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Does Nuclear Nonproliferation Have a Future?

Market-Based Atomic Power by Henry Sokolski
Harvard International Review

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Henry D. Sokolski is the Executive Director of the Nonproliferation Policy Education Center (NPEC), a Washington-based nonprofit organization founded in 1994 to promote better understanding of strategic weapons proliferation issues. He served as Deputy for Nonproliferation Policy in the Office of the Secretary of Defense, and earlier in the Office of Net Assessment, during the first Bush administration. He also worked in the US Senate as a nuclear energy assistant and a legislative military aide. Mr. Sokolski has authored and edited a number of works on proliferation related issues including, Best of Intentions: America’s Campaign Against Strategic Weapons Proliferation (Westport, CT: Praeger, 2001).

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If enforcement and compliance are the measures of a rule’s vitality, the Nuclear Nonproliferation Treaty (NPT) and the key nuclear control efforts associated with it—the Nuclear Suppliers Group (NSG) and the International Atomic Energy Agency (IAEA)—are all but dead. These rules, which prohibit most of the world’s nations from acquiring nuclear weapons, have been interpreted in such a way as to guarantee all adherents an implicit right to acquire all the “peaceful” nuclear technology they need to come to the brink of getting a bomb. Instead of demanding that countries stay far from bomb-making technology and use nuclear energy economically, these rules have been loosely interpreted and poorly enforced. With increased interest in reducing greenhouse gas emissions, the inclination of governments to back nuclear power and to loosen the rules further is again on the rise.

Consider the three most recent cases of North Korea, Iran, and India.

North Korea clearly violated its NPT pledges to allow full international inspections of its plants in the late 1980s, withdrew from the NPT in 2002, and has made bombs with impunity. Although the United Nations finally sanctioned North Korea after it tested a weapon this year, the United States and other countries have given Pyongyang billions of dollars in energy and food aid and continue to offer the North Korean government more to eventually get it to comply with its NPT obligations. Iran, also in noncompliance with its NPT inspections obligations, is likely to follow North Korea’s example. It too has been offered light water reactors, normal trade and diplomatic relations, and advanced technology in hopes that it might stop its march towards nuclear weapons. Meanwhile, Washington has offered all of the privileges of NPT membership to India even though India never signed the NPT, broke earlier pledges not to use foreign nuclear aid to make bombs, again tested nuclear weapons in 1998, and continues to make fissile material for military purposes (unlike the first five declared nuclear weapons states). Recently, India allowed one of its most respected former nuclear officials, Doctor Y.S.R. Prasad, to trade dangerous nuclear goods with Iran.

In response to these nonproliferation breakdowns, the United States, the IAEA and most leading private nonproliferation organizations have advocated two courses of action. The first is strengthening the NPT with new enforcement mechanisms. The second is bribing non-weapons states not to produce nuclear fuel by offering them an “assured supply” of low cost, subsidized nuclear fuel and reactors. Sadly, both of these approaches could easily make matters worse, as they gloss over precisely what is “peaceful” and overemphasize the risks of running out of nuclear fuel.

Under the current interpretation of the NPT, all nations are thought to have an unqualified right to any and all nuclear technology (even uneconomical production of nuclear fuel, which can bring a state to the very brink of acquiring nuclear weapons), so long as this technology meets two conditions. First, it must be claimed to have some conceivable civil application. Second, IAEA inspectors must occasionally visit a country’s nuclear facilities, even though such inspections cannot reliably catch military diversions in time to prevent a nation from building bombs. The risk of this over-generous interpretation of the NPT is obvious: It can create a world full of nuclear fuel-producing states who claim to be on the right side of the NPT, but are in fact only days or weeks from having nuclear weapons.

This interpretation of the NPT is both unnecessary and wrong. In fact, the NPT makes no mention of nuclear fuel-making. When Spain and Mexico tried in the late 1960s to get NPT negotiators to include an explicit reference to “the entire fuel cycle” including fuel making as a right, their requests were turned down. The Swedish representative even suggested that rules needed to be established to prevent nations from getting into such dangerous activities. They understood that the NPT was designed to share the “benefits of the application of peaceful nuclear energy” and that it made no sense to have the NPT protect propositions which would cost countries money and bring them to the brink of having bombs.

The current problem, however, is that the United States has long condoned the nuclear fuel-making of so many of its key allies and friends who do not yet have nuclear weapons—countries such as Germany, the Netherlands, Japan, Brazil, Argentina, Australia, and Ukraine—that it is now very difficult to reverse course. In a very real sense, public officials have chosen to make their past mistakes hereditary in this regard. Although it is politically difficult to change course, this stance must be altered if we are to prevent the further spread of nuclear weapons.

