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DECISION MEMORANDUM

4/6/2017
TO: NATIONAL SECURITY COUNCIL

FROM: David A. Hidinger

SUBJECT: Proposal Regarding U.S. Policy for Uranium Enrichment and Plutonium
Reprocessing

Issue:

Current nuclear technologies can be utilized to meet the growing demand for energy in cleaner
more reliable ways but this requires facilities and materials that could alternatively be used to
produce weapons grade nuclear material. Consideration should be given to whether the United
States should require that signatory parties in bilateral nuclear agreements (123 Agreements)
must forgo their right, if such a right exists, to enrichment and reprocessing (ENR) facilities in
order to secure material and technological support for civil nuclear power generation in order to
reduce the proliferation of nuclear materials and technologies that could be weaponized.

Recommendation:

It is recommended that the United States should continue to pursue the gold standard in making
123 Agreements without countries. It should also begin working on developing a set of expanded
and specific criteria that would allow countries that meet all criteria to be exempt from the gold
standard. This criteria needs to be carefully crafted to ensure that includes those countries that
should retain their ENR rights.

Approve: ________________________ Disapprove: ________________________

Attachment:

Options Analysis
Works Cited

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OPTIONS ANALYSIS

Background

The current system, in the United States, with which these concerns are handled, is
through 123 Agreements. These agreements are so named because they are outlined in
section 123 of the Atomic energy Act of 1954. This section is tilted “Cooperation with
other Nations” and lays out “the terms, conditions, duration, nature, and scope of the
cooperation”. This section further specifies that signatory parties must guarantee that
appropriate security safeguards and standards are maintained, the material will not be
used for the research or development of nuclear weapons, and that the cooperative state
will not transfer any material or restricted data to unauthorized persons.

According to the National Nuclear Security Administration the United States has 123
Agreements with 22 countries, the European Atomic Energy Community (Euratom), and
the International Atomic Energy Agency (IAEA).

The 123 Agreements are complex legal documents that all share the same initial
framework for an agreement between the United States and other parties. However, since
each agreement is done on a case by case basis each final agreement that is reached
between the United States and these parties is unique. The majority of the variations are
to adjust for slight difference in each partner’s exact situation. However, since the mid-
2000s discussion has arisen over what rights countries are given to enrichment and
reprocessing facilities under different international laws and norms and what conditions
the United States has historically agreed to, what they should agree to, and what other
partners will be willing to agree to.

The most frequently referenced international law on the issue of civil nuclear production
and bilateral agreements made between states is the Treaty on the Non-Proliferation of
Nuclear Weapons (NPT). It was signed on July 1st, 1968 and on May 11th, 1995 it was
extended in force indefinitely. The NPT formal declares any State (United States, Russian
Federation, United Kingdom France and China) that “manufactured and exploded a
nuclear weapon or other nuclear explosive device prior to 1 January 1967” as a Nuclear
Weapon State. All other signatories of the treaty are considered non- For the scope of this
memo Articles I, II, IV, and V from the NPT will play the most central role. Articles I and
II are formal statements preventing the transfer or reception of nuclear weapons. Article
IV contains two paragraphs, both of which are the subject of debate in the international
community. Paragraph 1 of Article IV provides signatories the “inalienable right of all the
Parties to the Treaty to develop research, production and use of nuclear energy for
peaceful purposes without discrimination and in conformity with Articles I and II of this
Treaty.” Paragraph 2 of Article IV “calls upon all parties to the treaty to facilitate the
‘fullest possible exchange of equipment, materials and scientific and technological
information’ on peaceful uses of nuclear energy.”1 Lastly, Article V outlines the

1
Christopher Ford, “Statement to the 2005 Review conference of the Treaty on the Nonproliferation of Nuclear
Weapons” (speech, New York, New York, May 18, 2005)

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permissions with which the United States acts to form bilateral agreements with other
signatories to share technologies and materials.

