New fuel deal with Iran

After a year-long stalemate, nuclear negotiations with Iran are expected to restart. Since October 2009, the deal to refuel Tehran’s medical isotope reactor proposed by the Vienna Group — France, Russia, the United States, and the IAEA —  has been the touchstone of engagement. These technical discussions between the group and the Islamic Republic were intended to open up separate talks with the P5+1 (the permanent United Nations Security Council members plus Germany) on Iran’s nuclear program. Though Tehran has favored cooperation on fuel supply for both its research reactor and the Russian-built Bushehr power reactor, it has refused to discuss its other nuclear activities, especially its controversial uranium enrichment program. In September, however, President Mahmoud Ahmadinejad said Iran is “in principle” ready to re-enter discussions with the P5+1, and President Barack Obama reaffirmed that “the door remains open to diplomacy should Iran choose to walk through it.” Washington now plans to pursue the technical and political dialogues simultaneously.

Ultimately, a successful fuel deal is a necessary condition for further engagement, and the Vienna Group will try once again to work with Iran to reach consensus on the terms for exchanging Tehran’s low-enriched uranium (LEU) for ready-made fuel elements for its research reactor. But circumstances have changed since the offer was first proposed in 2009. In February 2010, Iran began production of 20 percent uranium — a first step in the domestic manufacturing of fuel for the research reactor, and a move that could cut by more than half Tehran’s time to a bomb. The Security Council, pressed by Washington, passed a new round of sanctions against Iran’s nuclear program, despite Tehran’s last-minute concession to ship a ton of its uranium to Turkey in exchange for fuel — the once-rejected condition that had originally created the impasse in discussions. In addition, Iran’s LEU production has continued since the swap was proposed, so its stockpile is now twice what it was then.

Both Washington and Tehran say the fuel-swap deal is still on the table but differences remain. Iran insists that its May 2010 joint declaration with Turkey and Brazil, which closely mimics the Vienna Group’s October 2009 proposal, establishes new grounds for discussions. However, the US wants to review the terms of the original offer.

A successful agreement hinges on realistic expectations from both sides. Some of the goals set in October 2009 — like undermining Iran’s rationale for domestic enrichment — are still valid now, but others — like leaving Tehran with less than a weapon’s worth of material — are today beyond the reach of this deal under the best of circumstances.

New circumstances shouldn’t mean moving goalposts. There are common misconceptions about the fuel deal, and it is important to understand what it can, cannot, and ought to achieve.

Common myths. The international community does not object to selling Iran fuel for its nuclear research reactor, which Iran purchased from the US more than 40 years ago under Dwight D. Eisenhower’s Atoms for Peace program. While certain aspects of Iran’s nuclear drive may pose various security concerns, providing the mullahs with reactor fuel is not one of them. As a signatory to the Nuclear Non-Proliferation Treaty (NPT), Iran has the right to pursue peaceful nuclear energy and purchase fuel. Because uranium can be purchased easily and reliably, the West argues that Iran does not need to develop indigenous, potentially dual-use, fuel-cycle capabilities.

Selling fuel to Tehran is not a security concern — the costs of using the fuel elements in a breakout scenario surely outweigh any potential benefits. In theory, the fuel elements could be disassembled, and uranium oxide could be extracted, reconverted to uranium hexafluoride gas, and further enriched to highly-enriched uranium, which could be used for bombs. This is a multi-step process that would certainly be detected by International Atomic Energy Agency (IAEA) safeguards and encourage international scrutiny.

The deal in October 2009 was not the only legitimate way for Iran to buy fuel, although it was presented as a final offer by the US and its allies. This arrangement — that is, shipping a ton of LEU to Turkey for storage; sending it from Turkey to Russia, where it is further enriched to 20 percent; transporting the 20 percent enriched uranium to France and converting it into uranium oxide and manufacturing this into fuel rods; then returning the fuel rods to Iran via Turkey — was hardly business as usual. Agreeing to the swap was a concession for Tehran, which met a great deal of domestic opposition by political hard-liners.

Iran was not sanctioned by the UN because it rejected the Vienna Group’s proposal; the fuel deal was in no way a requirement. Tehran was punished because it has refused to actively engage with the international community on the nuclear issue — it has ignored numerous Security Council resolutions to stop uranium enrichment, and it has not addressed the IAEA on “broadly consistent and [technically] credible” allegations of nuclear weapons research.

Although it lacks the experience, Iran does have the technological know-how and the core infrastructure to produce its own fuel; IAEA data suggests this production is possible before it exhausts its current supplies. Tehran prefers an outside supplier because domestic production is expensive and risky. But until fuel-supply negotiations are successful, Iran plans to continue with 20 percent enrichment. Tehran’s actions show that the country is now likely beyond posturing. A new law passed in June 2010 requires the government to manufacture its own fuel; further, the country told the IAEA that it will install research reactor fuel production lines in November 2010.

Impossible goals. There are certain issues, which, though important, the fuel deal
would not have addressed, even if an agreement was reached last October. The narrow technical arrangement was never meant as a solution to the entire nuclear issue. The current proposal neither compels Iran to stop enrichment nor explains alleged nuclear weapons activity. It does not directly aim to stop an Iranian nuclear bomb or even permanently prolong the time needed to manufacture one.

