Iran’s nuclear program has been marked by enormous financial costs, unpredictable risks, and unclear motivations. The program’s covert history, coupled with the Iranian government’s prohibition of open media coverage of the nuclear issue, has prevented a much-needed internal debate about its cost-benefit rationale. Presenting a newly launched report by the Carnegie Endowment and Federation of American Scientists that probes critical questions about the Iranian nuclear program’s economic efficacy and safety, Carnegie hosted a discussion with Iran analyst Ali Vaez of the International Crisis Group, physicist James M. Acton of the Carnegie Endowment, and economist Mohammad Jahan-Parvar of the U.S. government. Carnegie’s Karim Sadjadpour moderated the discussion.

Economic Efficacy of the Nuclear Program 

  • Direct and Indirect Costs: Vaez explained that while it is impossible to determine the exact cost of Iran’s nuclear program, the cost of the Bushehr reactor alone is approximately $11 billion, making it one of the most expensive reactors in the world.  There are also significant indirect costs associated with the program, Vaez added. For example, the cost of lost foreign investment and lost oil revenue from sanctions add up to a conservative estimate of $100 billion. Jahan-Parvar added that while one cannot separate the opportunity cost of the nuclear program from the general mismanagement of the Iranian economy over the last 40 years, “the cost is enormous.”

  • Lost Energy Opportunities:  Sanctions have also stymied Iran’s ability to cultivate its enormous potential in the field of natural gas, Vaez explained. Iran has the second largest reserves in the world, but it’s twenty-fifth on the list of natural gas exporters. He added that the nuclear program has come at the expense of Iran’s immense potential in the field of alternative energies. For example, in the field of solar energy, one percent of the country’s land surface could fulfill Iran’s entire energy needs for a year and produce an equal amount of solar energy for exports. There is also tremendous potential for wind power which is not being used.

  • Iran’s Economic Ideology: Jahan-Parvar argued that the ideological drive behind Iranian economic policy is very concentrated under the guidance of the supreme leader. From analyzing Ali Khamenei’s speeches, Jahan-Parvar observed that Iran is not interested in economic development in the Western sense. Iranian officials, he argued, will likely be willing to sacrifice the welfare of the population in order to keep the nuclear program alive, meaning that sanctions will be relatively ineffective and could force Iran into a North Korea-like situation.

  • Nuclear Safety and Security Risks: Vaez explained that despite the fact that the Bushehr reactor is located at the intersection of three tectonic plates, the government has neglected to address basic questions on its preparedness for a nuclear emergency, including evacuation plans for the residents of Bushehr. Iran has also refused to ratify conventions on nuclear safety and security.  Acton agreed, stating that he was particularly concerned when Iran’s government asserted that there were no security risks associated with their program post-Fukishima. He argued that every nation could learn lessons from Fukishima, and whenever a country starts “resting on its laurels,” there are serious dangers that come with such “regulatory complacency.” 

Military Nuclear Ambitions 

  • Credibility of Claims: Acton argued that IAEA reports suggest that Iran is engaging in nuclear activities that are not peaceful. “The IAEA believes that Iran has conducted activities that are hard to explain unless there is a military component to the nuclear program,” he explained. He noted that in the run-up to the Iraq war, the IAEA did not think there was a nuclear military program in Iraq, whereas in Iran the organization has expressed increasingly serious concerns.
     
  • Plutonium Facility in Arak and the IR40 Reactor: Acton explained that Iran is building an IR 40 reactor in Arak, which could produce plutonium that would be particularly suitable for designing weapons. However, producing weapons grade plutonium would also require a chemical reprocessing facility to extract plutonium from the radioactive spent fuel being produced at the IR 40 reactor and there is no evidence that Iran is currently building such a facility, Acton added. Nonetheless, he explained that turning on the IR40 reactor would be very significant, as bombing a “hot reactor” would be an environmental catastrophe. There is therefore a possibility that before the reactor gets switched on, there will be pressure on the Israelis and Americans to strike the reactor before it becomes hot.

  • Choosing to Weaponize:  Acton argued that Iran will need to take into account the impact that acquiring a nuclear weapons capability would have on its global relations. Assuming that the supreme leader is making key decisions on the nuclear program, the grounds on which he would decide to weaponize will be a greater function of internal regime politics than rational cost benefit analysis, Acton argued. Such a decision may be strongly influenced by the role of the military and the IRGC, and the regime’s survival, rather than rational deterrence calculations. Vaez added that the weaponization option has been at the back of the minds of Iranian officials since the time of the Shah. 

The Road Forward 

  • Need for a Political Solution: Vaez argued that the nuclear program is entangled in “too much pride and sunk cost to abandon.” Economic coercion or military force therefore cannot end Iran’s nuclear program. The crisis cannot be resolved without a broader political settlement worked out in a diplomatic process that is a win-win solution for both sides, he asserted. Jahan-Parvar added that the most effective solution would be to “chuck all parts of the program that are antagonizing the world” and then turn to better, more modern technology to effectively pursue nuclear power while taking safety concerns into account. As long as the program is adding to Iranian energy diversification, it does not need to be scrapped if it is economically viable and is not provoking the international community.

  • Models for Iran’s Nuclear Program: Iran views itself as a great power rather than as a rogue state, Vaez said. Iranians do not want to be like North Korea and become an outlier state that develops nuclear weapons and gets isolated by the international community. Unfortunately, Vaez pointed out, when Iranians look at the models that other countries have followed in obtaining nuclear power or nuclear weapons, there is no viable example which proves to the Iranian regime that “if you give up your nuclear ambitions or put them under strict IAEA monitoring there will be light at the end of the tunnel,” Vaez argued.  
     
  • An Important Crossroads: Vaez concluded that “we are at an important crossroads and we should sit down and think about this as a strategic, rather than a tactical problem.”  There is no “silver bullet solution,” he asserted, but the contours of a deal for the nuclear solution are clear and the difficulty is finding the right strategy to move in the direction of reaching an agreement. Both Vaez and Jahan-Parvar suggested providing Iran with positive incentives to use their alternative energy sources, for example, in order to undermine the belief that the West wants Iran to remain “backwards” and isolated from modern technology or opportunities.