Making Sense Of That Nuclear Deal With Saudi Arabia

The United States is trying to develop a nuclear cooperation agreement (123 agreement) with Saudi Arabia. The stories (another) focus on whether such an agreement would limit Saudi Arabia’s access to uranium enrichment and plutonium reprocessing, two technologies that can produce materials for nuclear weapons.

Let’s look at two other factors. 1) Although Saudi Arabia has had big ambitions for nuclear power, starting from sixteen reactors and now down to two, it is not clear that they can afford those reactors and have no administrative support for them. 2) Westinghouse, the company being pushed by the United States, is in no position to build those reactors.

In September 2014, Saudi Arabia announced plans to build 16 reactors by 2032. At that time, the price of oil was $100 a barrel. In January 2015, the price of oil dropped to $60 a barrel and Saudi Arabia delayed their plan for the reactors. Financial uncertainties continue. In 2017, Saudi Arabia announced a revised plan for two reactors of a size corresponding to that of reactors being built by South Korea in the UAE. South Korea is also building a smaller reactor for electrical power and desalination in Saudi Arabia. Thus, South Korea is in a favorable postion to bid on Saudi Arabia’s reactors.

Westinghouse is fresh off a major failure at the V. C. Summer nuclear plant in South Carolina and a consequent bankruptcy filing. A report prepared by Fluor for Westinghouse as the project soured shows extremely poor management. Another report, by Bechtel, found “flawed construction plans, faulty designs, inadequate management of contractors, low worker morale and high [worker] turnover.”

What is Saudi Arabia attempting to accomplish with this request for bids? And why is the United States offering up a bankrupt company and, potentially, a weak 123 agreement?

Development of nuclear power in Saudi Arabia makes some sense; climate change makes burning fossil fuels less desirable, although as the rest of the world takes steps in this direction, Saudi Arabia’s budget difficulties will increase. Although South Korea appears to have a lock on the proposal, Saudi Arabia may be looking to learn more about nuclear technologies from other sources.

For two reactors, there is little reason for Saudi Arabia to have the capability to enrich uranium, which it wants to keep open in any 123 agreement. Additional facilities would be needed for it to manufacture fuel from that enriched uranium. A few years ago, the United States signed an unusually restrictive 123 agreement with the UAE, in which the UAE agreed to forego enrichment and reprocessing technology. This has come to be called the “Gold Standard,” an ideal for nonproliferation.

It may be that Saudi Arabia wants to retain the possibility of enrichment to hedge against Iran. Another possibility is that Saudi Arabia wants proof of wide-ranging support from the United States. Thus, American and Saudi interests in a 123 agreement conflict. However, the American nuclear industry badly needs new contracts, so that and President Donald Trump’s fondness for Saudi Arabia may override the nonproliferation considerations.

Saudi Arabia is concerned about rival Iran’s investigations into nuclear weapons technology. The Joint Comprehensive Plan of Action (JCPOA), the nuclear agreement between Iran and six other countries, including the United States, limits Iran’s work on nuclear issues, but Iran continues enrichment at a low level, which is allowed to increase with time.

Russia and China would like to supply reactors to Saudi Arabia. Their agreements would be less restrictive of enrichment and reprocessing than a 123 agreement would. A 123 agreement that was less than the Gold Standard would be more desirable for nonproliferation.

It’s also worth asking whether this effort is somehow connected with an effort by Michael Flynn, Trump’s former National Security Advisor, to sell Russian reactors to Saudi Arabia. In 2015, Flynn was working on a US-Russia project to sell sixteen reactors to Saudi Arabia. The American firms he was working for planned to supply security to the reactors and their fuel transport. The Saudi order for sixteen reactors, however, had been canceled four months before Flynn started his project. There is much more about the Flynn deal that does not make sense, including that he was working with Russian firms to sell their reactors to Saudi Arabia.

The Trump administration has been very friendly to Saudi Arabia. It was the first country that Trump visited after his inauguration (top photo source). Oddly, mystery professor Joseph Mifsud was there at the same time. Jared Kushner has spent significant time with Crown Prince Mohammad bin Salman.

There are a number of aspects to the US-Saudi 123 agreement that don’t add up. Hopefully reporters will keep looking.

 

Dan Yurman and I continue to discuss these questions behind the scenes. Check out his blog, Neutron Bytes, for nuclear business news.

 

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