Understanding the US-Saudi Nuclear Cooperation Controversy
By Henry Sokolski
Secretary of Energy Rick Perry seems in a rush to strike a formal US 123 nuclear cooperative agreement with Saudi Arabia, one that would be “flexible” on the question of whether or not Riyadh could enrich uranium or separate plutonium from spent reactor fuel. He’s already traveled to Riyadh once to discuss such a deal and is rumored to be returning soon. Let’s hope that this dialogue takes a bit more time and the rest of our government mulls it over. Reprocessing and enriching, after all, are the same nuclear activities the world is rightly worried Iran might use in several years to make bombs under the provisions of the current Iran nuclear deal.
As Will Tobey and I explain in a recent National Interest piece, “A Poorly Negotiated Saudi Nuclear Deal Could Damage Future Regional Relationships,” cutting a “flexible” nuclear deal with Saudi Arabia is the diplomatic equivalent of putting out a nuclear fire with a drum of kerosene at the risk of burning down the entire region.
It certainly is passing strange that our government would soft pedal being tough on Saudi Arabia after getting its neighbor, the United Arab Emirates (UAE), to formally agree to forgo enriching and reprocessing and to agree to intrusive inspections under the International Atomic Energy Agency’s (IAEA’s) Additional Protocol in 2009 (experts refer to this as the nonproliferation "Gold Standard"). Expect Abu Dhabi to demand that their 2009 agreement be adjusted to give it the same generous reprocessing and enrichment privileges Mr. Perry may offer the Saudis and other Middle Eastern states.
None of this will help “fix” the Iran nuclear deal’s allowance for Tehran to enrich and reprocess in several years — just the reverse. Nor can it reliably serve to deter or spook Iran from making bombs. Instead, it will only signal to the Gulf States and the world that Washington is not that concerned about preventing the spread of the most dangerous nuclear weapons-related technologies in the most dangerous region of the world.
Don’t we need to be realistic, though? Saudi Arabia says it needs nuclear power. If the Kingdom does not buy American, won’t it buy Chinese or Russian, costing us jobs and influence? The short answer is no. First, the key reactor vendor that most Americans think is American — Westinghouse — is now entirely foreign-owned and focused on design work, and it no longer builds reactors or major reactor components overseas. Whether or not Westinghouse wins the bid on the two reactors the Kingdom is considering, there will not be a large number of US manufacturing jobs or American profits at stake.
Second, if the Saudis actually follow through and build the two reactors (and, no, this is not absolutely certain), they are unlikely to buy from Westinghouse, China, or Russia (or from France). These vendors' export reactors are either mere designs or still facing operational licensing challenges. Instead, Riyadh is focused on the only nuclear reactor firm that actually has a proven, safe design (the APR 1400) — the Korean Electric Power Company (KEPCO). The APR 1400 is fully licensed and commercially operating. It has an export version actually being built roughly on schedule and on budget in the UAE with a tried and true construction crew ready and willing to build in the Kingdom
Could KEPCO build such plants in Saudi Arabia, though, without having to use key Nuclear Regulatory Commission (NRC)-licensed U.S. nuclear components that would require Washington first to seal a 123 agreement with the Kingdom? As is detailed in a recent NPEC brief, there is good reason to believe the answer is yes since there are alternative foreign suppliers for these parts that KEPCO has already used in their APR 1400 machine.
This may be an option. If there is no need for our government to conclude a 123 agreement, Washington could avoid actively undermining the Gold Standard that it set with the UAE. This would give our diplomats more time to push the Gold Standard conditions with the Saudis and all other supplier states. Meanwhile, the Saudis could continue their bidding process and the U.S. could anticipate helping complete the two plants (assuming the Saudis follow through and build them) with U.S. "balance of plant" hardware and know-how, which do not require NRC approval.
An even bigger issue, of course, is that there are much cheaper ways for the Kingdom to generate electricity than with nuclear reactors. As a recent NPEC-commissioned study makes clear, cheap, abundant natural gas provides in base-load electricity in the region for much less than nuclear and can also satisfy peak demand – something large nuclear plants can’t do.
Then, there is the stunning local drop in solar energy prices – Saudi Arabia’s most recent contract for photovoltaic (PV) solar power at 2.7 cents per installed kilowatt hour and the UAE’s construction of a 700 megawatt concentrated solar power thermal storage plant that is designed to operate at night at 7.3 cents per installed kilowatt hour.
These and other developments have prompted the UAE to announce it will build no more nuclear power plants. They also help explain why Saudi Arabia has recently stopped talking about building 17 gigawatts of nuclear capacity (roughly 15 or more reactors) and now only talks about building two power reactors (i.e., 2.8 gigawatts of capacity). The bigger point, of course, is that if the Kingdom is serious about producing electricity, investing in even two reactors (projected to produce electricity at roughly 11 cents per installed kilowatt hour) would not make economic sense.
Secretary Perry would do well to raise these points when he visits Middle East rather than pushing nuclear power in Riyadh. At the very least, our government ought not to cave on calling for Gold Standard conditions on any nuclear deal it might chose to cut with the Kingdom or with other states in the region. Meanwhile, the House and Senate should ask questions and hold hearings to shape these negotiations well before they produce any final text whose terms we might later regret.