An Iran Deal Buy-In for Russia?

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Op-Ed Arms Control Wonk
Summary
A comprehensive P5+1 Iran deal that included a Russo-Iranian agreement on nuclear cooperation could give Moscow a powerful incentive to work with the West and open a sustainable path for Iran toward commercial nuclear power development.
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The last time someone came up with a scheme to square the circle with Iran was back in 2010, and the leading actor was Russian Foreign Minister Sergei Lavrov. The “Lavrov Plan” never took off because the U.S. and European powers wouldn’t embrace it, for reasons including differences over how to handle orders to Iran from the United Nations Security Council to suspend uranium enrichment.

Since then, other differences between Russia and the West over how to deal with Iran have emerged. Beginning last November, Russia has expressed prickly views on this and related issues at the IAEA, and Russian President Vladimir Putin has also spelled out that he expects his diplomats to more firmly represent Russia’s national interests–including specifically on Iran’s nuclear program. Russian Deputy Foreign Minister Sergei Ryabkov last month publicly endorsed direct U.S.-Iran bilateral discussions, but it also appears that if the U.S. proposes to Iran and the P5+1 anything to resolve the crisis that doesn’t take into consideration Russia’s interests and concerns, it isn’t going to fly.

So while waiting for the United States and the other powers to step up to the plate in coming weeks, I’ve been mulling how a comprehensive package deal with Iran might include a Russian buy-in. There’s no silver bullet, but my thoughts keep returning to the potential for nuclear cooperation between Iran and Russia.

Were a comprehensive P5+1 Iran deal to include a Russo-Iranian agreement on nuclear cooperation, that element might accomplish three things:

  • afford Moscow a powerful incentive to unite with Western powers in persuading Iran to fully cooperate with the IAEA
  • open a sustainable path for Iran toward commercial nuclear power development, and
  • provide a clear peaceful-use rationale for Iran’s uranium enrichment program, including for Iran’s steadily growing inventory of enriched uranium product (EUP)

Russia’s nuclear export agenda

Putin’s ongoing foreign policy rethink is aimed in part at enhancing Russia’s leverage as a global supplier of energy fuels and technologies, including for nuclear power. His government is pressing vendor Rosatom to expand nuclear power plant exports, and a bilateral agreement to provide Iran several modern VVER power reactors would fit that agenda. Currently, Russia is aiming at construction in Belarus, China, India, Turkey, Ukraine, and Vietnam, but not all these prospects will be commercially viable. More recently, Rosatom has made known it has plans to complete a generic design assessment in five years to allow the U.K. to certify its VVER PWR design for construction there, and it also wants to certify the design in the U.S.

Were Iran to agree to and implement a deal meant to establish that Iran’s nuclear program is wholly dedicated to peaceful use, UNSC sanctions on Iran could be lifted, Iran could use receipts from oil exports to finance its diversification investments into nuclear power, and Russia’s commercial and political risk in exporting nuclear reactors to Iran would thereby be reduced. Iran–not the powers–would pay Russian industry for reactors and other infrastructure.

It can be assumed that any power reactors Russia would export to Iran would be modern turnkey VVERs. The hybrid German-Russian Bushehr-1 unit–the product of commercial turmoil unleashed by Iran’s Islamic revolution–would not be replicated. New Russian VVER projects in Iran–like those currently underway in China–would be subject to standard commercial construction schedules including milestones. What might this be worth to Russia? If an agreement were made, say, for construction of four reactors, the total price tag might be around $20 billion.

During and after the commissioning of Bushehr-1, Russia has worked with Iran, including at the plant site, to assure that the reactor is operated safely. This is in Russia’s own interest, as its nuclear exporting plans would be severely damaged were a severe accident to take place at Bushehr. But Iran still is the only nuclear power generating country in the world which is not a party to the international Convention on Nuclear Safety. Under a new nuclear agreement with Russia, Iran could bolster international confidence that its nuclear deployment will be safe and transparent by ratifying the convention and participating in its activities, including providing information to other convention parties about the status of its nuclear safety efforts.

Iran’s nuclear power aspirations

Iran has had plans to build a fleet of power reactors since the mid-1970s but until now, Iran’s success is limited to completion of Bushehr-1–delayed three decades by revolution, war, foreign sanctions, engineering challenges, and domestic political turmoil. The current regime in Iran says it remains committed to building more power reactors. A nuclear agreement with Russia as part of a package deal with the P5+1 could assist Iran in doing this. While UNSC resolutions concerning Iran’s nuclear program do not expressly prevent Iran from importing power reactors, it is unlikely that any power reactor exporting country–including Russia–would commit itself to building more reactors in Iran so long as the IAEA has not established that Iran’s nuclear program is wholly accounted for and is exclusively peaceful.

Iran is the first country in the Middle East to operate a nuclear power plant. But it knows that, without partnerships with foreign industry, in the future it will be overtaken by the Arab states in the Gulf, first by the UAE, which is building a group of modern Korean reactors, and then perhaps by Saudi Arabia, which aims to deploy a fleet of nuclear units during the next two decades. If Iran wants to keep pace with its neighbors, it will need foreign partners it currently doesn’t have.

Iran’s enriched uranium product

Russia and Iran might mutually benefit from a bilateral nuclear power plant supply deal, but that arrangement would not address the proliferation concerns in Iran which are at the core of the Iranian nuclear crisis. If a Russo-Iran nuclear agreement were however to include the transfer of PWR fuel fabrication technology and equipment to Iran, that might help de-escalate those concerns.