The exact interpretation of Article IV is still a debated topic not only in the international
community but also domestically within the United States. In 2005 Christopher Ford
clearly stated that “during the past two decades, several states including Iran, Iraq, Libya
and North Korea, have sought enrichment or reprocessing capabilities to support efforts
to develop nuclear weapons in violation of the NPT. This reality inexorably leads to the
conclusion that States Party should . . . undertake steps to limit the spread of enrichment
and reprocessing capabilities.” Just over a decade later the Joint Comprehensive Plan of
Action (JCPOA) between the United States, the United Kingdom, France, Russia, China,
Germany and Iran stipulates that “expiration of the JCPOA enrichment restrictions will
be ‘followed by gradual evolution, at a reasonable pace’ of Iran’s enrichment program.”2
This is not meant to be critical of the JCPOA, but simply to illustrate that the United
States is not consistent with its negotiations when it comes to enrichment and
reprocessing rights. While the JCPOA is a plan of action and not an agreement, it still
showcases the willingness of the United States to maintain different requirements for
different countries. Later in this memo similar discrepancies will occur with the
negotiation of 123 Agreements.

These agreements have many stakeholders. Chiefly those being nations that seek to
develop or maintain their civil nuclear engineering projects, countries that are concerned
about their neighbors nuclear capabilities, militaries across the globe, and agencies or
organization that are concerned about non-proliferation of weapons of mass destruction.

The national security implications for the United States are clear due to the nature of the
technologies and materials required for nuclear energy production. Naturally occurring
uranium has about 0.7% U235 and most reactors require anywhere from 3% to 20% U235.
In order to concentrate the amount of U235, it must be enriched. There are multiple
technologies that can be employed to enrich the uranium and once the facility is built,
there is very little stopping the operator of that facility from making 3% U235 or greater
than 90% U235. U235 above 90% rapidly approaches weapons grade. Furthermore, when
operating nuclear reactors with enriched uranium a byproduct of these reactors is
plutonium. Reactor bred plutonium will contain a fair amount of both P239 and P240. This
is of lesser risk as P240 is unstable enough to fissile spontaneously in low quantities. As a
result weapons grade plutonium needs to be P239 at 93% or greater. Changing the fuel rods
of a nuclear reactor can be a multiweek process providing ample opportunity for
oversight and material control. However, U238 can be placed around reactors in individual
slugs that will then convert to P239 and can be easily reprocessed to reduce the P240 content
to well below 7%.The speed at which these U238 slugs can be converted and switched out
makes ensuring that material is not being inappropriately used quite difficult.

The oversight of these reactors and ensuring compliance with the 123 Agreements is the
most difficult part of these agreements. Oversight responsibility is almost always given to
the International Atomic Energy Agency (IAEA) a third party organization. On the one
2
Kenneth Katzman & Paul K. Kerr, “Iran Nuclear Agreement”, Congressional Research Service, February 10, 2017

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hand nuclear energy is reliable and far more environmentally friendly than the fossil fuel
alternatives. On the other the technology and materials for nuclear energy provide
countries and perhaps malicious non-state actors operating within those countries
significantly more opportunity to acquire weapons grade material, the technology to
create weapons grade materials, or access to facilities that can create weapons grade
materials.

At the turn of the century – more specifically the latter half of the ‘00s – the United States
shifted its approach to handling ENR agreements. The new 123 Agreements that were set
to expire (and the principle reason for discussion to resume around the topic) were being
renegotiated and the United States began pushing for countries to forfeit ENR capabilities
in exchange for guaranteed materials and technological support. This shift occurred
because when all of the initial legal documentation was being drawn up there was
significantly less concern for these countries to manage to acquire and convert the cutting
edge technology for civil nuclear purposes into a weapon. Now, more than 70 years after
the discovery of the atomic weapon, proliferation concerns are heightened and advances
in technology make maintaining the integrity of the material and technology supply chain
integral to the success of preventing nuclear weapons from falling into the wrong hands.
These fundamental changes in circumstance explain the shift in the United States attitude
towards ENR capabilities.

Overview of Options

As mentioned above there appears to be an established history for how the United States
has handled ENR in the past though it is not consistent. The legal framework within
which the United States can act is reasonably well bounded with the NPT and 123
Agreements. This provides a finite amount of options to consider. First the United States
could opt to minimize its presence in the nonproliferation arena; this would be an
unprecedented departure from past actions but seems to fall into the isolationist
tendencies of the newest administration. Second, the United States could pursue 123
Agreements utilizing language that was used in the 20th century. This would allow for
countries to retain their ENR capabilities. Third, the United States could pursue 123
Agreements utilizing language that has come about since the turn of the 21st century and
effectively trade technical expertise and access to materials for a guarantee that a country
will not pursue an ENR capability. Fourth, the United States could use some combination
of the second and third option on a case by case basis. This is the path the United States is
currently following. Lastly, the United States could provide ENR technology, nuclear
civil technology and the materials for operation of peaceful nuclear projects in a free
market. This is as nearly an extreme departure from past behavior as the first option and
while unlikely, for the sake of thoroughness will be examined.