The main purpose of the Vienna Group’s original proposal was not to reduce the Iranian threat, but to sell Iran fuel and build confidence between the West and Iran: in Iran, by showing that credible fuel guarantees exist; and in the West, by demonstrating — through a significant (but not game-changing) reduction of Iran’s uranium stockpile — that Tehran is seriously interested in engagement. However, the core objective of the deal was to sell Iran fuel — by pure coincidence, the ton of LEU that, if further enriched, could fuel Tehran’s medical isotope reactor for 20 years could also produce enough material for one crude nuclear bomb. A fuel exchange would reduce by one the number of bombs that Iran could make at any given time in the future. In addition, if the material immediately left Iran and was shipped to Turkey, Tehran would temporarily have less than a weapon’s worth of LEU,which would effectively prolong its time to a bomb. The latter was always a short-lived benefit, since the Vienna Group did not obligate, or expect, Iran to stop enrichment.

Inappropriate goals. The threat-reduction benefits of the deal stem from the fuel needs of Tehran’s research reactor. These technical requirements still determine what is or is not acceptable when other circumstances have changed.

One of the State Department’s concerns is Iran’s growing stockpile of LEU, an approximately 1,400 kg increase since October 2009, according to IAEA data. This changes the original threat-reduction calculus — an exchange today would not add time to the nuclear clock — so Washington may be tempted to require Iran to export more LEU. However, such a demand would be unrealistic under this fuel arrangement and will surely be seen by Tehran as moving goalposts.

Quantitative stockpile goals were never a formal objective of the agreement, and there is no technical justification for increasing the swap amount — the exchange of 1,200 kg of LEU corresponds to 120 kg of research reactor fuel, the same amount sold to Iran by Argentina in 1992. In addition, an increase in the amount of LEU shipped, means an increase in the fuel sold to Iran. Tehran is already buying fuel supplies to last until 2030 and beyond and will unlikely agree to purchase additional fuel.

Iran’s larger stockpile is not as significant as it might seem. The benefit of leaving Iran with less than a bomb’s worth of LEU was always a fleeting advantage and, inevitably, that benefit is now gone. For example, regardless of whether Iran shipped out its uranium in October 2009 or August 2010, it would have ended up with 1,590 kg of LEU that August, based on calculations from IAEA reports. The net effect on the Iranian stockpile would have been the same because Tehran would have continued enriching uranium irrespective of whether a fuel agreement was signed.

Insisting on a deal that would leave Iran below this “breakout” threshold makes sense only under two very unlikely scenarios for the US and Iran: If in the short time that it would take Iran to rebuild its stockpile, it would be persuaded to stop enrichment — or if, during that period, it would rush to a bomb, in which case buying more time would provide the US with a significant strategic advantage.

Realistic goals. The main goals of the deal were not strategic, but political — to alleviate mistrust and set grounds for negotiations. Although the stalemate has undermined the confidence-building aspect, some benefits can still be salvaged.

Delays have created a new baseline: Iran’s growing stockpile of 20 percent uranium and, with it, the additional important goal of stopping this higher level enrichment. If Iran buys fuel from abroad, it will not have an immediate reason to continue these activities. Prospects for negotiating a suspension of higher level enrichment are good; in August, Ahmadinejad said that he “promise[d] to stop enriching uranium to 20 percent if fuel supply is ensured,” echoing earlier statements by Iranian officials.

The new fuel deal could require Iran to ship about 1,000 kg of LEU and its entire stockpile of 20 percent uranium — or currently about 30 kg LEU (equivalent to 200 kg of LEU). This would still reduce the number of nuclear bombs Tehran could potentially make and, relative to Tehran’s current capabilities, would also prolong its time to a bomb, thereby maintaining the important threat-reduction and confidence-building aspects of the deal.

The deal is still worth pursuing. Not selling fuel to Iran only strengthens its case for uranium enrichment. On the other hand, going through with the exchange reaffirms Washington’s position that credible fuel guarantees exist, and undermines Iran’s rationale for its own enrichment. Inaction would give Tehran carte blanche to further increase its breakout potential. Once Iran manufactures its own fuel — and installation of fabrication equipment begins in November — buying fuel from abroad will no longer be an attractive option and its 20 percent enrichment program would be more difficult to reverse.

Unfortunately, so much distrust has been created that a deal, even if ultimately successful, is hardly evidence of reliable fuel guarantees — a key confidence-building element for Iran that the October 2009 deal aimed to achieve. The complicated circumstances around the current swap proposal may not provide proof of credible fuel guarantees in the same way a straightforward fuel supply contract would have a year ago, but it is a start. The Russian-powered Bushehr reactor, expected to go online by the end of this year, also supports that objective. With sanctions or military strikes unlikely in the short term, Washington must make engagement work. Right now, a successful fuel deal is the door to a long-term diplomatic solution.

Technical note: All LEU quantities mentioned are in uranium hexafluoride (UF6) mass.