Proliferation and the Logic of the Nuclear Market

Transcription

1 1 2 Proliferation and the Logic of the Nuclear Market 3 4 Eliza Gheorghe a a Department of International Relations, Bilkent University 5 6 ARTICLE HISTORY Compiled October 23, ABSTRACT Why haven t more countries acquired nuclear weapons? Why are there only nine nuclear weapons states today, not 25 or more? This article answers that question by focusing on an important pathway to the bomb: the nuclear market. I argue that proliferation is a function of the competition among suppliers in that market. In the absence of a supplier cartel that can regulate transfers, the more suppliers there will be, the more intense their competition will be as they vie for market share. This commercial rivalry makes it easier for nuclear technology to spread, because buyers can play suppliers off against each other. The ensuing transfers help countries either acquire nuclear weapons or become hedgers. The great powers seek to thwart proliferation by limiting what suppliers can sell and putting safeguards on potentially dangerous nuclear technologies. Their success depends on two key structural factors: the global distribution of power and the intensity of the security rivalry among the great powers. Stemming proliferation is more likely in unipolarity, and less likely in multipolarity, with bipolarity falling in between. Furthermore, the more intense the rivalry among the great powers in bipolarity and multipolarity, the less effective they will be at curbing the spread of nuclear weapons. The world appears to be moving from unipolarity to multipolarity with potential for intense security rivalry among the great powers (the United States, Russia, and China), which does not portend well for checking proliferation KEYWORDS nuclear weapons; nuclear trade; US; China; Russia; Cold War; polarity eliza.gheorghe@bilkent.edu.tr

2 29 Introduction Few topics have been paid as much attention by policymakers and security experts across the world as nuclear proliferation. The United States, for example, has been committed to curtailing the spread of nuclear weapons since 1945, making non-proliferation a strand of its grand strategy. 1 It was widely believed in the early Cold War that nuclear weapons would spread to many other countries. This pessimism was reflected in the National Intelligence Estimates (NIEs) from those years and maybe most famously in President John F. Kennedy s prediction in March 1963 that a president in the 1970s might face a world in which 15 or 20 or 25 nations have the bomb. 2 That gloomy outlook was especially acute after India s nuclear test in May Yet, these fears have not been realized. Only ten states have acquired nuclear weapons, and one of those countries (South Africa) gave them up. This unforeseen pattern of proliferation raises the obvious question: why haven t more countries acquired nuclear weapons? Why are there only nine nuclear weapons states today, not 25 or more? This article attempts to help answer that question by focusing on an important pathway to the bomb: the nuclear market. The logic of the nuclear market suggests that suppliers, as they compete, will offer to sell technologies and materials that could make it easier for a state to develop nuclear weapons. The free market that emerged in the 1950s, with its intense competition among suppliers, looked like an especially dangerous pathway to proliferation by the 1970s, not only because it played a key role in India s nuclear program, but also because it appeared that other countries would follow in India s footsteps. But that route to the bomb was blocked by the US and the USSR. The conditions for thwarting supplier competition may be eroding, however, and this pathway may again threaten to increase the number of nuclear weapons states (NWS). My aim is to explain how competitive 1 Francis J. Gavin, Strategies of Inhibition: U.S. Strategy, the Nuclear Revolution, and Nonproliferation, International Security, Vol. 40, No. 1 (2015), 9-46; Or Rabinowitz and Nicholas L. Miller, Keeping the Bombs in the Basement: U.S. Nonproliferation Policy toward Israel, South Africa, and Pakistan, International Security, Vol. 40, No. 1 (2015), On NIEs, see Moeed Yusuf, Predicting Proliferation: The History and Future of Nuclear Weapons, Brookings Foreign Policy Paper No. 11 (Washington, D.C.: Brookings Institution, January 2009), John F. Kennedy, Press Conference, March 21, 1963, Public Papers of the Presidents of the United States: John F. Kennedy 1963 (Washington, DC: US Government Printing Office, 1964), William Burr, The Making of the Nuclear Suppliers Group, (Washington, DC: Woodrow Wilson International Center for Scholars, 2014). 2

3 markets can facilitate proliferation, identify the conditions under which the spread of nuclear weapons can be thwarted, and show how thwarting has succeeded in limiting the number of NWS. I also look toward the future and explain why thwarting may not endure. My analysis is based on a theory of proliferation, which maintains that the spread of the bomb is largely a function of the interactions among suppliers, buyers, and thwarters in the nuclear market. In the absence of a supplier cartel that can regulate transfers, the more suppliers there will be, the more intense the competition among them will be, as they vie for market share. This commercial rivalry makes it easier for nuclear materials and technology to spread, because buyers can play suppliers off against each other. The ensuing transfers help countries either acquire nuclear weapons or become hedgers states sitting on the threshold of weaponization. The thwarters, who are the great powers in the system, try to counter proliferation by limiting what suppliers can sell and putting safeguards on potentially dangerous technologies that can be sold. Their success depends on two key structural factors: the global distribution of power and the intensity of the security rivalry among them. Thwarting is most successful in unipolarity, and least successful in multipolarity, with bipolarity falling in between. Furthermore, the more intense the rivalry among the great powers in bipolarity and multipolarity, the less effective thwarting will be and thus the more likely it is that nuclear weapons will spread. How does my theory fare against the empirical record? The history of proliferation can be divided into four periods: World War II ( ), the early Cold War ( ), the late Cold War ( ), and the post-cold War ( ). The nuclear age began in 1945, when the first atomic bomb was exploded. At roughly the same time, the international system was becoming bipolar, and soon thereafter the Cold War started. The security rivalry between the superpowers in this conflict was more intense in the first part ( ) than the second ( ). The system was unipolar in the wake of the Cold War and the collapse of the USSR. My theory predicts that more countries would acquire nuclear weapons during the early Cold War than either the late Cold War or the post-cold War period, mainly because Moscow and Washington were locked in a bitter security rivalry and thus were largely incapable of cooperating to thwart proliferation. They would be better situated to counter proliferation after their relations improved in the late Cold War. And once the US became the sole pole, 3

