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Iran and North Korea – Growing Connections

News has surfaced that Iran has invited Kim Jong-Il to Tehran in order to ‘to further economic ties’.  The invitation comes amid a flurry of recent diplomatic contact between the two states.  Two weeks ago, an Iranian delegation led by Vice-Minister Mohammad Ali Fathollahi met with Kim Yong Nam, de facto head of the North Korean state, to hold talks regarding ‘bilateral political, economic and cultural relations’ and ‘international and regional issues’.  Last week Iran’s ‘Press TV’ subsequently reported that Kim Yong Nam will visit Iran this summer to launch a ‘scientific and cultural exchange program’ between the two countries.  

Even if suggestions that Kim Jong-Il has an aversion to flight are true (thus rendering the idea of him visiting Tehran unfeasible), that the invitation was sent is in and of itself significant.  Indeed, it marks the greatest diplomatic contact between the two countries since their recognition of one another diplomatically in 1979.  Given their shared history of missile collaboration, however, these closer ties raise some disconcerting questions…

Regarding economic relations, Iran’s Oil Minister Kazem Vaziri Hamaneh said in 2007, that ‘Both nations can cooperate in the fields of exploration, production and other fields of the energy sector’.  It is well known that Pyongyang has had difficulties obtaining crude oil for many years, and that Tehran lacks enough refined petroleum to meet domestic demand.  As such, Hammeneh summarized his Iranian-Korean proposal as ‘North Korea [getting] oil from Iran and [providing] Iran with a surplus of its own refined petrol’.  However, a closer look reveals that this concept doesn’t quite add up.

According to research released by Choi Su Young just three months after Hamaneh’s statement, North Korea was at the time importing its ‘entire amount of petroleum for transportation and production’.  The CIA World Factbook 2010 states today that this situation remains unchanged, with North Korea only importing – not exporting – petroleum.  Indeed, so reliant has the DPRK’s been on importing petroleum that it remains highly unlikely that Pyongyang has ever had a surplus of petroleum to export.  Thus, the notion that North Korea might import extra heavy oil from Iran to refine it into petroleum for export back to the Iranian market seems far fetched, especially due to the extreme distances and costs involved.  So if North Korea is getting oil from Iran, what might Pyongyang be getting in return?

Well, history shows that in the 1980s and early 1990s Iran got arms in return.  Early in its war with Iraq, Tehran bartered with North Korea to obtain conventional Soviet technology in exchange for crude oil.  Similarly, Iran used its oil in 1993 to invest in the research and development of North Korea’s new No-Dong missile, which helped greatly in the establishment of an indigenous Iranian missile production infrastructure.

Recent reports suggest that Iran may be continuing to purchase arms from North Korea – although with what intensity is unclear.  An article from 2007 stated that Iran may have received four mini submarines from North Korea.  In August 2009, the UAE intercepted a ship carrying DPRK-manufactured munitions bound for Iran.  And just days ago, Shimon Peres stated that North Korean entities were continuing to supply weapons to both Iran and its affiliates, although admittedly without any evidence.

Whether Iran is still purchasing missile technology from the DPRK today seems less likely, due to the more advanced state of the Iranian missile / space program.  That said, there does appear to still be some evidence detailing scientific cooperation in this area, with Iranian nationals allegedly dispatched to North Korea to assist in last April’s attempted satellite launch.  The Department of Defense’s April 2010 report on Iran’s military power states that “In developing and expanding its missile program, Iran has received assistance from North Korea and China,” but it does not elaborate on what form this assistance has taken or when it occurred.

In the nuclear domain it is interesting to note the sympathetic regard Iran and North Korea have for each other’s respective programs.  Following North Korea’s 2006 test Iran targeted the totality of its criticism at the U.S (for provoking it). Likewise, following Pyongyang’s 2009 test, Tehran simply denied that it had been involved – it did not criticize North Korea.  For its part, North Korea’s ambassador to Tehran, Kim Chon Ryong, reportedly has expressed North Korea’s support for Iran’s right to peaceful nuclear technology.  How far cooperation in the nuclear domain goes or will go beyond this mutual deference is unclear.

Overall, it is evident that Iran and North Korea are forging closer and closer ties – a worrisome development.  And further sanctions would likely ensure that these ties continue to flourish.

