MTA NSG Report

8/6/2019 MTA NSG Report

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May 2011

Limiting Transfers of Enrichment and

Reprocessing Technology:Issues, Constraints, Options

PROJECT ON MANAGING THE ATOM

by: Fred McGoldrick

With Contributions from:

Matthew Bunn

Martin Malin

William H. Tobey


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About the Author

Fred McGoldrick has extensive experience in nuclear non-prolieration and international nuclearpolicy elds. He held senior positions in the U.S. Department o Energy and the U.S. Departmento State, where he negotiated U.S. peaceul nuclear cooperation agreements and helped shape U.S.policy to prevent the spread o nuclear weapons. He also served in the U.S. Mission to the Inter-national Atomic Energy Agency (IAEA) in Vienna. Since his retirement rom the State Depart-

ment, he has been a partner in Bengelsdor, McGoldrick and Associates, LLC., an internationalconsulting rm.

About the Project on Managing the Atom

Te Project on Managing the Atom (MA) is the Harvard Kennedy Schools principal researchgroup on nuclear policy issues. Established in 1996, the purpose o the MA project is to provideleadership in advancing policy-relevant ideas and analysis or reducing the risks rom nuclear andradiological terrorism; stopping nuclear prolieration and reducing nuclear arsenals; lowering thebarriers to sae, secure, and peaceul nuclear-energy use; and addressing the connections amongthese problems. Trough its ellows program, the MA project also helps to prepare the next gen-

eration o leaders or work on nuclear policy problems. Te MA project provides its research,analysis, and commentary to policy makers, scholars, journalists, and the public.

Acknowledgments

Te author thanks Olli Heinonen, Mark Hibbs, Lawrence Scheinman, and Sharon Squassoni ortheir comments on an earlier dra o this report, and thanks the participants o a workshop onNSG guidelines held at the Center or Strategic and International Studies in Washington, D.C.Tis project was supported with unds rom AREVA, Inc., and the John D. and Catherine .MacArthur Foundation, and the Beler Center or Science and International Aairs.

Copyright 2011 President and Fellows o Harvard CollegeTe authors o this report invite liberal use o the inormation provided in it or educational pur-poses, requiring only that the reproduced material clearly cite the source, using Fred McGold-rick, Limiting ransers o Enrichment and Reprocessing echnology: Issues, Constraints, Options,(Cambridge, Mass.: Project on Managing the Atom, Harvard University, May 2011).

Project on Managing the Atom

Beler Center or Science and International AairsHarvard Kennedy School79 JFK Street; Malbox 134

Cambridge, MA 02138Phone: 617-495-4219Email: [email protected]: http://managingtheatom.org

Cover Image: A 1984 photo o a cascade o gas centriuges used to produce enriched uranium rom a U.S. gascentriuge plant in Piketon, OhioPhoto Source: U.S. Department o Energy


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May 2011

PROJECT ON MANAGING THE ATOM

Limiting Transfers of Enrichment and

Reprocessing Technology:Issues, Constraints, Options

by: Fred McGoldrick

With Contributions from:

Matthew Bunn

Martin MalinWilliam H. Tobey


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Limiting ransers o Enrichment and Reprocessing echnology: Issues, Constraints, Optionsii

Table o Contents

Preace .......................................................................................................................................... v

Section I: Introduction ................................................................................................................. 1Purpose and Organization o the Report ............................................................................................ 4

Section II: Enrichment and Reprocessing: Te State o Play ......................................................7Recent ransers o Enrichment and Reprocessing echnology ...................................................... 9Status o World-wide Enrichment and Reprocessing Capabilities ................................................ 10

Section III: Status o Current Eorts to Strengthen Controls on Exportso Enrichment and Reprocessing ............................................................................................... 13

Te NSG Debate over New Controls on E&R ransers ................................................................. 13Te Clean ext o November 2008 .................................................................................................. 15

Continued Impasse .............................................................................................................................. 16Section IV: Constraints: Political and Institutional ................................................................. 19

Political Controversies and Constraints ............................................................................................ 19Disagreements within the NSG ....................................................................................................... 19Resistance rom the Non-Aligned Movement................................................................................. 21Bilateral U.S Peaceul Nuclear Cooperation Agreements.............................................................. 22

Te State o Play: Evolution o U.S. PolicyLanguage, Policies, and Laws .................................. 24Institutional Constraints ...................................................................................................................... 26

Implementation by Individual Members........................................................................................ 26No Legal Obligations........................................................................................................................ 26

Consensus Needed or Changes to Guidelines................................................................................ 27Lack o Universality.......................................................................................................................... 27Questionable Legitimacy.................................................................................................................. 27

Section V: Options ...................................................................................................................... 29Option 1: Convincing Countries Tat Do Not Presently Have Enrichment andReprocessing Capabilities to Formally Forswear or Forgo Such Capabilities .............................. 29

1.1 Persuade Individual Countries or Countries in Regions o Prolieration Concernor Political Instability to Forswear or Forgo E&R ......................................................................... 29

Option 2: Undertake Steps to Make It Harder to Buy E&R Legally .............................................. 312.1 Continue to Press or NSG Adoption o the So-Called Clean ext........................................ 31

2.2 Limit the New Guidelines to the So-Called Objective Criteria o the Clean ext.............. 322.3 Maintain Existing NSG Criteria For E&R ransers .............................................................. 332.4 Institutionalize Recent Understandings Among the G-8 to Exercise Restrainton E&R ransers ............................................................................................................................. 33

Option 3: Make Illegal ransers o E&R More Dicult ................................................................ 343.1 Strengthen Mechanisms or Controlling E&R echnology ransers by NSG Membersand Non-Members............................................................................................................................ 34


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Project on Managing the Atom | Beler Center or Science and International Aairs ii

Option 4: Positive Incentives to Countries to Forego Teir Own Enrichmentand Reprocessing Capabilities ............................................................................................................ 35

4.1 Fuel Assurances .......................................................................................................................... 354.2 Multinational Participation to Enhance Fuel Assurances...................................................... 364.3 Cradle-to-Grave Incentives..................................................................................................... 384.3.1 Oering a Broad-based Cradle-to-Grave Fuel Cycle Service .............................................. 384.3.2 Oering Cradle-to-Grave Services or Limited Quantities o Spent Fuel romSmall Countries ................................................................................................................................ 394.3.3 Oering Cradle-to-Grave Services to Countries in Regions o Instabilityor Prolieration Concern .................................................................................................................. 40

Option 5: Limiting Te Risks o E&R I Tese Sensitive Nuclear echnologies Spread ............ 405.1. Elevate Multinational Ownership, Control, or Stang o, E&R Facilities to

an International Norm..................................................................................................................... 41

Section VI: Conclusions and Recommendations ......................................................................45

Appendix 1 ..................................................................................................................................51

Appendix 2 ..................................................................................................................................59


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Project on Managing the Atom | Beler Center or Science and International Aairs v

Preface

For several years, the Nuclear Suppliers Group (NSG) has been unable to reach a consensuson the adoption o revised guidelines or its members. Te most contentious issue is how tostrengthen restraints on the transer o enrichment and reprocessing technologies in a manner

that would be acceptable to all NSG members, and credible to the major exporting states and in-dustry. In response to the ongoing impasse, Mary Alice Hayward, Director o Strategy at AREVA,Inc., suggested to us that an inormed analysis and set o recommendations rom the Project onManaging the Atom might help to catalyze a more productive discussion among key NSG mem-bers.

Faced with the prospect o generating a set o grounded, judicious, and novel recommendations,we turned to Fred McGoldrick who has worked on nonprolieration and ocused on the NSG,both in and out o government, or more than 30 years. He did not disappoint. As the principalauthor o the report, McGoldrick emphasizes that the key to progress is keeping the limited prob-lem o enrichment and reprocessing transers in perspective, ocusing on constructive outcomes

instead o abstract principles, and strengthening international cooperation to deal with the mostserious prolieration risks. McGoldrick makes a number o recommendations, which should helppolicy makers weigh their choices and resolve long-standing issues.

We thank Olli Heinonen, Mark Hibbs, Lawrence Scheinman, and Sharon Squassoni or theircomments on an earlier dra o this report. Te Center or Strategic and International Studieshosted a group o distinguished experts rom several governments, nongovernmental organiza-tions, and industry to discuss the report in an o-the-record setting and to help sharpen its rec-ommendations. We thank CSIS or its hospitality. Finally, we thank AREVA, Inc., the John D. andCatherine . MacArthur Foundation, and the Beler Center or Science and International Aairsor their support o this project.

