Knowing when to walk: What is the best alternative to a formal US-Saudi nuclear agreement?

For years, Washington has been working to finalize a deal with Riyadh in regard to Saudi Arabia’s planned nuclear energy program. Although negotiations for this deal—known as a “123 agreement,” which is legally required if the United States wants to transfer key nuclear technologies to any country—are continuing, there doesn’t appear to be a light at the end of this tunnel. Indeed, it may be getting darker.

Thus far, the Kingdom has resisted US requests for added transparency measures and constraints on Saudi Arabia’s ability to enrich and reprocess nuclear material (known as “ENR” capabilities), which can be used in creating fuel for nuclear power plants, but are also critical for creating the highly enriched uranium or plutonium used in nuclear weapons. Moreover, increasing congressional scrutiny of Saudi Arabia—including the administration’s nuclear dealings with the Kingdom—means that there is a real risk that an agreement that meets the minimum legal threshold would not survive Congress. Indeed, members of his own party in October requested that President Trump pause nuclear negotiations because the Kingdom’s involvement in the murder of US resident and journalist Jamal Khashoggi demonstrated that the Saudis cannot be trusted with nuclear technology.

Although Washington should keep working to bridge the divide with Riyadh, the United States also needs to begin planning for a scenario in which it is unable to reach an acceptable agreement. The key for the United States, in the parlance of negotiating strategy, is to know its BATNA, or “Best Alternative to a Negotiated Agreement.” If the Saudis don’t bend, the United States will have options to safeguard US interests, including, for example, increased US intelligence on Saudi’s nuclear program and clear guidelines for when sanctions might be imposed should the Saudis move toward enrichment. In the end, then, the question is: How good are those options?

How acceptable is acceptable? So what should “acceptable” terms for a US-Saudi nuclear cooperation agreement be? There are essentially three answers to this question: Accept a standard 123 agreement, insist on the so-called “gold standard,” or something in between.

Some have insisted that a bare bones 123 agreement is sufficient, as it would still require Riyadh to seek US consent to enrich or reprocess any US-supplied materials or use US technology for those purposes. These measures, the argument goes, are far better than whatever China or Russia—both of which are also bidding to build reactors in the Kingdom—will require. Although not necessarily advocating a minimalist 123, both Secretary Pompeo and Secretary Perry have highlighted the risks of Russian and Chinese encroachment with Saudi. Assistant Secretary Chris Ford also noted in February that “whatever the negotiated terms” of a 123, the US arrangements will “always protect nonproliferation equities better than the conditions attached by any other nuclear supplier.”

True, the US nonproliferation requirements are more stringent than others, but these baseline obligations are still not good enough in the case of Saudi Arabia. A basic 123 alone would provide insufficient assurances and mechanisms to verify that Saudi Arabia’s program will remain peaceful, which is important given that senior Saudi officials have openly stated that the Kingdom will get the bomb if Iran builds one. It also leaves the door wide open for other countries in the region to push for the same terms.

But the United States does not necessarily have to hold out for the gold standard, which would require that Riyadh make a legal commitment not develop ENR capabilities, period. This option, according to Henry Sokolski and Victor Gilinsky, is the only way to prevent Saudi from acquiring the key capabilities needed for weapons and prevent other countries in the region from doing the same. But insisting on the gold standard for Saudi Arabia is not realistic, nor is it necessary. The Saudis will almost certainly continue to reject it, and there are other options that provide reasonable means to address US proliferation concerns.

A more practical option, advanced by Robert Einhorn and others, would stop short of a full ban on ENR but still require more restrictions than a standard 123. There are two components of this middle ground in particular that the United States should push for as part of any deal. First, Washington should require that Riyadh adopt the Additional Protocol (AP) to its safeguards agreement with the International Atomic Energy Agency (IAEA). This would provide the agency with greater information on and access to Saudi’s nuclear program and is the best option for resolving any international concerns about the peaceful nature of Saudi’s program, should they ever arise. As Nick Miller and Tristan Volpe note in their defense of the AP requirement, unlike the extremely rare gold standard, more than 130 countries have the AP in force. It is the rule, not the exception.

Second, Washington should insist on a joint US-Saudi Arabia consultative and decision-making body where issues such as enrichment can be discussed and decided upon. This would not require Riyadh to permanently foreswear ENR but would maximize long-term US influence over Saudi’s program. Any Saudi development of these capabilities is likely years away. Riyadh’s intent for now seems to be to simply safeguard its future ability to do so.

