CONTAINMENT THROUGH COOPERATION: A PROPOSAL

Transcription

1 JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY RICE UNIVERSITY STUDENT PAPER CONTAINMENT THROUGH COOPERATION: A PROPOSAL FOR A NUCLEAR ENERGY AGREEMENT WITH IRAN BY SAM HILE STUDENT RESEARCHER JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY RICE UNIVERSITY MARCH 2013

2 THIS PAPER WAS WRITTEN BY A BAKER INSTITUTE STUDENT INTERN. THE RESEARCH AND VIEWS EXPRESSED IN THIS PAPER ARE THOSE OF THE INDIVIDUAL AUTHOR, AND DO NOT NECESSARILY REPRESENT THE VIEWS OF THE JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY BY THE JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY OF RICE UNIVERSITY THIS MATERIAL MAY BE QUOTED OR REPRODUCED WITHOUT PRIOR PERMISSION, PROVIDED APPROPRIATE CREDIT IS GIVEN TO THE AUTHOR AND THE JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY. 2

3 I. Executive Summary Purpose The United States has a strong commitment to prevent Iran from obtaining nuclear weapons, since the resulting destabilization of the Middle East would directly and adversely affect the national security and economic interests of both the U.S. and its allies in the region. The U.S. has until now favored coercive diplomacy, attempting to change Iran s behavior by alternating between negotiations with the P5+1 and threats of increased economic sanctions. However, these efforts have not produced the desired effect, as Iran continues to enrich uranium and make progress toward acquiring a nuclear weapon. Because nuclear facility inspectors are no longer permitted in Iran, the precise amount of progress is largely unknown. For this reason, most Western analysts perceive preemptive military incursion and continuing sanctions as the only available policy options to break the deadlock. This study outlines a third solution, one of nuclear energy cooperation. Key findings Iran was one of the first nations to join the Nuclear Nonproliferation Treaty (NPT). Preserving its inalienable right to domestic uranium enrichment as per Article IV of this treaty (albeit subject to the restraints of Articles I and II) is of utmost importance to Iran. The refusal of the P5+1 to recognize this right has defeated most negotiation attempts. While President Ahmadinejad and other hardliners unequivocally favor the development of nuclear weapons, reformists within Iran s ruling elite seek only civilian nuclear energy and are amenable to limiting Iran s weapons production capability. Despite sharing a common technological foundation, nuclear energy and nuclear weapons are not the same thing. Given its ailing energy balance, Iran s desire to establish a nuclear power sector is legitimate and is not a front for the establishment of a parallel clandestine weapons operation. 3

4 The U.S. maintains nuclear energy cooperation agreements (123 Agreements) with nations all around the world. These agreements have been remarkably effective at bolstering regional nonproliferation goals and strengthening diplomacy. Continued employment of economic sanctions and military intervention are not viable options; the first has only strengthened the hardliners cause within Iran, and the second s efficacy is probably limited to the short term only. In addition, pursuing either option makes Iran s eventual acquisition of a nuclear weapon all the more likely. Proposed solution This study concludes that the U.S. should work with the rest of the P5+1 group (China, France, Russia, United Kingdom and Germany) to offer Iran a comprehensive 123 Agreement that preserves its right to limited uranium enrichment for the peaceful purpose of civilian nuclear power yet imposes rigorous safeguards and monitoring mechanisms. Most important, Iran would fully comply with the IAEA Additional Protocol (AP). The agreement would additionally provide for: Long-term nuclear fuel supply contracts for Iran; Monetary assistance with the nuclear power sector; Training programs for Iranian nuclear scientists, including exchange programs for both Iranian and American and European students. The easing of visa and other restrictions that unnecessarily impede the development of the Iranian scientific establishment; and The gradual lifting of economic sanctions contingent upon full Iranian compliance with IAEA demands. While there are some risks inherent in this commitment (most seriously, the existence of a parallel clandestine nuclear weapons program), this study will outline some feasible and promising mitigation strategies. 4

5 This study envisions many beneficial outcomes from the proposal. The predicted results of this agreement are: Complete awareness of all of Iran s nuclear activities; Elimination of whatever nuclear weapons program Iran currently has; Resolution of a longstanding international security crisis and improved Iranian-American relations. II. Introduction Iran s nuclear program began in 1957 when the United States struck an agreement for nuclear cooperation with Mohammad Reza Shah Pahlavi as part of Dwight D. Eisenhower s Atoms for Peace program. In 1968, the nation became one of the first members of the Nuclear Non- Proliferation Treaty (NPT), a binding international agreement that has been remarkably successful in deterring the spread of nuclear weaponry throughout the world. 1 Article IV of this treaty gives each of its 190 members the inalienable right to uranium enrichment for a peaceful civilian nuclear power program (that is, contingent upon its compliance with Article I and II guidelines), a right Iran has repeatedly and vigorously asserted. The nuclear technology research Iran has been conducting since the mid-1980s, though closely guarded, is auspiciously for this purpose. However, Iran also gradually adopted an antagonistic stance toward its neighbors and the West during this time, and some ruling elements have openly advocated the pursuit of nuclear weapons. This, combined with Iran s at-best sporadic compliance with International Atomic Energy Agency (IAEA) inspections of its facilities and recalcitrant apathy toward the U.N. Security Council (UNSC) sanctions that followed its refusal to cooperate, has led the international community to suspect less benign ulterior motives than the acquisition of nuclear energy. 2 Today, this concern is growing more pervasive. Israel is weighing the possibility of a tactical strike on Iranian nuclear facilities so as to hinder the development of what it believes is a nuclear weapon that would be used on Israel itself. Diplomatic relations between the two countries are nonexistent, and those between Iran and the U.S. are similarly floundering despite recently 5

