subsequently the Nuclear Suppliers Group put still more 

constraints on it. The NPT itself does give that right, but it has 

been significantly limited by the evolution of the Nuclear Suppliers 

Group. 

Chairman BERMAN. Do any of you disagree with that? Ms. 

Squassoni. 

Ms. SQUASSONI. I would just add to Tom’s statement that when 

the NPT was under negotiation gaseous diffusion was the technology for uranium enrichment. It was incredibly expensive, a huge 

industrial undertaking, and so the assumption there was that 

many states would not go down that route. Clearly, that has 

changed over the years, and I suppose because I am maybe a purist 

on arms control, having worked for Tom at ACDA many years ago, 

that it is better not to approach this problem as taking away a 

right but to level the playing field. We should come to an understanding as an international community that this is a sensitive 

technology, and multinationalize it for everyone. 

Chairman BERMAN. Mr. Fly, do you have anything to add to 

that? 

Mr. FLY. I certainly would not question Ambassador Graham’s 

knowledge on this issue. I would just say, even if it is a right under 

the NPT, going back to what was in my statement, I believe it is 

imperative that we work with other countries that want this technology to find alternatives, as Ms. Squassoni just mentioned, 

whether it is fuel banks, multinational enrichment centers, things 

like that. I think those are the ways that we should go. 

49

Chairman BERMAN. Taking that then to the point that Ms. 

Squassoni specifically addressed in her testimony, what is our leverage to get the UAE-type of provision not simply as part of our 

agenda for new nuclear cooperation agreements, such as we are 

now negotiating with Jordan and Vietnam, but to get other countries who are being approached to have nuclear cooperation agreements with these countries to insist on the same provision, and 

what is our leverage to in a sense—how central is a nuclear cooperation agreement with the United States to these countries’ pursuit of nuclear energy? 

Ambassador. 

My time is—I am going to be a little looser, if it is all right. That 

is my last question, but I would like to hear the answers, and we 

will give, obviously, the other members the same latitude. 

So why don’t we just answer that question? 

Ambassador GRAHAM. Mr. Chairman, that is a very important 

question that to accurately answer it would take a small book, but 

it is a very important question and one that needs to be thought 

about very carefully. It is different for different countries. A country like the UAE, it wants to demonstrate its close relationship 

with the United States. It wants to demonstrate that it is not pursuing this technology because of Iran. It is because they want the 

nuclear power. There are reasons why it makes sense for them. 

I think that kind of argument might apply to some other countries in that region, but perhaps not all. The issue is, of course 

that—and this actually came out in the NPT negotiations, to which 

I referred to before—as the Italian delegate said that we have one 

level of discrimination with nuclear weapons; we shouldn’t have another with the fuel cycle. 

So many countries see the fuel cycle as their sovereign right, 

even though they don’t intend to ever utilize it. I don’t know if 

there is any sort of magic formula. I think it is probably just that 

the United States should champion this outcome and should try to 

persuade, as Sharon said, some of our allies, who are suppliers, 

that this is good for everybody, that fuel cycle technology has 

spread far enough, and gradually try to persuade countries such as 

Jordan that it would be a good thing for them in various ways and 

then make the same argument with countries in Asia. 

For many countries, having an agreement with the United States 

is politically a good thing. That can help. Not all countries, but 

many. 

But it is a very important question and one that needs careful 

analysis and answer in detail. 

Chairman BERMAN. Ms. Squassoni. 

Ms. SQUASSONI. I agree largely with Ambassador Graham. It is 

a tough question. From a non-proliferation perspective, a U.S. 123 

agreement is kind of the gold stamp. That is what India found out, 

that is what the UAE found out. So from a political perspective, 

these U.S. nuclear cooperation agreements are still important. 

On the supply side—you asked the question in the summary of 

the hearing, What can we do with vendors? This is a topic a lot 

of people have debated. I think my answer is ‘‘not much,’’ because 

the vendors themselves will follow the leads of their governments. 

