In the second half of this two-part series, the author explores the complex interrelationship between nuclear energy cooperation and nuclear nonproliferation and argues that relations between the United States, Russia, and Japan are the key to progress in both areas.

A Complementary Relationship

Russia has concrete reasons of its own for pursuing cooperation with Japan’s nuclear energy industry. Moscow’s electricity-reform policy includes plans to increase Russia’s dependence on nuclear power from the current 15.4% to 25% by 2030. But apart from a few isolated segments, such as uranium enrichment, the nuclear energy industry’s manufacturing capabilities declined sharply after the collapse of the Soviet Union owing to the extended fiscal crunch. Alliances with foreign businesses are going to be crucial if Russia is to achieve its energy goals.

For Russia, then, collaboration with Toshiba and other Japanese companies represents a golden opportunity to acquire the engineering technology essential to plant design and construction, as well as manufacturing technology needed for the production of turbines and other peripheral equipment. Meanwhile Russia’s uranium enrichment business—already the world leader in terms of supply capacity—gets to stake its claim in the Asia-Pacific market. Herein lies the potential for a complementary, mutually beneficial relationship between Japan and Russia in the nuclear power sector.

Japan’s Nuclear Energy Policy Goes International

Toshiba, for its part, will doubtless continue pursuing this strategy of seeking out international partnerships to compensate for its own shortcomings vis-à-vis the nuclear fuel cycle. It is likely, moreover, that the Japanese government will actively support these initiatives, recognizing that such activity is bound to give a boost to various allied industries in Japan, given their high level of technology. On a practical level, Japan’s nuclear energy policy is becoming inextricably linked to Toshiba’s global strategy and vice versa.

This signifies an important departure from Tokyo’s previous policy of developing Japan's own, homegrown nuclear fuel cycle technology, supplemented by other countries only as absolutely necessary, to ensure long-term energy security. That “closed” development policy was completely at odds with the open, international strategy Toshiba had embraced since transforming itself into a global corporation through its acquisition of Westinghouse. Toshiba’s international strategy was one of the key factors that spurred the Japanese government to conclude the Japan-Russia Nuclear Energy Cooperation Agreement and take its first step toward internationalization of the nation’s nuclear energy policy.

Seeing Eye to Eye on Iran

In addition to Toshiba’s business strategy, however, Tokyo’s shift toward a more international nuclear policy was driven also by important developments in the area of international security. This brings us to the second trend mentioned at the beginning of Part I: ) the development of a new nonproliferation regime (which is to say, internationalization of nuclear fuel cycle technology), centered on the International Atomic Energy Agency (IAEA) along with Washington and Moscow, in response to growing concerns over nuclear proliferation.

Even as nuclear power has staged a comeback over the last few years, worldwide nuclear proliferation has emerged as a clear and present danger, a danger embodied in the nuclear programs pursued by Iran and North Korea. Of late, the biggest concern of Washington and much of the international community has been Iran, which is pursuing nuclear development in the powder keg of the Middle East.

In 1995, Russia signed an agreement to assist in the construction of the Bushehr Nuclear Power Plant in southern Iran. At the time the United States and Israel criticized the deal, fearing it could assist Iran in the development of nuclear weapons.

However, in August 2002 it came to light that Iran had begun working to obtain uranium enrichment technology by a different route altogether. From that point on, the positions of Washington and Moscow gradually began to converge.

Multinational Control of the Nuclear Fuel Cycle

In an op-ed piece appearing in the Economist in October 2003, then IAEA Director General Mohamed ElBaradei laid out his ideas for multinational control of the nuclear fuel cycle. To prevent nuclear proliferation while expanding the peaceful use of atomic energy, he argued, it was vital to establish a multinational framework (1) to guarantee supplies of nuclear fuel in exchange for a commitment not to transfer nuclear fuel cycle technology that could lead directly to weapons development, including uranium enrichment and reprocessing of spent nuclear fuel, and (2) to control the back-end stages in the cycle, particularly interim storage and reprocessing of spent fuel.

An international experts group reporting to Director General ElBaradei was appointed in August 2004 to study these proposals, and on February 22, 2005, the group issued its report under the title Multilateral Approaches to the Nuclear Fuel Cycle (hereafter referred to as the IAEA report).

A Quick Start for Fuel Leasing

Just five days after the release of the IAEA report, on February 27, 2005, Russia and Iran signed a nuclear fuel deal for the light water reactor in Bushehr, with a provision for return of the spent fuel. The agreement stipulated that Iran would use Russia as the sole source of fuel for the nuclear reactor the Russians had helped build and would return all the spent fuel to Russia. It was a contract rooted in the concept of fuel leasing proposed in the IAEA report. Furthermore, three days before the signing of that agreement, then US President George W. Bush and then Soviet President Vladimir Putin had met for talks in Bratislava, Slovakia, where they had issued a joint statement on nuclear security cooperation.

First the release of the IAEA report on February 22, then the US-Russia summit on February 24, and finally the Russia-Iran nuclear fuel agreement on February 27. From the timing, it seems clear that Russia’s decision to conclude the fuel agreement with Iran was taken in close consultation with the IAEA and the Bush administration. Of particular interest was an op-ed piece praising the agreement, carried in the March 9 issue of Britain’s Financial Times. Its co-authors were Daniel Poneman, senior director for nonproliferation and export controls in the National Security Commission during the first term of President Bill Clinton and a prominent figure in US nonproliferation circles, and Brent Snowcroft, national security advisor under President George H. W. Bush.