One Down, Two to Go – and a Big Win for India

On March 29, the U.S. and India reached an agreement which grants India the right to reprocess U.S.-origin spent fuel, meaning that the landmark U.S.-India nuclear trade deal is one step closer to reality.  The text of the agreement was released on March 30.

The reprocessing agreement includes protocols intended to prevent the diversion of U.S.-supplied nuclear materials to India’s weapons program.  However, the agreement – like the larger deal it is a part of – increases the potential for proliferation and nuclear terrorism…

Timothy Roemer, U.S. Ambassador to India, announced that the reprocessing deal was “part of the great, win-win narrative of the U.S.-India global partnership.”  Other sources, however, note that India has been able to secure significant concessions in the accord.  

For one, reprocessing will be monitored by the IAEA rather than U.S. officials, as Indians “did not want direct American oversight with an American flag on them. It is a symbolic, sovereignty issue for Indians.”  The only other countries operating under this model are Japan and EURATOM.  As Ted Jones of the U.S.-India Business Council noted, “India is now in a special circle. This is a big deal.”

Military facilities and existing stockpiles of nuclear fuel will continue to be exempt from inspections and safeguards. New Delhi has also refused to allow IAEA monitors access to a breeder reactor that can run on plutonium.  

While the U.S. will be able to suspend Indian reprocessing rights if a “serious threat” to national security or the physical protection of the reprocessing facility arises, in the case of a suspension of reprocessing rights beyond six months, the U.S. may be required to provide compensation for the adverse effect on the Indian economy resulting from the disruption of electricity generation.  

India was also able to secure the right to build additional reprocessing plants in the future.  While America had hoped to limit India to one such facility, New Delhi’s argument that it would be risky to transport fuel from reactors to the reprocessing plant through densely populated areas won the day.

The cooperation deal in general is a huge win for India, as they are still not party to the NPT.  The Indian exemptions have all been obtained despite the fact that diverted civilian nuclear fuel was used to build New Delhi’s first nuclear weapons three decades ago.

Despite the reprocessing agreement, hurdles remain before U.S. firms can break into the billion dollar Indian nuclear energy market.  While two sites have been identified for U.S.-built reactors, no company has yet been able to enter into a contract.  As documented on this blog, India must still pass a controversial nuclear-liability law and provide a letter of assurance on nonproliferation.  

At the recent Nuclear Security Summit, the 47 participating nations endorsed President Obama’s goal of securing all “loose” nuclear material within four years.  Yet the summit largely ignored the dangers posed by reprocessed plutonium.  As Edwin Lyman of the Union of Concerned Scientists pointed out “At a time when nuclear terrorism and proliferation concerns are only increasing, the United States should be doing everything it can to stop existing reprocessing, not facilitate more.”

Double Standards & Pakistan’s Quest for Nuclear Power

Critics of the U.S-India Deal have long warned that not only did the arrangement have the potential to undermine the global nonproliferation regime, but it would also make it more difficult to say no to other countries, particularly Pakistan, demanding the same treatment in the future.  Unfortunately, the critics’ worst fears are now becoming reality…

Pakistan is no doubt interested in a cooperation agreement for the attractive energy benefits it would offer.  However the key factor at work here is likely Pakistan’s desire to be treated on a similar footing as its long-time adversary India.  Many observers have noted that the NSGs exemption for India conferred a sense of legitimacy on the Indian nuclear program – despite the fact that it is not a signatory to the NPT – and Pakistan – which has also not signed the NPT – wants similar recognition.  As Leonor put it recently, “the fact that we gave India such a sweetheart deal set a very dangerous precedent and it’s no surprise that Pakistan wants a similar deal.”

Pakistan has also noted that by providing India with nuclear fuel and reactors for its civilian nuclear program, the deal would allow New Delhi to divert more of its domestic supply of uranium toward its weapons program.  Since Pakistan’s nuclear arsenal and stockpiles of fissile material are considerably smaller than those of India, Pakistan fears that the deal could upset regional stability.  

Taking all this into account, Pakistan is beginning in earnest to pressure the U.S. for similar cooperation, and for the first time, some in the U.S. appear willing to explore the possibility.