6 renewed attempts at negotiations. Current international sanctions against Iran may not be enough to deter it from acquiring a nuclear weapon, an event that most of the international community fears to be on the horizon but is not prepared to accept. The potential disastrous impacts of this event on Middle Eastern stability, the international nuclear nonproliferation regime and the global economy all arguably dictate the U.S. take action to break the current deadlock. Although they share a common technological foundation, a civilian nuclear power and a nuclear weapons program should not be thought of as synonymous. This study will profile Iran s current energy sector and demonstrate that Iran in fact has several compelling and legitimate reasons for wanting to develop a nuclear power industry that should not be discounted. In turn, this study espouses the view that a carefully constructed and safeguarded nuclear power cooperation agreement, or 123 Agreement, could satiate Iran s burgeoning energy demand and nationalistic desire for access to the nuclear fuel cycle while allaying American concerns about nuclear weapons and in so doing improve relations between the two sides. This study argues that a thoroughly monitored and controlled Iranian nuclear power sector is not fundamentally inimical to American foreign policy interests, as long as there is no parallel Iranian clandestine operation conducted in pursuit of a nuclear weapon. Furthermore, the kind of scientific collaboration and exchange between American and Iranian scientists and students that is necessary to embark on such a venture would ultimately promote more favorable relations between the two nations. Accordingly, this study will explore the reasoning behind Iran s arguments for nuclear energy, as well as examine its domestic politics regarding the issue. The evolution of U.S policy toward Iran s nuclear activities will be used together with a selected overview of recent nuclear negotiations to explain the current impasse. A detailed proposal for multilateral nuclear energy cooperation follows, along with analyses of and rebuttals to anticipated roadblocks for reaching this agreement. The study concludes with a refutation of the leading policy alternatives and a calculated judgment of Iran s true intentions. 6

7 III. The Case for Iran s Development of a Civilian Nuclear Energy Program To what extent does Iran truly need nuclear energy, and why does Iran feel this demand can only be met with nuclear technology? The arguments Iran most frequently proffers are 3 : Nuclear power would free up more oil and natural gas resources for export, and enhance Iran s energy security by lessening its dependence on these depletable resources. Iran needs the ability to enrich uranium to produce medical isotopes, which are used worldwide in vital imaging technologies. As a longtime member of the NPT, Iran has a right to peaceful use of nuclear technology. If it concedes this right, the ensuing precedent of bowing to American demands would eventually amount to cumulative regime change. Energy exports Iran s oil sector is fraught with problems. At the end of 2010, Iran had 138 billion barrels oil equivalent (BBOE) or around 10 percent of proven world oil reserves 4, and was the fifth largest global oil producer 5. All of its oil exports pass through the Strait of Hormuz, which falls exclusively under Iran s control and carried 20 percent of total world daily oil demand and 25 percent of U.S. imported oil in Iran is heavily dependent on its oil revenues, which comprise about 50 percent of government revenues and 80 percent of export revenues 7. Misuse of these funds for wasteful energy subsidies have further stagnated Iran s economy: Iran s citizens pay only 38 cents for a gallon of subsidized gasoline, increasing consumption beyond the capacity of domestic refineries and forcing Iran to import up to 40 percent of its gasoline. Iran s natural gas sector is similarly fraught with challenges. Its reserves are second only to Russia s, totaling 29,600 billion cubic meters (bcm) or about 15 percent of total proven global reserves. Although in 2010 it was the world s fourth largest producer, Iran was also the third largest consumer and a net importer of natural gas 9 (EIA). This is partially because most of Iran s gas fields are not linked to oil fields ( non-associated ) or are off-shore, making them harder to develop. 10 In addition, Iran s dying oil fields requite that about 10 percent of its natural gas be re-injected to enhance recovery rates and maintain steady production 11. International trade 7