However, concrete indications that the IAEA, Washington, and Russia were working together to build a new nonproliferation regime were not in evidence until autumn that same year. On September 26, in a videotaped speech to the 49th session of the IAEA General Conference, US Secretary of Energy Samuel Bodman announced that the United States would reserve 17 metric tons of high-enriched uranium for use in the event that the IAEA decided to establish a fuel-supply program. On November 7, Director General ElBaradei attended the 2005 Carnegie International Non-Proliferation Conference, where he announced his international nuclear fuel bank initiative, noting that the United States and Russia had already assured him of their support.

On November 18, during talks between Bush and Putin at the APEC summit in Busan, the Bush administration gave its first official statement of US support for Russia’s assistance with construction of the Bushehr nuclear power plant and the fuel agreement that committed Iran to send spent nuclear fuel back to Russia. It was shortly after these talks that Russia launched a very visible effort to persuade Iran to halt its uranium enrichment program in return for Russia’s guarantee of nuclear fuel supplies.

Russia’s Crucial Role in Nonproliferation

During the first two months of 2006, Moscow announced an initiative to develop a network of international nuclear fuel cycle centers, and Washington followed with a proposal for a Global Nuclear Energy Partnership (GNEP). In connection with the former initiative, Russia announced plans to establish international uranium enrichment centers that would guarantee all participants access to uranium enrichment services at market prices, and it called on Iran to participate in the program rather than attempt to develop or import its own uranium enrichment technology. In July 2006, Moscow and Washington finally agreed to begin negotiations on a bilateral nuclear cooperation pact that would integrate the Russian and US initiatives.

Another element in Moscow’s plans to create international fuel cycle centers is the eventual construction within Russia of international centers for storage and management of spent nuclear fuel. In addition to boasting the greatest uranium enrichment capacity of any nation, Russia is the only country in the world equipped to accept spent nuclear fuel from other nations—albeit only for interim storage predicated on future reprocessing—as evidenced by its nuclear fuel leasing contract with Iran. This is one reason the United States and the rest of the international community have no choice but to seek Russia’s involvement in any effort to build a new nuclear nonproliferation regime oriented to preventing nuclear proliferation while encouraging the peaceful use of nuclear energy.

Toward a Japan-US-Russia Nuclear Energy Partnership

As we have seen, much of the impetus for the Japanese government’s February 2007 decision to begin negotiating a nuclear energy cooperation agreement with Russia came from Toshiba, which had its sights set on an international partnership for the nuclear fuel cycle. However, other important factors were developments driven by international security concerns, namely, the emerging accord between Washington and Moscow on nonproliferation in response to concerns over Iran’s nuclear program and associated moves to build a new nonproliferation regime centered on the IAEA for the purpose of establishing international controls over the nuclear fuel cycle.

What this means is that stable ties between the United States and Russia anchored by cooperation on nuclear nonproliferation are an essential precondition if Japan and Russia are to take cooperation on nuclear energy, including the nuclear fuel cycle, to the next level.

Unfortunately, there are a number of contentious issues with the potential to throw a wrench in relations between Washington and Moscow. In fact, after signing a US-Russian agreement for peaceful nuclear cooperation and submitting it to Congress for review in May 2008, the Bush administration was compelled to withdraw it in response to the conflict that broke out between Russia and Georgia the following August, passing the issue on to the next administration.

After Barack Obama took office, the new administration signaled its intention to press the “reset button” on relations between Washington and Moscow after the deterioration in ties under the Bush administration. The first step was the negotiation of a new Strategic Arms Reduction Treaty (START) with Russia. President Obama met for the first time with the leader of the world’s other great nuclear power, Russian President Dmitry Medvedev, on April 1, 2009, in London, where the two formally agreed to enter into START negotiations. On April 5, 2009, in a speech delivered in Prague, President Obama spoke in lofty terms of “America's commitment to seek the peace and security of a world without nuclear weapons.”

Nonetheless, there are still a number of volatile issues, including NATO’s eastward expansion and plans for a missile defense system in Eastern Europe, that could flare up and strain bilateral relations once again. Given that nuclear energy cooperation with Russia is now a key component of Japan’s energy strategy, Japan has no choice but to actively promote stable ties between Washington and Moscow anchored in cooperation on nuclear nonproliferation.

From Storage Facility to International Bank?

Of particular interest in the agreement announced by Toshiba and Atomenergoprom in 2009 is the possibility of joint construction of facilities for stockpiling enriched uranium. Interpreted narrowly, such stockpiles would function to support Toshiba’s expanding international nuclear energy business. However, if Tokyo Electric and other Japanese power companies were to participate in the initiative, then the stockpile would become a national enriched uranium reserve. And if the United States and other Asian countries took part as well, it would be the beginning of the kind of international nuclear fuel bank that the IAEA has advocated. In this sense, the proposal for cooperation between Japan and Russia on enriched uranium stockpiling facilities raises exciting possibilities.

But before we can make such dreams a reality, Japan, the United States, and Russia need to forge a strong strategic partnership for the peaceful use of nuclear energy. In this context, the Japan-Russia Nuclear Energy Cooperation Agreement was an important step in the internationalization of Japan's nuclear energy policy. But the real work still lies ahead of us.
(Translated from an article in Japanese published on May 14, 2009)