On February 15, the Pakistani ambassador to the U.S., Husain Haqqani, claimed that “the U.S. is not skeptical about our nuclear program. Talks between Pakistan and the U.S. for cooperation on atomic programs are underway, and we want the U.S. to have an agreement with us like the one it had with India on civil nuclear technology.”

While in the past the U.S. has insisted that the Indian agreement was exclusive to New Delhi, more recent reports suggest otherwise.  The Pakistani foreign minister, army head, and spy chief met with Secretary of State Clinton and other U.S. officials from March 24-25 for talks on strategic issues after a nearly two year break.  Civil nuclear cooperation was on the agenda, but the U.S. was silent on the substance of what was discussed on the nuclear front – though further talks on nuclear cooperation were not ruled out.  

Prior to the talks, Foreign Minister Shah Mahmood Qureshi explained: “My message to Washington is: we’ve been talking a lot. The time has come to walk the talk… We’ve done our bit… We’ve delivered. (Now you) start delivering.”

Ambassador Anne Patterson, the U.S. envoy in Islamabad, conceded before the talks that the U.S. is “beginning to have a discussion with the Pakistan government” regarding nuclear power.  Though she acknowledged the concerns about Pakistan’s nonproliferation record, Patterson expressed confidence that “we are beginning to pass those and this is a scenario that we are going to explore.”  President Obama proclaimed last June that “the Pakistani government has safeguarded its nuclear arsenal.  It’s Pakistan’s nuclear arsenal.”

Similarly, Ambassador Richard Holbrooke, the U.S. special representative for Afghanistan and Pakistan, noted: “We have a very broad and complex agenda in these talks, and this is the first strategic dialogue ever at this level, and the first of this administration. And we’re going to listen carefully to whatever the Pakistanis say.”

Support for cooperation with Islamabad has also been growing in strength outside of the government as well.  

In a recent Washington Post op-ed, David Ignatius pointed to Pakistani security concerns that “the United States is secretly plotting to seize Pakistani nukes” and suggested that the U.S. should “implicitly accept Pakistan’s status as a declared nuclear weapons state” to counter this misperception.  

Georgetown University Assistant Professor Christine Fair suggested a civilian nuclear pact could be just the incentive needed for Islamabad to move to conclusively sever ties with extremist groups, arguing: “We need a big idea for Pakistan, to transform it from a source of insecurity for the region to a country committed to eliminating terrorism and ensuring that nuclear proliferation doesn’t happen again.”  

For its part, Pakistan appears to believe that it has significant leverage in pressuring for a deal, as the U.S. believes Pakistan’s support is necessary to stabilize neighboring Afghanistan.  

If the U.S. does in fact opt to seriously pursue negotiations with Pakistan on a civilian nuclear energy cooperation agreement, the move has the potential to further undermine the rule-based nonproliferation regime, especially if Pakistan gets a deal that is devoid of any real, meaningful nonproliferation conditions, as was the case with India.

Perhaps there is some comfort to be taken from the fact that securing domestic and international support for such a deal would be incredibly difficult, if not impossible. As Daniel Markey, senior fellow at Council on Foreign Relations, notes “there is zero chance that Pakistan will get a nuclear deal of the sort that we have with India. They cannot get it through Congress or the NSG.”  In a move probably orchestrated to demonstrate its commitment to nonproliferation, Pakistan announced plans to investigate A.Q. Khan’s ties with the Iranian nuclear program before strategic talks with the U.S.  

But even preliminary discussions about a deal with Pakistan could be detrimental at a time when the Obama administration is preparing for the upcoming Nuclear Security Summit and Non-Proliferation Treaty Review Conference. Rumblings that the U.S. is considering extending special rights and privileges to Pakistan that not even states in good standing under the NPT enjoy would weaken our argument to the international community that we are seriously pursuing our disarmament and nonproliferation commitments.  

Roadblocks to Implementation of the U.S.-India Deal

As I blogged in late February, there has been progress toward implementing the U.S.-India Nuclear Deal.  I also pointed out that obstacles remain to the deal’s entry into force, including completion of an agreement regarding a nuclear spent fuel reprocessing facility and approval by New Delhi of a liability limitation bill for U.S. firms.