8 sanctions against Iran have also scared away crucial investment. Iran hopes to invest $38 billion in this sector and double gas output by 2015, which appears necessary in order to keep pace with demand. 12 One study estimates Iran s total energy demand in a business as usual scenario growing an annual 2.6 percent on average, doubling its 2005 value by Energy intensity (defined by units energy/gdp) has been steadily increasing by an average of 3.4 percent since Generous government energy subsidies make up an estimated 12 percent of Iran s GDP help make Iran one of the most energy inefficient countries of the world, with the energy intensity three times higher than global average and 2.5 times the Middle Eastern average. 14, 15 Iran is acutely sensitive to fluctuations in export volumes and, given its rampant consumption and high energy intensity, likely eager to diversify its energy sources. An energy sector riddled with inefficiencies and a sizeable dependence on oil revenue amply justify these concerns. A more detailed analysis by Bryan Hamilton concurs that simply considering the finite nature of fossil fuels for which Iran is so dependent upon for revenue and energy, Iran must view acquisition of civilian nuclear power as vital. 16 Conventional power plants accounted for 17 percent of final oil consumption in 2010; replacing this quantity with nuclear energy would save Iran roughly 54 million barrels of oil equivalent (Mmboe), or $4.25 billion annually at current WTI spot prices. 17 Power plants also made up 32 percent of natural gas consumption in 2010, which if displaced by nuclear power would save 8 Mmboe or 261 billion cubic feet (bcf), a value of $2.7 billion at current prices 18. It is beyond the scope of this study to estimate how much of these savings would be offset by the capital costs of nuclear power plants or the price of the electricity they would produce, but we may still conclude that they are not inconsequential. Accordingly, Iran aims to have 7,700 megawatts (MW) of installed nuclear production capacity by For comparison, the U.S. currently operates over 20, ,000 MW of nuclear capacity. Medical isotopes Iran currently feeds heavy-enriched uranium (HEU) at the 20 percent level of enrichment into its Tehran Research Reactor (TRR) in order to produce medical isotopes for use in its hospitals. 8

9 This technology, which relies on the fission of HEU atoms, has important medical applications such as assisting in bone marrow transplants and imaging organs. While most countries currently use HEU to create these medical isotopes, there has been a movement in the last few years among medical organizations and states such as Australia, Argentina and Indonesia to use lowenriched uranium (LEU) instead of HEU as a means of mitigating proliferation risks (LEU is typically enriched to only 3.5 percent). However, the four major producers (Canada, the Netherlands, Belgium and South Africa) have resisted this conversion on the grounds that it would disrupt production and pose an unfair cost burden. 22 In April 2012, head of the Iranian Atomic Energy Organization Fereidoun Abbasi declared on state television that Iran doesn t want to enrich uranium above the 20 percent level needed to produce medical isotopes; in fact, he added, Based on our needs and once the required fuel is obtained, we will decrease the production and we may even totally shift it to the 3.5 percent. 23 However, Abbasi also admitted in an August 2011 interview that Iran s holdings of 20 percent uranium already exceed the required amount for the TRR. 24 Although Abbasi maintained that the surplus was being kept in the event of a supply disruption from damaged equipment, it has nonetheless drawn raised eyebrows from arms control experts. The relocation of the stockpiles from Natanz to the more fortified and secretive Fordow facility has only served to reinforce this suspicion. 25 Inalienable right Nationalist sentiment has long been used by the Ayatollahs to safeguard the 1979 Revolution and preserve their regime. This ability is perhaps best exemplified by the Iranian nuclear power program, which has been manipulated into an outsized source of national pride in the country. The White House remarked in 2010 that Iran s ideological commitment to nuclear weapons is such that they re not making a simple cost-benefit analysis on this issue. 26 Indeed, economic arguments are practically an afterthought in the context of the fierce nationalism that Iranian leaders exhibit when asserting their nation s inalienable right to nuclear power under Article IV of the NPT. U.S. and European sanctions, frustratingly, only serve to intensify this conviction and ground it more in extremist ideology and less in productive political discourse. For example, in 2010 Iran s Minister of Economics compared to the sanctions to those imposed on the Prophet 9

10 Mohammad by non-believers. 27 Later that year, Iran reacted to yet another round of heightened sanctions by vowing they would make Iran s economy to [sic] become more powerful, more flourishing and even stronger. 28 If Article IV provides for the right to peaceful nuclear energy, why is Iran being denied this right? A cursory examination of the NPT reveals that the inalienable right in Article IV right is only guaranteed in conformity with articles I and II of the Treaty. Article I stipulates that nuclear-weapon states take appropriate measures (often in the form of export controls) to prevent non-weapon states from acquiring weapons. Article II requires that non-weapon states not manufacture or acquire nuclear weapons or devices. According to Christopher Ford, the U.S. interprets this article to mean that these states should refrain from activities designed to develop a nuclear weapons capability as well as provide transparency into their activities that is sufficient to demonstrate their peaceful intent. 29 To date, Iran has not demonstrated to the IAEA that its nuclear activities are wholly peaceful, nor has it disclosed their full nature or extent. For this reason, Iran s Article IV right to civilian nuclear energy is not being seriously considered at present. IV. The Case for Iran s Nuclear Weapons Program This study now turns to discussing the current state of Iran s nuclear weapons program. Although Iran has several legitimate interests in civilian nuclear power, might it also be developing a nuclear weapons program under this mere guise? The answer to this is hardly straightforward, since Iran s leadership appears to be remarkably divided on the subject. The following sections offer insights based on an examination of the current state of Iran s domestic politics at both the upper and lower levels. The key findings are: The Iran-Iraq War and other historical events heightened Iran s interest in nuclear weapons. The Iranian regime has used the cause of nuclear sovereignty as a means of consolidating power. 10

