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Russia and Iran are conferring about the supply of new nuclear power plants at the Bushehr site on the Persian Gulf. Iran operates one Russian reactor there and building more could contribute to a comprehensive agreement between the six powers and Iran.

Let’s be clear that so far there’s no hard and fast deal for new Russian reactors in Iran, and also that there should be no concern about Russian sanctions-busting related to new reactor construction that is clearly linked to a comprehensive agreement between the powers and Iran. A news report that grabbed some attention on March 12, claiming that “Russia has agreed” to build two more reactors came from Iranian media–not Russian sources. More nuanced accounts said Iran and Russia were still discussing a “draft agreement.”

If we take for granted that this discussion is for real–since vendor Rosatom has confirmed that its deputy director was in Tehran this week to to hold talks about it–then the critical question for the future negotiation between Iran and the six powers is whether Russia will supply the low-enriched uranium (LEU) fuel–for new reactors but also for the first Bushehr unit when Iran’s current 10-year fuel contract with Russia expires.

After Russia and Iran agreed in 1992 to complete the first Bushehr reactor, a contract was signed committing Russia to supply all the fuel for the initial ten years of operation, and committing Iran to returning the spent fuel to Russia. The reactor began operating in 2011. There’s no contract yet for Iran’s procurement after the first ten years.

Iran’s ‘practical needs’

What does this have to do with negotiations for a comprehensive nuclear agreement with Iran?  Negotiators must arrive at what the November 2013 Joint Plan of Action (JPOA) calls “a mutually defined enrichment programme [for Iran] with mutually agreed parameters consistent with practical needs, with agreed limits on scope and level of enrichment activities, capacity, where it is carried out, and stocks of enriched uranium, for a period to be agreed upon.”

At the end of the day, the parties must decide how many of Iran’s 19,000 centrifuges Iran may operate for a specific period of time. Some observers speculate that the powers might agree to let Iran use between 3,000 and 5,000 centrifuges–with estimates trending in the upper part of the range should Iran agree to convert the IR-40 reactor from natural uranium to LEU fuel and then enrich the uranium for that and any other future research reactors under construction during the term of the agreement.

But the calculation of Iran’s “practical needs” for enrichment capacity would dramatically increase should it be agreed that Iran would make LEU fuel for power reactors. A Bushehr-type VVER reactor, with a nominal power rating of 910-megawatts and operating with a commercial capacity factor and duty cycle, would require about 100,000 separative-work units of enrichment capacity per year to meet the needs of refueling the reactor. Should Iran propose that it enrich the uranium for just a quarter of the fresh fuel that the reactor would require, it would need an enrichment capacity somewhat larger than Iran’s current population of  centrifuges. Should Iran aspire to make a lot more of this fuel, that could in its view justify development and deployment of more advanced centrifuges. These would include a model perhaps four times more powerful than its current IR-1 workhorse, and, as Iranian experts have suggested, a carbon-fiber machine maybe 15 times more powerful than IR-1 which apparently is still on the drawing board.

Because a primary objective of the JPOA is to lengthen Iran’s breakout timeline and, following from that, to strictly circumscribe its centrifuge enrichment capacity, the negotiation should preclude any understanding that a large centifuge population and an unbridled advanced centifuge R&D program in Iran would be justified by Iran’s vision for power reactor deployment.

Who will enrich Iran’s power reactor fuel?

Continued Russian supply of LEU fuel for reactors at Bushehr under commercial contracts would be the most straightforward solution from the point of spent fuel management, economics, safety, and successful negotiation of a comprehensive agreement with Iran. Were Iran to include substantial enrichment requirements for future power reactors in its assessment of its “practical needs” under the JPOA, the negotiation of a comprehensive agreement with Iran would overnight become imperiled.

For the foreseeable future Iran will not be able to make fuel assemblies for the VVER reactor design used at Bushehr. Last fall, Ali Akbar Salehi, the head of the Atomic Energy Organization of Iran (AEOI), asserted that a fabrication plant to make uranium dioxide fuel for power reactor fuel would soon be fully operational. But Iran has no agreement with Russia licensing the AEOI to make Bushehr fuel, giving Iran access to the intellectual property for the design of the reactor core internals, for the design of the fuel assemblies, and for the chemical and physical specifications of the fuel. Without that, Iran cannot make the Bushehr fuel.

Iran has no diagnostic quality assurance program for making power reactor fuel. Russia and Rosatom–with serious asperations in the global commercial nuclear power market at stake–would never permit Iran to load any domestically-produced fuel into the Bushehr reactor without acceptable safety assurances and legal liability coverage.

Russia has a strong commercial interest in making sure that there will be a Russian fuel supply component in any future reactor contract with Iran. Russia lost hundreds of millions of dollars in the first Bushehr project, and Rosatom sees fuel supply as an important route to recouping its losses.

The contract for Bushehr fuel delivery was signed for 10 years, but a 1992 bilateral government agreement to build the plant specifies that Russia will deliver the fuel during its whole life cycle, Anton Khlopkov pointed out. According to Article 5 of this agreement. “Russian organizations shall supply the Islamic Republic of Iran with nuclear fuel for the nuclear power plant being built there in accordance with the present Agreement for the entire lifespan of the nuclear power plant. The fuel shall be supplied in the form of finished sets of fuel assemblies and control rod assemblies.”

In negotiations over Iran’s “practical needs” for enrichment capacity, Iran may pull a joker out of the deck: aspirations to build an indigenous 300-MW power reactor at Darkovin. If Iran were to claim that it needs enrichment capacity to support this venture, the same dangers for the negotiation with the powers loom as in the case of any Iranian designs to enrich VVER fuel. Most caveats about Iran’s ability to make power reactor fuel for Bushehr would also apply–to say nothing about Iran’s doubtful capabilities to make critical pressure-boundary components and other safety-significant items for a wholly-indigenous power reactor project.

Iran Foreign Minister Javed Zarif and other Iranian officials have explained that, in the past, Iran kept secret its nuclear activities and sought fuel cycle autonomy because the regime was convinced that Western powers aimed to thwart Iran’s success. On the basis of the JPOA and flanking measures, were the powers to provide Iran access to the global nuclear market, Iran would not need a loss-making autarchic nuclear fuel cycle industry.

The geopolitics of uranium enrichment are at a crossroads and how Iran and the powers resolve this issue will have signal global imporance. For reasons which to some extent resonate with Iran’s national narrative, Brazil has embarked on an indigenous centrifuge enrichment program to serve a future line of power reactors. After several decades of development Brazil’s centrifuges are meeting about 5% of the country’s demand for enrichment services. On the other side of the ledger, South Korea, whose industry has recently favored plans to set up a domestic enrichment plant to supply fuel to about two dozen operating power reactors, may instead become a shareholder in an existing uranium enrichment plant located elsewhere.

 
 

IAEA Director General Yukiya Amano on March 3 had this to say about recently-voiced Chinese concerns about Japan’s plutonium inventory:

We have drawn (the) conclusion that all nuclear materials in Japan stay in peaceful purposes… Therefore, I do not have (a) reason to have concern that this (material) … will be diverted.

At issue are 331 kilograms of weapons-grade plutonium long associated with the Fast Critical Assembly operated by the Japan Atomic Energy Agency at Tokai.

Friends in the IAEA boardroom this week expressed the view that Amano’s confidence seemed informed by the IAEA having for years reached a safeguards “broader conclusion” for Japan — as Amano himself explained that concept to a general audience in 2012: “If [a country] implements the Additional Protocol, we can provide assurance that all the activities in that country [are for] peaceful purposes.” The IAEA has annually renewed its broader conclusion for Japan since it was first given in 2004.

The broader conclusion is about IAEA safeguards, not nuclear security, and Amano in his reported remarks did not refer to the nuclear security dimension of the Tokai plutonium. But he must know that security issues–not Japan’s nonproliferation credentials–have been at the heart of five years of  bilateral U.S.-Japan discussions about this plutonium inventory.

Japan has agreed to remove the Tokai weapons-grade plutonium to the U.S. as part of its voluntary offer to the 2014 Nuclear Security Summit in the Netherlands later this month. This will be announced then, was more or less spelled out by Japanese media in January, but it wasn’t refered to by Amano in his answer to reporters’ questions in Vienna this week.

In addition to the Tokai weapons-grade plutonium inventory, Japan’s nuclear R&D facilities also host considerable inventories of weapons-grade uranium–perhaps 1,400 kilograms, with about 500 kg hosted by a single critical assembly installation. Given Japan’s evolving policy on its weapons-grade plutonium inventories, we might anticipate that in the future at least a portion of Japan’s uranium inventory may likewise be removed to the U.S.

Fukushima may have informed this decision making. While some media reports on U.S.-Japan interaction left open whether Japanese “balking” at repatriating the plutonium meant that Tokyo was hedging for strategic reasons, in fact Japan had argued that weapons-grade materials were needed for JAEA’s fast reactor research on sound scientific grounds. Since 2011, however, Japan’s advanced reactor vision has receded into the distance.