So AREVA will not require—will do business with a country that 

50

doesn’t have an additional protocol until the Government of France 

says, ‘‘You shall not do that.’’ France is not going to do that until 

the Nuclear Suppliers Group comes to that agreement. Then you 

face the problem of the Nuclear Suppliers Group and China and 

Pakistan. Consensus has eroded, I believe, dangerously, since the 

U.S.-India deal because of the pressure placed on other suppliers. 

So I think we need to be creative in dealing with the other suppliers, and it is not just the advanced suppliers. It is China, South 

Korea, and India, also. So now is the time. India is prepared to export its reactors. Now is the time to get serious about India’s commitments from the U.S. Agreement and make sure that it does the 

right thing in terms of its export. 

Chairman BERMAN. Mr. Fly, quickly, if you could, just because 

my time has so expired. 

Mr. FLY. Just very quickly, I would say I agree with what has 

been said. We need to certainly use every element of persuasion 

that we have to try to convince other countries to adopt that standard. 

I would also say though we need to be prepared to not conclude 

cooperation agreements when necessary if we are unable to conclude agreements that fit that model, and I understand the argument that other countries will rush in, but we cannot be the leader 

of global non-proliferation efforts if we are chasing after AREVA 

and Rosatom. 

My second point would just quickly be that we can’t let the market drive this. 

One note I included in my testimony is, less than a year after 

Israel bombed the al Kibar reactor in Syria, there were press reports that AREVA was interested in building a nuclear reactor in 

Syria. I think it is pretty clear cut, and most Americans would 

agree, that that does not mean that we, the U.S., should suddenly 

be conducting nuclear cooperation with Syria. We cannot follow 

these other countries’ standards. 

And finally I think, as I mentioned as one of my recommendations, we need to find points of leverage with these foreign companies, whether we can somehow limit their ability to do business in 

the U.S. if they do not follow these standards. But I think all aspects of this need to be pursued in addition to trying to work with 

members of the Nuclear Suppliers Group and our allies. 

Chairman BERMAN. Well, thank you very much. 

Mr. Wilson, the gentleman from South Carolina, is recognized for 

at least 5 minutes. 

Mr. WILSON. Thank you, Mr. Chairman; and I thank all of you 

for being here today. 

Ambassador Graham and Ms. Squassoni, a question: If China 

proceeds with the sale of the two new reactors to Pakistan, what 

is the likely impact on the Nuclear Suppliers Group? Should the 

U.S. attempt to persuade the NSG to disapprove the sale? Should 

China be expelled from the NSG? What is the cost of doing nothing? 

Ms. SQUASSONI. The Nuclear Suppliers Group can essentially not 

disapprove a sale. It is a voluntary gathering of nuclear suppliers. 

There is nothing that the Nuclear Suppliers Group can do as a 

body. And one example is, right before President Bush went to New 

51

Delhi, Russia decided in advance of the exemption for India that 

it would resupply the Tarapur reactors with fuel. So it decided, 

well, you know, the game is up. We can all go ahead and do what 

we want. 

We shouldn’t throw China out of the Nuclear Suppliers Group. 

Even though that might be attractive, they are building nuclear 

power reactors like crazy domestically, and they will be a major exporter. So I think we need to keep them in that group. There may 

be other ways outside of the nuclear realm that we can influence 

their actions, but I think those reactors are a done deal. 

Mr. WILSON. And I would hope it would be in China’s interest 

to consider the consequences of what they are doing. 

Ambassador GRAHAM. Mr. Wilson, I entirely agree with what 

Sharon just said. In addition, I might just say that for a long time 

the Nuclear Suppliers Group held the line pretty well with respect 

to most transfers. Prior to the U.S.-India agreement, there was 

some Russian playing around with the guidelines, but, overall, the 

record was reasonably good. 