11 The Iranian regime is divided between hardline nationalists and economic reformists regarding the necessity of nuclear weapons. Certain ruling entities have entrenched financial interests in the nuclear weapons industry as well. Politics of the Iranian ruling elite The fragmented hierarchy of Iran s leadership complicates the process of determining its true political intentions. At the top is the Supreme Leader, who controls the armed forces and appoints leaders of the judiciary, the Islamic Revolutionary Guard Corp (IRGC, a special military branch designated with protecting the revolution), and six of the twelve members of the Council of Guardians (which oversees Parliament and interprets the constitution). The Supreme Leader also controls the bonyads, tax-exempt foundations that manage hundreds of companies worth as much as 40 percent of the state economy. Second highest in command is the President, who mainly determines only economic policy since in practice the Supreme Leader dictates all matters of foreign and domestic security. Although the IRGC falls under direct control of the Supreme Leader, according to Wilfried Buchta it is reportedly among the most autonomous power centers in Iran, and it has resister subordination to any civilian authority. 30 As will be shown, the IRGC is one of many constituents responsible for Iran s push to pursue nuclear technology. Immediately after the revolution, nuclear weapons were considered contrary to Islam and their research was abandoned. However, this respite proved to brief. Around this time Iran became increasingly interested in nuclear technology and isolated from the rest of the Middle East for several key reasons: Iran s dependence on outside assistance was made painfully evident by the crippling arms disruptions it experienced during the Iran-Iraq War. This, along with the more friendly relations between the United States and Iraq, encouraged Iran to pursue an independent, isolationist foreign policy; 2. Israel s development of a nuclear deterrent spurred Iran, which had not previously been interested, to start seriously considering acquiring one of its own. This shift was 11

12 accelerated by Iran s frustration that Israel s nuclear weapons are condoned by the United States and remainder of the international community despite never having been officially acknowledged by Israel; 3. Iran views a sovereign nuclear weapons program as consistent with the ideals of independence codified during the Islamic revolution, and as a means of protecting its entirely Shi ite culture from its Sunni-dominated neighbors; 4. The abrupt reversal of American support for Iranian nuclear power after the revolution and the marked absence of India, Pakistan and Israel from the NPT and IAEA inspections are both seen as betrayals by the Iranian people. Yet position statements issued by different regime officials have been wildly contradictory: while Khamenei stated in 1991 that Iran would never use WMDs based on its religious and jurisprudence fundamental beliefs, in 2001 President Rafsanjani said that the imperialists strategy will reach a standstill because the use of even one nuclear bomb inside Israel will destroy everything. 32 This duality in Iran s nuclear behavior is partially due to external pressures such as the 1991 Gulf War and the intense scrutiny of Iraqi WMD facilities that followed. It also stems from struggles during the 1990s between economic reformists, who advocated a utilitarian approach to foreign policy, and those who supported nationalization. 33 According to Ray Takeyh, this is related to the regime s cardinal ideology that Iran must be militarily self-reliant to combat various external rapacious forces. 34 While hardliners today view the nuclear program primarily in terms of its deterrence purpose, others see it as a way of ensuring regime survival by rallying citizens around the populist cause of sovereignty over the nuclear fuel cycle. For example, forefather of the nuclear weapons program Asgar-Khani stated that Internally Iran is in a state of disarray. I would argue that, only by becoming a nuclear weapons state, can Iran consolidate its social coherence. 35 There is a financial dimension to these factional politics as well. While unquestionably wholly nationalist, Iran s current political spectrum spans radicals and reformists who differ in their degree of support for a weapons program mostly by their willingness to both incur external trade sanctions and their extent of personal of investment in the nuclear technology industry. Thanks to a history of unchecked economic protectionism, groups like the Guardian Council and the 12

13 IRGC have used the profits from their monopolies over embargoed goods like consumer electronics and Western clothing to reinvest in nuclear technology and supplies, so much so that the IRGC, which controls the military, have opposed expanded usage of conventional forces to minimize competition. 36 The bonyads, described as among the biggest economic complexes in the Middle East, likely also play a large part in the push for nuclear weapons, although the lack of transparency makes this claim difficult to verify. 37 This patronage has had readily transparent effects on Iranian foreign policy: while the Guardian Council has urged for Iran to leave the NPT and the IRGC has moved to block EU3 (France, Germany and the United Kingdom) negotiations, the reformist Majlis Islamic Participation Front has pushed for cooperation with the IAEA, EU3 and ratification of the AP. These reformers have since fared poorly in elections and do not actively participate in Iranian foreign policy formulation. 38 However, Khamenei s ruling coalition is still rife with division. Ahmadinejad s immediate restarting of the enrichment program after taking office is at odds with the prodiplomacy views of Rafsanjani and other officials who are nonetheless forced to publicly support his policies lest they lose their jobs. His infamous calls to wipe Israel off the map have created further division amongst the rulers. 39 While the American media often portrays Iran as a regime wholly intent on acquiring nuclear weapons, it fails to recognize that it is largely internal political fracturing within the Iranian ruling elite (and not the intractable character of the regime itself) that has stymied past negotiation attempts. Although Tehran may well be able to produce a weapon without external assistance, the U.S. and other interested powers should seek to convince Tehran that they will support its peaceful nuclear power ambitions if Tehran complies with the relevant safeguards, the resumption of which will shift Iran away from becoming a nuclear weapon state. Having debunked the myth that the Ayatollahs are utterly fanatical and immune to the constraints of a rational decision-making calculus, this study argues that the U.S. should seek to offer Tehran a deal it can t refuse. 13