Option 1: United States Isolationism in Nuclear Non-Proliferation

This option is highly unlikely.

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It is currently not being discussed in the international community, among scholars or with
the halls of government. The United States pursuing this course of action would
jeopardize the current non-proliferation regime developed and maintained in the
international system. It would expedite the spread of nuclear fissile material around the
globe; it would galvanize terrorist organizations, worry allies, and compromise
negotiation abilities with nuclear belligerent countries.

The only foreseeable advantages to such a decision is it would be a cost cutting measure
that would provide the United States the ability to focus resources elsewhere as well as
being able to remove our attention from the international arena. However, the costs
incurred as a result of compromising the current non-proliferation regime almost
certainly outweigh the money that would be saved by removing these expenditures.

Option 2: The Silver Standard - Permissive Enrichment and Reprocessing

This option, the opposite of the gold standard, would allow countries that engaged in 123
Agreements with the United States to retain their rights to ENR facilities. This is what
was done prior to the turn of the century with nearly all countries (as it wasn’t yet
considered an issue since the capabilities of enrichment and reprocessing were cost
prohibitive to all but a few developed countries) and is still done with some countries
currently.

Countries have been separated into four categories that better explains their relationship
with the United States. These categories are; Friend meaning they have ENR rights
granted to them by the U.S. and have a military alliance with the U.S., Colleague
meaning they have not been granted ENR rights but are in a military alliance, Business-
Partner meaning they have ENR rights but are not in a military alliance and Suspect
meaning they do not have ENR rights nor are they in a military alliance.3 For this option
only examples of countries that fall into the categories of Friend and Business-Partner
will be analyzed.

Friends: EURATOM, Argentina, Australia, Canada and Japan

Business-Partner: Switzerland, Norway, India, China, Russia, South Africa, Brazil, Iran
and Vietnam

Looking at the distinction between these two categorizes it is clear they are aptly named.
The United States has allowed countries in the Friends category to retain their
enrichment and reprocessing capabilities because not only are these countries politically
and economically similar to the United States they also fall within the umbrella of the
United States’ nuclear deterrent. As such these countries are not currently motivated to
pursue nuclear weapons and thus are more readily able to convince negotiations to allow
them to have ENR rights and facilities.

3
Seungkook Roh & Wonjoon Kim, “How can Korea secure uranium enrichment and spent fuel reprocessing
rights?”, Energy Policy Volume 68, May 2014.

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When looking at the Business-Partner category of countries it is clear that these countries
negotiated their ability to maintain ENR rights and facilities for either economic or
political rationale.

A major advantage to this option is that it allows for countries that have a significant
nuclear energy infrastructure to handle everything internally. This allows them to reduce
waste produced by the reactors, reduce the amount of shipments that must be made to or
from the country, and allows for tighter control on the supply chain of these nuclear
materials. These advantages make operating nuclear power plants in a country with ENR
facilities more cost effective.4 This makes it economically attractive for countries that
operate large nuclear facilities or for countries that are attempting to diversify the way in
which their energy needs are met.

A reality of allowing countries to maintain their ENR rights and facilities is that it
drastically reduces their break-out time that is the time required for them to develop and
build a working nuclear weapon. There are arguments as to whether or not this is good or
bad, but put most simply reduced break-out time for Friends is in general advantageous
to the United States and its allies while reduced break-out time for Business-Partners is
what makes many people nervous. States in this group, specifically when looking at non-
nuclear weapons states (such as Iran), that are developing robust domestic civil nuclear
programs and are granted ENR rights and facilities may be participating in nuclear
hedging.

This leads into one of the two major negatives associated with this course of action;
nuclear hedging. Nuclear hedging was defined by Ariel Levite as “A national strategy of
maintaining, or at least appearing to maintain, a viable option for the relatively rapid
acquisition of nuclear weapons, based on an indigenous technical capacity to produce
them within a relatively short time frame ranging from several weeks to a few years.”5
The most advanced form of nuclear hedging is realized when a country has enrichment
and reprocessing facilities and is able to quickly create enough fissile material, of
appropriate quality, to have a nuclear weapon.