The U.S. has now made the exception for India, pursuant to the 

Indian agreement, and pushed that through the NSG. It is difficult 

to see how a proposal like China’s could be stopped within the 

NSG, given the Indian precedent. Perhaps—perhaps the NSG can 

be persuaded that this exception for India is India only and won’t 

apply to any other country, most especially Pakistan. But where 

does that leave China? And my guess is that they probably go 

ahead and sell them anyway. It is not a situation over which we 

have much control. The NSG is not quite the effective instrument 

it was, in my judgment, a few years ago because of various developments. 

Mr. WILSON. Well, I appreciate both of your input; and, Mr. Fly, 

I share your concern about the consequences of a nuclear Iran 

being truly unthinkable. Even though it is unthinkable, the American people need to know of what some of those consequences 

would be, consequences to our country and to our regional allies 

that are also important to us. So could you expound a bit on the 

unthinkable? 

Mr. FLY. Certainly. I guess my concern would be that, setting 

aside the issue—and there is an active debate about this—whether 

Iran can be contained in terms of its actual use of a nuclear weapon. My concern is that, given its history of sponsorship of terrorist 

groups like Hamas and Hezbollah, it would certainly allow those 

terrorist groups—regardless, again, of whether it actually transferred any sensitive material—it would allow those terrorist groups 

to be emboldened in terms of their attacks on a country, one of our 

closest allies, Israel. 

One of my greater concerns is actually the cascade of proliferation I described previously. I don’t see any way around the fact 

that countries in the region will feel that they need to develop their 

own nuclear weapons programs in response. Many of them are U.S. 

allies. But I cannot come up in my mind with a system under 

which the U.S. will be able to convince countries like Saudi Arabia, 

Jordan, Egypt that we are going to extend our nuclear umbrella to 

those countries; and I doubt that the American people are willing 

to extend our nuclear umbrella to those countries. I doubt the 

52

American people are ready to commit to defend Riyadh as we 

would respond to an attack on Chicago. I just don’t think that is 

going to happen. 

So I see think we will see a polynuclear Middle East. And it is 

the sort of situation which I don’t think nuclear strategists in the 

past have had to deal with, and I just think it is a frightening scenario. That is why I argue that we need to take every action possible to make sure that Iran does not develop nuclear weapons. 

Mr. WILSON. Again, thank you for your input; and I agree with 

your assessment. Thank you all for being here. 

Chairman BERMAN. The time of the gentleman has expired. 

The gentlewoman from California, Ambassador Watson, is recognized for 5 minutes. 

Ms. WATSON. Yes, I thank you for holding this hearing. This is 

information that we need to start dealing with, and I see that our 

members have gone back to their districts. 

But, really, there is a bottom-line question in my mind, and what 

forms of influence should we, as the United States, use with foreign 

supplier countries and their nuclear vendors to convince them to 

adopt these non-proliferation criteria in their foreign sales or at 

least not undercut the U.S. goals? I mean, what can we do? Mr. 

Graham. 

Ambassador GRAHAM. That is another very good question. I don’t 

have really a particularly good answer. 

Ms. WATSON. We are just kind of winging it, huh? 

Ambassador GRAHAM. We have to just use diplomacy and negotiate with them and try to persuade them that nuclear bombs in 

their backyards are not any better than in our backyard and that 

we shouldn’t want the fuel cycle to spread any further. It is in their 

interest just as much as it is in our interest. That kind of diplomacy, it might work with some countries. It might work with all 

of them. But I don’t see any other alternative to just classic diplomatic discussions to try to bring the governments around to our 

point of view. 

Ms. WATSON. Well, with Ahmadinejad’s speech that he made yesterday, I would hope that people would see the danger that Iran 

offers not only us but the world. I mean, with the kinds of remarks 

he made about 9/11—in some way, we were involved in that? I 

would hope they would see what a true danger Iran would offer not 

only us—you know, we are a little ways away—but areas in——

But can I hear from the rest of you? What kind of an approach 

can we use to convince? I hope everyone was tuned in to 

Ahmadinejad’s words yesterday because I think that really would 

chill them, what an irrational human being he is. Do you want to 

comment? 

