JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY RICE UNIVERSITY STUDENT PAPER CONTAINMENT THROUGH COOPERATION: A PROPOSAL FOR A NUCLEAR ENERGY AGREEMENT WITH IRAN BY SAM HILE STUDENT RESEARCHER JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY RICE UNIVERSITY MARCH 2013 A Proposal for a Nuclear Energy Agreement with Iran THIS PAPER WAS WRITTEN BY A BAKER INSTITUTE STUDENT INTERN. THE RESEARCH AND VIEWS EXPRESSED IN THIS PAPER ARE THOSE OF THE INDIVIDUAL AUTHOR, AND DO NOT NECESSARILY REPRESENT THE VIEWS OF THE JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY. © 2013 BY THE JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY OF RICE UNIVERSITY THIS MATERIAL MAY BE QUOTED OR REPRODUCED WITHOUT PRIOR PERMISSION, PROVIDED APPROPRIATE CREDIT IS GIVEN TO THE AUTHOR AND THE JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY. 2 A Proposal for a Nuclear Energy Agreement with Iran I. Executive Summary Purpose The United States has a strong commitment to prevent Iran from obtaining nuclear weapons, since the resulting destabilization of the Middle East would directly and adversely affect the national security and economic interests of both the U.S. and its allies in the region. The U.S. has until now favored coercive diplomacy, attempting to change Iran’s behavior by alternating between negotiations with the P5+1 and threats of increased economic sanctions. However, these efforts have not produced the desired effect, as Iran continues to enrich uranium and make progress toward acquiring a nuclear weapon. Because nuclear facility inspectors are no longer permitted in Iran, the precise amount of progress is largely unknown. For this reason, most Western analysts perceive preemptive military incursion and continuing sanctions as the only available policy options to break the deadlock. This study outlines a third solution, one of nuclear energy cooperation. Key findings • Iran was one of the first nations to join the Nuclear Nonproliferation Treaty (NPT). Preserving its “inalienable right” to domestic uranium enrichment as per Article IV of this treaty (albeit subject to the restraints of Articles I and II) is of utmost importance to Iran. The refusal of the P5+1 to recognize this right has defeated most negotiation attempts. • While President Ahmadinejad and other hardliners unequivocally favor the development of nuclear weapons, reformists within Iran’s ruling elite seek only civilian nuclear energy and are amenable to limiting Iran’s weapons production capability. • Despite sharing a common technological foundation, nuclear energy and nuclear weapons are not the same thing. • Given its ailing energy balance, Iran’s desire to establish a nuclear power sector is legitimate and is not a front for the establishment of a parallel clandestine weapons operation. 3 A Proposal for a Nuclear Energy Agreement with Iran • The U.S. maintains nuclear energy cooperation agreements (123 Agreements) with nations all around the world. These agreements have been remarkably effective at bolstering regional nonproliferation goals and strengthening diplomacy. • Continued employment of economic sanctions and military intervention are not viable options; the first has only strengthened the hardliners’ cause within Iran, and the second’s efficacy is probably limited to the short term only. In addition, pursuing either option makes Iran’s eventual acquisition of a nuclear weapon all the more likely. Proposed solution This study concludes that the U.S. should work with the rest of the P5+1 group (China, France, Russia, United Kingdom and Germany) to offer Iran a comprehensive 123 Agreement that preserves its right to limited uranium enrichment for the peaceful purpose of civilian nuclear power yet imposes rigorous safeguards and monitoring mechanisms. Most important, Iran would fully comply with the IAEA Additional Protocol (AP). The agreement would additionally provide for: • Long-term nuclear fuel supply contracts for Iran; • Monetary assistance with the nuclear power sector; • Training programs for Iranian nuclear scientists, including exchange programs for both Iranian and American and European students. • The easing of visa and other restrictions that unnecessarily impede the development of the Iranian scientific establishment; and • The gradual lifting of economic sanctions contingent upon full Iranian compliance with IAEA demands. While there are some risks inherent in this commitment (most seriously, the existence of a parallel clandestine nuclear weapons program), this study will outline some feasible and promising mitigation strategies. 