President George W. Bush visiting a U.S. nuclear power plant

Russia has a vested interest in building up nuclear energy to provide itself some cushion while making the long-term transition to charging market rates for domestic gas. While Russian industries may not pay the same rates for gas as their American counterparts for several more years, surging demand from Russia's booming economy and setbacks in developing major offshore fields may force Russia to hasten this transition. For the Russian government, partially subsidizing the construction of new nuclear and coal-fired plants with revenues from gas exports is probably a better business plan than providing the same gas at a discount to domestic industries. Prices for coal are likely to remain less violatile than oil, natural gas and uranium for the foreseeable future.

The former Soviet Union sits behind only the U.S. in proven coal reserves, and even with world uranium prices on the rise there is plenty of material leftover from dismantled Soviet nuclear warheads. The U.S. Department of Energy-sponsored "Megatons to Megawatts" program has already safely disposed of enough enriched uranium to produce 8,000 nuclear warheads and will get rid of 12,000 more between now and 2014. According to an article in the October 6, 2006 edition of the Wall Street Journal, the world currently consumes 170 million pounds of uranium and only mines (mostly from Australia and Canada) 109 million pounds a year. The difference is provided by dismantled American and Russian nuclear warheads and uranium supplies previously purchased by utilities.

On this side of the Atlantic, as we mentioned in a July 2006 post on a Russian-American nuclear agreement, the U.S. nuclear industry stands to profit as well. The U.S. nuclear industry has fought for years to safely dispose of waste from existing reactors in a deep mineshaft in Yucca Mountain in Nevada. These efforts have been blocked both in Congress and in U.S. courts. Disposing of radioactive waste in sparsely populated Siberia would provide a lower-cost way around this deadlock, and free up the U.S. nuclear industry to concentrate on building the next generation of low-waste reactors on the sites of existing plants.

Original Article

The Safety in Loaning Nuclear Fuel
By Richard Weitz
Special to washingtonpost.com's Think Tank Town
Thursday, October 5, 2006; 12:00 AM

The recent thwarted transatlantic terrorist attacks underscore the need to strengthen international defenses against catastrophic terrorism. At the July 2006 G8 summit in St. Petersburg, U.S. President George W. Bush and Russian President Vladimir Putin launched a global initiative to combat nuclear terrorism and opened negotiations on bilateral civil-nuclear-energy cooperation. These complementary steps toward enhancing global security deserve broad international support.

Despite their differences on other issues, Russia and the United States play a unique role in helping avert nuclear terrorism. In their February 2005 Bratislava summit declaration, Bush and Putin affirmed that their countries "bear a special responsibility for the security of nuclear weapons and fissile material." Along with existing threat-reduction projects, their recently announced collaboration on nuclear energy and nuclear terrorism demonstrates substantial progress toward meeting this commitment.

For several years, Russia has sought to become a core participant in a new network of global nuclear-fuel-service providers. At the mid-August 2006 summit of the Eurasian Economic Community, Putin again proposed that Russia (and other states that already possess advanced civil nuclear technologies) sell uranium fuel at modest prices to countries lacking their own enrichment facilities -- provided the recipients returned the fuel. The original suppliers would then store and reprocess the spent nuclear fuel under international oversight.

Although Taiwan, South Korea, and other countries have expressed interest in storing spent nuclear fuel in Russia, the provisions of their atomic-energy agreements with the United States forbid them from transferring U.S.-origin nuclear material elsewhere without prior American consent. U.S. law requires a separate Russian-American accord before such shipments may occur. Until recently, American concerns about Russian-Iranian nuclear cooperation and Russian plans to reprocess the spent fuel into plutonium have blocked such an agreement. The need for enhanced multinational collaboration to counter nuclear proliferation, reduce greenhouse-gas emissions, and provide additional energy sources has appropriately led the U.S. administration to reassess its position.

Requiring the return of spent nuclear fuel to its original suppliers would advance global nuclear-nonproliferation goals by depriving recipient countries of opportunities to reprocess it and extract plutonium. Guaranteeing developing states the right to purchase and store fuel internationally at modest cost would make it unnecessary for them to develop national uranium-enrichment and reprocessing capabilities. Without such sensitive technologies, Iran and other countries would find it much harder to use a civilian nuclear-power program to acquire nuclear weapons. Any government that persisted in developing a costly indigenous nuclear-fuel cycle -- despite assured access to international nuclear-fuel services -- would raise the alarm that they were driven by military rather than economic motives.

Iran has thus far declined to participate in such a fuel-leasing program. For the past month, Iranian leaders have claimed they have been too distracted by the war in Lebanon to address the issue. They continue to insist on their right to develop their own indigenous fuel-cycle services -- which would also conveniently allow Tehran to manufacture nuclear weapons. Even Russian policy makers express suspicion that their Iranian interlocutors are stringing them along while they advance their nuclear research

Russia's offer to provide uranium enrichment and spent-fuel disposal services to foreign countries could yield substantial nonproliferation benefits even without Iran's participation. For example, it would remove fissile materials from places that have less experience than Russia with such dangerous materials. Unlike most developing countries, which account for over half of the new nuclear reactors under construction, Russia has been receiving extensive international nuclear-safety and security assistance for years.

The Russian government would earn an estimated $10-20 billion from supplying such fuel-cycle services. Congress should support the Russian-American nuclear accord if Moscow allocates some of this projected revenue to support nonproliferation projects. Russia must also limit its nuclear collaboration with problem states such as Iran.

A Russian-American civil-nuclear-energy accord would provide a core component of the administration's planned Global Nuclear Energy Partnership. The GNEP aims to enhance multinational cooperation on many important nuclear-security issues, including developing more proliferation-resistant fuel cycles. Limiting the spread of sensitive nuclear technologies and materials remains the most effective strategy for reducing the dangers of nuclear proliferation and catastrophic terrorism.

Richard Weitz is a Senior Fellow and Associate Director of the Center for Future Security Strategies at the Hudson Institute.