Ambassador GRAHAM. Well, I think—maybe I am naive, but I 

think statements like that are so extreme and so off the wall that 

him saying them and giving them worldwide treatment is only 

going to damage Iran. More and more countries are going to think 

that Iran is led by a leader who is crazy, and that is not good for 

a country. Now there may be a few countries that liked what he 

said, although I offhand can’t think of who they might be. But, generally speaking, I don’t see how Iran gains from such incredibly, 

apparently, irrational behavior. Now I assume, on the other hand, 

53

what his objective is is to be as widely known as possible, and he 

is definitely succeeding in that. 

Ms. WATSON. I kind of got the sense in the beginning that maybe 

there was an issue with allowing him to develop it for domestic 

use. But the more I watch the behavior coming from him over the 

last year or so, I see that there is not a scintilla of hope that that 

is going to change. I think he is really being isolated, I feel, from 

people in his own country. He is just kind of speaking off the top 

of his head, am I correct? 

Ambassador GRAHAM. He just damages his cause, I think. Those 

kinds of statements are so absurd. 

Ms. WATSON. Please, I still have 15 seconds. 

Ms. SQUASSONI. I would say, it is exactly Iran and the danger of 

Iran that causes some states to want to develop certain capabilities 

as a way to hedge against Iran. 

But I would like to make a few points. One is, you attack this 

problem of how do we convince other countries to do the same 

thing we are doing from the supply side and from the demand side. 

On the supply side, you support allies, like Japan. It is one of the 

few countries that requires the additional protocol as a condition 

of supply. Support them and urge other countries to join them. 

On the demand side, fuel leasing, and multinationalizing fuel facilities dampen this demand for domestic enrichment and reprocessing and, in fact, take away the prestige that has accrued to 

these highly technical endeavors. The UAE is very proud of its nuclear program because it will be the first to do this in the Middle 

East. 

And, lastly, there is a question about can we exert commercial 

pressure on some of the other nuclear firms? And Henry Sokolski 

had a very creative idea, which is we have a lot of foreign investment in the nuclear energy in this country. I would put a slight 

twist on that and say, well, are there ways to give countries—firms 

from countries that adopt the same requirements, as we do, preferential treatment? There are certainly a lot of subsidies for the 

nuclear industry. Maybe we can use those to our advantage. 

Ms. WATSON. Mr. Fly? 

Mr. FLY. I actually agree with everything Ms. Squassoni just 

said. 

One additional point, I agree we need a multifaceted approach to 

this problem. The one recommendation I would have—and it is not 

a criticism of just this administration. I know many outside observers accused the Bush administration of focusing too much on 

counterproliferation and not focusing enough on arms control. I 

would argue we have now reversed this problem, and this administration has focused its efforts on disarmament and arms control. 

And although it does still have some of these programs to gain 

international agreement to limit proliferation of the fuel cycle, I 

don’t hear the President or other senior members of the administration talking about those programs on a regular basis and I 

would encourage them to do so. We need to talk about both sides 

of the coin more frequently. 

Ms. WATSON. Thank you, Mr. Chairman. 

Chairman BERMAN. The time of the gentlelady has expired. 

54

The gentleman from California, Mr. Royce, is recognized for 5 

minutes. 

Mr. ROYCE. Thank you. 

Mr. Chairman, I will follow up with Ms. Squassoni’s observation 

there on the carrot approach. But I wonder if what Henry Sokolski 

was thinking about was more the stick approach. 

Chairman BERMAN. Sounds like it. 

Mr. ROYCE. You know, that we use their access to the U.S. market and the U.S. Government loan guarantees and so forth to try 

to leverage these countries’ support for our non-proliferation policies, especially with respect to Iran. And I would just ask you briefly what you think of strategy. More of the stick end of this. 