4 it would be in the position to prevent new countries from becoming NWS. Seven states acquired nuclear weapons in the early Cold War, which prompted fears of unbounded proliferation. Only two states, however, built a bomb in the late Cold War, primarily because relations between the thwarters the USSR and the US began improving in the late 1960s and reached the point by the mid-1970s where they could work together to create a cartel that slowed down proliferation. In the post-cold War period, one country acquired nuclear weapons and one gave them up, for a net gain of nil. As the world is now moving into multipolarity, my theory predicts that the great powers will have difficulty cooperating to regulate the market, thus leading to an increase in proliferation. This article recognizes that two factors must be present for a state to become a proliferator. First, it must have the intention to become a hedger or acquire nuclear weapons. Second, it must have the capability to achieve that goal. Specifically, a state must have the materials and technology, as well as the engineering and scientific expertise, necessary for building nuclear weapons. This article does not examine why countries want to become proliferators. It assumes that security is the main motive, although there are other motives as well. 4 Instead, it seeks to analyze how countries, once they have decided to become hedgers or acquire the bomb, use the nuclear market to achieve their goal. I am not arguing that once states acquire nuclear materials and technologies they will reflexively develop an interest in building a nuclear arsenal. Many states secure the nuclear wherewithal for a peaceful program and show no interest in becoming a proliferator. Indeed, my research shows that 31 states fit in this category, while another 34 states were proliferators. In short, technological determinism has no place in my theory. The remainder of this article is organized into six sections. I discuss the different pathways to proliferation and define key terms in the first section. I then present my theory and research design in the second section. In the third section I look at the broad patterns of proliferation between 1945 and 2014 to determine how well they fit with my argument, while the fourth section provides a more fine-grained analysis of what my theory says about the spread of nuclear weapons over time. I examine how the behavior of the thwarters the US and the USSR affected the evolution of 4 On the causes of proliferation, see Scott D. Sagan, Why Do States Build Nuclear Weapons? Three Models in Search of a Bomb, International Security, Vol. 21, No. 3 (1996/1997), 54-86; and idem, The Causes of Nuclear Weapons Proliferation, Annual Review of Political Science, Vol. 14 (2011),

5 the nuclear market. I also look closely at three countries India, South Korea, and Romania that had varying success as proliferators. The fifth section considers what the future holds for proliferation as the world moves from unipolarity to multipolarity, while the conclusion offers policy recommendations and suggests possible avenues for further research. 123 Pathways to the Bomb A country can acquire the capability to build a nuclear weapon by following different pathways. 5 It can rely on indigenous means or do it with the help of others. 6 Specifically, it can get the necessary materials and technologies from another country in the nuclear market. State-to-state transfers, which are the focus of this article, are commonly understood to represent nuclear trade. 7 A proliferator can also acquire the capability via multinational cooperation, which is where several countries collaborate to develop a particular nuclear technology. 8 States sometimes get nuclear materials and facilities from sub-state actors through smuggling rings, which is regarded as il- 132 licit trade, or by capturing facilities from vanquished states. 9 Finally, international 5 Countries that were born with the bomb, following the break-up of a nuclear weapon state such as Ukraine, Belarus, and Kazakhstan, fall outside the scope of this article. For a discussion of nuclear inheritance, see Mariana Budjeryn, The Power of the NPT: International Norms and Ukraine s Nuclear Disarmament, The Nonproliferation Review, Vol. 22, No. 2 (2015), For works on indigenous capabilities, see: Dong-Joon Jo and Erik Gartzke, Determinants of nuclear weapons proliferation, Journal of Conflict Resolution, Vol. 51, No.1 (2007), ; R. Scott Kemp, The Nonproliferation Emperor Has No Clothes: The Gas Centrifuge, Supply-Side Controls, and the Future of Nuclear Proliferation, International Security, Vol. 38, No. 4 (2014), 39-78; Jacques E. C. Hymans, Achieving Nuclear Ambitions: Scientists, Politicians, and Proliferation (Cambridge: Cambridge University Press, 2012); Alexander Montgomery, Stop Helping Me: When Nuclear Assistance Impedes Nuclear Programs, in Adam N. Stulberg and Matthew Fuhrmann (eds.), The Nuclear Renaissance and International Security (Stanford, California: Stanford University Press, 2013), ; Målfrid Braut-Hegghammer, Unclear Physics: Why Iraq and Libya Failed to Build Nuclear Weapons (Ithaca: Cornell University Press, 2016). 7 Matthew Kroenig, Exporting the Bomb. Technology Transfer and the Spread of Nuclear Weapons (Ithaca: Cornell University Press, 2010); Matthew Fuhrmann, Atomic Assistance: How Atoms for Peace Programs Cause Nuclear Insecurity (Ithaca: Cornell University Press, 2012). 8 Margaret Gowing, Britain, America, and the Bomb, in Michael L. Dockrill and John W. Young (eds.), British Foreign Policy, (London: Palgrave Macmillan, 1989), 31-46; Shane J. Maddock, Nuclear Apartheid: The Quest for American Atomic Supremacy from World War II to the Present (Chapel Hill: The University of North Carolina Press, 2010), Alexander H. Montgomery, Ringing in Proliferation: How to Dismantle an Atomic Bomb Network, International Security, Vol. 30, No. 2 (2005),