Before he became the Director General of the IAEA, Amano was ambassador in Japan’s Permanent Mission in Vienna, and in that capacity he offered these remarks in 2006 concerning Japan’s management of its HEU inventories:

[Japan] has used highly enriched uranium at research reactors in the past, but since the end of 1970s, it has reduced the uranium enriched level from HEU to LEU. By now, Japan has almost completed the conversion. A remaining issue is that of the transportation of highly enriched spent fuel to the United States. A considerable amount of this fuel has already been transported, with the remainder due for transportation at a later date. Reducing the use of highly enriched uranium fuel is an important issue in preventing nuclear terrorism. I hope the process of replacing it with low enriched uranium fuel will be accelerated worldwide

Why did China raise the issue of Japan’s plutonium beginning last month? (Beijing quasi-official media after Amano’s statement this week reiterated its concerns). The most readily available explanation is that a Japan bristling with weapons-grade nuclear materials fits a Chinese narrative that the Abe government intends to re-militarize and threaten Japan’s neighbors. Is China concerned about Japan’s plans to reprocess its power reactor spent fuel at Rokkasho-mura? Perhaps, but China itself is planning on embarking on commercial-scale reprocessing of its own growing spent fuel inventory.

Recent media interventions over this issue in fact look more like an us-versus-them standoff in the East China Sea and less like a discussion of Japan’s nuclear materials security. China ran the Japan plutonium issue up the flagpole in Beijing in mid-February. That was three weeks after Japanese media had already reported that Japan had agreed to U.S. wishes to give up the plutonium at Tokai. When Amano this week brushed aside Chinese concerns about the plutonium, the U.S. ambassador in Vienna in a statement reinforced Amano’s message that weapons-grade materials in Japan were of “no concern.”

That’s not the view of U.S. officials who have been discussing this issue with Japan since 2009. On less public occasions, they have pointed out that with respect to Japan’s comparative openness–the weapons-grade materials are clearly civilian and located in facilities where international research is ongoing–there is a residual security risk associated with them. The U.S. view is that removing weapons-grade nuclear materials from Japan to the U.S. would enhance their security. Japan now appears to clearly share that perspective.

 
 

Cutaway view of a Sherman tank

The six powers and Iran are in Vienna this week to move forward the process of concluding a comprehensive agreement on the Iranian nuclear conundrum. At the outset of talks on February 17, the U.S. Department of State provided some public clarification about what the six have in mind for the Joint Commission in contributing to that result.

The explanation was welcome, but it also left open how Iran, the powers, and the International Atomic Energy Agency in coming months will ultimately put to rest allegations concerning what the IAEA has been calling the possible military dimensions (PMD) of the Iranian nuclear program.

To recall: The Joint Plan of Action (JPOA) that Iran and the powers agreed to last November 24 said this:

A Joint Commission of E3/EU+3 and Iran will be established to monitor the implementation of the near-term measures [under the JPOA] and address issues that may arise, with the IAEA responsible for verification of nuclear-related measures. The Joint Commission will work with the IAEA to facilitate resolution of past and present issues of concern.

What, exactly, will the Joint Commission do? Beginning on November 24, I have asked that question, because until now the “resolution of past and present issues of concern” has been the responsibility of Iran and the IAEA–not the powers.

The JPOA provided no self-evident answer to this question, and officials from negotiating states will tell you that the language in the JPOA assigning the Joint Commission responsibility for “resolution of past and present issues of concern” was ill-chosen and confusing. Especially because during the negotiation of the JPOA different parties had expressed very different views about the future of the PMD issue, indeed about the significance of resolving it, in December and January I continued to pursue this.

In the public space, meanwhile, lack of clarity prevailed, abetted by accounts distilled from supremely contradictory Iranian and Western media reports asserting, for example, that according to Deputy Iran Foreign Minister Seyed Abbas Araqchi, the Joint Commission would be “an influential body that will have authority to decide disputes,” while “U.S. officials described it as a discussion forum.”

The confidential “non-paper” that Iran and the powers negotiated prior to entry-into-force of the JPOA on January 20, to flesh out details of how the JPOA would be implemented, does not provide further details on what role the Joint Commission will have.

That’s the essential background to a press briefing given in Vienna on  February 17 by a person described by the State Department as a “Senior Administration Official.” I’m in Berlin, not Vienna, but I’m assuming as usual it was U.S. Undersecretary of State Wendy Sherman doing the talking (she had briefed the U.S. Senate on February 4).  According to the State Department’s posted transcript, at the briefing Jonathan Tirone at Bloomberg asked the question I and Vertic director Andreas Persbo had put forth last month about the Joint Commission, and specifically concerning its role in explaining PMD.

This was the answer:

The joint commission is not set up to clear away PMD. That is, in the first instance, the IAEA’s job. And they’re undertaking that. And in fact, the more that Iran can do to meet their obligations with the IAEA, the better for the nuclear negotiating process around a comprehensive agreement. So the two partner with each other, but they are not the same. The JPOA says that we will be of assistance where we can in resolving past and present issues, which reflects possible military dimensions of Iran’s nuclear program. But we want to do that in service to the IAEA, and we don’t want to do the job that belongs to the IAEA.

The joint commission was set up as a mechanism, when necessary, if there are compliance issues with the JPOA or questions that need to get resolved. So that’s what the joint commission is for. So if Iran was not fulfilling a commitment they made or we weren’t fulfilling a commitment we had made, there would be a place to discuss those things, even while we are negotiating the comprehensive agreement, so that any compliance issues wouldn’t come to the comprehensive negotiation, but would have another mechanism for facilitation. And it was anticipated that would happen at the expert level, and then come up to the political directors and up to foreign ministers if needed.

So far, there hasn’t been need or a purpose for the joint commission to meet. There needs to be content and substance for such a meeting. The IAEA is preparing monthly reports to let us know how things are going…

We can conclude from this answer that, in principle, the powers fully accept the view that the IAEA is supposed to handle with Iran the resolution of the PMD file, and further–as both Andreas and I had outlined as a possibility–that, if a problem in the future were to arise because Iran did not satisfy the IAEA, the Joint Commission would provide a forum to try to resolve it initially.

The answer is also consistent with secure information that the Joint Commission was originally intended to be set up as a forum to address concerns by Iran that sanctions-lifting happens as it should. That would explain why, as the answer says, there have been no meetings of the Joint Commission so far.

But what happens if Iran balks and the IAEA after discussion with the powers and Iran at the expert level fails to resolve significant PMD issues? What the State Department said would be consistent with our suggestion from January that ultimately a political decision would made whether an unresolved issue might, in fact, be declared sufficiently addressed. That decision would not happen in the trenches of the IAEA Department of Safeguards but at the top and only after high-level consultations including, presumably, IAEA Director General Yukiya Amano himself–although the State Department did not mention the IAEA in this regard:  …Any compliance issues would [first be dealt with] at the expert level, and then come up to the political directors and up to foreign ministers if needed.

There you have it.

But is my suggestion that critical PMD matters might not be solved by Iran’s simply answering the IAEA’s questions just mean-spirited grist to the mill of those in Washington and elsewhere who haven’t joined the bandwagon on the Iran deal? Hardly.

On February 3, Iran’s Foreign Minister, Javad Zarif, visited the German Council of Foreign Relations in Berlin. Zarif explained to us that Iran has no aim or interest in having nuclear weapons. In fact, he said that the credibility of Iran’s regime was founded upon Iran not having such an ambition or interest. That’s the crux. If the credibility of Iran’s regime rests on its disavowal of nuclear arms, then any admission by Iran to the IAEA that the Islamic Republic of Iran has been engaged in nuclear weapons-related research or experiments–which prima facie would have to be reported to the Board of Governors–would severely damage the regime’s reputation. Shia theology might imply that nuclear weapons are sinful, but the IAEA’s dossier poses a potential major credibility problem. For Iran at any point to admit that it worked on nuclear weapons would be  an order of magnitude more significant than Iran admitting, as it did in 2003, to having failed to declare to the IAEA a flurry of nuclear activities which could be justified by Iran’s peaceful nuclear program.

Beginning last November, the IAEA has joined the powers in a strategy of moving forward in “resolution of past and present issues of concern” by picking low-hanging fruit first. That’s spelled out in the Framework for Cooperation that the IAEA and Iran signed in Tehran. The two parties started building confidence by arranging visits to sites that probably don’t raise any show-stopper issues. They’ve now set forth a second set of seven issues they want to resolve. One of these–allegations that Iran has worked on developing detonators for nuclear explosives–was pulled out of the IAEA’s PMD dossier with the deliberate intention of getting the resolution on PMD matters moving.

At the Munich Security Conference on February 2, during a somewhat misinformed interchange with a German newspaper editor, Amano seemed to imply that the IAEA was keen to probe further Iran’s previous experiments with polonium that might have been related to PMD, since Po-210 can be used for directed neutron initiation. There are in fact nuclear detonator-related issues to resolve in the IAEA’s PMD file, but unless there is new and undisclosed information, polonium can hardly be the most important of these.  For several years, Iran’s polonium experiments have not been on the IAEA’s front burner.

A few commentators therefore have opined this month that Amano was amiss in mentioning the agency’s interest in polonium. But in fact after Amano took the bait in Munich, the mini-media frenzy which followed advanced a possible civilian explanation for Iran’s electronic bridgewire experiments–development of detonation technology for Iran’s oil and gas industry–which Iran may well put forth before Amano reports next to the Board of Governors. If Iran explains this work to the IAEA on these grounds, and if Amano accepts that explanation, Iran and the IAEA will then move on to the next PMD issue.