Regardless of which answer one favors, the question remains of what to do if Washington and Riyadh can’t narrow their differences. In other words: When is no deal better than a bad deal? It’s hard to know when to walk without knowing the alternatives. The United States needs to know its BATNA, if the Saudi’s don’t compromise. What are US options to safeguard US interests, and how good are they?

These interests, some of which are in tension with one another, include: preventing Saudi Arabia from getting the bomb (or getting close to it) and more generally preventing the spread of nuclear weapons and critical enabling technologies; maintaining an ability to work with Saudi Arabia to advance shared goals on other issues; preventing Russia and China from enhancing their influence with key US partners or otherwise frustrating US goals in the region; and enabling US companies to be competitive in the global nuclear energy market.

The United States has several good options to protect, if not advance, its interests at stake in this decision.

Increase US intelligence on Saudi nuclear intent and capabilities. A no-deal decision whereby Riyadh refuses to adopt the Additional Protocol or accept any limits on enrichment and reprocessing would be a worrying sign because it would suggest the Saudis might have more serious, near-term ENR ambitions than previously thought. Thus, Washington would need to up its intelligence focus on the Kingdom’s goals and capabilities vis-à-vis nuclear weapons. This would also include its development of any delivery systems. The purpose of this effort would be to provide warning of a Saudi decision to pursue nuclear weapons or critical underlying technologies or, failing that, to detect their actual development or procurement. This would help mitigate the lack of additional transparency that would have been gained via Saudi adherence to the IAEA’s AP, and provide support to the additional options outlined below.

Create tripwires for sanctions. Without the leverage of a nuclear deal, the United States would need to think about new ways to disincentivize Saudi Arabia from going down the pathway toward a bomb. One would hope that, if there were ever indications that Saudi was secretly developing ENR capabilities or a nuclear weapon, the White House would be willing to call them on it and put stiff diplomatic and economic penalties on the table. But recent developments make clear that intervention from the executive is not a given, and therefore Congress should get involved.

Several existing laws, such as the Arms Export Control Act, could in theory allow the United States to reduce support to—or impose sanctions on—Saudi for nonproliferation reasons. But each has weaknesses and a mixed track record of enforcement. Congress could build on these by passing legislation to impose mandatory sanctions on Saudi entities if certain conditions are met. For example, Congress could require the president or secretary of state to periodically certify that Riyadh was not pursuing ENR capabilities. It could also request recurring updates from the Intelligence Community on this same issue. If this certification could not be granted, then sanctions would kick in. It would be important that the threshold for sanctions be fissile material production capabilities—the fuel for a bomb—and not a “weapons program,” a more nebulous term that would leave an administration ample wiggle room.

Explore ways to mitigate Saudi threat perceptions. Saudi’s nuclear ambitions are driven at least in part by a desire to match Iran’s program. Thus, if Saudi ENR capabilities or other sensitive technologies ever begin to materialize, the United States should think through potential steps that might help lessen Saudi Arabia’s threat perceptions in exchange for abandonment of those efforts. Such reassurance measures have been a key ingredient inhibiting proliferation attempts of US allies in the past.

It is admittedly difficult to foresee what form such reassurance could take: The United States already provides significant weaponry to Riyadh, and a firmer or more formal security commitment would be politically problematic in Washington and might not be viewed as credible to Saudi Arabia anyhow. But it is hard to predict the geopolitical environment and US-Saudi relationship 15 or 20 years from now. It is also hard to weigh the risks and benefits of theoretical US security commitments in a vacuum: Modest steps might be more palatable if they were the only thing standing between a Saudi nuclear bomb or a Pakistani deployment of nuclear weapons to the Kingdom. And if Saudi threats are to be believed, in this scenario Iran would likely be close to a bomb or already have one, so US deterrence requirements would likely be undergoing a fundamental re-evaluation. The point is, that carrots also need to be a part of the policy discussion.

Apply diplomatic pressure to third parties to minimize the proliferation risk.  The good news is that none of the governments competing for Saudi’s nuclear future—Russia, China, France, South Korea, and the United States—are likely to provide the Kingdom with enrichment or reprocessing capabilities. Although the export of ENR is technically allowed under the Nuclear Suppliers Group—of which all five countries are members—in practice members stopped transferring these capabilities to countries that didn’t already have them decades ago. Suppliers are also motivated for reasons of profit to supply the fuel for these reactors. Russia also offers to take back the spent waste—which could otherwise be used for a bomb if reprocessed—for a price.

