Talks on Fuel Bank Stalled at IAEA

Daniel Horner and Oliver Meier

Plans to establish an international nuclear fuel bank, a key part of nonproliferation programs put forward by several world leaders, have failed to receive the support they need to start being put in place.

The International Atomic Energy Agency (IAEA) Board of Governors ended its September meeting with little progress since June, the last time the board met. Earlier this year, advocates of the proposed fuel bank had talked about a timetable under which the board in June would have directed the IAEA Secretariat to flesh out a proposal for the September meeting and the board could have then endorsed it.

But at the June meeting, some of the board’s 35 members balked at the plans. The board essentially decided to continue discussing the plan at a conceptual level. The talks have not made much headway since then, sources at the September meeting said.

IAEA Director-General Mohamed ElBaradei, President Barack Obama, and others have strongly backed the fuel bank concept.

The aim of the fuel bank proposals is to dissuade countries from pursuing their own uranium-enrichment programs by providing them with an assured supply of fuel at market prices. The bank would serve as backup to existing commercial mechanisms for countries with good nonproliferation credentials.

In February 2004, President George W. Bush proposed a version of this approach in a speech at the NationalDefenseUniversity in Washington. (See ACT, March 2004.) But Bush’s version required countries to “renounce” enrichment and spent fuel reprocessing and was combined with a call for a ban on enrichment- and reprocessing-related exports to states that do not already operate fuel cycle facilities. That approach led to complaints from many potential recipients, and U.S. officials eventually turned away from such language.

All proposals so far, however, have come from current or potential supplier states, while potential recipients have been largely indifferent or critical. (See ACT, January/February 2009.)

The first proposal before the June board was aimed at establishing an IAEA-owned reserve of low-enriched uranium. In 2006 the Nuclear Threat Initiative (NTI), a private U.S. organization, had pledged $50 million for such a reserve on the condition that IAEA member states would donate another $100 million. By the June meeting, the IAEA had received pledges from the United States ($49.5 million), the European Union (up to €25 million), Kuwait ($10 million), the United Arab Emirates ($10 million), and Norway ($5 million), enabling it to implement the proposal. Kazakhstan had offered to host the fuel bank.

Deadline Extension Possible

The NTI originally had set a September 2008 deadline for the IAEA to receive the required pledges and put the program in place. The NTI later agreed to a one-year extension. In a Sept. 29 interview, Charles Curtis, NTI president and chief operating officer, said he had received a request from ElBaradei for another one-year extension. The request is “under review,” he said, adding that he expects a decision “in very short order.”

The board also had before it a proposal from Russia to host and provide the funding for a similar reserve. The Russian proposal and the one responding to the NTI offer are considered the most mature. Other fuel assurance concepts are in various stages of development.

In presenting the proposals to the board in June, ElBaradei stressed that countries would not be giving up any rights, including the right to develop an indigenous fuel cycle, by endorsing a fuel bank or by receiving nuclear fuel from it. Both proposals also emphasized that point.

However, both proposals ran into heavy opposition from several members of the Non-Aligned Movement (NAM). Many of the criticisms aired at the board meeting centered on countries’ concerns that they would have to “surrender” fuel cycle rights, a source familiar with the discussions said in a July interview. That skepticism indicates “larger trust and credibility issues,” he said.

In her summary of the June session, the board’s chairperson, Taous Feroukhi of Algeria, said members raised questions on a range of issues, including “the reliability or credibility of the triggering mechanism, the eligibility criteria, the supply of natural uranium as fuel, and the financial implications of the proposals.” They also questioned “the proposition that the development of an enrichment capability posed a proliferation risk,” she said, according to the IAEA’s written record of her remarks.

Feroukhi summarized the results of the lengthy debate by saying the board “may continue with its consultations and discussion” and the secretariat “will assist in further elaborating a conceptual framework that could form the basis for developing detailed proposals that would adequately address the views and concerns of Member States.”