Matthew Bunn, Associate Proessor o Public Policy, Harvard Kennedy SchoolMartin Malin, Executive Director, Project on Managing the AtomWilliam H. obey, Senior Fellow, Beler Center or Science and International Aairs


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Project on Managing the Atom | Beler Center or Science and International Aairs 1

Section i: introduction

Te diusion o enrichment and reprocessing (E&R) technologies can increase the risk o theprolieration o nuclear weapons in several ways. First, enrichment and reprocessing acilities canproduce nuclear materials highly enriched uranium (HEU) and separated plutoniumthat are

directly usable in nuclear weapons. With such materials, a state could abrogate its nonproliera-tion commitments and produce a nuclear weapon within a short period o time. Given the legalability o a party to the reaty on the Non-Prolieration o Nuclear Weapons (NP) to acquireenrichment and reprocessing acilities, produce weapon-usable materials and then withdraw romthe reaty aer giving notice o its withdrawal three months in advance, a state would be ree todevelop nuclear weapons without, strictly speaking, violating the NP.

Second, reprocessing plants are challenging and costly to inspect. Te International AtomicEnergy Agency (IAEA) aces technical and nancial problems in ensuring timely detection o thediversion o signicant quantities o weapon-usable materials to nuclear explosive purposes.

Tird, it is dicult to detect, either through national technical means or international inspec-tions or both, clandestine enrichment plants using such technologies as centriuge or laser isotopeseparation.

Fourth, having enrichment or a reprocessing capability could increase the chance that nuclearweapons advocates could convince leaders o a state to develop nuclear weapons. Other statesearing such an outcome may be tempted to build standby capabilities o their own. (In thisregard a strong distinction should be made with power reactors, or which there is little evidencethat a decision to proceed with a nuclear energy program increases the probability o a state de-ciding also to pursue a nuclear weapons program.)

Finally, highly enriched uranium produced at enrichment plants and plutonium recovered rom

reprocessing acilities oer tempting targets or terrorists or other non-state actors.

For these reasons, restraining the spread o reprocessing and enrichment capabilities has longbeen an important nonprolieration objective. One o the most signicant steps to achieve thisobjective was the agreement among the major nuclear suppliers to orm the Nuclear SuppliersGroup (NSG) in the late 1970s. Te NSG put into place a common set o guidelines governingexports o nuclear materials, equipment and technology and agreed to exercise restraint in thetranser o sensitive nuclear acilities, technology and weapons-usable materials and to establishspecial controls on exports o E&R. Since then, the members o the NSG have exercised consider-able restraint in the transer o sensitive nuclear technologies to countries that lack such capabili-ties.

In recent years, however, certain developments have given rise to new concerns about the spreado enrichment and reprocessing technologies.

First, A.Q. Khan, when he was head o the Khan Research Laboratory in Pakistan, operated asuccessul illicit network that supplied sensitive nuclear technologies and equipment to help somestates ulll their nuclear weapons ambitions. Tis included the transer o enrichment technol-ogy to North Korea, Iran and Libya. Tere have also been allegations that North Korea oeredtechnology to other states, e.g., Iraq and Syria. Additional concerns have emerged that North


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Limiting ransers o Enrichment and Reprocessing echnology: Issues, Constraints, Options2

Korea may transer, or may have already transerred, sensitive nuclear technology to other states.

In addition, ears o global warming and the security o supply o ossil uels have lead to a grow-ing global interest in nuclear power. Some orecasts project an increase in nuclear power o40-120% over the next two decades.1 Many states that had no interest in nuclear energy in thepast are developing plans to initiate civil nuclear power programs, and some have already begunto arrange or the purchase o reactors on the international market. Some o these countries arelocated in regions o political instability or areas o prolieration concern.

It is ar rom certain whether these projections and plans will be realized, particularly since therecent nuclear crisis in Japan may halt nuclear power plans in some countries or at least cause amajor reconsideration. Te Fukushima nuclear crisis may provide time to devise strategies thatwill allow or a growth in nuclear energy while minimizing the risks o prolieration. Neverthe-less, there are apprehensions that a new interest in civil nuclear power may lead some states toseek enrichment and reprocessing technologies.

However real, this problem is a limited one so ar. Very ew states that do not already have such

capabilities have shown any real interest in acquiring them over the near and mid-term.

In addition, most states with civil nuclear power programs do not pursue E&R capabilities. Acountry would have little economic or programmatic incentive to build E&R acilities to service asmall number o nuclear reactors and would ace serious technical challenges in developing E&Rcapabilities that are commercially viable.

Countries that have sought E&R capabilities have done so or a variety o reasonsto carry outentirely legitimate, peaceul programs (e.g., West Germany, the Netherlands, Japan); to removedoubts about the reliability o uel supply rom oreign sources (e.g., Eurodi, Urenco, Japan,Germany, India, Argentina, Brazil, and South Arica); to conserve nuclear uel resources through

reprocessing (e.g., Japan, France, UK, Russia, Germany, India); to achieve the prestige o pos-sessing advanced, sophisticated uel cycle acilities as a symbol o national achievement, and animportant component o their national security (e.g., Argentina, Brazil, India, Iran); to satisy thedemands o an infuential nuclear bureaucracy (as was especially true in the case o India); or tosell enrichment or reprocessing services on the international market (e.g., US, France, Germany,the Netherlands, UK, Russia, Argentina and Iran). Countries with nuclear power programs havemade varying degrees o progress in nding a solution to the management o their spent uel andnuclear wastes, but none have actually implemented a program or the permanent disposal otheir spent uel or nuclear wastes. Small countries ace particularly ormidable obstacles in locat-ing suitable and politically acceptable sites or the disposal o nuclear wastes. Some countries

1. Te 2009 update o the International Atomic Energy Agencys annual projections or the uture o nuclear powerorecast a low projection o an installed global nuclear power capacity o about 510 gigawatts (GW(e)) in 2030, a 40%increase over the 370 GW(e) currently installed in 2009. Te IAEAs high projection oresees 810 GW (e), more thana doubling o present capacity. Te Nuclear Energy echnology Roadmap, published in 2010 by the InternationalEnergy Agency (IEA) and the OECD Nuclear Energy Agency (NEA) estimates that almost one quarter o globalelectricity could be generated rom nuclear power by 2050, making a major contribution to cutting greenhouse gasemissions. In the IEA scenario or a 50% cut in energy-related CO

2emissions by 2050 (known as the BLUE Map

scenario), on which the roadmap analysis is based, nuclear capacity grows to 1,200 GWe by 2050, providing 24% oglobal electricity at that time. otal electricity production in the scenario more than doubles, rom just under 20,000Wh in 2007 to around 41 000 Wh in 2050.


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may look to reprocessing as a means o either reducing the quantity and toxicity o waste thatwill require disposal and/or conserving resources. Tey may also consider the use o plutoniumas uel in their nuclear power reactors. A ew have also sought such E&R technologies to serve aspart a dedicated nuclear weapons program (e.g., the U.S., UK, Russia, France, China, Israel, India,Libya, South Arica, aiwan, Pakistan, Iraq, Iran, DPRK); to create an option or establishing a

nuclear weapons capability on short notice (e.g., Brazil and the ROK); or to pursue both peaceuland military purposes (U.S., Russia, UK, France, China, Argentina, Brazil, India, South Arica).

Whatever the reasons or seeking E&R capabilities, the spread o these sensitive nuclear acili-ties to additional countries will, or the reasons outlined above, place considerable strains on theinternational nonprolieration regime.