6 organizations that are created to help countries develop civilian nuclear programs can inadvertently help proliferators. 10 The reason is that the civilian and military uses of the atom are two sides of the same coin. 11 The dual nature of atomic energy means that some nuclear technologies generally regarded as civilian, like reactors, can be used in a nuclear weapons program. All proliferators have used more than one pathway to acquire the bomb. The US, for instance, benefitted from multinational cooperation with Britain and Canada as well as from indigenous capabilities. The Soviets employed indigenous means, German scientists and facilities their army captured at the end of World War II, and centrifuge technology they acquired from Sweden. 12 Nevertheless, certain pathways matter more than others. Capturing an enemy s nuclear facilities has rarely happened, and while an international organization like the IAEA helps countries develop their nuclear programs, it also serves as the world s nuclear watchdog, thus making it harder for countries to divert nuclear wherewithal to military programs. Illicit smuggling networks have helped countries like Pakistan and North Korea build nuclear weapons, but the black market is not nearly as robust as the licit one. Indigenous means, multinational cooperation, and nuclear trade are the most common pathways to the bomb. Each offers a set of advantages and disadvantages. The indigenous route protects the proliferator against outside interference but is costly and does not guarantee the best product. Multinational cooperation allows the collaborators to share knowledge, reduces the costs each has to pay, and boosts their ability to solve difficult problems. This tight interdependence, however, limits a proliferator s ability to pursue its own interests, which is likely to matter for building a bomb. A nuclear market populated by multiple suppliers competing with each other for market share allows buyers to maximize the benefits they get regarding quality of the product, price, and most importantly for proliferation purposes, terms of use. 13 In short, 10 Robert L. Brown, Jeffrey M. Kaplow, Talking Peace, Making Weapons: IAEA Technical Cooperation and Nuclear Proliferation, Journal of Conflict Resolution Vol. 58, No. 3 (2014), David E. Lilienthal, We Must Grasp the Facts About the Atom, New York Times, Pavel V. Oleynikov, German Scientists in the Soviet Atomic Project, The Nonproliferation Review, Vol. 7, No. 2 (2000), Supplier competition is discussed in Joseph S. Nye, Maintaining a Nonproliferation Regime, International Organization, Vol. 35, No. 1 (1981), 15-38; Robert Boardman, James F. Keeley (eds.), Nuclear Exports and World Politics (New York: St. Martin s Press, 1983); William Walker and Måns Lönnroth, Nuclear Power Struggles. Industrial Competition and Proliferation Control (London: George Allen & Unwin, 1983); Benjamin N. Schiff, International Nuclear Technology Transfer. Dilemmas of Dissemination and Control (London: 6

7 the nuclear market is a significant pathway to proliferation, which has contributed, to varying degrees, to the nuclear programs of a majority of the world s ten proliferators: the USSR, France, China, Israel, India, South Africa, Pakistan, and North Korea (see Figure 1). Figure 1. Negotiations between proliferators that became NWS and suppliers, Definitions The nuclear market is a system in which the parties engage in commercial transactions involving technologies, materials, and know-how related to atomic energy. The main protagonists in this market are buyers, suppliers, and thwarters. The nuclear market is unlike any other market because the products being traded can be used to build nuclear weapons, which are the most destructive weapons the world has ever known. Croom Helm, 1984); Rodney W. Jones, Cesare Merlini, Joseph F. Pilat, and William C. Potter (eds.), The Nuclear Suppliers and Nonproliferation. International Policy Choices (Washington, DC: Center for Strategic and International Studies, 1985); William C. Potter (ed.), International Nuclear Trade and Nonproliferation (Lexington, MA: Lexington Books, 1990); J. Samuel Walker, Nuclear Power and Nonproliferation: The Controversy over Nuclear Exports, , Diplomatic History, Vol. 25, No. 2 (2001), ; Sungyeol Choi and Il Soon Hwang, Effects of Nuclear Technology Export Competition on Nuclear Proliferation, The Nonproliferation Review, Vol. 22, No. 3-4 (2015), None of these scholars, however, argue that the structure of the international system explains variation in the competitiveness of the market. 7