14 Domestic politics General public opinion on nuclear weapons, though admittedly divided, suggests that the attitudes of Ahmadinejad and his hardline supporters are not representative of those of the Iranian people as a whole. Dr. Nasser Hadian at the University of Tehran believes there are currently four distinct viewpoints held by the public regarding Iran s nuclear ambitions 40 : 1. Iran does not need nuclear weapons or the capability of producing them. The group is called The Greens and according to Hadian makes up two to three percent of the population. 2. Peaceful nuclear technology is Iran s inalienable right and should not be relinquished. 3. Iran should develop nuclear weapons capability, but not the weapons themselves (for now). This position comes from aforementioned mistrust of the international community and bitterness about the Iran-Iraq War. This is also the most strategically compelling option and likely what Iran s leadership is actually following. 4. Iran should immediately withdraw from the NPT and begin developing nuclear weapons. This viewpoint is shored by the hardliners. Determining the actual concentrations of each of these groups is difficult in a society that does not always permit free expression, but some data is available. A 2009 poll revealed that to Iranians, nuclear energy is desirable but nuclear weapons are not. This consensus spanned moderates, conservatives and reformers. 41 In addition, a very recent poll conducted by the Islamic Republic of Iran News Network (IRINN) asked citizens Which way do you prefer to confront the unilateral sanctions of the West against Iran? and found that more than two-thirds of respondents favored the suspension of uranium enrichment in exchange for the gradual 42, 43 lifting of sanctions. This supports Richard Falkenrath s argument that while Iranian nationalists and populists may decry any agreement as a subrogration of Iranian sovereignty ordinary Iranian citizens may appreciate a reduction in economic sanctions and international ostracization 44. Generally speaking, opposition (or at least apathy) to nuclear weapons appears highest among wealthier and more educated demographics. For example, a 2011 public opinion survey 14

15 conducted by the Rand Corporation found that a plurality of respondents opposed the development of nuclear weapons, 45 and that generally those opposed possessed higher levels of education and income. 46 ). Conversely, those Iranians most ardent in their support of obtaining nuclear weapons were lower-class, the least educated 47 and likely most receptive to the populist pandering of President Ahmadinejad. On the subject of nuclear energy for peaceful purposes only, 87 percent were strongly in favor. 48 The above data collectively shows that public opinion on developing nuclear weapons is highly divided, but least favorable among the young, college-educated crowd. While it is admittedly unknown if this antipathy toward nuclear weapons would lessen if sanctions were not a factor, one may still conclude that if there is a demographic willing to look past its government s extremist rhetoric and put nuclear technology to constructive use, it is the youth population. Taking this conclusion at face value, however, it would still be foolhardy to idly wait around for a Persian Spring comprised of Iranian students to overthrow the current regime before resuming nuclear negotiations in a more conducive and liberal political space. Similarly, orchestrating regime change by propping up liberal opposition groups would be ill-advised, mainly because the Green Movement the principal front in 2009 has since failed to articulate its objectives and lost its direction and cohesiveness. 49 V. The U.S. Case Against an Iranian Nuclear Program American foreign policy on Iran s nuclear activities is just as varied and nuanced as Iran s own domestic policy on the issue. There are several reasons, both historical and modern, for the U.S. to be hesitant in pursuing nuclear cooperation with Iran. For the proposed agreement to be attractive to American negotiators, certain constraints must be satisfied: Iran must demonstrate complete transparency in its nuclear activities to make up for a history of secrecy. The U.S. must protect the security interests of its Israeli and Arab allies in the region. The U.S. cannot implicitly acquiesce to Iran s support for Hezbollah or other terrorist groups. 15

16 Evolution of U.S. policy on Iran s nuclear program Iran s nuclear program under the Shah was jumpstarted by American collaborative sharing of technology, training and equipment 50, beginning with the sale of a 5 MW research reactor in the early 1960s. 51 Iran ratified the NPT in 1970, and established the Atomic Energy Organization of Iran in During this period, European and American-trained Iranian scientists were returning to Iran to establish nuclear research programs 53. President Richard Nixon s 1972 visit to Tehran, intended to help implement the Nixon Doctrine of regional Soviet containment, further strengthened cooperation between the two countries. 54 In 1975, a contract providing for the training of Iranian nuclear engineers was signed by Massachusetts Institute of Technology. The Carter administration awarded Iran most favored nation status for reprocessing of spent fuel in 1977, and these collaborations culminated on July 10, 1978 with the U.S. Iran Nuclear Energy Agreement, which would have allowed for the export of several light-water nuclear reactors. 55 However, the political instability and accusations of mismanagement that preceded the 1979 Iranian Revolution sounded a death knell for these agreements and set the course for future strained relations between the two nations. By this time, American intelligence agencies had already detected a possible clandestine operation, despite the Shah s previous insistence that the notion of Iranian nuclear weapons was ridiculous. 56 After the 1979 embassy hostage crisis, the U.S. switched to a policy of denial and pressured other countries to abstain from aiding Iran s nuclear energy endeavors. 57 The result has been a markedly nationalistic nuclear power movement. In 2006 Iranian MP pointedly stated in an interview, We don t trust the U.S. And because we believe that they and the Zionists don t want us to progress, we must build reactors ourselves, make fuel ourselves, and be independent. 58 While Iran has in fact repeatedly opened itself up to scientific collaboration and exchange with both the East and the West since the inception of its nuclear program, the U.S. currently finds Iran s nuclear program so impenetrable and inaccessible because its post-revolution foreign policy reversal forced Iran was forced to make other alliances as described. From the restarting of its nuclear program in the late 1980s until 2003, Iran was unable to find Western nuclear partners and instead received assistance from Russia and China, although the 16