Ms. SQUASSONI. I am sorry. Could you repeat that? As applied 

to——

Mr. ROYCE. Well, you know, there is access to U.S. Government 

loan guarantees, to the U.S. market, to the necessity of interacting 

with our own industry on this front. What if we were to use that 

basically as leverage to say, if you want to continue that relationship with the United States—there are certain players here that 

we are talking about that are the ones that aren’t stepping up in 

the international community and doing what needs to be done. 

Ms. SQUASSONI. I think there is some merit in that approach. I 

think it would be controversial for the U.S. nuclear industry, which 

does not have the capital it needs to go out there and build these 

plants itself. I mean, one of the reasons why EDF, the French electric utility, is involved in the new reactor or the proposed reactor 

at Calvert Cliffs is because U.S. utilities don’t have the kind of 

money. 

Mr. ROYCE. Because GE is really the only American company 

still on the field, right? And it runs in last place, if we take the 

half dozen major companies. 

Ms. SQUASSONI. There are two parts to this. One is foreign investment in U.S. nuclear activities here, including manufacturing. 

AREVA has built a facility down in Lynchburg. They are pouring 

millions of dollars into our economy, and you know better than I 

do the impact of that. 

The other part is the reactor vendors like GE and Westinghouse. 

And there it is hard to see how——

Mr. ROYCE. But the French are on board anyway. 

But here is my other question to you. 

Chairman BERMAN. The French are on board? 

Mr. ROYCE. Well, in terms of—vis-a ́-vis Iran. 

Chairman BERMAN. Oh, yes. 

Mr. ROYCE. But my other question, the worry I have is that our 

one player might quit the business at some point; and I think that 

is a result of some policy decisions, bad decisions that we made 

decades ago and have continued in terms of abandoning nuclear 

power and also the red tape that the industry faces today that really hasn’t been addressed. I would ask, does the U.S. nuclear industry’s low standing weaken our ability to shape the rules of the 

international nuclear game going forward? 

Ms. SQUASSONI. I would say our standing is certainly not what 

it was in the 1970s. That is absolutely clear. We do have some leverage through patents, through the fact that many of the reactors 

55

around the world were based on U.S. designs. And it is true that, 

you know, when the UAE made its decision and bought a Korean 

reactor, that Korean reactor was based on a Westinghouse design. 

So there is a window I think in which we have some leverage 

through these complicated relationships. But I would agree with 

your assessment that that is definitely dwindling. 

Mr. ROYCE. Now I wanted to ask Mr. Graham a question and Mr. 

Fly. Mr. Graham, in discussing the NPT, you suggest that the treaty is strengthened to the extent that the nuclear weapons—that 

those states involved with nuclear weapons, if they ultimately 

eliminate their nuclear weapons, that is going to move us forward. 

Using that logic, are you suggesting that North Korea or Iran may 

react this way? 

Years ago, Hwang Jang Yop was the minister of propaganda who 

defected; and in South Korea I had a chance to talk to this former 

North Korean minister. He had told me that for 40 years this was 

their objective. It is kind of like the old adage: We build, they build; 

we have stopped building, they build. They had one thing in mind, 

according to him, and that was developing this nuclear capability. 

So I am just wondering, are you sure with respect to Ahmadinejad 

or North Korea that that is the logic? 

And then, lastly, Mr. Fly, the 123 agreement with the UAE is 

supposed to be the model, and its prohibition on the UAE enriching 

nuclear material is a good thing. That was supposed to be the cornerstone of other agreements. I think it was supposed to be a cornerstone of the Vietnam agreement, but that doesn’t seem to be 

happening, and I was going to ask you why. 

So, gentlemen, if you could respond. Thank you. 

Ambassador GRAHAM. Thank you, Congressman Royce. 

I would just like to address briefly the previous question before 

I answer that question. 

In terms of the Henry Sokolski approach, I think it would have 

merit as long as it is done in a very subtle, diplomatic way. You 

don’t just hit them over the head with it. What it is that Teddy 

Roosevelt said, ‘‘Speak softly but carry a big stick.’’