This brings us to the second popular option designed to address the problem of nonproliferation: giving non-weapons states affordable (meaning subsidized) nuclear fuel and reactors to get them to forgo making nuclear fuel. The IAEA recently added on to this idea by suggesting that it would be useful to share “proliferation resistant” (but not necessarily “proliferation proof”) reprocessing technologies. Reprocessing is a key method of making nuclear weapons fuel. All of this, of course, would be voluntary. Countries that sign up could change their minds.

But backing this nuclear supply proposal could be worse than doing nothing. Such subsidized nuclear aid, at a minimum, will undermine whatever moral or economic authority the United States might otherwise have to scold or isolate would-be bomb makers about their unnecessary, uneconomical, and dangerous activities. Certainly, all of the sound argumentation the United States and others made against Iran building a large light water reactor—not to mention the economic critique against Tehran building its own fuel-making plants—would lose much of its punch. After all, if a subsidized fuel bank is necessary to “assure” countries continued nuclear supply, what could be the argument against countries choosing to subsidize their own assured supply? Once one backs the establishment of heavy subsidies, one enters the world of economic relativism where any public expenditure, no mater how indefensible on private economic grounds, seems perfectly legitimate.

What, then, should we do instead? The short answer is to rely more on market mechanisms than government guessing to guide us through the myriad of choices to fuel and generate clean, economical electricity. Fortunately, the most dangerous nuclear activities, like nuclear fuel-making, are uneconomical, as is producing large amounts of nuclear power in oil and gas-rich countries with small electrical grids (for instance, in much of the Middle East). We should also exploit a number of non-nuclear ways to reduce greenhouse gas emissions (the new, popular argument of governments now trying to subsidize additional nuclear projects).

First, we should encourage open international bidding on the construction of large electrical power generators and related fuel-making plants. Winning bids in any national competition should not go to the priciest or the most subsidized project but rather to the option that is the best value for producing a desired amount of clean electricity. Here, one might begin by using the Global Energy Charter for Sustainable Development, a popular treaty which calls for "open and competitive" energy markets. This should be used as a springboard to encourage nations to both open their electrical generation markets up, and to accept the lowest bidder, which more often than not will be a non-nuclear electrical generation option.

Second, we must recognize that to meet tough greenhouse-gas emission goals, a consumption tax on carbon-generating fuels is necessary. When introduced, the tax ought to be made revenue-neutral and progressive through tax reform (including income tax reductions, and rebates for citizens who are poor). This new tax should also be accompanied by an early sunset on all fuel-specific subsidies now in place for nuclear power, natural gas, oil, clean coal, and renewables. Anything less would only stack the deck higher in favor of nuclear energy against safer alternatives such as natural gas, clean coal, hydropower, and renewable resources that are much cheaper.

As the British government noted in its energy review, published July 11, 2006, under these circumstances it would be realistic for firms building and operating nuclear electricity-generating plants to assume the full costs of financing, insuring, and decommissioning them. They also should assume the expense of safeguarding the plants against diversions. Ideally, keeping governments from subsidizing these activities should be a priority not only for national governments, but for trade organizations like the European Union and the World Trade Organization.

Under such a market regime, nations that choose to subsidize any particular form of energy production would be called to account for undermining economic fairness. If they subsidized nuclear activities, they also could also be collared for threatening international security. Certainly, subsidizing nuclear fuel-making (where the world production capacity is projected to exceed demand for the next decade or more) makes no economic sense. Countries might claim that they need to make fuel for energy independence but this is nonsense: the reactors and the fuel-making plants that such an effort requires would have be imported, in most cases along with raw uranium to fuel them.

Would a market regime of this sort stop nuclear proliferation? Probably not. But unlike today's interpretation of the NPT, which ignores suspicious "civilian" nuclear undertakings even when they obviously lack any economic rationale, the market system described would help flag worrisome nuclear activities far sooner—well before a nation came anywhere near making bombs. Would this solution stifle the use nuclear power? No. As noted, a carbon tax would actually favor nuclear power if it is clearly cheaper than clean coal, natural gas, hydropower, and renewable alternatives.

Would the suggestions discussed eliminate the problems posed by a nuclear-ready Iran or North Korea? Unfortunately, again, the answer is no. Only military, economic, and diplomatic efforts to squeeze Iran and North Korea—such as those used on the Soviet Union during the Cold War—can handle those problems now. But the market system suggested would help prevent Iran or North Korea’s patently uneconomic ploys from becoming an international nuclear model for countries now professing an earnest desire to back peaceful nuclear power development. These countries include Indonesia, Burma, Saudi Arabia, Egypt, Turkey, Morocco, Jordan, Yemen, and more. It would certainly be far more effective in promoting nonproliferation than any current American-led effort to subsidize atomic power at home or abroad.