Addressing the detonation issue will bring Amano and Iran to Parchin–a location where member-state information suggests Iran has carried out suspicious neutron-generation experiments. Some important member states have long considered the IAEA’s prioritizing of getting renewed access to Parchin to be counterproductive, especially since Iran has meanwhile scrubbed that site clean. Following discussions with the U.S. and other member states last fall leading up to the November 11 agreement with Iran, and in line with the coordinated low-hanging-fruit strategy, Amano has accommodated the powers and walked back the IAEA’s approach to getting information about this site. If Iran’s answers to the IAEA’s questions about what happened at that site are in the view of the IAEA not sufficient, then, as the State Department implied this week, the problem would be aired at the “expert level” first and if not resolved there, Iran and the powers would count on “political directors and foreign ministers if needed” to try to finesse it.

 

 
 

The following post was authored by Mark Hibbs and Andreas Persbo.

When the six powers and Iran announced in Geneva on November 24, 2013 that they had agreed to an “initial step” toward comprehensive resolution of the nuclear crisis, some critics glumly predicted that a final deal would never materialize. It was more likely, they asserted, that Western states keen to curb Iran’s nuclear program would face ever-greater pressure to lift sanctions, fortifying Iran’s resolve to resist long-term limits on sensitive nuclear activities. Ultimately, according to this dusky scenario, Iran would outlast its adversaries, sanctions would wither, and Iran would emerge with a rejuvenated economy and with its nuclear program back on track.

In the absence of clarity about how the Iran deal will be implemented, those of us thinking hard about the verification component have also been a little concerned. But beginning on November 24, our concerns were different–not about negotiations for the “final step” grinding to a halt, but instead about the prospect that Iran and the powers might achieve results too quickly.

The Joint Plan of Action (JPOA), concluded in Geneva set the ambitious goal that the “final step” will be in place “no more than one year” after the “initial step” enters into force. Pessimists to the contrary, a final agreement could emerge on schedule if negotiators–especially in Iran and in the United States–respond to their domestic critics by cracking whips to get fast results.

If the JPOA’s parties want to close the deal on time, they have a lot of work to do, including figuring out how they will interact with the International Atomic Energy Agency (IAEA) in “resolving outstanding issues.”

How that is supposed to happen isn’t explained by the JPOA because it was concluded quickly, after the U.S. accelerated the pace of negotiations. Led by the U.S., negotiators abandoned a four-step plan for a two-step plan. That permitted a dramatic breakthrough in Geneva, but it also meant that the route to the “final step” would have to be improvised.

The JPOA says that the IAEA is “responsible for the verification of nuclear-related measures.” Its role in more intensive monitoring in Iran may be straightforward, but what is less clear is how the IAEA will work with the parties to resolve “past and present issues of concern.” These include the allegations–not directly mentioned by the JPOA–that the IAEA has brought forth concerning so-called “possible military dimensions” (PMDs), including the involvement of military organizations and officials in activities related to the development of nuclear weapons. The JPOA calls for the creation of a Joint Commission, representing the powers and Iran, to “monitor the implementation of the near-term measures and address issues that may arise [and] work with the IAEA to facilitate resolution of past and present issues of concern.”

The Role of the IAEA Secretariat

The powers and Iran should strike a “final step” agreement in parallel with a judgment by the IAEA expressing, at the very least, confidence that Iran is not carrying out activities allowing it to turn its nuclear materials, especially its inventory of enriched uranium, into nuclear weapons. If that doesn’t happen, the comprehensive Iran deal would not be politically sustainable, Iran might retain undeclared and undetected nuclear capabilities, and the IAEA’s credibility would be damaged. Beyond that requirement remains the need to comprehend Iran’s past activities in this area.

But will it be up to the IAEA Secretariat to decide whether “outstanding issues” are laid to rest so the “final step” can be concluded? How the powers have responded to the PMD challenge so far does not tell us how the JPOA will proceed in this matter.

The IAEA has accumulated PMD-related evidence since about 2005. In November 2011, the IAEA Secretariat provided a detailed accounting of PMD allegations in a report to its Board of Governors. The report got a mixed reception in the boardroom. Western states applauded Director General Yukiya Amano for having aired the allegations. Russia strongly objected that doing so would make resolving them more difficult. Amano’s report added to the political pressure on Iran. But Russia’s assessment may also prove to be correct.

Prior to November 2011, Western states on the board had urged Amano to reveal its PMD evidence to the governors. The U.S., in a statement to the Board in March 2011, charged Iran with “serious non-compliance with its obligations” on six grounds, one being that “Iran is not cooperating with the Agency regarding the outstanding issues which give rise to concern about possible military dimensions to Iran’s nuclear program.”

The U.S. said that the IAEA has the “legal safeguards authority to request cooperation from Iran to determine the correctness and completeness of Iran’s safeguards declarations” and also that it was “Iran’s obligation to comply with those requests.” Further, the U.S. said, “We recognize the Director General cannot draw final verification conclusions in specific cases if the state in question will not allow the necessary access.”

But while repeatedly urging Iran to answer the IAEA’s questions about PMD, the U.S. did not categorically state that actions by the IAEA Secretariat were essential for resolution of the PMD issue. And since the conclusion of the JPOA, some of the parties to the deal have suggested that the IAEA’s role in implementing it should not be framed in terms of independent “authority” to resolve the PMD allegations previously leveled at Iran.

The JPOA’s lack of clarity about how PMD allegations will be resolved may ultimately reflect a lack of consensus about the IAEA’s mandate to pursue allegations of weaponization activities in non-nuclear-weapons states. This matter was first raised after the 1991 Gulf War exposed Iraq’s secret nuclear weapons program.

Until the Gulf War, the IAEA’s safeguards system was mostly based on material accountancy at declared locations. Failure of the IAEA to detect most aspects of Iraq’s weapons effort forced a re-evaluation of the IAEA’s safeguards philosophy, culminating in the adoption of the Additional Protocol (AP). The AP gives the IAEA more access, but there is no expert consensus that it expands the IAEA’s reach into weaponization activities in a state. Some experts have also objected to IAEA involvement in nuclear weapons-related investigations on nonproliferation grounds, arguing that in the case of NPT parties, this should be left to the five nuclear-weapons states–all of which are parties to the JPOA.

In 2005, former IAEA Director-General Mohamed ElBaradei appeared to doubt whether the IAEA was mandated to investigate weaponization. He told Arms Control Today that “we don’t have an all-encompassing mandate to look for every computer study on weaponization. Our mandate is to make sure that all nuclear materials in a country are declared to us.” The “logic behind” the IAEA’s focus on nuclear materials, he said, was that “if a country is denied the nuclear material, they cannot have a weapon.”

Some experts have adopted a very literal view on safeguards implementation, essentially arguing that the IAEA has only the right to verify the correctness of material declarations. They challenge the notion that the IAEA has an inherent right to judge the completeness of a country’s declaration as well. Under such a narrow interpretation, investigation into weaponization work falls outside the IAEA’s mandate. The IAEA has not, however, limited its judgments to nuclear materials accountancy in its reports on Iran to the Board of Governors. In an aside that has appeared in its Iran reports since May 2011, the Secretariat observes:

The Board of Governors has confirmed on numerous occasions, since as early as 1992, that paragraph 2 of INFCIRC/153 (Corr.), which corresponds to Article 2 of Iran’s Safeguards Agreement, authorizes and requires the Agency to seek to verify both the non-diversion of nuclear material from declared activities (i.e. correctness) and the absence of undeclared nuclear activities in the State (i.e. completeness) (see, for example, GOV/OR.864, para. 49 and GOV/OR.865, paras 53–54).

In support, others argue that because the development of nuclear weapons must at some stage involve nuclear material, the IAEA has a clear mandate to investigate where weaponization activities involve such material. After all, in such cases the material used would be undeclared and the state’s material declaration accordingly “incorrect.” Moreover, they would say that weaponization activities are a clear indication of intent to use material for explosives purposes, hence raising questions as to whether all nuclear material has, in fact, been declared by the state.

The Role of the Board of Governors

The most straightforward way to resolve PMD issues would be, prima facie, for Iran to answer all the allegations raised by the IAEA, and to admit any specific cases of past or current activities related to the development of nuclear explosives. However, because Iran has steadfastly denied that it has even considered developing nuclear weapons, and has routinely denounced the IAEA’s allegations as “baseless” and “fabricated,” it is highly unlikely that Iran would concede to the IAEA that it had lied to the agency that it has crossed the line into nuclear weapons activities.

Instead, Iran might agree to inform the powers of any PMD-related activities it has carried out. One former IAEA official said that Iran might tell the powers something like this:

Look, we know that your intelligence agencies are all over our program, you know what we did, when, and where. To move forward, the most important thing is that we agree not to do these things in the future. Iran won’t cooperate if we have to admit past activities. Iran’s pride and status in the region and the world are supremely important to us. If we give the information to the IAEA, it will be made public, like most of the other information the IAEA has learned about us since 2003. Instead, we can tell you what you need to know in the Joint Commission, and we can brief the IAEA in very general terms about what we disclose to you.