That said, there are a series of steps the United States could take to up the diplomatic pressure to ensure Saudi’s nuclear program remains peaceful. Washington could publicly and privately emphasize that, at a minimum, Saudi Arabia needs to update its current safeguards arrangement (part of which is based on an outdated IAEA framework that exempts it from IAEA inspections) if it wants to build nuclear reactors, to help push Riyadh to adopt proper safeguards for its program.  Washington could also encourage Israel—which has grown closer to the Kingdom but also has strong reservations about Saudi Arabia embarking on a massive nuclear build up—to quietly communicate its concerns about ENR to Riyadh, perhaps paired with a reiteration of its commitment to never allow Iran to obtain nuclear weapons.

Finally, Washington could remind the one proliferator that many worry might actually transfer sensitive technology, Pakistan, that it has come a long way as a responsible nuclear state since the days of the A.Q. Khan network, and that it needs to continue to build on that reputation, not tarnish it. Rumors that Saudi has secured some form of commitment from Pakistan to provide a nuclear deterrent (undefined) if and when the call goes out are longstanding, but unverified. Although Pakistan has committed to abide by NSG guidelines, the potential for nuclear linkages remain open: A Saudi official recently indicated that if the United States wants to take itself out of the nuclear energy market, Riyadh could always turn to its “friends in Pakistan” for such assistance.

Keep the door open for continued diplomacy and potential nuclear cooperation in the future. The failure to reach a 123 agreement and Saudi Arabia’s selection of a US competitor for its first two reactors would set back, but need not end, any potential US-Saudi nuclear cooperation. Building one—let alone multiple—nuclear reactors is a years- if not decades-long process, likely subject to multiple delays, changes, and challenges along the way. The United States should be patient and look for other ways to enhance US-Saudi nuclear cooperation and keep one foot in the door in ways that do not require a 123 agreement, an approach that Assistant Secretary Chris Ford advocated in March. Revelations last month that the administration has quietly done exactly that raised eyebrows from Congress. While the administration’s handling of this has been poor and tone deaf to congressional concerns, the transfers are almost certainly not an attempt to evade legal requirements and create a “back door” to reactor sales to the Kingdom that some fear. The Trump team and future administrations would do well moving forward to err on the side of greater transparency and engagement with Congress, but not to needlessly restrict what is an otherwise useful and legal tool to advance US interests.

Push back more aggressively on Russian and Chinese attempts to leverage nuclear deals for influence. The risk that Russia and China could use their nuclear agreements to curry political influence and undermine US influence is not a hypothetical. Their government-backed nuclear enterprises leverage the ability to provide often generous financing options to create dependencies and advance their own strategic goals. There are a variety of options to counter these attempts however, including greater efforts to shine a spotlight on the strategic risks of partnering with Russia and China. Where applicable, the United States could also warn Saudi or other countries in the region that purchasing Russian defense equipment—which Moscow has offered up alongside nuclear projects—could make them subject to US sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA). Ultimately, however, the goal for the United States is not to try and shut down individual nuclear deals, but rather build relations and attract partners by offering a better alternative.

Focus on making US companies more competitive in the global nuclear energy market rather than winning specific reactor bids. Unfortunately, those emphasizing US industrial and economic needs in this debate have narrowed in too closely on the Saudi case. Even with a 123, winning a bid to build two reactors (although there is certainly the potential for more) will probably not be the savior of the nuclear industry that some hope. Problems in the industry run deeper, and longer-term solutions are needed. Rather than focusing on winning any one contract, the White House and Congress can do more to reform how the United States regulates its nuclear industry and invest in new nuclear energy technologies, as Laura Holgate and Sagatom Saha have argued. This will not be easy, but it is perhaps the best way to enhance the industry’s competitiveness and ensure the high US standard for security and safeguards are maintained into the future. Saudi is an important potential nuclear energy customer, but it is not the only one. Indeed, energy needs in Asia—where many argue the United States should be focused anyhow given growing competition with China—could offer even greater opportunities.

These policy options are realistic and stand a decent chance at success, particularly given the likely long lag time between now and any Saudi nuclear build up. They are also by no means exhaustive. Collectively, they suggest that the United States has a variety of good options to secure its interests if it fails to conclude a 123 agreement with Riyadh that provides sufficient safeguards against proliferation. While there are still more advantages to be found in a good 123 agreement, Washington should not be held hostage to the false logic that any deal is better than no deal.