Supporters of the proposal had been hoping for a “green light” from the board to keep developing the proposal, but the board issued “more of a slow-down signal” instead, the source familiar with the discussions said.

U.S. officials interviewed in July cast the results more favorably. One official said the discussions were a “positive step forward,” even though they indicated that additional time would be needed to put the program in place. The “tenor” of the discussions had changed from “general rhetorical comments” to questions about “concrete implementation,” he said.

Curtis said there had been some progress, with “serious work” being done by the IAEA Secretariat to develop answers to the questions that countries had raised. There also have been government-to-government communications on the issue, he said.

The UN Security Council last month endorsed a nonproliferation and disarmament resolution that includes a provision encouraging “multilateral approaches to the nuclear fuel cycle, including assurances of fuel supply and related measures, as effective means of addressing the expanding need for nuclear fuel and fuel services and minimizing the risk of proliferation” (see page 22). Curtis noted that the resolution “urges” the IAEA board “to agree upon measures to this end as soon as possible.” He said, “Arguably, some renewed momentum may flow from that.”

Questions Outstanding

Curtis acknowledged that there are “legitimate issues and questions that can and should be raised” and that, in spite of the explicit language in IAEA documents, there are still deep suspicions that the fuel bank proposal is a “first step to legislating a limitation” on countries’ rights to pursue the fuel cycle.

ElBaradei, in his Sept. 14 statement to the IAEA general conference, tried to inject new urgency into the fuel bank debate by pointing to the “growing number of ‘nuclear weapons capable’ countries which, because of their mastery of uranium enrichment or plutonium reprocessing, could manufacture nuclear weapons within a few months if their security perceptions change.” ElBaradei, who is scheduled to step down from his post at the end of November, said he believes that there are no insurmountable “technical or legal stumbling blocks” to setting up a fuel bank and that he hopes “an effective mechanism will be agreed upon by the [IAEA] in the near future.”

However, diplomats interviewed in September said the outstanding issues will take time to be resolved. Peter Gottwald, commissioner for disarmament and arms control at the German Federal Foreign Office, said in a Sept. 18 interview that discussions at the IAEA board demonstrated that it was “too early” to expect concrete results from a consideration of specific proposals to address the issue of multilateral fuel-supply assurances. Brazil’s permanent representative to the IAEA, Ambassador Antonio Guerreiro, in his Sept. 15 statement to the IAEA general conference, said that “an understanding of what we want to achieve with the different proposals or concepts that we have on the table” is lacking and  “what has to be clear is that the actual exercise of what is an inalienable right cannot be looked at with suspicion.” He was referring to Article IV of the nuclear Nonproliferation Treaty (NPT), which establishes an “inalienable right” to “develop research, production and use of nuclear energy for peaceful purposes.”

Yet, both sides of the debate were at pains to leave doors open by pointing out that the deadlock at the June meeting does not preclude future discussions. A Western diplomat said Sept. 16 that discussions on a nuclear fuel bank “have not been shut down” and that the IAEA director-general is free to continue the talks on that subject. Gottwald said he believes “that multilateralization is absolutely essential in the longer run” but conceded that he does not “expect much progress on this issue in the short term.” South African Ambassador Abdul Minty, one of the critics of proposals to establish multilateral fuel assurances, said in a Sept. 16 interview that “the dialogue has just started,” noting that the June board meeting marked the first time that concrete proposals were discussed.

Curtis said progress “will take a significant diplomatic effort in capitals,” rather than just among IAEA delegates, by the United States and the European Union. He said he did not expect the issue to be on the board’s agenda for its November meeting.

In private conversations, diplomats concerned with the issue said they do not expect any tangible progress before the May NPT review conference. Several said it is not clear what impact the change in IAEA leadership will have on the debate over nuclear fuel-supply assurances. Incoming director-general Yukiya Amano, whose appointment was affirmed by the general conference, did not mention the concept of multilateralizing the nuclear fuel cycle in his Sept. 14 acceptance speech.