In recognition o this potential danger, a number o proposals have suraced in the last severalyears to limit the spread o enrichment and reprocessing technologies. Tese have included:

Oers o strengthened nuclear uel assurances as incentives to countries to rely onthe international market instead o acquiring their own enrichment and reprocessing

plants. A large number o proposals or improved uel assurances have emerged in recentyears, and a ew have been actually put in place. Te United States has established a strate-gic reserve o up to 17 tons o highly enriched uranium (HEU) that is no longer needed ormilitary purposes and that is being blended down to low-enriched uranium (LEU) to helpqualied states deal with disruptions in their nuclear uel supply not related to their non-prolieration obligations. Te U.S. Government attached several conditions to the provisiono uel rom the U.S. reserve, including the requirement that the recipient would have tovoluntarily rerain rom domestic enrichment and reprocessing. Te Russians have set upguaranteed reserves o 120 tons o LEU at its international nuclear center in Angarsk thatcould be supplied upon the IAEAs request to ensure reliable supplies o uel or nuclearpower plants when the market cannot do so. Tis arrangement received the approval o

the IAEA Board o Governors in December 2009. Te Nuclear Treat Initiative (NI), aprivate U.S.-based organization, announced in September o 2006 that it would contribute$50 million to help create a low-enriched uranium stockpile under the auspices o the IAEA.Various IAEA Member States have pledged additional unds. While several members o theNon-Aligned Movement (NAM) delayed IAEA action on this proposal, the Board o Gov-ernors nally approved the NI-proposed bank in December 2010, and the IAEA is nowdeveloping a detailed plan or the bank. More recently the Board o Governors approved aBritish proposal or enrichment bonds to enhance uel assurances. Te Russian uel re-serve, the IAEA uel bank and the British enrichment bond scheme do not require potentialrecipients to orgo enrichment or reprocessing as a condition o supply rom these reserves

and supply arrangements. Oer o participation in multinational enrichment and reprocessing acilities as an in-

centive to orgo national E&R acilities and to provide greater transparency and controlo sensitive nuclear acilities. Tis idea has been promoted by ormer Director General othe IAEA Mohamed ElBaradei but has not thus ar generated great enthusiasm among thosewho possess such acilities. Some existing enrichment acilities are already multinational innature, but participation is generally restricted to industrialized states. Te only exceptionis Russias recent establishment o an international acility at Angarsk. Te Angarsk arrange-


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ment seems to have convinced Kazakhstan and Ukraine and possibly Armenia and Mongo-lia, but not Iran, to rerain rom pursuing enrichment.

Arrangements or supplier states to take back spent uel rom consumer states (so-calledcradle-to-grave uel cycle services). An oer to provide so-called cradle-to-grave ser-vicesincluding the supply o resh uel and removal o spent uelcould provide a strong

incentive or many countries to orego enrichment and reprocessing. In theory, such ar-rangements would oer greater assurance o timely delivery o reactor uel and a cleardisposition path or the used uel, thereby, reducing the energy security incentive to enrichor reprocess to produce uel indigenously. By providing or the return o spent uel, sucharrangements would undercut the argument that each country needs its own reprocessingcapability in order to reduce the volume and toxicity o waste destined or a repository. odate, Russia is the only state that has oered to take back spent uel (rom Eastern Europe,Finland and Iran.) Moscow has also suggested that it would be willing to oer a package orueling the reactors it exports, which would include provision o resh uel and return o thespent uel to Russia with no requirement or return o the waste a concept reerred to asuel leasing. For now, no state has shown an ability or willingness to host an internationalused uel storage or disposal acility that would be available or spent uel beyond its ownuel exports, though active discussions o such possibilities continue in several quarters.Hence, there do not appear to be realistic near-term prospects or implementing the cradle-to-grave idea, though this may change in the uture, and there may be other ways in whichsupplier states can assist countries that are developing new nuclear programs to managetheir use nuclear uel.

Development and deployment o prolieration-resistant uel cycle systems. Variousprolieration-resistant technologies are in the early stages o study and will require urtherresearch, development and demonstration. Some o the systems appear to oer only verymodest barriers to prolieration compared to traditional approaches to enrichment and

reprocessing.

Strengthening o supplier restrictions on the transer o enrichment and reprocessingacilities beyond those contained in the existing guidelines o the Nuclear SuppliersGroup. Among other things, the current guideline calls or restraint in exports o E&R andencourages supplier or multinational involvement in transerred E&R acilities.

Purpose and Organization o the Report

Each o the above noted proposals, alone or in combination, oer the potential o discourag-ing the spread or reducing the risks o E&R. Tis report emphasizes the last o these proposals,namely how existing international mechanisms and norms could be strengthened or new onescreated to restrain transers o enrichment and recycling technology in ways that would be cred-ible to governments, and industry. (However, the other proposals mentioned above will be exam-ined in Section V, which describes options or an overall strategy or discouraging the spread oE&R.) Since 2004, the NSG has been discussing proposals to strengthen controls and restrictionson transers o E&R technologies. As o November 2008, the NSG had developed a dra or anew criteria-based approach that would supplement the existing NSG criteria governing exportso E&R. However, NSG members have been unable to reach nal agreement on these new crite-ria. Te report will address possible ways to break this impasse in order to enhance controls and


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restraints on the transer o enrichment and reprocessing technology that are practical and cred-ible. While it will give particular emphasis to orging a consensus among members o the NSG toupdate their national controls on the transer o enrichment and reprocessing technology, it willalso examine possible paths orward or gaining wider international acceptance o a regime thatseeks to limit the dispersion o E&R.

Section II will describe the history o eorts to constrain the spread o enrichment and technol-ogy with particular emphasis on the NSG. It will also describe the current status o worldwideenrichment and reprocessing capabilities.

Section III will examine proposals over the past several years to upgrade the NSG guidelines ontranserring enrichment and reprocessing and the obstacles and opposition they have aced inreaching consensus on new criteria or controlling transerring E&R.

Section IV will discuss the political and institutional constraints that will conront any attemptto orge a consensus on limiting the risks o enrichment and reprocessing. Any such eort musttake into consideration not only the limitations o the NSG as an international institution but also

the many divergent views and interests among states on this issue, including the divisions be-tween developed and developing countries and those between nuclear-weapon states (NWS) and(NNWS) as well as the dierent interests between technology holders and non-holders who maywish to explore enrichment in the uture.

Section V will explore the merits, disadvantages and easibility o various options or breaking thecurrent impasse among members o the NSG on adopting a new set o guidelines or controllingnew transers o E&R technology. In particular, the report will explore options or resolving theimpasse in the NSG in ways that (a) would achieve the objective o limiting the prolieration risksthese technologies pose; (b) be credible to the international community, governments, and indus-try; and (c) address the numerous political divisions that have so ar blocked agreement among

NSG members. Tis section will also identiy and evaluate approaches that might be taken out-side the NSG such as by the Group o Eight or the principal E&R technology holders to constrainthe spread o enrichment and reprocessing technologies as well as complementary measures suchas uel assurances, multinational approaches to E&R and oers o cradle-to-grave uel cycle ser-vices.

Section VI will oer some conclusions and recommendations.


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Section ii: enrichmentand reProceSSing: the Stateof Play

Te spread o reprocessing and enrichment capabilities became a major concern in the mid-1970swhen a ew nuclear expor ting states began negotiating agreements to transer enrichment andreprocessing technology to non-nuclear-weapon states like South Korea, aiwan (then the Re-

public o China), Pakistan, Iran and Brazil,. Te states seeking these technologies were countriesthat had no commercial rationale or them. Some o them aced national security threats or hadambitions to acquire nuclear weapons or an option to do so. In response to this problem and tothe Indian nuclear test o 1974 in particular, the United States took the initiative with other majornuclear exporters to orm the NSG.2 Although supplier countries Party to the NP had alreadymade the commitment to require international saeguards on exports o so-called trigger listitems to non-nuclear weapon states, the objective o the NSG was to go beyond the saeguardsrequirement or nuclear transers and to toughen export controls in general. In 1978, the majorsupplier states ormed the NSG (now numbering 46 states)3 and published specic guidelines orthe export o nuclear materials, equipment and technology, which have since been elaborated.(Appendix 1 contains INFCIRC/254/Rev.8/Part 1).4

Tese guidelines now require, among other things, that states importing nuclear materials, equip-ment and related technology provide assurances o peaceul, non-explosive-use and eectivephysical protection and accept comprehensive saeguards. Te NSG members also establishedspecial guidelines or transers o sensitive nuclear acilities, technology and weapons-usablematerials. Specically, paragraphs 6, 7 and 8 o the current NSG guidelines or transers o enrich-ment and reprocessing provide or the ollowing:

6. Suppliers should exercise restraint in the transer o sensitive acilities, technologies and weap-ons-usable materials. I enrichment or reprocessing acilities, equipment or technology are to betranserred, suppliers should encourage recipients to accept, as an alternative to national plants,

supplier involvement and/or other appropriate multinational participation in resulting acilities.Suppliers should also promote international (including IAEA) activities concerned with multina-tional regional uel cycle centers.

7. For a transer o an enrichment acility, or technology thereore, the recipient nation shouldagree that neither the transerred acility, nor any acility based on such technology, will be de-signed or operated or the production o greater than 20% enriched uranium without the consento the supplier nation, o which the IAEA should be advised.5

2. Te Indian test was perhaps the most important actor in the creation o NSG, since the test was carried out usingmaterial produced in acilities and using materials that were provided to India on the basis o bilateral peaceul useagreements with Canada and the United States.