Iran continues to add gas centrifuge uranium enrichment capacity and may have enough soon to produce EUP for one reload of PWR fuel per year for Bushehr-1. Currently, Iran has been storing most of its EUP in the form of UF6, which could be quickly fed into centrifuges for further enrichment. A small amount of EUP has been converted to UO2 and U3O8. Iran has begun operation of a pilot-scale installation for production of modest amounts of research reactor fuel using U3O8 feedstock but Iran has not declared to the IAEA any installation in Iran for the production of enriched UO2 fuel for PWRs. Under agreement with Russia, Bushehr-1 operates using Russian-supplied EUP.

Were Russia to agree to provide additional power reactors to Iran, it might also agree to transfer technology and equipment to permit Iran to fabricate the fuel, using EUP enriched in Iran. In advance of the operation of such a fuel fabrication plant, Iran could agree to convert its enriched UF6 inventory to UO2. Iran could also fabricate UO2 pellets for VVER fuel assemblies in advance of making assemblies and loading and irradiating the fuel in a power reactor, as the UO2 would be chemically stable after pelletization. Iran and the P5+1 might agree that this unirradiated fuel would not be reconverted and re-enriched to above 5% U-235.

Since 2006, Western countries have been focused on trying to de-escalate the crisis in part by getting Iran to move its enriched uranium out of the country. If Russia instead provided Iran fuel fabrication know-how, that would enhance and in fact essentially complete Iran’s capabilities in the front end of the commercial nuclear fuel cycle, and permit Iran to process its EUP into reactor fuel inside the country. Iran having VVER fuel fabrication capability in tandem with agreements to build more VVER power reactors would provide a clearly peaceful nuclear objective for Iran’s uranium enrichment program, providing the basis for international confidence in Iran’s nuclear intentions.

Based on the record of efforts by U.S. industry to fabricate VVER fuel, and on an ongoing bilateral agreement under which Russia is transfering technology and equipment for VVER fuel fabrication to China, it might require as much as a decade for Iran to master precision fuel fabrication for Russian-supplied power reactors, an initial investment of between $75 million and $150 million for pilot-scale technology development and production, and ultimately perhaps about $250 to $300 million for establishment of an industrial-scale capability. Construction of a VVER fuel fabrication line in China was justified on the basis that China would build a handful of VVER units at its Tianwan site. China is now fabricating a small amount of VVER fuel for the first of these reactors. As in the case of Sino-Russian fuel fabrication cooperation, it could be assumed that for Iran to acquire the craftsmanship needed to manufacture UO2 fuel to extremely high specifications–implying the production of virtually leak-free welded fuel pins–guidance from Russian experts, first in Russia, and then in Iran, would be necessary.

Potential issues

I’ve looked at the potential for Russo-Iranian nuclear cooperation as a possible buy-in for Moscow to a broader deal which would provide Iran benefits in exchange for cooperation. That doesn’t imply that such an arrangement would be–as it was in the fateful Agreed Framework deal between the U.S. and North Korea–the singular or most important component of an umbrella agreement between the P5+1 and Iran.

Renewed Russo-Iranian nuclear cooperation could well be bedeviled by potential showstoppers, and here are a few of these:

  • Political will: Implementing an agreement to build a group of power reactors and fuel processing equipment in Iran would require heavy lifting by Russia. Moscow would have to be comfortable with the concomitant political risk. Were Iran not to agree to limit the scope of its enrichment program to production of EUP for power reactor fuel, Western powers would not agree to a deal which would endorse uranium enrichment by Iran.
  • Russian government-industry conflict: Rosatom has on some export projects favored by the Kremlin expressed objections about their commercial feasibility. It is possible that the prospect of deeper nuclear cooperation with Iran would likewise divide industry and the government over how to proceed. Iran’s track record of cooperation with foreign industrial partners, for example in the fields of natural gas liquifaction and petroleum refining, to say nothing of Germany’s experience with Bushehr, may not inspire sufficient confidence.
  • Cost: A bilateral nuclear export deal worth its salt would have to spell out who pays for what. Russia might be willing to offer Iran a discount to honor Iran’s willingness to cooperate, but ultimately, if Iran doesn’t want nuclear power badly enough to pay for it, such an agreement will fail.
  • The China factor: Don’t forget that in 1997, China forfeited its ambitions to export power reactors and other nuclear installations to Iran in exchange for nuclear cooperation with the U.S. China’s revved-up nuclear industry is now looking aggressively for export markets. How would China respond to a plan that would lock in Russia as a supplier of nuclear power plants to Iran?
  • Iran’s appraisal of Moscow: Hossein Mousavian’s personal account of the Iran nuclear crisis waxes in detail about what he describes as the failure of Iran’s leaders at times to have played the “Russian card” to advance Tehran’s interests vis-a-vis the West. Instead, he says, Russia showed its true colors by agreeing to all UNSC resolutions sanctioning Iran. If Tehran trusts Moscow little or no more than it trusts the West, its hard to see how Russia can contribute more than other UNSC powers to a comprehensive crisis solution.

This article was originally published in Arms Control Wonk.

End of document

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Source http://carnegieendowment.org/2013/01/03/iran-deal-buy-in-for-russia/ez4g

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