Yes, of course, various things like loan guarantees can play a 

part. But that is not what you open with. You try to work the problem with each one of these countries; and, in the end, it might 

prove to be possible. Because, fundamentally, it is in their interest 

to do these sort of things. It is in their security interest, perhaps 

not their economic interest as much. 

And the nuclear industry—I have been involved in that to some 

degree in the last several years. And the United States, primarily 

because of our 30-year hiatus with nuclear power, has pretty much 

abandoned the field. The field today is dominated by AREVA, the 

French company, and by the Koreans, using a derivative of Westinghouse technology to be sure but moving on. Westinghouse is 

owned by a Japanese company. GE does most of their deals with 

another Japanese company, and it still only represents about 1 percent of their earnings. Nuclear is a small part of GE. And then, of 

course, there are the Russians who are trying to get into various 

markets. So if the U.S. wants to play a major role in nuclear commerce, it is going to have to really change things. 

56

Lastly, with respect to nuclear weapons and strengthening the 

NPT, essentially what I was talking about was the basic bargain 

that created the NPT, that it was nuclear disarmament by the five 

nuclear weapons states and peaceful nuclear cooperation in exchange for the rest of the world not having nuclear weapons. So it 

was arguably a balanced treaty. 

But not much was ever done with respect to the disarmament. 

But the prevailing view at the time the treaty was signed and the 

prevailing view when the treaty was indefinitely extended in 1995 

from the nonnuclear weapons states was not so much we want to 

see zero nuclear weapons but we understand that that is going to 

take a very, very long time. But at least you can stop testing. That 

was kind of the attitude. 

I think it is very important to strengthen the NPT to do some 

of these interim measures, like the test ban, like the fissile material cutoff treaty, and so forth. Zero is a very long way off. And 

many problems, such as the one you mentioned with North Korea, 

the one you mentioned in Iran, and a number of others will have 

to be addressed over a long period of time before the world community can get there. 

Mr. FLY. Congressman, on the question about why the UAE 

model may not be what the Congress ends up seeing in the Vietnam 123, I don’t have any information on the status of the Vietnam agreement, other than what I have read in the press. So I will 

just say, my sense is, as someone who just has limited experience 

in some multilateral arms control negotiations, Ambassador 

Graham probably experienced the same thing during his years at 

ACDA. The party that is willing to walk away in the end is the one 

that is going to be able to achieve whatever principle they hold 

dear and whatever principle they want to maintain through the 

agreement. So my guess is that, in the case of Vietnam, the political concerns and our interest in moving closer to Vietnam and improving ties between the U.S. and Vietnam are probably outweighing our interest in maintaining the UAE model. 

Mr. ROYCE. It is a bad precedent, Mr. Fly. 

Mr. FLY. Yes, and I completely agree. 

Mr. ROYCE. I understand your point. 

Mr. FLY. I completely agree. 

One additional note I would add, just from my experience working on these issues in the U.S. Government, unfortunately, I think 

the proliferation bureaus and the various offices in the U.S. Government that work on non-proliferation are treated much like a lot 

of the other functional bureaus, including those who work on democracy and human rights, which is an issue this committee has 

done a lot on and our regional bureaus often hold more sway over 

policy decisions. And I think if we as a country are actually concerned about the potential proliferation of nuclear weapons, that is 

going to have to change. 

Mr. ROYCE. We are undermining it while we undermine human 

rights there, and we have failed to use what leverage we could 

have even to obtain a modicum of change in behavior in Vietnam. 

It is very unfortunate. 

I yield back, Mr. Chairman. Thank you. 

57

Chairman BERMAN. The Vietnam story is not over yet. Keep hope 

alive. 

I am going to ask the chair of the Subcommittee on Terrorism, 

Nonproliferation and Trade if he would be willing, at least for a 

while as he recognizes himself, to sit here and recognize himself 

while I make a phone call. 

