EU Pledges Funds for IAEA Fuel Bank

Miles A. Pomper

The European Union Dec. 8 pledged 25 million euros (about $33 million) toward the establishment of a nuclear fuel bank under the auspices of the International Atomic Energy Agency (IAEA). The EU contribution means that supporters have come close to meeting the initial financial requirements set down by a nongovernmental organization and IAEA Director-General Mohamed ElBaradei for establishing the fuel reserve.

Interest in such a fuel bank has grown in recent years amid increasing concerns that global tensions over Iran's uranium-enrichment program may be the first in a series of future crises, spurring governments and private organizations from nuclear supplier countries to step forward with new efforts to limit the spread of nuclear fuel-cycle technology. It is not clear if the steps will be enough to dissuade additional countries from undertaking activities that can provide either fuel for nuclear reactors or critical materials for nuclear weapons.

The EU pledge follows on a September 2006 offer from billionaire Warren Buffett in conjunction with the nongovernmental Nuclear Threat Initiative (NTI). Buffett pledged to provide $50 million to the IAEA to fund "a last-resort fuel reserve for nations that have made the sovereign choice to develop their nuclear energy based on foreign sources of fuel supply services and therefore have no indigenous enrichment facilities." The money would be used to create a stockpile of low-enriched uranium (LEU) to be manufactured into nuclear fuel, available for countries whose supplies of nuclear fuel were cut off for purely political reasons.

Buffett's offer was initially contingent on one or more IAEA member states contributing an additional $100 million in funds or an equivalent amount of LEU within two years and on agency member states agreeing on a political framework to manage such a stockpile. At ElBaradei's request, Buffett and the NTI extended the deadline for meeting the conditions until September 2009 after states pledged some but not all of the required $100 million. Other states that have pledged funds include the United States ($50 million), the United Arab Emirates ($10 million), and Norway ($5 million). After the EU pledge, only about $2-3 million is needed to meet Buffett's requirements.

ElBaradei told IAEA board members in March 2008 that he did not plan to approach them to establish the fuel bank or the rules to govern it until sufficient funding had been pledged. Javier Solana, the EU's top foreign policy official, told a Brussels conference Dec. 9 that the EU contribution "will allow the IAEA to finalize the modalities for the bank, so the IAEA board can approve it."

Solana added that "[w]e want the bank to be established very soon. In any case, before the next NPT [nuclear Nonproliferation Treaty] review conference in spring 2010" and said he was "convinced that the creation of a fuel bank will have a positive impact on the general climate" of that once-every-five-years gathering. The next opportunity the IAEA board would likely have to consider the matter would be at its March 2009 session.

NTI Vice President Laura Holgate said she hoped that the March meeting might direct the IAEA Secretariat and board to finalize the terms and conditions for the fuel bank in time for the board to vote on the matter this June or September. Of particular importance, she said, will be for potential consuming nations to become involved in negotiations, something from which they have shied away until now.

"Consuming nations need to be constructively a part of the conversation," Holgate said.

Solana also noted that the "fuel bank is not exclusive in its character. There are parallel initiatives and ideas that may prove useful to different situations."

Several other fuel cycle initiatives have been floated, with the most advanced being a Russian plan to establish a multinational enrichment center and fuel bank at Angarsk in Siberia. In 2007 the Russian Duma approved enabling legislation that would grant countries the right to participate financially in the facility. In addition, Russia began exploring a means through which a separate LEU stockpile could be set aside under IAEA safeguards for the use of IAEA member states.

Since then, Armenia and Kazakhstan have joined the facility, and Ukraine is on the verge of doing so. Russia's ownership share is slated to drop to 51 percent as other partners are admitted. In order to address concerns regarding the spread of technology, the International Uranium Enrichment Center will be structured in such a way that no enrichment technology or classified knowledge will be accessible to the foreign participants.

In a recent interview with Arms Control Today, Sergey Kislyak, Russia's ambassador to the United States, likened the Angarsk plan to "offering a Mercedes if you know how to shift gears and drive the car, but there will be somebody else, specialists, who will take care of your engine." (See ACT, December 2008.)

In December 2007, the Russian government took the decision to include the Angarsk enrichment center in the list of facilities it is willing to submit to IAEA safeguards. Safeguards are to be applied, in particular, to a 120-ton LEU stockpile that is to be set aside as a fuel bank in the event of a supply disruption for political reasons unrelated to nonproliferation.

Russia wants the IAEA to apply safeguards to the uranium materials at the facility, including feed uranium, enriched uranium, and uranium tails. Russia's atomic energy chief, Sergey Kiriyenko, told the IAEA General Conference in September that he was confident that the facility would "receive before the end of the year all necessary licenses to go into operation." No such agreement has been finalized.

Some analysts say that a final agreement has been held up in part because Moscow wants to ensure that its enrichment technology remains a secret. It is also unclear who will cover the cost of IAEA inspections.

Yet, Russian officials say a final agreement has been held up because of a dispute between the Russian government and the IAEA over which countries should be eligible to receive fuel from the facility. IAEA officials say that all IAEA members should be eligible to draw from the fuel bank.

Russian law, however, requires Moscow to follow Nuclear Suppliers Group criteria that limits such trade to states that have signed the NPT and have full-scope IAEA safeguards, aside from India, which won an exemption from such rules in September.

Similar issues could hinder the NTI effort as well, Russian officials caution, particularly as U.S. law contains similar requirements.