17 latter finally caved to U.S. pressure and terminated this assistance in the late 1990s. 59 The CIA reportedly estimated in 1992 that Iran was indeed trying to develop nuclear weapons, but not with great certainty. 60 During this time the Clinton administration adopted a policy of dual containment of Iraq and Iran, complete with a ban on American trade and investment in Iran in 1995 and sanctions on Iran s energy sector in However, the administration began easing these sanctions and trying a policy of engagement in President George W. Bush s administration reverted to the dual containment approach, and President Bush included Iran in his axis of evil in his State of the Union address. However, it was not until 2003 that the IAEA was finally able to confirm Iran s NPT commitment infringements, many of which dated back to the 1980s. 62 Yet 2003 was also the milestone year that the U.S. was reportedly offered a Grand Bargain from President Khatami s reformist government. Incredibly, the proposed deal addressed every key issue, including Iran s nuclear program, its support for terrorist proxies and its aggression toward Israel. Unfortunately, the U.S. State Department perceived the offer as too good to be true, and due to its current success in the Iraqi invasion saw no need for negotiation with Iran and never responded to the fax. 63 Genuine or not, no such overture has since been proffered by either side. Today, the maturity of Iran s weapons program is hotly debated but largely unknown (see later sections for details). This uncertainty is certainly a major stumbling block to reconciliation with Iran, but no more so than the identity of the regime itself. Iran s potential links to terrorist activity in the Levant and elsewhere, authoritarian system of government and political aggression toward Israel all have poisoned the well in the eyes of American policymakers. The events of 9/11 and a misplaced paranoia for dangerous Islamic extremism, though certainly not paramount, also have colored the regime s identity and inhibited productive negotiations. U.S. and Israel The U.S. has strong ties with Israel that constrain its foreign policy on Iran. Israel has a history of heavy dependence on American economic assistance, having received $115 billion in foreign aid from the U.S. since World War II. Much of this aid comes in the form of Foreign Military Financing (FMF) grants, from which the Obama Administration aims to secure $3.1 billion for Israel for FY A key player in securing this aid is the American Israel Public Affairs 17

18 Committee (AIPAC), a Congressional lobby that in 2005 tied for second place in the National Journal s muscle rankings of Capitol Hill influence. 65 Any sort of nuclear energy partnership with Iran would surely worry, if not infuriate Israel, which would likely continue to protest the presence of LEU and nuclear reactors in Iran as a fundamental threat to its security. However, the failure of renewed sanctions and negotiations clearly shows that difficult sacrifices are needed to break the impasse. Building a broad international coalition could soften domestic political opposition in the U.S., even if Israel refused to participate. Additionally, the U.S. could counterbalance this agreement by increasing U.S. commitment to Israeli security in the form of expanded defense contracts or assurances of military containment in the event that an Iranian nuclear weapon plot is unequivocally unearthed. Critics might retort that an agreement that throws Israel under the bus could prompt a unilateral strike against Iran. However, this study does not believe that Israel has the ability or will to achieve this. Furthermore, by making Iran s extant nuclear facilities international ones, an attack on them post-agreement could be construed as an attack on American facilities, which is something Israel would surely be keen to avoid. U.S. and Arab states The U.S. has also been reluctant to try non-coercive forms of diplomacy with Iran because the Saudi response to a U.S.-Iran agreement would be more than likely unfavorable, given the strained relations between Shi a Iran and the Sunni Gulf states. This could have a more ominous effect on the American economy if other members of the Gulf Cooperation Council (GCC) decided to coordinate a supply curtailment in retaliation. As Lindsay and Takeyh note, The advent of a nuclear Iran would be seen as a major diplomatic defeat for the United States. Friends and foes alike would openly question the U.S. government s power and resolve to shape events in the Middle East. 66 Even a civilian nuclear power industry might erode regional confidence in these abilities. This olive branch to Iran could even incentivize GCC states to pursue nuclear industries of their own, potentially leading to a Middle Eastern arms race. To avoid this, the U.S. will have to very clearly articulate its objectives and provide reassurances to these states. This will be made easier, however, with a broader international coalition behind the negotiation effort (which should perhaps include some of these parties). 18