In practice, the IAEA’s role in pursuing PMD allegations under the JPOA may be limited by understandings between Iran, the powers negotiating with Iran, and the IAEA Board of Governors. One resolution scenario might be this:

  • After Iran provides information on PMD to the powers, they would consult with the IAEA Secretariat and urge it to concur that the data and explanations provided by Iran are adequate;
  • The powers then obtain support from their allies in the Board of Governors, and Non-Aligned states on the Board join Iran in understanding that PMD issues are resolved; and finally
  • The Board of Governors passes a resolution recommending the U.N. Security Council to support it in urging the IAEA Secretariat to resume routine safeguards in Iran.


Resolving safeguards issues in Iran will require the judgments of all the organs of the IAEA. Ultimately, however, the authority to carry out the functions of the Agency rests completely with member states serving on the Board of Governors (this is explicit in Article VI.F of the Statute of the IAEA). The Director General, according to Article VII.B of the Statute, is the Chief Administrative Officer of the organization, and is required to perform his duties in accordance with regulations adopted by the Board.

In theory, therefore, the Board could simply instruct the Director General to resume “routine” safeguards practice in Iran. This step, however, would not be politically wise, as it could damage the credibility and reflect badly on the impartiality of the IAEA Secretariat. To the greatest extent possible, Board members and the Secretariat should proceed instead on the basis of frequent consultations.

After consultations, the Director General might report to the Board on behalf of the Secretariat that PMD allegations have been laid to rest. There is a risk that the Secretariat and the Board will not agree, but the more consultations take place, the less that risk will be. At the very least, the Director General may be able to report that the IAEA Secretariat does not have significant concerns about ongoing PMD activities in Iran.

The challenge facing the IAEA in consulting with powerful Board members to make judgments about a member state’s nuclear program that are necessary for permitting a political agreement to enter into force, and which could greatly affect world peace, is without precedent. Ultimately the IAEA’s Board will have the upper hand. But in the past, the Secretariat and member states have consulted and concurred in specific cases not to be deterred from moving toward routine application of safeguards by safeguards-technical uncertainties.

In one historical case, the tails of a specific enrichment plant in one state could not be adequately explained. As a consequence, the quantities of enriched uranium produced by the plant could not be satisfactorily assessed. These discrepancies remain today. In another case, a state that had not previously declared past production of significant quantities of plutonium, also did not provide key data about past weaponization-related activities.

In both cases, the IAEA Secretariat and member states decided to accept the uncertainties and move on. These were clearly political decisions, but they were informed by a holistic verification judgment, which included, significantly, these states’ record of cooperation with the IAEA throughout its investigations.

While these examples illustrate how the Secretariat and member states in the past took decisions on the basis of consultation, the challenge posed by Iran’s nuclear capabilities has no precedent in the IAEA’s history, and will require a unique approach.

Until now, the IAEA has not been satisfied with Iran’s cooperation in addressing the Agency’s concerns about past activities. That situation can change, however, through Iran’s implementation of the JPOA and a November 11 Iran-IAEA Framework for Cooperation. In the coming months, Iran could become transparent enough to allow the Agency to express that, at a very minimum, it has no significant PMD concerns about ongoing activities.

What about the IAEA’s PMD concerns about past activities? Were the IAEA to differentiate between “present” activities it was confident were peaceful and accounted for, and allegations of “past” activities that remained unresolved, the IAEA and its governors would have to decide–as in the above historical cases referred to–whether remedial and corrective actions by Iran are necessary. That approach would leave open the possibility that ultimate resolution of “past issues” in Iran would be postponed until after the “final step” is concluded. That might imply further that some sanctions would remain in place until it was finally agreed by the Board of Governors that the matter could be laid to rest. In any case, the sooner the Joint Commission and the IAEA get to work on this challenge, the better.

The Role of the Joint Commission 

The JPOA says that a “Joint Commission” staffed by the powers and Iran will be set up and “will work with the IAEA to facilitate resolution of past and present issues of concern.” According to a summary of an implementation document for the JPOA, made available by the U.S. in a public statement on Jan. 16:

The Joint Commission will be composed of experts of the EU, P5+1 and Iran, and it will convene at least monthly to consider the implementation of the Joint Plan of Action and any issues that may arise.  Any decisions that are required on the basis of these discussions will be referred to the Political Directors of the EU, the P5+1, and Iran.

The clarification that the powers and Iran will confer on a monthly basis helps dispel concern that the IAEA Secretariat might come under eleventh-hour pressure to accede to the will of the parties to declare certain sensitive issues resolved. There must and will be frequent consultation between the IAEA Secretariat and the parties to the JPOA.

The transcript of a U.S. government press briefing held Jan. 12 said that “issues like the military aspects of the program… will have to be dealt with in the comprehensive resolution,” without providing any information on the division of labor between the IAEA, the powers, and Iran. All this has led to some unease that past issues will be “grandfathered” before being adequately resolved. While full disclosure by Iran to the powers, followed by an informal briefing by the powers and Iran to the IAEA, may work practically, some fear that such a solution may set a bad precedent.

The Joint Commission has its forerunners. The concept of a consultative committee or a joint commission to facilitate the effective implementation of arms control commitments has been used in the past. Examples include the committee set up under the 1972 ABM Treaty and the 1977 Convention on the Prohibition of Military or Any Other Hostile Use of Environmental Modification Techniques (ENMOD). A similar mechanism is also in use in the 1985 South Pacific Nuclear Free Zone Treaty (in particular Articles 10 and 11 as well as Annexes 3 and 4). The South Pacific Nuclear Free Zone Treaty explicitly allows for a “complaints procedure” that does not involve the IAEA.

The Joint Commission might be involved in numerous tasks, including:

  • Considering questions regarding verification of compliance with obligations left ambiguous in the JPOA;
  • Providing, on a voluntary basis, information any party considers necessary to assure confidence in compliance with obligations assumed;
  • Considering changes in the strategic situation that may have bearing on the provisions of the JPOA;
  • Considering proposals for the strengthening of the JPOA;
  • Considering proposals for further measures aimed at restoring long-term confidence in Iran’s intentions; and
  • Considering whether long-term confidence in Iran’s intentions has been restored.


The Joint Commission would appear to be a critical tool for resolving PMD and other “outstanding issues” in the coming months. Its use should be informed by the need to make technically and politically sound judgments on the basis of close consultations that demonstrate Iran’s will to back away from nuclear weapons capabilities while strengthening the credibility of the IAEA.

 
 

With the initial Iran Deal done, we are now looking forward to its implementation and verification. That means that the International Atomic Energy Agency (IAEA) will have more work to do over the next six months. But what, exactly, will it be doing?

Most of the IAEA activities called for by the Joint Plan of Action appear to be fully consistent with things the IAEA is doing now, including in Iran. IAEA monitoring of centrifuge production will break new ground and may require an approach that will not offend other uranium-enriching countries. It isn’t clear why the agreement includes the provision for daily inspections at Iran’s enrichment plants. In any case, it would appear that the IAEA has the authority to move forward in doing the needed verification under the agreement.

 The Joint Commission

The Preamble of the Joint Plan of Action sets forth that “the IAEA [will be] responsible for verification of nuclear-related measures” called for by Iran and the powers. The deal establishes a Joint Commission that will consist of representatives from the powers and Iran to “monitor the implementation of… near-term measures. The Joint Commission will work with the IAEA to facilitate resolution of past and present issues of concern.”

What will be the specific tasks of the Joint Commission? Some participants in discussions with the IAEA claim to know that the Joint Commission’s members will concern themselves primarily with sanctions-related issues, leaving nuclear verification to the IAEA, regardless of whatever may be implied by the above reference to a cooperative relationship between the Joint Commission and the Vienna agency, which is not spelled out in the text. The IAEA is not a party to the Iran Deal, and it is not a member of the Joint Commission. If media reports are correct, however, the IAEA will attend an initial meeting of the Joint Commission early next week. By then at the latest, the IAEA, Iran, and the powers must know what is in store for the IAEA in dealing with the Joint Commission. If it is intended that the Joint Commission wikk work closely with the IAEA, there must be an understanding to protect confidentiality of information. Beyond that, any Joint Commission participation in any IAEA verification activities in Iran would pose serious legal and confidentiality issues.

 

Enhanced Monitoring

The text of the Joint Plan of Action says this about the IAEA’s role under the rubric “enhanced monitoring”:

Iran would undertake the following voluntary measures:

  • Provision of specified information to the IAEA, including information on Iran’s plans for nuclear facilities, a description of each building on each nuclear site, a description of the scale of operations for each location engaged in specific nuclear activities, information on uranium mines and mills, and information on source material. This information would be provided within three months of the adoption of these measures. 
  • Submission of an updated DIQ [Design Information Questionnaire] for the reactor at Arak, designated by the IAEA as the IR-40, to the IAEA. 
  • Steps to agree with the IAEA on conclusion of the Safeguards Approach for the reactor at Arak, designated by the IAEA as the IR-40. 
  • Daily IAEA inspector access when inspectors are not present for the purpose of Design Information Verification, Interim Inventory Verification, Physical Inventory Verification, and unannounced inspections, for the purpose of access to offline surveillance records, at Fordow and Natanz.
  • IAEA inspector managed access to:  centrifuge assembly workshops centrifuge rotor production workshops and storage facilities; and uranium mines and mills.

 

The first and the last of the above points appear to follow from the Framework for Cooperation, which Iran and the IAEA signed in Tehran on November 11. The Annex to that agreement specifically mentions only two locations: the Gchine mine and the heavy water production plant located adjacent to the IR-40 reactor under construction. The IAEA will visit the heavy water production plant on Sunday. But that visit is unrelated to the steps called for in the Joint Plan of Action.