8 The possibility that transfers might be used for military purposes is always on the minds of thwarters. Among buyers, my focus is on countries that are bent on proliferation, not those that acquire nuclear wherewithal solely for peaceful purposes. A proliferator can have two possible end goals: becoming a nuclear weapons state or developing the capability to acquire the bomb quickly, which is to say becoming ahedger. 15 Countries on the NWS track begin as aspirants. Specifically, an aspiring NWS expresses interest in building the A-bomb and takes concrete steps to either acquire the materials and technology - or uses its existing nuclear capabilities to reach that end. A country remains an aspirant until it has either exploded a nuclear weapon or other nuclear explosive device or has assembled an atomic bomb. 16 In the process, it may build nuclear reactors, laboratory-, pilot-, and industrial-scale ENR facilities, but it is only when all these ingredients come together to produce a bomb or test a nuclear device that the aspirant becomes an NWS. Countries aiming to be hedgers also start as aspirants. To be precise, an aspiring hedger pursues a robust infrastructure comprising the full nuclear fuel cycle, which allows it to keep open the option to become an NWS on short notice, without having a dedicated nuclear weapons program. To qualify as a hedger, a country must have a pilot- or industrial-scale ENR facility that can readily produce fissile material for a bomb. Suppliers are the countries that export nuclear technologies, materials, and expertise that can be used for civilian and military purposes. The key technologies suppliers export include nuclear research reactors, nuclear power reactors, and most importantly for proliferation purposes, enrichment and/or reprocessing (ENR) facilities. They are the building blocks of a nuclear program. Suppliers also sell uranium and plutonium, the main materials for powering reactors and building nuclear weapons. Transfers involving expertise can take the form of training, educational exchanges, or formal schooling. The great powers in the system are the thwarters, who act as market regulators Ariel Levite, Never Say Never Again: Nuclear Reversal Revisited, International Security, Vol. 27, No. 3 (2002/2003), 59-88; Vipin Narang, Strategies of Nuclear Proliferation: How States Pursue the Bomb, International Security, Vol. 41, No. 3 (2016/2017), United Nations Office for Disarmament Affairs, Treaty on the Non-Proliferation of Nuclear Weapons, Article IX. 17 For the period of the Cold War, this article will use great powers and superpowers interchangeably. Minor powers cannot be thwarters because they do not have the economic and military wherewithal to limit competition among suppliers. 8

9 Their aim is to put significant limits on what suppliers can sell to buyers. In particular, they try to prevent the sale of technologies like ENR, which facilitate proliferation; and they put safeguards on transfers that might be used by proliferators to build the bomb. These measures are designed to inhibit, contain, and roll back proliferation. Inhibition is all about preventing aspiring NWSs and aspiring hedgers from reaching their goals. 18 In effect, inhibition leads to containment, which involves keeping the number of hedgers and NWS constant. Rollback happens when a state ceases being an aspirant, abandons its hedging strategy, or gives up its nuclear weapons. 204 A Theory of Nuclear Proliferation There are different reasons why states pursue a hedging strategy or try to acquire nuclear weapons. Security concerns, bureaucratic politics, or the quest for prestige may push a country down the nuclear road. My theory assumes that security is the main motive, because possessing a nuclear arsenal is the best way for a country to guarantee its survival, which is the highest priority for states in the international system. Wanting nuclear weapons, however, does not mean that states will get them. They must also have the capability to do so. I argue that they are most likely to acquire this capability through the nuclear market. Thus, the central question is: what circumstances allow states to acquire the wherewithal in the market to become an NWS, or hedger? Proliferation is largely a function of the interplay between suppliers, buyers, and thwarters in the nuclear market. Specifically, the more competition there is among suppliers, the easier it is for buyers to obtain nuclear transfers that could be used to start, develop, and maintain a nuclear weapons program. But the great powers, which are the thwarters in the system, have powerful incentives to regulate the market to curb proliferation. Whether they succeed is largely dependent on the distribution of power among them as well as the intensity of their security rivalry A Buyer s Market A market with multiple suppliers works to the buyer s advantage in three related ways. First, buyers have finite resources and cannot buy all the goods that all the sellers are offering. For every sale one vendor makes, there will be several others who mark up 18 Gavin, Strategies of Inhibition. 9