19 Iranian support for terrorist proxies abroad Recall that Iran perceives a slippery slope between relinquishing its inalienable enrichment right and fears being compelled to accede to remaining U.S. demands that effectively amount to regime change. The right-wing leadership is worried about losing face by capitulating to what it sees as Western hegemony. By the same token, the U.S. should be wary about the potential consequences of appearing to condone Iran s support of terrorist extremist groups like Hamas and Hezbollah in the process of building up Iran s nuclear power industry and economy. It is not that Iran would necessarily be emboldened enough step up its support for these groups. Some experts believe that even if Iran acquired nuclear weapons it would not share them with these proxy groups and risk outright nuclear confrontation with Israel or the U.S. 67 Regardless, the U.S. cannot implicitly sponsor terrorism and will have to craft its proposal accordingly. VI. Deadlock: Selected Negotiations with Iran and Status of the Nuclear Program Overview of nuclear negotiations The terms of various previously attempts at settling with Iran appear so generous at first glance that it may seem incredible that an agreement has not by now been reached. The common theme to the disintegration of negotiations, as the following examples demonstrate, is the denial of Iran s right to domestic uranium enrichment: In fall 2005, Russia extended to Iran a joint enrichment opportunity wherein Iran would send processed uranium to Russia and have it returned as reactor fuel, in return relinquishing its right to access the enrichment technology itself. Although this would have impeded proliferation and benefited both countries respective industries, Tehran did not accept this deal because its right to enrichment would have been sacrificed. 68 In June 2008, the P5+1 in combination with the E.U. included in UNSC 1929 (a sanction by the U.N.) an offer for cooperation that offered several key guarantees and brilliantly addressed the all conceivable Iranian concerns 69 : o Reaffirmation of Iran s right to nuclear energy for exclusively peaceful purposes in conformity with its obligations under the NPT. 19

20 o Provision of technological and financial assistance necessary for Iran s peaceful use of nuclear energy, support for the resumption of technical cooperation projects in Iran by the IAEA. o Support for construction of LWR based on state-of-the-art technology. o Support for R&D in nuclear energy as international confidence is gradually restored. o Provision of legally binding nuclear fuel supply guarantees. o Cooperation with regard to management of spent fuel and radioactive waste. These terms were offered conditionally inter alia upon Tehran ceasing enrichment. Hence, the deal was unsuccessful. In 2009, an agreement was offered in which Iran would send 1,200 kg of low-enriched uranium (LEU) to Russia for further enrichment and then to France for reprocessing into fuel rods. This amount of uranium constituted 80 percent of Iran s known stockpile and would have taken a whole year to replace, making this an attractive deal to Washington. 70 Yet the agreement preserved Iran s right to sovereign enrichment under the NPT, the crux of the issue for Tehran. President Ahmadinejad even stated, We welcome fuel exchange, nuclear co-operation, building of power plants and reactors, and we are ready to cooperate on live state television. However, Iran s Green Movement opposition and other conservatives heavily criticized the deal, not wanting their opponent to receive credit for brokering an agreement and fearing the opportunity for an expanded American regional presence. In addition, Iran resented the prospect of having to wait for a year when the enrichment process could be completed in just a few months. While last-ditch diplomacy resulted in Iran approving Turkey and Brazil as partners in a fuel swap arrangement, Iran had in the meantime enriched more uranium, complicating the proposed terms of the agreement and ultimately terminating the bargaining. 71 The P5+1 proposed in Baghdad on May that if Iran shut down its Fordow enrichment plant, ceased uranium enrichment to 20% and shipped out its current stockpile of 20%- enriched uranium, it would be supplied with nuclear reactor fuel and safety assistance. While the potential for Iran to resume cooperating with the IAEA seemed promising, the deal died in Moscow the following month when Iran insisted that the P5+1 recognize its right to enrich

21 Why have none of these proposed agreements been successful in general? One reason is that the U.S. has failed to engage Iran on constructive grounds, instead relying on disparagement, threats and attempts to strengthen unilateral sanctions 73. The knee-jerk rejection of the Grand Bargain in 2003 further exemplifies the rampant distrust of Iran that has pervaded American politics. Another explanation is that political infighting has prevented Iran s leadership from accepting deals that many of its members favored. However, the most consistent factor is the hotly contested right to enrich, which Andrew Parasiliti correctly notes has been blown out of proportion by both sides. 74 Where is Iran s nuclear program now? Experts offer differing views as to the extent of Iran s scientific prowess. One opinion is that a scientific gap between Iranian and other universities has hindered collaboration and produced a subpar Iranian scientific establishment. 75 Yet the authors may be rash to dismiss indigenous Iranian talent. According to Ray Takeyh, The trajectory of Iran s nuclear program suggests that it rests on a more formidable scientific infrastructure than often assumed. It was massive government funding and an isolation-induced, nationalist and systemic pariah complex, the author contends, that dramatically increased the number of internationally recognized Iranian scientific publications and advanced Iran s nuclear program. 76 Gawdat Bahgat concurs, stating, In addition to relying on foreign technology, material, and equipment, Iran has developed an indigenous nuclear expertise. This technological know-how cannot be taken away from Iran. 77 The salient conclusion, therefore, is that Iran s never having benefited from the type of external patronage that China, Pakistan and other powers enjoyed with regard to their nuclear power sectors is a testament to its scientific acumen. 78 After all, the international community would not be nearly as agitated by the prospect of a nuclear Iran if it were merely a remote one. It is widely held that Iran s clandestine weapons program began around As many as 17,000 more students were being sent abroad for nuclear training at this time, and over the coming decade Iran secured supplies and training from several countries.79 Iran has concealed numerous violations, including: 21