Nuclear hedging can be seen quite clearly in both Japan and Iran. This is of interest
because they are categorized into different categories. In the Japanese case as a Friend of
the United States Japan is vocal about its ability to quickly create a nuclear bomb as they
have a mature fuel-cycle, precision electronic switches, technical expertise and advanced
delivery methods but does not need to withdraw from the NPT as long as the United
States remains allied with them and covering them with their nuclear umbrella. Iran on
the other hand is in the Business-Partner category and they have committed several
violations against international law regarding nuclear responsibilities, they lack the
sophisticated electronics that Japan manufactures, and are constantly fighting for their
right to greater and greater ENR facilities. There is a stark difference between these two

4
A. Adamantiades & I. Kessides, “Nuclear power for sustainable development: Current status and future prospects”,
Energy Policy, Volume 37, September 2009.
5
Ariel E. Levite, “Never Say Never Again”, International Security Volume 27, March 29, 2006.

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countries behavior and while they are both engaged in nuclear hedging it is for vastly
different reasons.

The second major negative to this option is that it increases the amount of material
created, the distribution of technology around the globe, and the amount of locations that
IAEA is required to monitor. All of these factors create an environment that is more prone
to theft, accident, or loss creating the conditions for malicious actors (state or non-state)
to attain a nuclear weapon.

Thus while this option is economically and politically beneficial to many of these
countries it does increases the chances of non-proliferation suffering a catastrophic failure
while also opening the door to the possibility that a country is engaged at some level of
nuclear hedging and is attempting to acquire a nuclear weapon.

Option 3: The Gold Standard – Restricted Enrichment and Reprocessing

This option would require countries to forgo their ENR rights and prevent them from
building or maintaining ENR facilities within their borders in order to engage in 123
Agreements with the United States. From the categories mentioned above, this would
include countries that were Colleagues or Suspect.

Colleagues: Korea, Morocco, Pakistan, Egypt, Taiwan, Thailand

Suspect: Indonesia, Kazakhstan , UAE, Colombia, Bangladesh, Turkey

The gold standard was named after the bilateral agreement between the United States and
the United Arab Emirates (UAE). This agreement saw UAE voluntarily renounce their
ENR rights and technological capability. There was an attempt by Congress to support
the new gold standard with the introduction of House Resolution 3766 which would have
reasserted Congress’ ability to monitor nuclear exports from the United States. Had this
resolution passed it would have solidified the gold standard as the de facto requirement
for bilateral nuclear agreements with the United States.

The gold standard allows for the greatest reduction in potential proliferation as it severely
limits other countries abilities to access nuclear materials and technologies. This is
beneficial to the international system as it solidifies the supply chain of nuclear materials
and technologies making it easier to entrench systems that monitor these transfers of
materials and will develop patterns that are readily understood and monitored.

It also furthers the United States’ appearance as a leader in setting global nonproliferation
policy and norms as well as managing the utilization of nuclear technology for peaceful
uses. This provides a great benefit to the United States as it will allow the country to
continue guiding the direction of non-proliferation efforts in a positive direction. It also
prevents the derailing of non-proliferation efforts by malicious actors. Lastly it provides
the United States more leeway in enforcing these requirements, be it on allies, adversaries
or as a bargaining chip.

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With the resurgence of nuclear issues to the forefront of international affairs, this is
occurring largely as a result of technological advancement and that these agreements are
coming back up for review and reiteration. The technical advancements in the past few
decades have allowed ENR facilities to be significantly cheaper, easier to manufacture
and to deploy covertly. “It is almost universally accepted by U.S. policymakers that a
world in which other countries agree to foreswear enrichment and reprocessing is
preferable from a nonproliferation perspective”.6 This is to say that it is currently, and for
the foreseeable future, advantageous for the United States to pursue an international
system that exists in which as many countries as possible forgo their ENR rights and
capabilities.

A downside to this option is that it creates a tension between the United States and both
Colleagues and Suspect countries. This occurs because the Colleagues (most notably
South Korea) feel that they are being treated unfairly in comparison to the countries in
the Friends category. In the case of South Korea the United States has backed itself into a
corner and ultimately took a copout deal in which they signed a new 123 Agreement in
which a committee was developed to figure out the remaining issues (such as ENR
capabilities). For countries in the Suspect category they begin to become belligerent and
attempt to undermine the non-proliferation regime established in the international
community. Some of these countries have substantial resources that they can put to bear
on the problem and if they want it enough, they will most likely acquire it (i.e. North
Korea).