10 a loss. Sellers understand that in a competitive market with winners and losers, the probability of closing a deal decreases as the number of suppliers increases. The core motivation for nearly all vendors is to maximize market share, which tends to give their competition a zero-sum quality. 19 Second, the presence of different suppliers intensely competing with one another allows buyers to play those suppliers against one another in pursuit of a strategy I call supplier manipulation. A supplier in a competitive market fears that its commercial rivals will steal a customer from under its nose by offering a better deal. A buyer can exploit this situation by dragging vendors into bidding wars. It can simultaneously reach out to several sellers and warn them that they must make the best possible offer to win the deal. The competitiveness of the market makes these threats credible. The more suppliers there are in the market, the better able buyers are to manipulate them. Consider a buyer that has access to 10 suppliers and chooses to pit 4 of them against each other at a time. That buyer has 210 possible combinations of bids at its disposal, without any combination of 4 suppliers repeating. If there are only two suppliers, however, the prospect of securing an attractive deal is markedly reduced. The buyer can still play the two sellers against each other, but if their bids do not satisfy the buyer, or if they decline to make offers, the buyer has no other options. In contrast, a buyer looking at 210 possible combinations of bids has a much greater chance of finding a supplier that can make an appealing offer. The greater the number of suppliers, the fiercer their competition, and therefore the easier it is for buyers to manipulate them. 20 Buyers in a competitive market sometimes do not explicitly manipulate suppliers, but instead negotiate deals with a single supplier. One might think that a one-on-one negotiation between buyer and supplier is a fundamentally different strategy than supplier manipulation. But that conclusion would be incorrect. Sellers in a competitive market are always under pressure from their commercial rivals, whether buyers are openly pitting suppliers against each other or not. All suppliers are constantly con- 19 This is not to deny that other considerations like security, domestic politics, prestige, and especially profit, can affect supplier behavior. See Kroenig, Exporting the Bomb; Fuhrmann, Atomic Assistance. But marketshare is a seller s primary goal, because it is the essential condition for pursuing those other goals. For an explanation of why suppliers prize market-share above profit, see Robert D. Buzzell, Bradley T. Gale, and Ralph G. M. Sultan, Market Share A Key to Profitability, Harvard Business Review, Vol. 53, No. 1 (1975), ; Horace Dediu, Which size really matters? Market Share vs. Profit Share, Asymco, October 18, George J. Stigler, A Theory of Oligopoly, Journal of Political Economy, Vol. 72, No. 1 (1964),

11 cerned that their competitors will steal a deal from them, because they know that buyers invariably have other options. In effect, the shadow of supplier manipulation hovers over and profoundly affects one-on-one negotiations, even if the buyer is not purposely manipulating rival suppliers. 21 Third, competitive interactions among suppliers allows buyers to secure better prices, products, and terms of use all of which facilitate proliferation. When faced with competition, suppliers make their offers as attractive as possible to potential buyers by lowering the costs of nuclear materials and technology. 22 The less a buyer spends on procuring these items, the more resources it has available to use for a military program. Recipient countries therefore pay careful attention to affordability, drawing suppliers into bidding wars. Vendors charging a higher price than their rivals are likely to lose the deal. Buyers understand this logic and use it to their advantage by threatening to accept a competitor s tender if a supplier refuses to lower the cost. Furthermore, suppliers facing stiff competition from their peers often seek to improve their export chances by offering better products, some of which will exacerbate the proliferation problem. For example, increasing a reactor s capacity not only produces more electricity, but also larger quantities of spent fuel, from which plutonium can be extracted. When there are a substantial number of suppliers and each seeks to dominate the nuclear market, buyers will have a variety of first-rate technologies to choose from. Finally, supplier competition facilitates proliferation by relaxing the conditions for nuclear transfers. Under market pressure, suppliers vie with each other to offer the most malleable rules for using their products. In other words, they enter bidding wars for leniency. A supplier known for being a stickler about enforcing non-proliferation norms and practices runs the risk of losing contracts to rival vendors who are less concerned about preventing proliferation. Turning a blind eye to the potential diversion of nuclear 21 If there is a single supplier, buyers cannot employ supplier manipulation. The nuclear market, however, has almost always included rival suppliers, and thus one-on-one negotiations have invariably been influenced by the fear buyers will go elsewhere if they are not offered an attractive deal. Nevertheless, the supply-side literature on proliferation treats one-on-one negotiations as if they take place in isolation from the wider market, which is not true. Even more surprising, cases in which buyers overtly manipulate suppliers are also treated as isolated cases involving the buyer and the chosen supplier. This narrow focus is due largely to the fact that the literature focuses on the final products that suppliers sell to buyers, and not on the processes that led to those outcomes, which include the buyer s negotiations with different suppliers. 22 Joseph Stiglitz, Competition and the Number of Firms in a Market: Are Duopolies More Competitive than Atomistic Markets? Journal of Political Economy, Vol. 95, No. 5 (1987),