22 In 1984, China provided conversion equipment and helped fabricate fuel for enrichment at the new Esfahan Nuclear Research Center. 80 Seven years later, Iran had a nuclear cooperation agreement with China and began surreptitiously importing uranium hexafluoride (UF6), a feedstock for gas centrifuges that is difficult to synthesize. 81 In 1987, Iran sent 39 of its nuclear scientists to be trained in Pakistan. 82 This is probably around the time A.Q. Khan visited the Bushehr reactor. 83 In 1995, Russia s Ministry of Atomic Energy signed on to build an $800 million block of the Bushehr reactor,84 although this was not completed until September In 2002, the existence of a gas centrifuge uranium enrichment facility at Natanz (which had been operating in secret for the past 18 years) and a heavy water production plant at Arak was leaked. 86 Intensified IAEA scrutiny revealed in 2004 that the rogue Pakistani nuclear scientist A.Q. Khan had given centrifuges, designs and other assistance to the Iranians. 87 In 2003 it was determined that Iran was using the uranium hexafluoride purchased from China for research even though it had previous declared it as lost. 88 In December 2003, heavy IAEA and EU3 pressure made Iran sign the Additional Protocol, although it would subsequently be revealed to have hidden blueprints for advanced uranium enrichment centrifuges (P-2) from previous inspections. 89 Iran restarted uranium conversion using an undisclosed tunnel that was detected by satellite in Ahmadinejad announced the restart of the uranium enrichment program in The construction of a facility for converting yellowcake in Esfahan was also uncovered. Finally, the existence of a secret underground uranium enrichment facility near Qom was announced in For these reasons, it is widely presumed today that there are several more underground sites that remain undiscovered. A key indicator for a nation s progress toward producing a nuclear weapon is the fraction of uranium that is enriched. In 2010, Iran began enriching uranium to 20 percent, which alarmed Western experts although this level is consistent with that needed to produce medical isotopes for 22

23 hospitals. By contrast, weapons-grade uranium must be enriched to 90 percent. 93 One would logically surmise that if Iran is still seventy percent away from a weapon, there is no cause for immediate concern and the door for negotiating remains wide open. Unfortunately, this is not the case because as the enrichment level climbs, the work to further enrich diminishes at an increasingly faster rate. To illustrate this, imagine sorting through a bag of 1000 red and blue marbles, where 900 are blue and 100 are red. Further suppose it costs one minute to extract and set aside each marble. Then to remove 600 blue marbles and arrive at a 25% blue bag (100 red marbles out of 400 total) requires 600 minutes of work. However, it only requires a third of that work (200 minutes-worth) to enrich the bag by another 25% to arrive at a 50% blue (100 red and 100 blue marbles) bag. Thus, we see that picking out all the useless U-238 (blue marbles) out of raw uranium feedstock requires less and less effort as the share of the coveted U-235 atoms (red marbles) in the mixture grows. In summary, the lower levels of enrichment actually require more work. 94 Some experts estimate that Iran is already dangerously close to having a nuclear weapon, in spite of sanctions against the regime being at an all-time high. Since Iran rarely allows even the least intrusive of inspections by the International Atomic Energy Agency (IAEA), quantitative statements about its nuclear program are inherently largely speculation. According to the February 2012 IAEA study, Iran continues to continue uranium enrichment despite being ordered by the agency to cease, and refused to allow inspectors into its Parchin site. Additionally, Iran has not implemented the Additional Protocol (AP) of its Safeguards Agreement, making the IAEA unable to provide credible assurance about the absence of undeclared nuclear material and activities in Iran. 95 The Obama administration currently maintains that Iran is not close to developing a nuclear weapon, although Israeli media claims that Obama recently received a new National Intelligence Estimate (NIE), or compilation of U.S. intelligence agency opinions, that says otherwise. The last NIE, released in 2007, attracted considerable controversy with its claim that Iranian weaponization research had halted in However, the existence of a new NIE has not been confirmed by the Obama administration. 96 Until sections of this new NIE are declassified or other intelligence comes to light, Iran s true progress largely remains informed speculation only. 23

24 VII. Proposal for a 123 Agreement with Iran 123 Agreements While the current diplomatic gridlock has inhibited discussion of a U.S.-Iran partnership for civilian nuclear power, there have been other well-documented instances of safe and successful cooperation between nations on this subject. Most significant among these are the so-called 123 agreements that govern peaceful uses of nuclear energy (named after a section of the U.S. Atomic Energy Act). The United States has such an agreement with almost every major nuclear program in the world, except with Russia due to its contentious support for Iran s nuclear program. The virtue of these agreements is that they are remarkably effective and preventing nuclear proliferation and terrorism. 97 There are normally nine key criteria that a state must meet to be eligible for a 123 Agreement with the U.S. These include guarantees that 98 safeguards on transferred nuclear material and equipment continue in perpetuity; full-scope International Atomic Energy Agency (IAEA) safeguards are applied in nonnuclear weapon states; nothing transferred is used for any nuclear explosive device [ ]; there is no enrichment or reprocessing by the recipient state of transferred nuclear material or nuclear material produced with materials or facilities transferred pursuant to the agreement without prior approval; storage for transferred plutonium and high enriched uranium is approved in advance by the United States The possibility of a 123 Agreement with Iran is not currently being entertained by most strategists since the proliferation risks are viewed as overwhelming and Iran has for the past 30 years been seen too much as an enemy to be thought of as a potential ally. However, it is not inconceivable that Iran may eventually satisfy the minimum requirements for a 123 Agreement, since many of the traditional terms of these agreements would likely be found very agreeable by 24