It is understood that the IAEA will need more resources–personnel and money–to do the verification work called for under the Joint Plan of Action. But the amounts need not be very great, since most of the work the IAEA will be asked to do follows from its application of routine safeguards at declared installations in Iran. Much of the scope of work itself would appear to be well within the IAEA’s existing competencies and routine activities, including in Iran:

  • At Iran’s Pilot Fuel Enrichment Plant (PFEP) at Natanz and the Fordo Fuel Enrichment Plant (FFEP) enrichment plants, the IAEA could without difficulty, using its existing inspection regime with some extra inspection activities, verify that Iran has halted all enrichment above 5% and dismantled the connections necessary to enrich to above 5% U-235.
  • The IAEA could verify the downblending of Iran’s inventory of 20%-enriched uranium at PFEP and maybe also at FFEP. At the Fuel Enrichment Plant (FEP) at Natanz it would verifiy that the UF6 is converted to oxide. Additional inspections may be required to meet the six-month timetable.
  • With some extra inspection activity, the IAEA could without difficulty verify that no additional centrifuges are being installed and that designated installed centrifuge capacity at both enrichment plants is idle.
  • The IAEA can verify that the IR-40 is not operating, and that Iran is not making or testing fuel, or installing equipment at the reactor. The IAEA can carry out inspections for this purpose at the Arak site, at the Tehran Research Reactor (TRR), and at a critical facility.
  • The IAEA can confirm that it has no information that Iran is not violating its agreement not to build a reprocessing plant for the IR-40. This issue should not be a problem under the agreement. If Iran were to inform the IAEA it is constructing a hot cell facility, the IAEA would in any case have to inspect it quickly to verify design information.
  • The same applies for construction of any new uranium enrichment facilities in Iran.
  • It should be possible for the IAEA to obtain information about Iran’s mining and milling activities, as well as about heavy water production, during the next six months.
  • Ditto for long-sought design information verification (DIV), more frequent inspector access, and provision of key data, consistent with the modified Code 3.1 and the Additional Protocol, for the IR-40 reactor.

 

Problem Areas

A few activities that the Joint Plan of Action calls upon the IAEA to perform do raise some potential issues.

The inventory of uranium enriched to 3.5% U-235: Iran has committed to halt progress in the growth of this stockpile. Iran must not increase the inventory such that the amount at the end of six months is not greater than at the beginning, and Iran must convert any newly-enriched uranium from UF6 to oxide. The IAEA can verify this at the FEP/PFEP and FFEP using its established inspection regime. But the six-month timeline may mean that the IAEA should perform an interim physical inventory verification (PIV) at these installations near the end of the six-month period.

Verifying Iran’s compliance on centrifuge production: This action is new and requires additional resources and agreement with Iran and the powers over what it entails. The IAEA is not doing this in other countries with centrifuge enrichment programs. It is possible that enriching states–the members of the Almelo Treaty, France, Russia, China, Brazil, Japan, perhaps even the U.S.–would not want to see the IAEA expand its authority into centrifuge production monitoring, in part for nonproliferation and intellectual property reasons. A “black box” approach to this challenge in Iran may therefore be the answer.

Daily inspections at Natanz and Fordo: Iran has committed to provide inspectors daily access at these facilities to ensure comprehensive monitoring. It isn’t clear why. Does the IAEA want to use this provision to increase the frequency of its inspections? If so, then the agency will have to work out the logistics required.

IAEA safeguards aficionados will tell you that, in safeguards terminology, “daily presence” means “continuous inspection”–a notion which was introduced for use at reprocessing plants, where significant quantities of material are constantly flowing. There’s lots of material flowing at enrichment plants, too, but the amounts are by comparison small; the IAEA only needs to look at the feed, product, and tails to do a material balance at the plant.  The enriched uranium product is collected in cylinders that fill up slowly and are detached from the process when full. What is of safeguards significance is how much and what material is in the product cylinders and where are they stored. (There is also the issue of undeclared feed and take-off points to reckon with.) So the question is whether the IAEA really needs “continuous inspection” to ensure against undeclared movement of product cylinders. The IAEA doesn’t really need 24/7 personnel presence in at least some enrichment plants operating today. Having inspectors in the plant all the time might make the window of opportunity for a diversion smaller, but the marginal value may be very limited.

The IAEA’s response to this point in the Joint Plan of Action may depend on the specific design of the enrichment plants in Iran. At Russian centrifuge plants, some settings which would be diversion-critical are made in the control room and the change would take just 15 minutes to accomplish. At Urenco plants, the same operations would require making hardware adjustments in the piping in centrifuge cascades.

IAEA Resources

Right now, the IAEA is spending a lot of money on safeguards in Iran–US $12,256,000 in 2012.  That’s more than for any other IAEA member state except Japan. The lion’s share of this amount pays for activities related to the IAEA’s investigation of Iran’s nuclear program under mandates from the IAEA board of governors and the U.N. Security Council–not routine inspections at declared facilities. Routine safeguards are comparatively inexpensive. Like Iran, the Netherlands has a large uranium enrichment plant and one power reactor. Routine safeguarding of nuclear activities in the Netherlands, however, last year cost only $1,888,000.

At any one time, the IAEA probably has no more than about four or five personnel on the ground in Iran doing safeguards. A few more–certainly not 100 or even a score–may be needed to fulfil the IAEA’s expanded mission under the Joint Plan of Action.

The same goes for the money that will be needed. This will likely be a small fraction of the total current safeguards cost in Iran. Since the IAEA passed its 2014 budget at the General Conference three months ago, the easiest solution would be for member states–most logically the six powers themselves–to agree to pay the costs under an extrabudgetary program. In the past some states have objected to the growth of extrabudgetary funding to cover the costs of IAEA safeguards. But it is not anticipated that this concern will stand in the way of funding verification under the Joint Plan of Action because most states on the IAEA board–on the basis of statements they made during the board meeting last week–clearly support the results of Iran’s diplomacy with the six.

The IAEA’s Authority 

Does the IAEA have the authority to do the work? Right after the Iran deal was closed in Geneva, questions in Vienna arose about that because, as I have said above, the IAEA is not a party to this agreement. The agreement itself is based on voluntary commitments by Iran and the six powers–not legal obligations.

As of last week’s board meeting, it wasn’t clear how the IAEA would proceed. Director General Yukiya Amano had proposed internally convening an extraordinary board meeting pertaining to the IAEA’s response to the Joint Plan of Action. Less clear last week was whether the IAEA would inform the board of its intentions or instead seek its formal approval.

In any case, it would appear that the agency has the authority go do the work which Iran and the powers assign to it under the agreement, as Article III A. 5 of the IAEA Statute tells us:

The Agency is authorized… to establish and administer safeguards designed to ensure that special fissionable and other materials, services, equipment, facilities, and information made available by the Agency or at its request or under its supervision or control are not used in such a way as to further any military purpose; and to apply safeguards, at the request of the parties, to any bilateral or multilateral arrangement, or at the request of a State, to any of that State’s activities in the field of atomic energy.

 PMD Reporting

The Joint Plan of Action says that the IAEA and the Joint Commission are to cooperate to “facilitate resolution of past and present issues of concern” but it does not make specific reference to “Possible Military Dimensions” in Iran’s nuclear program, which has been the subject of IAEA formal reporting to the board of governors since November 2011. The IAEA-Iran Framework for Cooperation likewise states that Iran will “resolve all present and past issues.”

Iran has not provided the IAEA answers to any key PMD-related questions since 2009. It is unlikely that all of these questions will be answered during the next six months. How much information the Iran gives to the IAEA will no doubt be subject to negotiation during this period along the lines of what the IAEA and Iran agreed upon on November 11 in Tehran. At the end of a year, assuming that six months will not suffice to reach a comprehensive settlement of the Iran conundrum, perhaps the biggest challenge will then appear: If we assume that Iran implements all other conditions of the Joint Plan of Action, save divulging what may be compromising details about its previous nuclear activities, how much about Iran’s most sensitive nuclear past must the IAEA know for the six powers to make a deal with Iran looking into the future?

 
 

Because neither side has disclosed details, we don’t know for sure whether the roadmap Iran proposed to the P5+1 powers in Geneva in mid-October includes the future of the IR-40 reactor project. Iran’s counterparts have good reason to make sure that the unfinished heavy water reactor is on a short list of must-resolve issues. Once it is completed, Iran will have an installation that can generate annually in its irradiated fuel between 5 and 10 kilograms of weapons-grade plutonium. That’s enough for one nuclear weapon a year.

The powers don’t want the IR-40 to make plutonium that Iran then separates. Iran wants a versatile and safe research reactor. These issues could be reconciled by diplomacy. The P5+1 could help Iran finish the reactor if Iran provides credible assurances it won’t access the plutonium.

Since 2006, the powers have served notice to Iran in United Nations Security Council resolutions that both the IR-40 project and Iran’s uranium enrichment program are proliferation threats.  The resolutions ordered Iran to suspend both endeavors. Iran has ignored the resolutions on both counts. It continues to enrich uranium and to build the IR-40.