3. Te current members o the NSG are: Argentina, Australia, Austria, Belarus, Belgium, Brazil, Bulgaria, Canada,China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland,Italy, Japan, Kazakhstan, Republic o Korea, Latvia, Lithuania, Luxembourg, Malta, Netherlands, New Zealand, Nor-way, Poland, Portugal, Romania, Russian Federation, Slovakia, Slovenia, South Arica, Spain, Sweden, Switzerland,urkey, Ukraine, United Kingdom, and United States.4. INFCIRC/254/Part.2, as amended, contains Guidelines or transers o nuclear-related dual use equipment, materi-als, soware and related technology.5. In addition, the initial NSG guidelines contained a provision that the transer o sensitive nuclear acilities, ormajor critical components thereo, or related technology, should require an undertaking (1) that IAEA saeguardsapply to any acilities o the same type (i.e. i the design, construction or operating processes are based on the same


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8. Suppliers should, in order to advance the objectives o these guidelines and to provide opportu-nities urther to reduce the risks o prolieration, include, whenever appropriate and practicable,in agreements on supply o nuclear materials or o acilities which produce material usable ornuclear weapons or other nuclear explosive devices, provisions calling or mutual agreementbetween the supplier and the recipient on arrangements or reprocessing, storage, alteration,

use, transer or retranser o any material usable or nuclear weapons or other nuclear explosivedevices involved.

Te NSG later adopted a non-prolieration principle, that is also relevant to transers o E&R.Paragraph 10 o the guidelines reads as ollows:

Notwithstanding other provisions o these Guidelines, suppliers should authorize transer o itemsor related technology identied in the trigger list only when they are satised that the transerswould not contribute to the prolieration o nuclear weapons or other nuclear explosive devices.

In addition, paragraph 16 o the guidelines sets orth provisions or consultations among NSGmembers on matters connected to the implementation o the guidelines. Te most important o

these is paragraph 16 (b), which reads:

Suppliers should consult, as each deems appropriate, with other governments concerned on spe-cic sensitive cases, to ensure that any transer does not contribute to risks o confict orinstability.

In addition to the NSG guidelines themselves, individual suppliers developed their own nationalpolicies on the export o enrichment and reprocessing technologies.6

or similar physical or chemical processes, as dened in the trigger list) constructed during an agreed period in therecipient country and (2) that there should at all times be in eect a saeguards agreement permitting the IAEA to ap-ply Agency saeguards with respect to such acilities identied by the recipient, or by the supplier in consultation with

the recipient, as using transerred technology. Tis provision was designed to prevent a recipient state that did nothave ull-scope saeguards rom importing sensitive nuclear technology(enrichment, reprocessing and heavy waterproduction technology) under saeguards and then replicating another plant ree o international saeguards. Tis re-quirement was subsequently deleted rom the NSG Guidelines when the NSG adopted the requirement o ull-scopesaeguards as a condition o supply in 1992. Now that the NSG has exempted India rom its ull-scope saeguardsrequirement, the absence o a replication provision leaves a loophole in the guidelines as they apply to India.6. In a notable reversal o previous policies, in the mid-1970s as a result o U.S. pressure both the French and GermanGovernments adopted a policy not to transer reprocessing technology. In December 1976, the French Governmentannounced that it had decided no longer to authorizeuntil urther noticebilateral contracts pertaining to the saleto third countries o industrial acilities or spent uel reprocessing. In June 1977 the German Government issued adeclaration to the eect that it would not grant any license or the export o reprocessing acilities until urther notice.Subsequent governments have rearmed this commitment. Although there has never been a similar pronounce-ment regarding enrichment, German government ocials have indicated that it was sae to assume that what was

said about reprocessing applies to enrichment too. However, IAEA inspections aer the rst Gul War revealed thatcompanies and individuals in Germany and other countries had supplied large quantities o dual-use equipment andtechnologies to the clandestine uel cycle programs o Iraq. Tis led to major eorts to strengthen export controls inGermany and several other countries. U.S. policies and laws go even urther than the European policies. Te NuclearNon-Prolieration Act o 1978 provides or tough conditions or the export o so-called sensitive nuclear technol-ogy, i.e., reprocessing, enrichment and heavy water production technology, and the U.S. as a matter o practice hasnot exported sensitive nuclear technology as dened in the Nuclear Non-Prolieration Act o 1978 (NNPA). Teseincluded all the requirements set out in section 123 o the Atomic Energy Act. U.S. oreign assistance law providesor the cuto o economic and military assistance to countries that transer or receive enrichment or reprocessingtechnology, and the NNPA provides or the termination o nuclear cooperation with any countries that enter into


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Recent Transers o Enrichment and Reprocessing Technology

Only a small number o transers o reprocessing and enrichment technology or civil projectsby NSG members have occurred in recent years. Tese have been overt and legal and have beenmade to states that already possess E&R capabilities.7 Tese have included the ollowing:

URENCO USA has constructed a centriuge enrichment acility in the United States in ac-cordance with an agreement between the U.S. and the European governments concerned.Te URENCO technology is black-boxed i.e., no sensitive nuclear technology or restricteddata is transerred to the U.S.

Australias SILEX Systems Limited has transerred to General Electric the so-called SILEXtechnology, which uses lasers to separate uranium a technology developed by Australia tothe United States. General Electric-Hitachi (GEH) Global Laser Enrichment (GLE) Ura-nium Enrichment Facility, a venture owned by GE, Hitachi and Cameco Corporation, hasbeen ormed to build the SILEX enrichment acility in the United States.

On July 3, 2006, Areva and URENCO signed an agreement to establish the Enrichment

echnology Company (EC), a joint venture between Areva and Urenco in the eld ouranium enrichment centriuge technology. Areva owns a 50% equity stake in EC. Teso-called Cardi Agreement provides or use by Areva o URENCOs centriuge enrichmenttechnology, while excluding access to classied design inormation. Te technology is beingused in Frances Georges Besse II uranium enrichment plant.

Areva is building an enrichment acility (Eagle Rock) in the United States using URENCOenrichment technology pursuant to an agreement under negotiation with the United States.However, enrichment technology, as in the case o the URENCO arrangement with LES, isblack-boxed, i.e., it is transerred under conditions that do not permit or enable the trans-er o classied enrichment technology.

Russia has made centriuge technology available to China under black-box conditions. Teplant at Shaanxi is under IAEA saeguards; the plant at Lanzhou is eligible or saeguards,but the IAEA has not chosen to implement saeguards there.

France and the United States have transerred some reprocessing technology to Japan. Forexample, in the case o the United States, the Department o Energy began cooperationin the 1990s with Japan in liquid metal reactor reprocessing technology. DOE made thedetermination, however, that this cooperation did not constitute sensitive nuclear technol-ogy as dened by the Nuclear Non-Prolieration Act o 1978 since Japan already possesses

an agreement or the transer o enrichment or reprocessing materials and equipment. More recently section 104 (a)o the United States-India Nuclear Cooperation Approval and Nonprolieration Enhancement Act or 2008, which

requires the President to certiy that it is the policy o the United States to work with members o the Nuclear Suppli-ers Group (NSG), individually and collectively, to agree to urther restrict the transers o equipment and technologyrelated to the enrichment o uranium and reprocessing o spent nuclear uel. (Several enrichment technologies suchas gaseous diusion and centriuge remain classied, while reprocessing technology has been declassied or manyyears.)7. On the other hand, a number o countries were able to build enrichment and/or reprocessing acilities either ontheir own or though overt and covert acquisition o technologies on the international market, e.g., Argentina, Brazil,India, Iraq, Iran, and South Arica. Tese occurred either beore the establishment o the NSG or as a result o illicittechnology transers. In addition, aiwan, the Republic o Korea and Libya sought to acquire sensitive uel cycleacilities but did not succeed in building ull-scale acilities.


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extensive reprocessing technology. Te French have also explained that their reprocessingcooperation with Japan is not inconsistent with Frances earlier declarations not to exportreprocessing technology because it involves transers to a country that already possess suchtechnology. (In the past France played a major role in transerring technology to Japan orthe construction o the Rokkasho plant and provided reprocessing technology to the Japan

Nuclear Cycle Institute (JNC).

Tere were some troubling reports o eorts by Russia to transer sensitive nuclear technology toIran. In 1995 the U.S. became aware that, in addition to signing an agreement to complete theBushehr reactors in Iran, then Minister o Atomic Energy Victor Mikhailov had agreed in a secretprotocol to provide the Iranians with key uel cycle acilities, including a uranium enrichmentcentriuge plant. Te U.S. immediately pressed the Russians to terminate all assistance to theIranian nuclear program. While the Russians did not agree to cancel their lucrative reactor dealwith the Iranians, they did commit to limiting their nuclear cooperation with Iran to the Bushehrreactor project during the period o its construction. Notwithstanding this commitment, Russianentities engaged in extensive cooperation with Iranian nuclear research centers, which is outside

the bounds o the Bushehr project, including sensitive technologies with direct application to theproduction o ssile materials. Again in 2000, according to press reports, the United States inter-vened at a high level to pressure Russia not to proceed with plans to sell Iran laser technology theU.S. regarded as too costly or enrichment uranium or a commercial reactor and mostly suited toproducing ssionable material or nuclear weapons. Since then, aside rom Moscows assistance tothe Bushehr reactor project, Russian-Iranian cooperation has been sporadic with less evidence oocial complicity.