12 technology for military use, can make or break a deal, which is why suppliers sometimes cut corners when selling their nuclear wares. Suppliers usually pay little attention to the possibility that the technology they sell might be used in a nuclear weapons program, mainly because they believe they can outsource the problem to the great powers, who are deeply committed to thwarting proliferation and who know they are the only states capable of handling that task The Role of the Thwarter Thwarters seek to curb proliferation by preventing buyers from exploiting the competition among suppliers. Specifically, they create cartels, which force vendors to comply with a fixed set of rules. 23 These guidelines, which determine what buyers can sell and under what conditions, form two lines of defense. The first involves prohibiting members from selling certain products, save for special circumstances. These off-limits goods are especially useful for facilitating proliferation. In practice, the cartel will pressure suppliers to refrain from selling ENR technology, although exceptions will often be made for buyers who already have ENR. If vendors cannot sell ENR, they will no longer compete with each other to sell that product, which helps curb proliferation. The second line of defense involves comprehensive safeguards. They are a complex set of rules designed to keep track of fissile materials used in nuclear installations and to verify whether those installations are serving peaceful purposes. 24 The ideal instrument a cartel can employ to monitor buyers is what is known as Full Scope Safeguards (FSS). Those restrictive rules not only apply to the technologies buyers acquire from suppliers, but to all of their other nuclear facilities as well. Therefore, FSS prevents buyers from using either imported or indigenous technologies to pursue a nuclear weapons program. The cartel applies comprehensive safeguards to two categories of nuclear technology: ENR and reactors, which includes both research reactors and nuclear power plants. Although thwarters seek to abolish the ENR market, there may be special circumstances where that technology is sold to selected buyers. In such cases, the cartel mandates that comprehensive safeguards accompany the sale. The cartel, however, does not pro- 23 David Fischer, The London Club and the Zangger Committee: How Effective?, in Kathleen Bailey and Robert Rudney (eds.), Proliferation and Export Controls (Lanham, New York and London: University Press of America, 1993), Laura Rockwood, How the IAEA verifies if a country s nuclear program is peaceful or not: The legal basis, Bulletin of the Atomic Scientists, Vol. 74, No. 5 (2018),

13 hibit reactor sales, because without ENR, countries cannot produce the fissile material necessary for building nuclear weapons. Nevertheless, the cartel insists that those transfers include safeguards, because as with all nuclear technology, civilian and military uses are two sides of the same coin. For example, if a country has an ENR facility or is building one, it can use the spent fuel from a reactor to produce fissile material. In short, buyers can still engage in supplier manipulation to secure reactor transfers, but safeguards must accompany those sales. With ENR, the aim is to eliminate that market, but if there are transfers, safeguards are required. How does the cartel work? It is an institution thwarters use to make suppliers behave in ways that prevent or minimize the likelihood that buyers of nuclear technology become NWS. The cartel s key operating principle is that its members act in unison. 25 Each member incorporates the same guidelines into its nuclear export policies, so they are all in sync. When suppliers coordinate with each other and form a united front, buyers cannot manipulate them. The guidelines, in effect, institute self-censoring behavior. With ENR technology, for instance, cartel member refrain from trying to sell altogether. Thus, when one supplier abstains from exporting ENR, it does not have to fear that other members will sell that technology. In the reactor market, however, buyers can still drag suppliers into bidding wars, but the benefits a country can reap from manipulating suppliers are more limited when there is a cartel. Buyers can obtain better products and prices, but not better terms of use, because all suppliers must apply the same safeguards to the deal. This regulation of the market makes it especially difficult for buyers to use transfers to pursue nuclear weapons. Cartels also operate as decision-making forums. Suppliers inform each other of their export plans and ring the alarm when a buyer seems bent on acquiring nuclear weapons. They also engage in consultations when facing contentious decisions, which usually involve making exceptions to the rules, like selling nuclear technology to countries that do not accept comprehensive safeguards. If at least one member opposes the transfer, it does not take place or the waiver for the exception is not granted. This veto power is a potent instrument in the thwarters hands, which is one reason why cartels are so important for countering proliferation. The pressure thwarters put on suppliers via the cartel changes the market in ways 25 Mancur Olson, The Logic of Collective Action. Public Goods and the Theory of Groups (Cambridge, MA & London: Harvard University Press, 2002),

14 that matter for proliferation. Aspirants possessing only reactors will find it difficult to become a hedger or NWS, because they cannot rely on supplier manipulation to secure ENR, which is necessary to produce fissile material for a bomb. Countries that have ENR can secure additional ENR facilities, but they would have to accept comprehensive safeguards designed to prevent them from using any of their nuclear facilities for military purposes. Countries without nuclear facilities can manipulate suppliers to secure reactors, and if they seek to weaponize, they would become aspirants. But an effective cartel would make it almost impossible for them to become a hedger or NWS. In short, the cartel transforms the nuclear market, which greatly limits proliferation, but does not prevent states from becoming aspirants. An effective cartel should also reduce the number of suppliers in the market. Many of the vendors who sell technologies that are essentially banned, like ENR, will go out of business. Furthermore, an efficient cartel will discourage potential proliferators from entering the market and even drive some aspirants from the market, because they have little hope of acquiring nuclear weapons. Not all suppliers, however, will join the cartel. After all, considerable economic benefits accrue to suppliers who do not have to put safeguards on their products, and thus are freer than cartel members to set terms that satisfy buyers. Moreover, those outsiders can sell ENR, which allows for possible supplier competition involving ENR, although it would be mitigated by the clout the cartel wields in the market. Countering proliferation matters to thwarters for several reasons. First, great powers fear that a proliferator might use its nuclear weapons against them. The likelihood is small, but given the horrendous consequences, no great power wants to take a chance. 26 Second, great powers appreciate the danger of inadvertent nuclear escalation during a conventional war. Therefore, the more nuclear powers there are, the more dangerous it becomes to fight conventional wars. 27 Third, there is the risk of accidental use, because the systems that manage nuclear weapons are not foolproof. Those weapons might be used because of human or mechanical errors. 28 Fourth, it is difficult for great powers to 26 Albert Wohlstetter, The Delicate Balance of Terror, Foreign Affairs, Vol. 37, No. 2 (1959), Paul J. Bracken, The Command and Control of Nuclear Forces (New Haven: Yale University Press, 1983); Barry R. Posen, Inadvertent Escalation: Conventional War and Nuclear Risks (Ithaca: Cornell University Press, 1991); Caitlin Talmadge, Would China Go Nuclear? Assessing the Risk of Chinese Nuclear Escalation in a Conventional War with the United States, International Security, Vol. 41, No. 4 (2017), Scott Sagan, The Limits of Safety (Princeton: Princeton University Press, 1993); Bruce C. Blair, The Logic of Accidental Nuclear War (Washington, DC: Brookings Institution, 1993); Peter Feaver, Guarding the 14