4 A Proposal for a Nuclear Energy Agreement with Iran This study envisions many beneficial outcomes from the proposal. The predicted results of this agreement are: • Complete awareness of all of Iran’s nuclear activities; • Elimination of whatever nuclear weapons program Iran currently has; • Resolution of a longstanding international security crisis and improved Iranian-American relations. II. Introduction Iran’s nuclear program began in 1957 when the United States struck an agreement for nuclear cooperation with Mohammad Reza Shah Pahlavi as part of Dwight D. Eisenhower’s Atoms for Peace program. In 1968, the nation became one of the first members of the Nuclear Non- Proliferation Treaty (NPT), a binding international agreement that has been remarkably successful in deterring the spread of nuclear weaponry throughout the world.1 Article IV of this treaty gives each of its 190 members the “inalienable right” to uranium enrichment for a peaceful civilian nuclear power program (that is, contingent upon its compliance with Article I and II guidelines), a right Iran has repeatedly and vigorously asserted. The nuclear technology research Iran has been conducting since the mid-1980s, though closely guarded, is auspiciously for this purpose. However, Iran also gradually adopted an antagonistic stance toward its neighbors and the West during this time, and some ruling elements have openly advocated the pursuit of nuclear weapons. This, combined with Iran’s at-best sporadic compliance with International Atomic Energy Agency (IAEA) inspections of its facilities and recalcitrant apathy toward the U.N. Security Council (UNSC) sanctions that followed its refusal to cooperate, has led the international community to suspect less benign ulterior motives than the acquisition of nuclear energy.2 Today, this concern is growing more pervasive. Israel is weighing the possibility of a tactical strike on Iranian nuclear facilities so as to hinder the development of what it believes is a nuclear weapon that would be used on Israel itself. Diplomatic relations between the two countries are nonexistent, and those between Iran and the U.S. are similarly floundering despite recently 5 A Proposal for a Nuclear Energy Agreement with Iran renewed attempts at negotiations. Current international sanctions against Iran may not be enough to deter it from acquiring a nuclear weapon, an event that most of the international community fears to be on the horizon but is not prepared to accept. The potential disastrous impacts of this event on Middle Eastern stability, the international nuclear nonproliferation regime and the global economy all arguably dictate the U.S. take action to break the current deadlock. Although they share a common technological foundation, a civilian nuclear power and a nuclear weapons program should not be thought of as synonymous. This study will profile Iran’s current energy sector and demonstrate that Iran in fact has several compelling and legitimate reasons for wanting to develop a nuclear power industry that should not be discounted. In turn, this study espouses the view that a carefully constructed and safeguarded nuclear power cooperation agreement, or 123 Agreement, could satiate Iran’s burgeoning energy demand and nationalistic desire for access to the nuclear fuel cycle while allaying American concerns about nuclear weapons and in so doing improve relations between the two sides. This study argues that a thoroughly monitored and controlled Iranian nuclear power sector is not fundamentally inimical to American foreign policy interests, as long as there is no parallel Iranian clandestine operation conducted in pursuit of a nuclear weapon. Furthermore, the kind of scientific collaboration and exchange between American and Iranian scientists and students that is necessary to embark on such a venture would ultimately promote more favorable relations between the two nations. Accordingly, this study will explore the reasoning behind Iran’s arguments for nuclear energy, as well as examine its domestic politics regarding the issue. The evolution of U.S policy toward Iran’s nuclear activities will be used together with a selected overview of recent nuclear negotiations to explain the current impasse. A detailed proposal for multilateral nuclear energy cooperation follows, along with analyses of and rebuttals to anticipated roadblocks for reaching this agreement. The study concludes with a refutation of the leading policy alternatives and a calculated judgment of Iran’s true intentions. 6 A Proposal for a Nuclear Energy Agreement with Iran III. The Case for Iran’s Development of a Civilian Nuclear Energy Program To what extent does Iran truly need nuclear energy, and why does Iran feel this demand can only be met with nuclear technology? The arguments Iran most frequently proffers are3: • Nuclear power would free up more oil and natural gas resources for export, and enhance Iran’s energy security by lessening its dependence on these depletable