Status o World-Wide Enrichment and Reprocessing Capabilities

At the present time, only a ew states possess enrichment or reprocessing capabilities. Although

several countries possess enrichment acilities, only the U.S., Eurodi (France and various otherinvestors), Urenco (Germany, the Netherlands, UK), and Russia are commercial suppliers oenrichment services at the present time. China has two commercial-scale enrichment plantssupplied by Russia to uel its domestic civil nuclear reactors. Some countries, such as Argentina,India, Iran, Japan, and Pakistan have small enrichment capabilities. Brazil has plans to build anenrichment plant to meet its domestic reactor needs, and has an enrichment plant to producenaval uel. Te acilities in India and Pakistan are unsaeguarded, and many believe that Irans en-richment acilities, even though subject to saeguards by the International Atomic Energy Agency(IAEA) are intended or a nuclear weapons option. Te North Koreans recently revealed anenrichment plant to visiting American scientists, and there are indications that they may possessmore than one such acility. Several nations have expressed an interest in acquiring a commercial

enrichment capability at some time in the uture, but there do not appear to be any states thathave developed specic plans to build enrichment acilities in the near uture with the possibleexception o China. Many countries, however, have made clear that they do not intend to ore-close the opportunity to acquire such technology or to orego their rights to do so.

Similarly, only a ew countries at the present time have large-scale commercial reprocessing acili-tiesFrance, Japan, Russia and the UK. France, the UK, and Russia provide reprocessing servicesto other countries, though in all three cases most o these contracts are coming to an end. Several


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countries have unsaeguarded reprocessing plants that have been dedicated to producing plutoni-um or a nuclear weapons program (China, DPRK, India, Israel and Pakistan.) Te United Stateshas an unsaeguarded reprocessing acility at Savannah River. In addition to its military acilities,China has a pilot civilian reprocessing plant and is considering a large-scale acility. Russia oper-ates reprocessing acilities that serve both military and civil purposes but has shut down, or is in

the process o shutting down, most o its dual-use reprocessing plants. Russia has shown someinterest in replacing its PUREX reprocessing plant with advanced closed uel cycle acilities somedecades rom now. Beyond the major nuclear suppliers, Argentina has oered reprocessing ser-vices or Australian research reactor uel. Te Republic o Korea has been engaged in R&D on thenuclear uel cycle, including the development o the so-called DUPIC process (Direct Use o spentPWR uel in CANDU reactors) and pyroprocessing. In 2005, South Korea built a laboratory-scaleAdvanced Conditioning Processing Facility (ACPF) in the Irradiated Material Examination Facil-ity o the Korean Atomic Energy Research Institute. India and Pakistan operate unsaeguardedreprocessing acilities or their nuclear weapons programs, although India has indicated its inten-tion to place some new reprocessing acilities under IAEA saeguards in the uture.8 In 2003 Iranrevealed it had conducted plutonium reprocessing experiments in a hot cell at the ehran Nuclear

Research Center. Te DPRK has an unsaeguarded reprocessing acility at Yongbyon.

Finally, countries such as Argentina, Brazil, Iran, Iraq and Pakistan successully acquired not onlynuclear materials and specially designed or prepared nuclear equipment and components orenrichment and reprocessing, but also dual-use items relevant to enrichment and reprocessing.In some o these cases, they were able to obtain such items rom states that did not have adequateexport control laws to regulate the transer o such dual-use items.

8. Tis does not apply to recently constructed reprocessing plant at arapur that the Indians dedicated in January o2011, but to uture plants that will be placed under saeguards in accordance with the U.S.-Indian peaceul nuclearcooperation agreement. For the new arapur acility, see PM dedicates arapur reprocessing plant to nation, Teimes o India, January 7, 2011.


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Section iii: StatuSof current effortSto Strengthen

controlSon exPortSof enrichmentand reProceSSing

In response to revelations about the clandestine operations o the A.Q. Khan network, PresidentBush gave a speech on February 11, 2004, in which he proposed, among other things, that a) the

worlds leading nuclear exporters should ensure that states have reliable access at reasonable costto uel their civilian reactors, so long as those states renounce enrichment and reprocessing, andb) the members o the NSG should reuse to sell enrichment and reprocessing equipment andtechnologies to any state that does not already possess ull-scale, unctioning enrichment andreprocessing plants.

Following the Presidents speech the United States made a major diplomatic eort in the NSG toupgrade its guidelines on the transer o enrichment and reprocessing materials, equipment andtechnology. Aer our years o ailing to obtain support or a ban on E&R transers, in 2008 theU.S. nally went along with eorts to adopt a more fexible, criteria-based approach, but the NSGhas thus ar been unable to reach agreement on such criteria. Te ssures the U.S. proposal caused

and subsequent eorts to establish a criteria-based approach reveal this issue to be a highly con-tentious and neuralgic one both in the NSG and in the wider international community.

The NSG Debate over New Controls on E&R Transers

From the outset most NSG members rejected President Bushs proposal that the NSG ban the ex-port o E&R technology to states that do not already possess ull-scale, unctioning plants. Ratherthan an outright prohibition on such transers, most members avored a more fexible approachthat would allow NSG members to transer E&R to countries that met certain nonprolierationcriteria. Te criteria-based approach, which was put orward by the French and modied byother members, proposed, among other things, that suppliers should not authorize the transer

o enrichment or reprocessing acilities and equipment and technology, i the recipient does notmeet certain minimum criteria. For example, the recipient would have to: be a party to the NPand in ull compliance with the reaty; have a comprehensive saeguards agreement and an Ad-ditional Protocol in eect; be in compliance with its saeguards commitments; be implementingits responsibilities under UNSC Resolution 1540; have an agreement with the supplier state thatincludes assurances regarding non-explosive use, and eective saeguards in perpetuity; applystandards o physical protection based on current international guidelines; and adhere to interna-tional saety standards.

In addition, the criteria-based proposal called upon suppliers to consider the ollowing actors:

Whether the transer would have a negative impact on the stability and security o the re-cipient state.

Whether the recipient has a credible and coherent rationale or pursuing enrichment orreprocessing capability in support o civil nuclear power generation programs.

I enrichment or reprocessing acilities, equipment or technology are to be transerred, sup-pliers should encourage recipients to accept, as an alternative to national plants, supplierinvolvement and/or other appropriate multinational participation in resulting acilities.(Tis language is already in the present NSG guidelines and would remain unchanged in thenew criteria-based approach.)


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While most NSG members were willing to work with this approach, some dissented. For example,Argentina and Brazil objected to the requirement o an Additional Protocol. Other states object-ed on other grounds.

Te U.S did not go along with the criteria-based approach initially and continued to insist onlanguage contained in President Bushs 2004 speech. However, U.S. policy changed over time inresponse to strong and widespread objections to the Bush proposal. U.S. ocials began to stressthat the United States had no intention o inringing on the sovereign rights o consumer states tomake their own decisions with respect to their nuclear energy policies and programs, and pro-posed that uel assurances be available to any state that did not have an enrichment or reprocess-ing acility at the time it took advantage o the assurance (such as drawing uel rom an interna-tional uel bank). Te Bush Administration also made clear that states choices on whether toorego sensitive acilities as a price or gaining new uel guarantees were purely voluntary. Despitethe soening o this approach to uel assurances, however, the U.S. continued to take a rm lineon E&R transers, opposing the criteria-based approach and pressing the NSG to agree to ban thetranser o enrichment and reprocessing, except to countries already possessing such capabilities.

Aer many months o disagreement between the United States and other members o the NSGover this issue, in the spring o 2008, in a reversal o policy, the Bush Administration nally cameto accept the criteria-based approach. In doing so, the U.S. proposed three additional criteria:

Te transer must take place under conditions that will not permit or enable the replicationo the technology (the so-called black-box approach).

Suppliers would take into account whether a transer would stimulate other countries in aregion to seek their own SN or whether it might lead to instability in the area.