15 impose their will on weaker states that are nuclear-armed, because the threat of using military force against them is unlikely to be credible. Nuclear weapons are sometimes the great equalizer. 29 Fifth, the spread of nuclear weapons increases the likelihood terrorist groups will obtain nuclear materials or possibly a bomb. 30 Finally, a nucleararmed ally might use those weapons in a moment of desperation, causing the target state to retaliate against both the great power and its ally. 31 Cartels are not the only tools great powers can use to counter proliferation. They also can threaten to sanction proliferators, destroy their nuclear facilities, and abandon allies. 32 These strategies are likely to fail, however, if proliferators can acquire nuclear technology especially ENR via the market. For example, a determined proliferator can simply absorb the punishment from sanctions and buy ENR from a willing supplier. Wrecking a proliferator s nuclear facilities matters little if the target state can still buy the technology it needs to start over and then locate it in places largely immune from attack. Threatening to forsake an ally, which would seem foolish for strategic reasons is unlikely to work if allies can acquire the ultimate deterrent from eager suppliers. The limits of these alternative strategies point up that a cartel, which regulates the conduct of nuclear suppliers, is the best way to maximize the prospects of thwarting proliferation. Although thwarters have powerful incentives to curb nuclear trade, that is not always possible. Sometimes they cannot build a cartel, making it difficult to halt proliferation. The thwarters fallback is to shape the market as much as possible by beating the suppliers at their own game and selling nuclear materials and technologies themselves. Guardians: Civilian Control of Nuclear Weapons in the United States (Ithaca: Cornell University Press, 1992). 29 Kenneth Waltz, The Spread of Nuclear Weapons: More May be Better, TheAdelphi Papers, Vol. 21, No. 171 (1981), 16; Scott Sagan and Kenneth N. Waltz, The Spread of Nuclear Weapons: A Debate Renewed (New York: Norton, 2002), Matthew Bunn and Nickolas Roth, Reducing the Risk of Nuclear Theft and Terrorism, in Joseph F. Pilat and Nathan E. Busch (eds.), Routledge Handbook of Nuclear Proliferation (New York: Routledge, 2015), Thomas J. Christensen and Jack Snyder, Chain Gangs and Passed Bucks: Predicting Alliance Patterns in Multipolarity, International Organization, Vol. 44, No. 2 (1990), Nicholas L. Miller, The secret success of nonproliferation sanctions, International Organization, Vol. 68, No. 4 (2014), ; Sarah E. Kreps and Matthew Fuhrmann, Attacking the Atom: Does Bombing Nuclear Facilities Affect Proliferation? Journal of Strategic Studies, Vol. 34, No. 2 (2011), ; Muhammet A. Bas and Andrew J. Coe, A Dynamic Theory of Nuclear Proliferation and Preventive War, International Organization, Vol. 70, No. 4 (2016), ; Alexandre Debs and Nuno P. Monteiro, Nuclear Politics: The Strategic Causes of Proliferation (Cambridge: Cambridge University Press, 2016); Nicholas L. Miller, Nuclear Dominoes: A Self-Defeating Prophecy? Security Studies, Vol. 23, No. 1 (2014),

16 In effect, they will adopt a supplying-to-thwart policy, which allows great powers to have some influence on which technologies are transferred and how they are used. 33 The thwarters also end up better positioned to assess the buyer s ultimate intentions. This strategy pushes thwarters to export nuclear technologies to many countries, thus gaining a large share of that market. Their ultimate aim is to squeeze other suppliers out of the market, and ideally monopolize nuclear trade. 34 The key question regarding thwarters is: when are they best able to create an effective cartel? The answer is that it depends largely on two factors: the number of great powers in the world, and the intensity of the rivalry among them. Only great powers can create an institution that can alter the dynamics of the nuclear market by reducing suppliers freedom of action. Nevertheless, building and 398 maintaining an effective export control system requires significant cooperation and coordination among the thwarters. Security rivalry among them makes it difficult to adopt the guidelines that make a cartel work, and then ensure that they function effectively over time. Great-power rivalry comes in two forms: intense and mild. Intense security competition impedes the formation and management of cartels, because the thwarters have powerful incentives to undermine each other whenever possible, which coordination between them. With mild security rivalry, the great powers have less difficulty synchronizing their export control policies. In short, the more intense the security rivalry among the great powers, the less likely it is they will form an effective cartel, which increases the probability of proliferation. Unipolarity is the optimal distribution of power for preventing proliferation and rolling it back. The unipole is well positioned to intervene in the market and regulate supplier behavior. By definition, there is no possibility of rivalry between great powers in unipolarity, which eliminates the need for the sole pole to coordinate with other great powers. Furthermore, the unipole is enormously powerful relative to other suppliers, which means it can use its economic, diplomatic, and military might to influence their behavior of vendors. The sole thwarter, in other words, has abundant coercive leverage, which means that other cartel members have a strong incentive to cooperate with it 33 Providing nuclear assistance to discourage states from going down the nuclear road was the main rationale behind Atoms for Peace and the Peaceful Atom. Peter R. Lavoy, The Enduring Effects of Atoms for Peace, Arms Control Today, Vol. 33, No. 10 (2003), Also see Gavin, Strategies of Inhibition, Olson, The Logic of Collective Action,