Another difficulty with this option is convincing the countries that forgo their right to
ENR facilities that they will have continued and affordable access to these materials. The
difficulty with civil nuclear energy production is that these power plants operate
anywhere from 30 to 80 years and require new fuel every 3 to 5 years. This leaves a long
period of time in which the political and economic environment could change and an
attempt to place economic pressure on a country by denying them access to nuclear fuel
could occur. Thus the challenge the United States faces is convincing these countries to
tie themselves to a supplier for a long period of time with few alternatives, if any, for
nuclear fuel.

Overall this option is the new direction that the United States has been headed and is
beneficial to preventing the proliferation of nuclear materials and technologies as well as
providing efficient management and oversight of a few select ENR facilities across the
globe. It is difficult because it creates a duality in treatment between different countries
with the United States and forces them to concede to economic dependency upon a
country to provide them nuclear fuel.

Option 4: A Blend of Gold and Silver – The Case by Case Basis

6
Jessica C. Varnum, “U.S. Nuclear Cooperation as Nonproliferation: Reforms, or the Devil You Know?” Nuclear
Threat Initiative, November 27,2012.

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This option is closest to what the United States is currently doing and is likely a result of
the long time spans in which these agreements are made over. When looking at the four
categories that the countries can be placed in and even though no two countries have
identical agreements there are clear distinctions between the different major facets of
these agreements.

The advantages and disadvantages are the same in this option. That is the United States
must treat the countries on an individual level. This is advantageous when making
exceptions to the existing international norms as it allows for special treatment. It is
disadvantageous when treating countries in a way that is perceived as more harsh than the
international standard dictates. It reduces the diplomatic flexibility in many cases because
they can point to other negotiations or instances and expect similar or near similar
treatment.

This option also allows for the greatest amount of international support in these
agreements compared to the other options. This is a result of being able to negotiate
special circumstances like in the India or South Korea Agreements or when putting
together plans of action for countries such as Iran. These special circumstances can
sometimes place the United States in difficult waters.

Recommendation

It is recommended that the United States pursue something much closer to Option 3 with
a few notable exceptions that should meet some codified and predetermined criteria that
can be used across the board in all cases. This would allow the United States to insist on
countries meeting the gold standard unless they met these extra criteria.

These extra criteria should be complex and well considered to ensure that any country
that meets all of these criteria is a country we are willing to allow ENR facilities. This
would remove the difficulties in negotiations by stating that the United States cannot
tolerate ENR facilities without these countries meeting the expanded criteria.

The gold standard is the best option moving forward as it provides reasonable assurances
for countries to have access to civil nuclear energy for peaceful purposes while
simultaneously reducing proliferation concerns and beginning to address the major hole
left in the NPT regarding ENR rights for countries. Lastly, it furthers United States’
leadership in the international system as it sets the standard for other nations to follow.

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Works Cited

A. Adamantiades & I. Kessides, “Nuclear power for sustainable development: Current status and
future prospects”, Energy Policy, Volume 37, Issue 12, December 2009.
(http://www.sciencedirect.com/science/article/pii/S0301421509005436)

Ford, Christopher, “Statement to the 2005 Review Conference of the Treaty of the
Nonproliferation of Nuclear Weapons” Speech. New York, New York May 18, 2005.
https://2001-2009.state.gov/t/vci/rls/rm/46604.htm

Katzman, Kenneth & Kerr, Paul K. “Iran Nuclear Agreement”, Congressional Research Service,
February 10, 2017. https://fas.org/sgp/crs/nuke/R43333.pdf

Levite, Ariel E. “Never Say Never Again Nuclear Reversal Revisited”, International Security,
Volume 27, March 29, 2006.
http://www.mitpressjournals.org/doi/pdf/10.1162/01622880260553633

Seungkook Roh & Wonjoon Kim, “How can Korea secure uranium enrichment and spent fuel
reprocessing rights?”, Energy Policy, Volume 68, May 2014, Pages 195-198
(http://www.sciencedirect.com/science/article/pii/S030142151400010X)

Varnum, Jessica C. “U.S. Nuclear Cooperation as Nonproliferation: Reforms, or the Devil You
Know?” Nuclear Threat Initiative, November 27,2012.
http://www.nti.org/analysis/articles/us-nuclear-cooperation-nonproliferation-reforms-or-
devil-you-know/

Issues:
1) US no longer has monopoly on nuclear materials and expertise
2) Countries believe they have an inalienable right to nuclear reprocessing a la NPT
3) Countries fear being reliant on external countries (“The Market”) for nuclear fuel should
they become heavily invested for their electrical needs

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