Suppliers will not transer SN to countries that have agreed to rerain rom acquiring suchtechnology. (Tis was aimed at the ROK and DPRK and their 1992 agreement in which

they agreed not to possess enrichment or reprocessing acilities.)Te black-box approach proved to be the most contentious o the new U.S. proposals. Canada,in particular, opposed this criterion, since it wanted to keep open the possibility o buying centri-uge technology and then upgrading this technology over time in order to compete eectively inthe international market.

As a counterproposal, the Canadians suggested at the NSG meeting in May 2008, that, insteado requiring black-boxing as a criterion or transerring SN, suppliers would only have to con-sider the option o black-boxing the technology or operating a turn-key operation when decidingwhether to transer enrichment or reprocessing to states in good nonprolieration standing. Sincethe United States was unable to accept this counter-proposal, this issue blocked agreement orsome time.

In addition, even though the ROK had reached an agreement in 1992 with the DPRK not tointroduce enrichment and reprocessing technology to their respective territories, the ROK hasmaintained a strong interest in acquiring nuclear uel cycle technologies and objected to the U.S.-proposed criterion that suppliers should not transer SN to countries that have already agreed torerain rom acquiring such technology.


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Finally, and perhaps most surprisingly, other NSG members objected to the U.S.-proposed cri-terion that suppliers would have to take into account whether a transer o SN would stimulateother countries in a region to seek SN capabilities or whether such a transer might lead toinstability in the region. Te Netherlands and the Republic o South Arica took the position thatall states in good nonprolieration standing are entitled to the peaceul benets o nuclear energy,

including enrichment and reprocessing. Te Netherlands also said it could not go along withany negative criteria that denied states in good nonprolieration standing their rights to nucleartechnology. On the other hand, both states indicated that they were prepared to go along withthe objective criteria in the French proposal, e.g. whether a recipient state is not in violation oits nonprolieration obligations, adheres to the NP, has a comprehensive saeguards agreementand the Additional Protocol in eect, etc. Both the Dutch and the Canadians opposed the earlierFrench-proposed criterion that suppliers should take into account whether the recipient has acredible and coherent rationale or pursuing enrichment or reprocessing capabilities in supporto civil nuclear power generation programs. Te Dutch and Canadians believed that this was anegative criterion and that only states that are engaged in bad behavior should be denied theright to SN. By contrast, the U.S. called or this criterion to be made mandatory.

The Clean Text o November 2008

By November 2008, the NSG members were able to dra what became known as the clean texto the guidelines or the transer o E&R technology. According to the clean text, NSG memberswould continue to abide by the existing NSG guidelines but also agree not to authorize transerso E&R unless the recipient met certain so-called objective criteria. (See Appendix 2 or theexact language o the clean text.) Tese required that the recipient:

Is a party to the NP and is in ull compliance with its obligations under that reaty;

Is implementing a comprehensive saeguards agreement and has in orce an Additional

Protocol or is implementing a regional arrangement approved by the IAEA which operatesto achieve the same objective;

Has not been identied by the IAEA as being in serious breach o its saeguards agreement,is not the subject o Board o Governors decisions calling upon it to take additional steps tocomply with its saeguards obligations or to build condence in the peaceul nature o itsnuclear program, nor has been reported by the IAEA Secretariat as a state where the IAEAis currently unable to implement its saeguards agreement.

Is adhering to the NSG Guidelines and has reported to the Security Council o the UnitedNations that it is implementing eective export controls as identied by Security CouncilResolution 1540;

Has concluded an intergovernmental agreement with the supplier including assurancesregarding non-explosive use, eective saeguards in perpetuity, and retranser;

Has made a commitment to the supplier to apply mutually agreed standards o physicalprotection based on current international guidelines;

Has committed to IAEA saety standards and adheres to accepted international saety con-ventions.


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In addition to the above objective criteria, the clean text provides that NSG members wouldagree to consider other actors such as: whether E&R transers are intended or peaceul purposes;whether the recipient has a credible and coherent rationale or pursuing an enrichment or repro-cessing capability in support o civil nuclear programs; and whether the transer would have anegative impact on the stability and security o the recipient state and general conditions o stabil-

ity and security.On the issue o black-boxing enrichment technologies, aer extensive consultations, the U.S.and Canada reached an agreement that would limit the black-box criterion to existing enrichmenttechnologies, but leave open the possibility o transerring new enrichment technologies withoutthe black-boxing requirement. Te clean text provides that, with respect to existingenrichmenttechnologies, suppliers would

Avoid, as ar as practicable, the transer o specialized design, development, and manuacturingtechnology associated with such items; and

Seek rom recipients an agreement to accept enrichment equipment, acilities, and technology

under conditions that, at a minimum, do not permit or enable replication o the acilities.

For new enrichment technologies, the government concerned should propose arrangments inthe NSG or the transer o such technologies, and those arrangements should at a minium be thesame as the objective criteria specied above. Te U.S. also agreed to accommodate South Koreanobjections and drop the criterion that suppliers should not transer E&R to countries that haveagreed to rerain rom acquiring such technology. Argentine and Brazilian objections to requiringstates to have the Additional Protocol in eect as a condition o receiving E&R were reportedly re-solved when the NSG agreed to accept language that would allow E&R transers to a recipient thateither has the Additional Protocol in orce or has signed, ratied and is implementing a regionalarrangement approved by the IAEA which operates to achieve the same objective by providing

condence in the peaceul nature o civilian nuclear programs. Tis would allow Argentina andBrazil to receive E&R without having an Additional Protocol in eect. Te regional arrangementthat these states participate in is the Brazilian-Argentine Agency or Accounting and Control oNuclear Materials. Te saeguards applied by this agency are not the equivalent o the AdditionalProtocol. Unlike the Additional Protocol, these arrangements do not give the inspecting agencythe right to additional inormation and access to acilities to detect the presence o undeclarednuclear activities.

Continued Impasse

Despite the progress made in draing the clean text, the Budapest meeting o the NSG in June

2009 could not reach agreement on the issue o E&R transers. urkey objected to the NSG adop-tion o any so-called subjective criteria that suppliers would have to take into account in trans-erring enrichment and reprocessing to recipient countries. In particular, the urks rejected theproposed criterion that a supplier would have to consider whether the transer o enrichment andreprocessing would stimulate other countries in a region to seek similar capabilities or whethersuch a transer might lead to instability in the region. Tey elt that some might regard urkey asbeing in an unstable area. Ankara said that it would be prepared to go along with the objectivecriteria in the clean text but opposed the NSG adoption o any subjective criteria. Tey stated


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that only states that are engaged in bad behavior should be denied the right to enrichment andreprocessing technology. Te urks also did not support the black-box criterion and took theposition that there should be no NSG guideline that would deny a state access to enrichmentor reprocessing technology i it were in ull compliance with its nonprolieration obligations asspelled out above.

South Arica continued to take the position that the NSG should require only adherence to theNP as a condition o supply. As a result o these various dierences, the NSG members were notable to agree on new criteria or the export o enrichment and reprocessing at the 2009 meetingin Budapest. However, they did agree to try again to work on new ormulations that would be ac-ceptable to all 46 members o the NSG.

When the NSG met in New Zealand in June 2010, urkey continued its objections to the NSGsadoption o any criteria that would deny states that are in compliance with their nonprolierationobligations access to enrichment and reprocessing technology. Ankara specically opposed theincorporation o the black box criterion in the NSG guidelines.

However, the Government o urkey now seems have overcome its objections and appears readyto go along with the clean text with a ew minor modications.

Tis has le South Arica as the only holdout to agreement on the dra o the clean text as itopposes any criteria or E&R transers that go beyond the NP. Te South Aricans reportedlyvoiced their objection to the dra criterion that a recipient would have to have an Additional Pro-tocol to its saeguards agreement with the IAEA as a condition or supply o E&R, since it regardsthe Additional Protocol as voluntary and not required by the NP.

Since the NSG operates on the basis o consensus, the group was unable to adopt a new guidelineon E&R, and the NSG public statement on the meeting said only Participating Governments

agreed to continue considering ways to urther strengthen guidelines dealing with the transer oenrichment and reprocessing technologies.

In an interesting aside, the 2010 NSG meeting saw another player emerge in the discussion othe clean text namely India, a non-member o both the NSG and the NP. As noted, one othe criteria in the clean text would ban the transer o E&R to any state that is not party to theNP. India would, thereore, not be eligible or obtaining such technology rom NSG members,i the group were to adopt the clean text. In the weeks preceding the Christchurch meeting, Indiareportedly pressed Russia, France and also Germany to deer an NSG decision on this question.Ocial Indian sources told the press that New Delhi sent a clear signal to its riends and partnersthat the NSGs September 2008 exemption o India rom its comprehensive saeguards guideline

must remain unaected by any changes adopted, since that decision was the product o mutualundertakings by both the NSG and India. For India that means that New Delhi should now beeligible or ull nuclear cooperation in all aspects o the uel cycle, including E&R. Te inability othe NSG to adopt the clean text was, thereore, welcomed by India, but in July 2010, the Group oEight (G-8) issued a statement that its members would abide by the clean text at least or the com-ing year. (For a discussion o the G-8 handling o the E&R issue, see Section V below.)