Unlike Iran’s enrichment plants, which are operating routinely, once the IR-40 is completed, operation of the reactor will pose safety concerns. Some of these are related to a raft of technical challenges that Iran must overcome in manufacturing the nuclear fuel for the reactor.

In part because of these issues, the IR-40 will not be finished and operated for awhile, most likely not before 2015, and possibly not for as long as Iran remains under international sanctions.

This project has been delayed at least four times since it got underway during  the 1990s. The most recent delay was revealed to the IAEA in August during a physical inventory verification. A number of items were still not in place, including cooling pumps, instrumentation and control systems, and sufficient uranium fuel.

Iran is behind on this project because it is under sanctions enforced by global export controls on know-how, materials, and equipment. Without these measures, the reactor would probably be operating today. Nearly everywhere else worldwide, research reactor projects like the IR-40 have access to off-the-shelf nuclear-grade items conforming to international safety and quality specifications. Iran is cut off from these sources.

Fuel Fabrication and  Testing 

As of September, Iran had made about 1/5 of the amount of fuel it had predicted in June it would make by then.

Iran faces two main challenges here: fabrication of fuel to quality standards, and testing of the fabricated fuel to make sure it will perform safely and as expected.

Fuel fabrication is difficult for several reasons. Iran chose zirconium for cladding material instead of much softer and more malleable aluminum. This will permit Iran to operate the reactor at higher temperatures and with higher fuel burnup–but only if Iran masters the difficulties of extruding less-ductile zirconium tubes. Add to this the difficulties in making the fuel itself. The natural uranium fuel pellets are produced in Iran in batch mode using mixers, which must be precisely controlled to ensure homogeneity, as well as sintering ovens, which must be carefully operated to guarantee a constant temperature profile and other technical parameters. Precise control is essential to make sure that the thousands of fuel pellets loaded into the  IR-40′s core are identical. If they are not, or if tubing is not precisely machined and welded, slight irregularities in geometry can result in deformation and loss of fuel integrity, possibly leading to a serious core accident.

In virtually all nuclear programs today, national regulators would not permit a reactor to operate using specially-designed fuel, produced by people with relatively little experience, without first carrying out a comprehensive fuel testing program. Tests would measure the behavior of fuel under irradiation, focusing on such factors as high temperature, chemical interactions, and both thermal and mechanical stresses. The cladding would be tested for irradiation growth, bowing, swelling, and resistance to fission gas pressure.

The fuel assemblies for IR-40 are uniquely designed long-tube bundles that do not fit into any other reactors in Iran and represent a modification of a Russian fuel design. Iran currently has no access to Russian experts to assist it in making and testing the fuel. So far, Iran has conducted limited irradiation tests of fuel assembly components only, not complete assemblies. Because of sanctions, Iran can’t test the fuel abroad.

What to do?

In theory, Iran could rely on testing individual segments of the fuel in Iran. Given Iran’s current lack of access to foreign expertise, this would not be ideal, but Iran could obtain considerable data that would be useful in determining whether the fuel made in Iran would be safe and perform as calculations would expect.

In May, the IAEA reported to its Board of Governors that Iran disclosed its intention to begin hot fuel testing in Q1 of 2014, but provided no details.

Iran currently has no management system to carry out such tests, little competency and experience, and insufficient infrastructure. The IAEA is aware of these deficits because its personnel have been to the IR-40 project on numerous occasions, including in 2010 when the IAEA carried out a formal review of Iran’s resources for performing experiments and tests which would be relevant for this project. Iran has not disclosed to the IAEA or other outsiders where it plans to carry out testing of the IR-40 fuel.

A decision by the Iran Atomic Energy Organization (AEOI), which is in charge of the IR-40 project, to operate the reactor without prior comprehensive fuel testing would challenge the authority of the Iran Nuclear Regulatory Authority (INRA). Its mission includes “regulatory review and assessment… prior to authorization… to determine whether the operating organization’s submissions demonstrate that the facility complies with the safety objectives, principles, criteria, and regulations approved by INRA.” Presumably, that would include preparations for commissioning a reactor of unique design loaded with fuel that was produced by a fabricator without a demonstrated performance track record.

Were Iran to systematically carry out comprehensive quality-assurance tests for all the hand-made fuel it is producing for IR-40, detection of any irregularities should delay commissioning of this project further since Iran must first identify and rectify any quality control problems. Should Iran instead assume the risk of commissioning and operating the IR-40 without taking such care, that course of action should prompt objections–both in Iran and elsewhere–that the AEOI is proceeding without heeding advice from the IAEA, which is based on international good practices.

What should Iran and the P5+1 do? The best course of action would be to include IR-40 commissioning in the basket of issues subject to a negotiated settlement. The powers don’t want Iran operating a reactor to accumulate weapons-grade plutonium in spent fuel, which it could reprocess. Iran needs a research reactor that it can use for a variety of civilian applications and that Iran can be confident will be safe to operate.

As part of a negotiated comprehensive settlement with the P5+1, Iran could get access to foreign expertise to realize its ambitions to have a versatile research reactor. The P5+1 might agree to help Iran replace the IR-40 with a light-water reactor better suited to produce the medical isotopes Iran says it wants to produce. Should Iran–like a number of other countries–want instead to have a heavy-water reactor to maximize production of neutrons for research (and given Iran’s investment in heavy-water production infrastructure, Iran may well insist on this), the P5+1 might consent to help Iran finish the IR-40 project–provided that Iran agree that IAEA safeguards would apply in perpetuity on both the IR-40 and its inventory of nuclear material, and that the irradiated fuel will not be reprocessed.

 
 

Pakistani luminaries met with Chinese luminaries a few months ago, and their handshake will translate into a brand new 1,000-MW power reactor–Kanupp-2–being plunked down into the middle of Pakistan’s mega-metropolis Karachi. Maybe even two reactors. The unofficial announcement with details is here. In April, China Daily confirmed that there is a foreign contract. So it’s a done deal. Right?

Not quite.

Friends at the Pakistan Atomic Energy Commision (PAEC) cautioned this month that this transaction hasn’t yet been formally approved and concluded. “It’s still pending” was how they described it.

The backstory, I subsequently learned, is straightforward. With questions looming about NSG guidelines and intellectual property rights for these 300-MW-loop projects, Pakistan and China may have their reasons for being more circumspect than most about how they conduct their bilateral nuclear commerce. But that plays no role here. In one very essential aspect this Sino-Pakistan reactor deal isn’t any different from any other transaction anywhere else where a nuclear power plant exporter is selling his wares to a foreign client: Money talks, and each side will try to leverage its political assets to gain commercial advantage.

The money

Whether two 1,000-MW PWRs would cost PAEC $9.6 billion as announced or a single unit could be had instead for about $4 billion, which is what I was told a week ago, that’s a lot more than I think some Western observers have generally assumed this project would cost (these are BTW the same pale faces who have already concluded that this sale is a foregone conclusion on the basis of soft Chinese financing). The starting point is this question: Does Pakistan have billions of dollars to throw at a venture like this? That’s dollars or rupees or RMB per installed kilowatt. If you talk to people hovering around the World Bank or the International Monetary Fund, which have devoted a lot of time and effort trying to understand and help fix Pakistan’s electricity supply problems, the answer is well, no, it doesn’t.

Friends in Pakistan point out that Chashma-3 and -4, each rated at 340-MW, cost $750-million each, with Chinese soft money financing about half of that amount. Hence at $4-billion, PAEC wouldn’t be getting any discount for installing more megawatts at Kanupp-2, even if China would provide $2-billion in financing. To the contrary.

So there’s an alternative scheme which has been floated in Islamabad and Beijing: Pakistan can get the reactor for less, but it would have to agree to cut Chinese industry into a build-own-operate (BOO) venture–a business model that Russia and Turkey are committed to trying out at Akkuyu, and that I hear Chinese investors are interested in pursuing with any of a small number of potential future nuclear power plant clients who are short of cash and perhaps nuclear project management expertise.

The grid

If China and Pakistan go that route, the project will certainly be delayed because of Chinese due dilligence. As Pakistani friends explain, Chinese potential owners of a nuclear power plant in Pakistan will make a hardnose calculation of estimated long-term return on investment. That would take into account a host of factors which would play out in any nuclear plant project anywhere in the world: management and engineering quality, infrastructure, regulation, political risk. But also the state of the power grid. And that is a touchy subject in Pakistan.

The existing Karachi Nuclear Power Plant (Kanupp-1) is connected to the grid system operated by the Karachi Electricity Supply Co (KESC). If Kanupp-2 is built, it will also connect to KESC.

In 2009, the World Bank estimated KESC’s grid losses to be a whopping 30%.  A lot of this loss was due to theft. One year before, the company was privatized on the basis of a $1-billion equity investment by shareholders. Now, if you are going to invest in Pakistan’s power sector, you had better have deep pockets, and KESC’s prime shareholder, Abraaj Capital, a Dubai-based private equity firm, apparently has them. KESC says it is now profitable, and foreign investment in Karachi’s grid, most recently this year by the Asian Development Bank, is continuing. Here’s one narrative which compares the situation at KESC to the rest of Pakistan. Why the confidence in KESC, you might ask. The answer in part is that KESC is today the only vertically integrated power company left in Pakistan, selling to a captive market  in an urban agglomeration–the world’s 11th biggest–of about 15-million people. That looks like shooting fish in a barrel. But for how long? And will customers pay their electric bills? According to this account, as much as 35% of KESC’s power is still being stolen, and the company’s restive workforce is yet another source of uncertainty. Given that it might take 20 years to amortize an investment in a nuclear power plant, it can be assumed that if potential Chinese investors are on the horizon, they will want an answer to those questions.