17 and stay in its good graces, so they benefit from its policies. 35 Thus, the unipole is well situated to impose its terms on suppliers, including those outside the cartel. Thwarting is more difficult in bipolarity and multipolarity, because there are now two or more great powers in the system that will compete with one another. Leaving aside the intensity of their security rivalry, counter-proliferation is more difficult in multipolarity than bipolarity, for two reasons. First, coordination among the great powers, which is essential for making a cartel work, becomes more difficult as their numbers increase. After all, having more thwarters invariably leads to more conflicting interests that must be resolved. Furthermore, collective action logic tells us that coordination becomes more difficult with greater numbers, because there will be powerful incentives to free-ride and buck-pass. 36 Cartels are not only difficult to form in multipolarity, but those that exist confront significant problems. For instance, because cartels operate on the principle of unanimity, there is a greater chance one of the thwarters will block a worthwhile proposal, for fear it might adversely affect its security. Punishing rule-breakers is also likely to be a problem, because joint consent is needed to adopt a retaliatory plan all the thwarters accept. Wrongdoers might then think they can avoid punishment for violating the cartel s rules, which would lead to an increase in rule breaking that would undermine the cartel. Second, in bipolarity, the world tends to be organized into rival camps with stable alliances, whereas relations among states tend to be more fluid in multipolarity. 37 Consequently, the great powers are better positioned in bipolarity to monitor suppliers in their orbit and apply pressure when necessary to keep them from selling sensitive nuclear technologies. The great powers in multipolarity, in contrast, are not as well situated to monitor and coerce suppliers, who would be vulnerable to being manipulated by proliferators. Still, curbing proliferation in bipolarity has its limits if the rival great powers engage in intense security competition and hardly cooperate with each other to address the problem. A great power may have influence over close allies that supply, but it will have little clout over suppliers outside its own camp, and they sometimes have reasons to undermine its rival s counter-proliferation policies. In sum, the key to curbing proliferation is for the thwarters to build an effective cartel that regulates supplier competition, by limiting what can be sold and putting 35 Nuno P. Monteiro, Theory of Unipolar Politics (New York: Cambridge University Press, 2014), Olson, The Logic of Collective Action, Waltz, Theory of International Politics,

18 safeguards on transfers. How successful great powers are at creating and maintaining a formidable cartel depends on the intensity of their security rivalry and polarity. By combining these variables, we can derive five predictions. First, in multipolar settings where the great powers intensely compete for security, suppliers engage in fierce outbidding, which leads to a sharp uptick in proliferation. Second, the combination of bipolarity and intense security rivalry among the great powers leads to acute competition among vendors, which results in a steep growth in proliferation. Third, in multipolar structures where the security rivalry among the great powers is mild, the struggle among suppliers is limited, thus bringing about a moderate rise in proliferation. Fourth, in bipolar systems where the security rivalry is mild, competition among suppliers is weak, and proliferation slows down. Fifth, the competition among suppliers is faint in unipolarity, and proliferation plateaus. Table 1. Predictions of the Theory Variation in Polarity & Intensity of Security Rivalry Regulation by the Cartel and Level of Supplier Competition Level of Proliferation Multipolarity & Intense Security Rivalry Bipolarity & Intense Security Rivalry Multipolarity & Mild Security Rivalry Bipolarity & Mild Security Rivalry Unipolarity (No Security Rivalry) Weak Regulation of Transfers &Fierce Supplier Competition Weak Regulation of Transfers & Acute Supplier Competition Strong Regulation of Transfers & Limited Supplier Competition Strong Regulation of Transfers & Weak Supplier Competition Very Strong Regulation of Transfers & Faint Supplier Competition Sharp Uptick in Proliferation Steep Growth in Proliferation Moderate Rise in Proliferation Slowdown in Proliferation Plateauing Proliferation 459 Research Design This article seeks to solve the following puzzle: why haven t there been more nuclear weapon states since 1974? My answer is that competition in the market largely accounts for the spread of nuclear weapons. The nature of that competition, however, is shaped by systemic factors. By 2014, there had been 202 countries in the international system, 34 of which qualify as proliferators, which means they were either aspiring NWS, aspiring hedgers or they had become hedgers or NWS. Of those 34 prolifera- 18