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Section iV: conStraintS: Politicaland inStitutional

Te proposals to limit the spread o E&R technology have encountered signicant obstacles thatstem rom the political and commercial interests o states with existing or aspiring nuclear powerprograms. Tey have provoked angry charges o discrimination and a spirited deense o the

rights o non-nuclear-weapon states and developing countries to pursue peaceul nuclear pro-grams and to make their own nuclear uel cycle choices. Te reactions have occurred in both theNSG and the wider international community. Tese divisions may continue to aect the ability othe NSG to reach agreement on the conditions or transerring E&R and to orge a broader inter-national consensus on an appropriate approach to reconcile the need to reduce the prolierationrisks o the dispersion o E&R technologies with the rights o states to pursue peaceul nuclearprograms. In addition, any attempt to strengthen controls on transers o E&R must take into ac-count the act that the NSG operates (as do other international ora) under certain institutionalconstraints and weaknesses as well as image problems with non-NSG members, especially withdeveloping countries.

Tis section describes in more detail the political constraints and controversies surroundingrecent initiatives to upgrade export controls on E&R and identies some o the key limitations osuch institutions as the NSG in implementing such controls

Political Controversies and Constraints

Proposals to limit the spread o E&R technology have been the subject o considerable contro-versy within the NSG itsel, the IAEA Board o Governors, the NP Review Conerence, and inbilateral negotiations that the United States has conducted with individual states.

Disagreements within the NSG

Te NSG is composed o the ve NP nuclear-weapon states and orty-one non-nuclear weaponsstates party to the NP. It includes advanced industrialized countries and nations in varying stag-es o economic development. Some o its members have major nuclear programs, including com-mercial enrichment and reprocessing acilities, while others have only small programs but haveaspirations to build new nuclear acilities. Others possess uranium resources and want to preservethe option o constructing enrichment plants in order to produce value added to such resources.Some o the members are interested in acquiring E&R capabilities or want to protect their optionsto do so in the uture. Members o the group do not necessarily assign the same priorities to non-prolieration or to the conditions that the NSG should apply to exporting such technology.

Since discussion o strengthening export controls on E&R began in 2004, a number o NSGmembers, including Argentina Brazil, Canada, South Korea, Spain, Switzerland, urkey andSouth Arica registered opposition to one or more o the proposed new criteria or the transer oE&R. Te idea o black-boxing enrichment technology, in particular, ran into varying degreeso opposition rom both developing and developed members o the NSG, all o whom viewedthe proposal as a threat to their right or opportunity to employ enrichment technology. As notedabove, the Canadians were reluctant to accept the black-box concept because they believed itwould place undue constraints on their commercial nuclear interests, namely keeping open theoption o importing centriuge technology and upgrading it over time to compete eectively inthe international market.


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Although they eventually came around to support the clean text, Spain and Switzerland were alsouncomortable with the black-box criterion. Tey took the position that, i they were ever to be-come a member o Urenco, they should have access to the Urenco centriuge technology. By thetime o the June 2009 NSG meeting in Budapest, however, most NSG members seemed preparedto go along with the black box idea. Perhaps progress on this issue was acilitated by the act that

exporting enrichment technology under a black-box approach has, in act, been the commoninternational practice in recent years. As pointed out earlier, the Russian transer o centriugetechnology to China, the Urenco transer o technology to AREVA and URENCO USA in theU.S. and the proposed construction o the Eagle Rock Areva plant in the U.S. have taken placeor are to take place under commercial black-box conditions, implying that there is no transero classied enrichment technology9 Whether such arrangements, which include review by theNuclear Regulatory Commission and access to design knowledge by URENCO employees whoare U.S. citizens, would be suitable in all other contexts is questionable. How black a box in thereal world is will depend on a number o actors, including the type o technology, the specicconditions required by the supplier and the eectiveness o the controls established to prevent thetranser o classied technology.

Another major dispute preventing the adoption o the clean text in the NSG concerned the so-called subjective criteria. urkey took particularly strong objection to the subjective criterionthat suppliers would have to consider whether the transer o enrichment and reprocessing wouldhave a negative impact on the stability and security o the recipient state and general conditions ostability and security. Ankara was concerned that suppliers would regard urkey as being locatedin a politically unstable area. However, as noted, urkey has reportedly overcome its objections tothe clean text and is prepared to go along with the document with a ew minor modications.

An additional issue was South Aricas insistence that the NSG should only require adherence tothe NP as a condition o supply o E&R. Tis view is somewhat surprising since the basic ratio-

nale o the NSG rom its ounding was the recognition that the NP requirements or IAEA sae-guards and no explosive use assurance were insucient to provide eective controls on nuclearexports. Nonetheless, the South Arican position is refective o a wider view held by many NPparties that any restrictions on nuclear cooperation that go beyond the NP are inconsistent withArticle IV o that reaty. Article IV o the NP provides that:

1.Nothing in this reaty shall be interpreted as aecting the inalienable right o all the Parties todevelop research, production and use o nuclear energy or peaceul purposes without discrimina-tion and in conormity with articles I and II o this reaty.

2. All the Parties to the reaty shall undertake to acilitate, and have the right to participate in,the ullest exchange o equipment, materials and scientic and technological inormation or thepeaceul uses o nuclear energy. Parties to the reaty in a position to do so shall also cooperatein contributing alone or together with other States or international organizations to the urtherdevelopment o the applications o nuclear energy or peaceul purposes, especially in the territo-ries o non-nuclear-weapon States Party to the reaty, with due consideration or the needs o thedeveloping areas o the world.

9. An exception to this general practice may be the General Electric purchase o Silex technology rom Australia.Unlike centriuge technology, Silex technology apparently cannot be easily black-boxed, since the lasers involved in aSilex plant need a great deal o tending to by the operator.


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Te incorporation o this article in the NP was part o a basic bargain that was essential to thesuccess o the negotiations and the entry into orce o the reaty. Te philosophy underlyingthis provision was that, i non-nuclear weapon-state parties to the reaty agreed to oreswear themanuacture acquisition o nuclear weapons and accept IAEA saeguards on all their peaceulnuclear activities, they should be assured the right to obtain the ull benets o the peaceul uses

o nuclear energy. Several parties to the reaty take the position that Article IV implicitly entitlesany Party in good standing to acquire its own independent uel cycle, including enrichment andreprocessing, so long as it ully abides by the reatys provisions. U.S. statements arguing that thetreaty does not provide such a right only exacerbated the political controversy.

It bears emphasis that opposition to the proposals on E&R transers came not just rom develop-ing countries but rom advanced states and even rom states with a long history o strong supportor the nonprolieration regime, such as Canada and the Netherlands, whose opposition stemmednot only rom commercial interests but rom concerns that states compliant with the NP obliga-tions should not be denied enrichment and reprocessing options.

Resistance rom the Non-Aligned MovementTus the debates within the NSG revealed dierences over economic and commercial interestsamong various members as well as conficting views over subjective criteria that that went be-yond compliance with the NP and IAEA saeguards obligations. Tese various dierences werealso expressed, and perhaps more clearly and strongly, in broader international ora. In particu-lar, the Non-Aligned Movement (NAM) voiced sharp and uncompromising protests at the IAEABoard o Governors and the NP Review Conerence. For the NAM, the issue has been one odiscrimination and what they view as a denial o rights that are specically set out in the NP tothe peaceul uses o nuclear energy.

In a paper submitted to the June 2009 meeting o the Board o Governors, the NAM made a

tough statement on the proposal or an international uel bank. Tis statement is also highlyrelevant to the eorts o the NSG to restrict transers o enrichment and reprocessing because itchallenges the whole idea o discouraging or limiting trade in sensitive nuclear technologies.

Te Group, in principle, reiterates its strong rejection o any attempts aimed to discourage thepursuit o any peaceul nuclear technology on the grounds o its alleged sensitivity.

Te Group is o the view that any proposal or the assurance o supply should not be designed ina way that discourages States rom developing or expanding their capabilities in the area o thenuclear uel cycle, nor to hamper research and development and international cooperation in theeld o peaceul nuclear activities. Te Group reiterates that it is the sovereign right o all States

without discrimination to develop or expand their capabilities in the eld o peaceul nuclearactivities including the nuclear uel cycle.

