IAEA and the Nuclear Fuel Bank: Signs of Spring in a Nuclear Winter

Five years after the idea of a Nuclear Fuel Bank was first proposed by the Nuclear Threat Initiative, the International Atomic Energy Agency (IAEA) has cleared the way for its establishment at a cost of $ 150 million. At the IAEA’s 35-member Board of Governors (BOG) meeting on December 3, the resolution for the Nuclear Fuel Bank (NFB) was passed with 28 votes in favour, six abstentions and one member choosing not to vote. India voted in favour of the resolution. Whereas the Nuclear Threat Initiative (NTI) and the investor tycoon Warren Buffet have collectively contributed $50 million, several countries have also made funds available to the IAEA for the purpose. Major contributors are: the United States ($ 50 million); European Union ($ 25 million); the United Arab Emirates ($10 million); Kuwait ($ 10 million) and Norway ($ 5 million).

It has taken more than 55 years for the world to agree to such an agreement. The idea of institutionalising the Nuclear Fuel Cycle (NFC) was first mooted in the 1946 Acheson-Lilienthal Report, officially called Report on the International Control of Atomic Energy. Acknowledging the inherent dangers in the proliferation of fuel cycle know-how, the report categorically stated that “the industry required and the technology developed for the realization of atomic weapons are the same technology which play so essential a part in man’s almost universal striving to improve his universal standard of living and his control of nature.”1 Recognising this dual aspect of nuclear technology, the report recommended international control over all ‘intrinsically dangerous phases’ of NFC, the development of which was to be assigned to an international organisation ‘ responsible to all people’.

The Nuclear Fuel Bank to be established is far less extensive in scope compared to what the Acheson-Lilienthal report had in mind. It does not propose to aggregate all sensitive phases of NFC under the IAEA. What it purports to do however is to “dissuade countries from pursuing their own uranium enrichment programmes by providing them with an assured supply of fuel at market price.”2 The proposed NFB would provide fuel to only those states that shall be in good standing with the international nuclear watchdog – the IAEA. This basically means that all states seeking assistance from the IAEA should be in compliance with their international commitments especially obligations under the Nuclear Non-proliferation Treaty (NPT). This also suggests that non-NPT member states such as India and Pakistan would not be able to access fuel from the NFB. Moreover, the bank does not propose to replace existing market mechanisms but only intends to fill the gap whenever states seeking peaceful uses of nuclear energy face supply bottlenecks due to political reasons.

Since nuclear reactors are expensive and nuclear energy needs a lot of initial investment, states are always concerned about nuclear fuel supplies. Many times in the past, supplier states have put forth conditions on the supply of nuclear fuel. The abrupt changes in US nuclear fuel supply policies in the 1970s are one of the most glaring examples in this regard. Since such uncertainties create a strong incentive for states to develop indigenous nuclear fuel cycles, the NFB under the IAEA may help mitigate some of these concerns. Countries such as Iran and North Korea have often rationalised their indigenous NFCs on the pretext of their hostile relationship with other states such as the USA who wield considerable influence on the global nuclear fuel supply chain. Once the NFB is established, states would not be able to argue the need for the development of fuel cycle technologies on grounds of uncertainty in supplies.

However, the six abstentions and the lone ‘vote not cast’ are symbolic of considerable dissension at the IAEA. While Venezuela, Tunisia, South Africa, Ecuador, Brazil, and Argentina abstained, Pakistan refused to not cast its vote. Except for Pakistan all other countries are members of the NPT. These countries were primarily responsible for scuttling the proposal for an NFB in previous meetings of the IAEA Board of Governors. The non-nuclear NPT members are concerned about the shifting focus from disarmament to nuclear proliferation. According to these states, without making adequate progress on elimination of nuclear weapons, more emphasis is being placed on their non-proliferation commitments. However, there is more than the issue of disarmament which informs their opposition to the NFB. It also emanates from the fear of the very process which the NFB represents: if multilateralisation of NFC were to be taken to its logical extreme, these states fear that their rights to nuclear technology for peaceful purposes will be fully appropriated in the long run.

Two factors seem to have helped the resolution to get through this time. The first is the change in the composition of the BOG. Vocal critics of the fuel bank such as Egypt and Iran made way for more accommodating members such as Jordan and the UAE. The absence of Egypt, as the leader of the non-aligned countries, proved to be consequential. Egypt was one of the most vociferous voices during the NPT Review Conference held in May 2010 and was solely responsible for the resolution on the Middle East which was included in the final draft. The presence of Iran in the BOG meeting would have also not allowed such a result since the BOG works on consensus. The fuel bank has been referred to as an act of ‘Nuclear Apartheid’ by Iran.

The second factor was the nature of the draft proposal itself. Unlike many other proposals submitted at the IAEA on multilateral approaches to the NFC, the NTI’s proposal was the most innocuous in terms of the concerns of NPT members. There is no stipulation in this proposal for states seeking assistance to forgo peaceful nuclear activities. Moreover, the proposed nuclear fuel bank would not replace existing market mechanisms. Hence, aspiring nuclear suppliers such as Brazil, Argentina and South Africa are reassured that they will not be “closed out off the commercial nuclear fuel market.”3 And finally, the sole decision making authority with regards to the NFB rests with the IAEA, which enjoys considerable legitimacy in the eyes of most of its member states.

The opposition from Pakistan is more of an unsought reaction to the India-US nuclear deal. Post the deal, the idea of ‘obstruction’ has been so internalised in Pakistan’s approach to international nuclear politics that there is hardly any signs of self-reflection. Whether it be the case of Fissile Material Cut-off Treaty or Nuclear safety and Security, Pakistan always starts with a firm ‘No’. Recent revelations made by wikileaks also point to this approach.

The curious case of India is however the most startling. In April 2008, then Foreign Secretary Shiv Shankar Menon had publicly supported the idea of a NFB while addressing the ISIS-CITI Global Forum in Delhi. He even proposed India to be the home of the new fuel bank. However, India led the G-77 against the NTI’s proposal when the BOG sat to discuss the issue in the summer of 2009. Again, India abstained from voting when the Russian proposal was discussed in November 2009. India’s consent in the present instance is therefore puzzling. Two arguments can be brought to reason such a shift. First, the NTI’s proposal should never have been a reason of concern for India. For, neither does it explicitly exclude the involvement of non-NPT members in future, nor does it say anything about the right of such states to participate in the supply side of international nuclear trade. To this effect, the Indian delegate at the IAEA said “as a country with advanced nuclear technology, India would like to participate as a supplier state in such initiatives.” Thus, the coming around of India should be seen as a rectification of an erroneous policy. However, as has been delineated by C. Rajamohan elsewhere, the consent can also be a reflection of an assertive India playing a constructive role on the global nuclear turf.

• 1. A Report on the International Control of Atomic Energy, available at www.ipfmlibrary.org/ach46.pdf
• 2. Daniel Horner, “Countries Aim for Fuel Bank Endorsement,” Arms Control Today, November 2010.
• 3. Thomas Lorenz and Jonna Kidd, “The Uncertain future for International Nuclear Fuel Bank,” Bulletin of Atomic Scientists, May 1, 2010, vol. 66, no. 3, pp. 44-49.