Mr. SHERMAN [presiding]. The chair recognizes himself for 5 minutes. 

The Convention on Supplementary Compensation for Nuclear 

Damages, the CSC, establishes an international liability regime for 

compensation for nuclear damage. Some have argued that the U.S. 

nuclear industry is at a competitive disadvantage for nuclear contracts because competitors such as French AREVA and the Russian 

Rostam are at least partially state owned and consequently allegedly enjoy sovereign immunity from liability in the wake of a nuclear accident. 

Can the U.S. nuclear industry be competitive for nuclear contracts in countries that have not signed on to the Convention on 

Supplementary Compensation for Nuclear Damages? What are the 

benefits and drawbacks of an international nuclear liability regime 

such as the one described by the Convention on Supplementary 

Compensation? And should the United States establish some sort 

of state ownership in order to compete and to provide sovereign immunity to those American workers who would like a piece of this 

world economic pie? 

I am trying to determine—why don’t I address that to Ambassador Graham, unless I see any of you volunteer—and I do not. 

Ambassador GRAHAM. Well, I will begin, Congressman, and then 

perhaps Sharon could weigh in here. 

In terms of state ownership, I mean, that is just not going to 

happen in the United States. But we do have to face the fact that 

all of our competitors are virtually state owned, if not actually 

state owned. AREVA is 96 percent owned by the French Government. The Russian program is entirely owned by the Russian Government. The Korean program is very close to the government. 

Mr. SHERMAN. Close enough to enjoy sovereign immunity? 

Ambassador GRAHAM. I don’t know. I would have to ask a lawyer. But their bid in the United Arab Emirates was 50 percent subsidized by the government. 

Mr. SHERMAN. I am not talking here about government subsidies, 

although that could have been a separate question. 

Let me build on this. Should the United States Government build 

on a 123 agreement with any country which fails to adopt the CSC? 

Ambassador GRAHAM. I think we shouldn’t. But, I mean, that is 

something we need to have. But it is unquestionably a disadvantage that we have in dealing with these state-owned companies, although even they worry a bit about unlimited nuclear liability. 

So, Sharon, do you want to add more detail there? 

Ms. SQUASSONI. Sure. I think there are two things. The Convention on Supplementary Compensation is something that improves 

on the two existing conventions, the Paris and the Vienna. So I am 

not sure—it is just essential that a country with which we conduct 

nuclear trade has a liability, has signed one of the conventions. A 

58

123 agreement is just a framework for cooperation. It doesn’t guarantee——

Mr. SHERMAN. But it is the one opportunity for Congress to have 

some role in the process, and we have a State Department bureaucracy that is utterly disinterested in American jobs. 

Ms. SQUASSONI. Well, do you care about just signing the convention? Because it will be a while before it enters into force. 

Mr. SHERMAN. Clearly—well, if we can be guaranteed that it will 

enter into force before the new nuclear plants begin significant construction or reach a stage where liability would be an issue, as a 

practical matter, that achieves the objectives. But I have seen situations where the State Department will consider something from 

92 different angles and produce 500-page position papers, and jobs 

isn’t there. As a matter of fact, if anything, if you could provide 

jobs to some other country, that is thought of as a plus. 

So I think Congress has to be involved in making sure that, as 

the world tries to reduce carbon output, moves toward more nuclear facilities, that the American worker has a place. And hence 

my question. 

My time has expired. I believe Chairman Berman already announced that people would have time to enter statements into the 

record. I will be entering my opening statement into the record, 

and I thank the witnesses for being here. 

We are adjourned. 

[Whereupon, at 11:46 a.m., the committee was adjourned.] 

(59)

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MATERIAL SUBMITTED FOR THE RECORD BY THE THE HONORABLE ILEANA ROSLEHTINEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA


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[NOTE: The statement of Mr. Henry Sokolski, Executive Director, The Nonproliferation Policy Education Center, is not reprinted here but is available in committee 

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