The dams

It’s no secret that the U.S. isn’t too happy about yet another Chinese PWR–this would be number three–slipping under the wire of the NSG guidelines by means of China’s grandfathering claim, after the NSG’s 46 members abetted this state of affairs by awarding India an exception to those rules back in 2008. I and two colleagues at Carnegie two years ago proposed a possible long-term fix for this, but if that general approach has its merits, and we still think it’s worth consideration, it won’t happen overnight.

In the meantime, the U.S. has been mulling prospects for revving up development assistance to Pakistan to generate a lot of hydropower. According to the State Department in August, at issue is the Diamar-Bhasha dam project which would have a price tag of about $12-billion–and generate 4,500-MW-worth of electricity.

Lest you conclude that the U.S. government in its infinite wisdom, and informed by NSG considerations, is subtly connecting the dots here, Pakistani friends insist that it’s not at all a conspiracy by Washington to try to substitute dams for reactors. They point out that the U.S. isn’t the only one helping Pakistan. Saudi Arabia and the EU are also contributing to Pakistan’s hydropower development.

But the dam projects on the upper Indus figure in PAEC’s strategic planning and in its negotiations with China. Some press reports over the last couple of years identified the first ACP-1000 reactor would be Chashma-5. That site is up in the Punjab closer to where all that river water is supposed to generate electricity. Karachi is near the mouth of the Indus, 1,000  kilometers downstream.  The bottom  line is that Pakistan has to figure out where its electricity is going to come from during the next 20 years. Depending on the answer, the next Chinese reactor  might not be built at Karachi at all but instead somewhere else–and there are six candidate sites scattered about Pakistan which PAEC has selected to build it.

To get back to the Sino-Pakistan reactor negotiation, for PAEC the dam-building has its utility. If Pakistan has other potential sources for generating a lot of electricity, the price for ACP-1000 might come down. Already, PAEC has interjected that the price should reflect the fact that, while China will build the ACP-1000 as Fuqing-5 and -6, right now there is no reference plant, entitling Pakistan to a certain risk discount. That logic takes into account that, for the 300-MW units which PAEC has set up at Chashma, Pakistan is highly confident that these reactors will perform according to design specifications because Pakistan has done most of the safety upgrading and site-specific design and project engineering work, including seismic related engineering, while China never continued with the 300-MW plant design after it finished Qinshan-1 back in 1991. In fairness to China, it must be said that China has built two-loop 650-MW units based on this template to more advanced specifications.

There’s also the question of how much Chinese soft money will be available for financing. That, friends in Pakistan say, will depend directly upon how much of the engineering and procurement work for the project is assigned to Chinese contractors, and, indirectly, upon what kind of countertrade opportunities Pakistan can offer China.

At the end of the day Pakistan might tell China this: Especially if France raises IP issues, we might be your only real market outside China for ACP-1000 for a while. In response, rest assured, China would tell Pakistan: But if you want more nuclear energy we are the only option you have.

 

 

 
 

This little item was prompted by Andreas Persbo, executive director at Vertic, who yesterday afternoon filed a few comments to a post of mine on Facebook at the conclusion of the IAEA’s September Board of Governors meeting here in Vienna.

I had retold a bon mot pronounced by an ambassador during the board meeting on Wednesday, referring to his country’s reservations about a report which IAEA Director General Yukiya Amano had submitted to board members last month in anticipation of Agenda item 6b entitled “Safeguards Implementation at the State Level.”

The ambassador in question was one of 23 board members who spoke on September 9 under that agenda item. You’ll be hearing from me on this subject fairly soon. And in considerable detail and length as this important matter deserves.  But not today. One thing at a time. Der Reihe nach, as the locals say.

Sometimes our bilateral conversations move onto some, um… unrelated tangents. This was one of those cases. We got off the SLA and eventually Andreas touched upon security personnel at the IAEA and other U.N. family agencies, at which point he imparted: “I’ve learned never to ask a security guard about his side arm.”

Well, Andreas, I couldn’t resist.

When we return to the VIC next week for the IAEA’s 57th General Conference, the shooting iron we’ll see stuffed into holsters in the halls of the M Building will be a Glock 19.

The technical specifications are these.

It turns out that the Glock 19 is a pretty standard item in the arsenal of United Nations security personnel,  maybe just a tad on the petite side but nonetheless, according to its manufacturer, deemed by the U.S. Air Force trustworthy to provide “efficient defense in emergency situations.”

More or less everything mere mortals should want to know about this weapon can be found well-explained and demonstrated right here.

So, Andreas, your hunch yesterday about Glock was spot on. IAEA security guards pack the little 9mm number, made right here in Austria.

 

 

 

 
 

Near the end of what seemed a super-busy and seamless six-month transition from spring to fall without the respite of a summer silly season, a lighter tabloid moment arrived last week. The government of Zimbabwe proclaimed that a revelation in the London Times of a secret uranium deal with Iran had been breathed into life by reporters whose poetic license spun out of control.

Thanks to chronologizing by Diane Barnes, it would appear that the essential facts in the case are these: Two days after the Times on August 8 interviewed Zimbabwe’s Deputy Minister of Mines, the paper asserted that Zimbabwe President Robert Mugabe had signed a secret uranium deal with Iran. Immediately thereafter, the government hotly denied the allegation, issued arrest warrants for two co-authors, and nabbed one of them. He then signed an affidavit, as Barnes recounted, stating that he had invented his share of the report.

The Backstory

Far more significant than the trials and tribulations of the Times is the fact that, after Iran’s uranium enrichment program at Natanz was revealed in 2002, a number of IAEA member states, chief of which is the United States, have systematically tried to prevent Iran from importing uranium-bearing minerals. Iran’s efforts to obtain materials that would qualify as potential secondary uranium sources have been global but the centerpiece is Iran’s humanitarian and commercial diplomacy in Africa. Last week’s distorted media allegations concerning Zimbabwe point to just one piece of that puzzle.

UNSC sanctions since 2006 ban UN member states from exporting uranium to Iran. But sanctions don’t bar mining firms from selling to Iran secondary uranium sources. Chief of these are phosphates–a subject the IAEA knows a lot about having since 2007 tried to account for all the uranium in Syria’s nuclear program.

Iran, it turns out, has in recent years tried to obtain phosphates from major producers strung out along the coast of northern and western Africa from Togo to Egypt. Western governments have responded with equal determination to isolate Iran diplomatically and commercially.

According to the World Nuclear Association, recovering uranium from phosphates is a business with an established track record globally, and about 20,000 tons of uranium have been recovered. The technology for extracting the uranium from phosphates is well-known, mature, and not considered sensitive.

Iran imported phosphates from Africa beginning in the 1970s, but since imposition of UNSC sanctions, Tehran has redoubled efforts to scour the continent for access to phosphates and other secondary uranium sources, such as chromium and copper, most recently this year in Tunisia, and apparently also in Sierra Leone. From Morocco, the world’s biggest phosphate exporter, Iran has hauled in phosphates worth up to $100 million per year through at least 2009. Informed by the IAEA’s judgment that the Atomic Energy Organization of Iran is outfitted to extract uranium from phosphates, the U.S. during the late 2000s therefore urged Morocco to monitor and reduce its trade with Iran. In 2009, Morocco cut off diplomatic ties with Iran on the grounds that Iran was interfering in Morocco’s domestic affairs. More recently, Iran has sought commercial agreements with Togo’s phosphate industry. Iran’s long-standing connections with phosphate producers in Senegal however were scuttled in 2011 when Dakar cut links with Tehran over alleged Iranian assistance to armed rebels in southern Senegal.

Beginning around 2005 the U.S. began obtaining information suggesting that the Democratic Republic of Congo (DRC), formerly Zaire, may have abetted or tolerated illegal uranium mining in that country, and that uranium-bearing ores mined in the DRC may have been dispatched to Iran through intermediaries in Tanzania. The U.S. informed the IAEA of these findings. Separately, the U.S. and other states have raised Iran’s quest for primary and secondary uranium sources with a panoply of other African states. These discussions certainly alerted Zimbabwe. But the U.S. brought virtually all sub-Saharan governments into the information loop.

Paragraph 34

What do the rules say about countries exporting uranium-bearing ores to Iran? As Barnes reported out this week:

[N]either Iran nor Zimbabwe is legally obligated to keep international monitors apprised of any trade in unrefined uranium ore, according to Olli Heinonen, a former top monitoring official for the International Atomic Energy Agency. The U.N. watchdog organization is responsible for ensuring that nuclear assets under its watch are not diverted for military use.“If Iran recovers uranium from the ore, it is obliged to report it only when it has reached the purity suitable for fuel fabrication or enrichment,” Heinonen said.

Iran is therefore free to import uranium-bearing ores, and regardless of sanctions Iran’s foreign partners may legally export uranium-containing minerals to Iran not declared as uranium-bearing material. In theory, a problem arises–for Iran, not the exporters–only if and when Iran thereafter elects to extract the uranium and process it into purified oxide or fluoride compounds.