Te Agency should not lose its main ocus on promoting the peaceul uses o nuclear science andtechnology, including national uel cycle capabilities, through national capacity building andtranser o technology.

Te NAM took a similar tough stance at the NP Review Conerence in May 2010, insisting thatthe nal document contain no language restricting nuclear transers.


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Te NAM Working Paper at the 2010 NP Review Conerence made the ollowing statements:

Para. 42. o emphasize that the reaty does not prohibit the transer or use o nuclear equipmentor material or peaceul purposes based on their sensitivity, and only stipulates that such equip-ment and material must be subject to ull-scope IAEA saeguards.

Para. 43. o reiterate that the issue o assurances o nuclear uel supply is a very complex andmulti-dimensional concept with technical, legal, commercial and economic implications. In orderto reach a consensual conclusion, it is premature or this issue to be considered beore undergoingextensive, comprehensive and transparent consultations. In this context, reject, in principle, anyattempts aimed at discouraging certain peaceul nuclear activities on the grounds o their allegedsensitivity; and emphasize that any ideas or proposals, pertaining to the non-prolieration oany peaceul nuclear technology, which are used as a pretext to prevent the transer o such tech-nology, are inconsistent with the objectives o the NP.

Te NAM has made similar assertions at previous NP Review Conerences. As expected, thenal document o the 2010 NP Review Conerence rearmed the inalienable rights o parties to

the reaty to nuclear energy or peaceul purposes. It also stated that each countrys choices anddecisions in the eld o peaceul uses o nuclear energy should be respected without jeopardiz-ing its policies or international cooperation agreements and arrangements or peaceul uses onuclear energy and its uel cycle choices.

Te nal document called upon all State parties, acting in pursuance o the objectives o thereaty, to observe the legitimate right o all State parties, in particular developing States, to ullaccess to nuclear material, equipment and technological inormation or peaceul purposes andto acilitate transers o nuclear technology and materials, and international cooperation amongStates parties in conormity with Articles I, II, III and IV o the reaty and eliminate in this re-gard any undue constraints inconsistent with the reaty.

Bilateral U.S Peaceul Nuclear Cooperation Agreements

Recent U.S. eorts to conclude bilateral peaceul nuclear cooperation agreements with certainstates have also raised misgivings and objections rom developing countries about how ar theU.S. is willing to go in restricting enrichment and reprocessing. In the 2009 U.S peaceul nuclearcooperation agreement with the United Arab Republic (UAE), the U.S. insisted that the UAEassume the obligation not to possess enrichment and reprocessing technologies. Article 7 o theU.S.-UAE agreement explicitly provides that,

Te United Arab Emirates shall not possess sensitive nuclear acilities within its territory orotherwise engage in activities within its territory or, or relating to, the enrichment or reprocess-ing o material, or alteration in orm or content, (except by irradiation or urther irradiationor, i agreed to by the parties, post-irradiation examination) o plutonium, uranium 233, highenriched uranium, or, i agreed to by the parties, irradiated source or special ssionable material.

Tis is the rst time that a cooperating partner o the United States has made a legal commitmentin a peaceul nuclear cooperation agreement to orego enrichment and reprocessing. Te UnitedStates has sought to establish the U.S.-UAE agreement as the model or such programs in peace-ul nuclear cooperation agreements with other states in the Middle East. In the agreed minute the


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U.S. committed to give the UAE a most avored nation treatment in the event it were to negotiatean agreement with another state in the Middle East that contained more avorable terms.10

Te Obama Administration has sought to persuade Jordan to agree to the same commitmentsound in the UAE agreement to abstain rom domestic enrichment and reprocessing.

Khaled oukan, the head o the Jordan Atomic Energy Commission told the press that,

We believe in the universality o the NP. We do not agree on applying conditions and restric-tions outside o the NP on a regional basis or a country-by-country basis. But I think we stilldont have common ground. Tey started to understand our viewpoint, but still (there is) nocommon ground. 11

oukan made clear that Jordan will not ollow the example o the UAE in relinquishing its NPrights to enrichment and reprocessing, stating that, Te United Arab Emirates has relinquishedall its NP rights to sensitive nuclear technology indenitely. Why should we give up our rights?He added that Article IV o the NP stipulates that, all countries have the right to ull utiliza-

tion o peaceul nuclear energy, research and development. He added that, We are sticking andadhering to the NP, and (we want) ull rights and privileges under the NP.

Tus whether Jordan will be willing to accept restrictions comparable to those in the U.S.-UAEagreement remains to be seen.

Te United States will likely ace resistance i it seeks to require that the Republic o Korea or-swear enrichment and reprocessing as it negotiates a new peaceul nuclear cooperation agree-ment with the Republic o Korea (ROK) to replace the existing agreement that expires in 2014.Te ROK is expected to press the United States to provide the same kind o advance, long-termconsent to reprocessing12 used nuclear uel subject to the new U.S.-ROK agreement as it has givenin the cases o its agreements with Japan and EURAOM. However, the U.S. has long opposed re-processing on the Korean Peninsula. Moreover, Under Secretary o State Ellen auscher stated inwritten answers to the Senate Foreign Relations Committee, in connection with her nominationhearings, that, the existence o a reprocessing plant in the Republic o Korea would be inconsis-tent with the commitments made in the 1992 Joint Declaration. Tat declaration provides that:Te South and the North shall not possess nuclear reprocessing and uranium enrichment acili-ties. Now the North Koreans have both technologies. Te South Koreans, on the other hand, arelikely to press the point that North Korean reprocessing and enrichment, and its nuclear weaponstests, both constitute a violation o the two countries 1992 denuclearization agreement. Tis, they

10. Te agreed minute to the U.S.-UAE agreement provides, Te Government o the United States o Americaconrms that the elds o cooperation, terms and conditions accorded by the United States o America to the United

Arab Emirates or cooperation in the peaceul uses o nuclear energy shall be no less avorable in scope and eectthan those which may be accorded, rom time to time, to any other non-nuclear-weapon State in the Middle East in apeaceul nuclear cooperation agreement. I this is, at any time, not the case, at the request o the Government o theUnited Arab Emirates the Government o the United States o America will provide ull details o the improved termsagreed with another non-nuclear-weapon State in the Middle East, to the extent consistent with its national legisla-tion and regulations and any relevant agreements with such other non-nuclear weapon State, and i requested by theGovernment o the United Arab Emirates, will consult with the Government o the United Arab Emirates regardingthe possibility o amending this Agreement so that the position described above is restored.11. Ibid.12. In this case, the ROK is interested in developing and deploying pyroprocessing.


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will argue, renders null and void the South Korean commitment in that agreement not to pos-sess enrichment or reprocessing capabilities and urther that the ROK has the right to engage inreprocessing as long as it is abiding by its NP obligations. Te ROK will also likely make the casethat it has the right to engage in reprocessing as long as it is abiding by its NP obligations.

The State o Play: Evolution o U.S. PolicyLanguage, Policies, and Laws

Te United States initiated the most recent eorts to restrict the transers o enrichment and re-processing technology beginning with President Bushs speech o February 11, 2004. Tis speechcontained highly restrictive and provocative language as it called or a ban on the sale o E&R toany state that did not already possess ull-scale, unctioning enrichment and reprocessing plantsthus explicitly proposing a highly discriminatory regime o nuclear haves and have-nots. It alsosuggested that improved uel assurances be oered only to those states that renounce enrichmentand reprocessing, thus calling on states to surrender what they consider their sovereign rights asstates as well as the rights guaranteed them by the NP.

President Bushs speech was ollowed by additional initiatives and statements that urther anned

the fames. Te terminology used to describe the U.S.-initiated Global Nuclear Energy Partner-ship (GNEP) proposed dividing the world into so-called uel-cycle states and reactor statesthe latter category to consist o states that did not possess enrichment or reprocessing capabilities.A major objective o GNEP was to have a limited number o countries so-called uel cycle states,provide nuclear uel to other states or reactors to generate electricity, and then remove the uelor reprocessing or disposition. Non-nuclear-weapon states and developing countries saw this asan unconcealed eort to divide the nuclear world into two separate but unequal parts. Perhapsmost provocative were the remarks o John Bolton, then Under Secretary o State or Arms Con-trol and International Security, to the NP Preparatory Conerence in 2004 in which he statedrather categorically that, Te reaty provides no right to such sensitive nuclear technologies.

Non-nuclear-weapon states viewed this kind o language as a renunciation o t

Documents

MTA NSG Report