Behind this understanding looms Paragraph 34 of Infcirc/153, the model agreement for NPT safeguards agreements. It says:

When any material containing uranium or thorium which has not reached the stage of the nuclear fuel cycle described in sub‐paragraph (c) below is directly or indirectly exported to a non‐nuclear weapons State, the State shall inform the Agency of its quantity, composition and destination, unless the material is exported specifically for non‐nuclear purpose.

Some IAEA member state governments are not happy with this state of affairs. When the Australian mega-miner BHP Billiton Ltd. a few years back planned to export semi-processed copper concentrates with significant uranium content to China, Canberra raised the matter with Beijing, and the Chinese government swiftly provided safeguards arrangements for the uranium it recovered. But Australia had become sensitized to the potential for abuse of Paragraph 34 by other, less scrupulous, parties.

Leading Western uranium producing countries with CSAs–such as Australia and Canada–routinely report their exports under Paragraph 34. Under the Additional Protocol, which spells out the IAEA’s right of access to information from states with an AP about uranium mining and processing, Australia and Canada routinely afford the IAEA complementary access to facilities and information on mining activities to demonstrate that they are reporting findings to the Department of Safeguards–including under Paragraph 34.

But some countries with CSAs are lax, and those without CSAs (let alone an AP) as a matter of course don’t track secondary uranium sources or report uranium exports to the IAEA at all since they are under no legal obligation.

Even if a state has a CSA and an AP in force, that’s no guarantee that that state will cooperate with the IAEA. In one such case where the IAEA pursued information suggesting that one government south of the Sahara didn’t effectively control its uranium industry, that country’s mining officials told the Department of Safeguards, in so many words, to do this.

 

 
 

Hans Blix said a lot of things while Director General of the International Atomic Energy Agency for 16 years, and one of them was this:

“We cannot inspect every nook and cranny in a large country.”

Before running the IAEA, Blix was a politician, a career civil servant, and a foreign minister, and in public sometimes he could be, well, more than a little cagey. On occasion Blix fiercely defended his agency’s prerogatives and reputation, but there were also moments when he felt that he shouldn’t commit the IAEA to take avoidable risks or promise to do things that couldn’t be delivered. In recent years, with the IAEA prominently extending its reach into Iran, and with significant changes in the making concerning how the IAEA implements safeguards, Blix’s views about the IAEA’s role are still informed by concern about the agency’s risk and reputation.

I was in the room in 1992 when Blix made the above remark, and I recall that my initial reaction was that it allowed him to dodge probing questions about the IAEA’s responsibility for making sure that a state’s nuclear activities were all accounted for, as the first Gulf War a year before had revealed that the IAEA missed a billion-dollar nuclear weapons program in Iraq.

But my first impression of  his remark, informed by Blix’ cleverness, was shortsighted. As is also the case today, back in 1992 the IAEA needed to think about its risk and reputation. Many people then expected Blix to chase down every Iraqi machine tool, mop up every speck of South Africa’s enriched uranium, and get cracking on safeguarding heretofore undeclared nuclear activities in Argentina and Brazil–all at a time when Blix’ paymasters were closing in on and reducing the IAEA’s budget. Blix could not overcommit himself and his agency–and he therefore chose his words wisely.

Enter the PMOI

I can’t remember when I last recalled Blix’ 21-year-old response to a question about the IAEA’s capability to penetrate into hidden domaines of a country’s nuclear program, but shortly after I saw this announcement by the People’s Mojaheddin Organization of Iran early this morning, it resurfaced. The PMOI report was backed up by documentation asserting that Iran is building a secret nuclear installation at a place called Damavand, north of Tehran.

What to make of that claim? Reuters asked me this morning. I told them the PMOI should not be simply brushed off for two reasons: 1.) because the organization has a mixed track record which includes revealing some correct information, and 2.) because in light of Iran’s own failure to declare its activities, “it has been widely assumed that there is likely some Iranian nuclear infrastructure which is secret, undeclared, and which may be underground.”  Reuters published that.

But I also told Reuters this, which didn’t get into print and which in my view was more germane to the questions raised by PMOI’s material:

Given that Iran has just elected a new president from whom we anticipate initiatives, it’s hard to believe that Iran would provoke the powers by equipping a new underground site with centrifuges. It’s more likely that intelligence agencies have known about this site for some time and that information is being leaked now to smoke out that site in advance.

Why did I draw that preliminary conclusion?

In 2010, Iran announced it would build ten enrichment plants. At the time this claim was widely dismissed by many observers as hyperbole, given the views of some people, including Olli Heinonen, that Iran was likely runing low on embargoed materials it needed to build more centrifuges.  The IAEA  requested that Iran provide design information for any additional enrichment plants it intended to build. So far, Iran has not provided the IAEA any information indicating that it plans to build more enrichment facilities than the ones the IAEA knows about.

So is Iran building or intending to build a new underground enrichment plant now, at the site that PMOI is fingering? I have no facts, and no knowledge. I doubt it. But if so, or if such a facility was ever planned, it’s probably too late.

There’s also Iran’s presidential election and Hassan Rouhani’s victory to consider. With Iran poised to reap the benefits in the form of further delays in sanctions or other negative actions, news that Iran had a third clandestine centrifuge plant would be fatal to efforts by Iran to demonstrate that its failure to make known the Fordo plant before September 2009 was a one-off mistake (actually, a two-off mistake, since back in 2002 Iran’ had likewise failed to declare its Natanz plant). Were U.S.-Iran diplomacy to take off after Rouhani’s election, revelation that Iran was preparing a new underground nuclear site would be poison.

The PMOI has some new wrinkes–including the allegation that Mohsen Fakhrizideh is in charge of a company constructing the facility on behalf of Iran’s Defense Ministry–but the PMOI does not in fact identify any specific nuclear purpose for the site which it claims hosts a “secret nuclear facility.”

More likely is the prospect that PMOI may be obtaining information from people connected to foreign intelligence agencies who are busy trying to uncover Iranian nuclear-related facility construction.  Their hunt for secret sites in Iran got revved up long before Iran told us of its 10-enrichment plant ambitions. Even before that I was told that Western governments had located about a dozen potential sites where a centrifuge plant in the future might be bunkered or erected underground. Intelligence agencies and their governments could therefore well have an interest in signaling to Iran now that they know about sites which Iran has developed and which it could dedicate to future uranium enrichment–whether clandestine or declared.

For the powers negotiating with Iran, were Iran to declare to the IAEA that it intended to build a third enrichment plant, that would make more difficult a future deal intending to limit Iran’s future uranium activity to a single installation in Iran. Iran’s adversaries would therefore want to nip any third plant in the bud. The powers also don’t want to see Iran reprocessing spent fuel from its heavy water reactor in Arak. Removing any undeclared infrastructure which may host such future activities–as Israel did in destroying the installation at Al-Kibar in Syria in 2007– was not an option. Lifting the veil would have been an option.

 

Back to Blix

During interactions with the IAEA after early 2009, Iran changed its narrative about the intended purpose of the Fordo facility. That made the IAEA suspicious that Iran had intended the facility to be undeclared before it was spooked by foreign intelligence agencies. The IAEA reported to its Board of Governors in November 2010:

Iran’s failure to inform the Agency, in accordance with the provisions of the revised Code 3.1, of the decision to construct, or to authorize construction of, a new facility as soon as such a decision is taken, and to submit information as the design is developed, is inconsistent with its obligations under the Subsidiary Arrangements to its Safeguards Agreement. Moreover, Iran’s delay in submitting such information to the Agency does not contribute to the building of confidence. While the Agency has confirmed that the plant corresponds to the design information provided by Iran, Iran’s explanation about the purpose of the facility and the chronology of its design and construction requires further clarification.

Could the IAEA inject itself into Iran to find out whether Fordo, or any other project, was intended to be declared or not? In 2009, before he vacated the Director-Generalship of the IAEA to Yukiya Amano, Mohamed ElBaradei had this to say:

It isn’t realistic for an international organization to have an intelligence branch…. Having our own spies going around the world is contrary to our nature. We do our work above ground; we don’t work underground. So I continue to preach transparency.

That brings us full circle back to what ElBaradei’s predecessor said 17 years before. The IAEA is only as robust and capable as its member states permit. In 1992, the IAEA had no resources to commit itself to look under every rock for signs of clandestine nuclear activity. Today, with or without the State-Level Approach for safeguards, the IAEA is in the same situation. Then as now, the IAEA can’t cover all the territory. “We cannot inspect every nook and cranny in a large country.” 

So maybe that’s why the information about the Damavand site got leaked today.

Under Code 3.1 of the subsidiary arrangements to Iran’s safeguards agreement, which the IAEA says is in force, Iran must notify the IAEA of a nuclear facility at the time that it decides to construct it. It would be difficult for the IAEA to independently establish when Iran would have decided to build any specific installation. In practical terms Iran might therefore take advantage of the situation to build as many underground tunnels as it wants without providing the IAEA any information about their intended purpose. Were Iran however to introduce specific equipment or material into such a site, betraying a nuclear purpose–and were that action to be exposed–then Iran would have a serious international public relations problem on its hands.

Unless of course Iran declared its intention to construct a nuclear facility there first. The leak of information to PMOI may mean that, if Iran had ever contemplated Damavand hosting a nuclear installation, that option is now foreclosed.