With the news last week that the government decided not to introduce the Civil Liability for Nuclear Damage Bill in the Indian parliament, there is still no telling when U.S. firms will be able to start reaping the benefits from nuclear trade with India.  The tragic comedy that many opponents of the deal warned it would become seems to be playing out as predicted: U.S. efforts to rewrite the rules on international nuclear trade are likely to end up benefiting firms in Russia, France, and other nations much earlier (and perhaps even far more) than their U.S. counterparts…

The proposed liability limitation bill would shield U.S. suppliers from liability in the event of a nuclear accident and make plant operators responsible for damages from any accidents. It would cap legal liability for international nuclear reactor operators at $65 million and limit the Indian government’s financial obligation to roughly $385 million. It would also require that all assertions of wrongdoing be filed inside of 10 years.

Without such legislation U.S. firms would likely be unable to get the necessary insurance to engage in nuclear cooperation. Competitors to U.S. firms such as France’s Areva and Russia’s Rosatom do not require liability limitation legislation because they are covered by protections from their home governments.  

While the Indian cabinet has approved the legislation, consideration of the bill was pulled on March 15 by the lower house of parliament, the Lok Sabha.  Speaker Meira Kumar deferred consideration after receiving notice from at least four members of the opposition that they intended to block the bill at the introduction stage, as they found it to be in violation of the Indian Constitution and several former Supreme Court rulings.  

The ruling government in India largely supports the bill, as it is in their interest to fully implement the U.S.-India Nuclear Energy Cooperation Deal.  They argue that the nation requires a liability structure to bring it up to par with global standards, especially given the frequent power blackouts that affect even the capital, New Delhi.  Analysts believe Prime Minister Manmohan Singh wanted to secure approval of the legislation before he travels to Washington in April for President Obama’s Nuclear Security Summit.  They now estimate he will seek passage of the bill before Obama visits India later this year.

Critics of the bill in India include members of the Bharatiya Janata Party and the Communist Party of India (Marxist).  They have voiced concern that the bill is being forced through parliament as a result of U.S. pressure, noting that the ruling government is “safeguarding the interests of the United States at the expense of the safety of Indian people.”  They argue that the legislation does not provide adequate protection for residents and leaves the bulk of responsibility for any ensuing land reclamation efforts to Indian citizens.  Under the bill, the majority of compensation for victims of nuclear accidents would fall on Indian taxpayers.

One observer notes, however, that the bill does have a loophole allowing the operators of Indian nuclear power plants the “right of recourse” against supplier firms if an accident results “from the willful act or gross negligence on the part of the supplier of the material, equipment or services, or of his employee.”  This right is not included in the IAEA’s Convention on Supplementary Compensation for Nuclear Damage (CSC), which India also plans to join, and, according to the observer, should work to allay Indian concerns that the supplier is completely protected, even if the amount is capped.  Omer Brown of the DC-based council for the Contractors International Group on Nuclear Liability (CIGNL) also emphasized that joining the CSC would ensure that India would be “eligible to get supplemental funds from the CSC international fund paid by the United States and other CSC Member States.”

Information Minister Ambika Soni has stated that the ruling coalition would pursue an understanding with the opposition prior to sending the measure back to parliament. Science and Technology Minister Prithviraj Chavan also supports reconsideration, noting that “there is no urgency to introduce the bill.”  Meanwhile, Foreign Minister Nirupama Rao, who was in Washington early last week, continued to insist that the U.S.-India deal was “proceeding smoothly and satisfactorily,” adding that “we are in the process of operationalizing the agreement through close coordination between our two governments.”

In other news, little progress appears to be being made in negotiations on a spent fuel reprocessing arrangement, which is an additional required step before the U.S. and India can begin nuclear trade.  Current estimates are that negotiations may not conclude until after the May NPT RevCon.  

One thing we know for sure is that while the U.S.-India deal remains in limbo, countries such as Russia and France, which do not face the same impediments to nuclear trade, will continue to eat up more of the lucrative Indian nuclear energy market pie, estimated to exceed $150 billion in coming years .  Will there be any pieces left for the U.S. by the time all of the roadblocks are removed?

India Moving Forward on Nuclear Energy

In early February, President Obama issued a memorandum certifying that India has placed its civilian nuclear facilities under IAEA safeguards, thereby bringing the Indian Safeguards Agreement into force and moving the two nations another step closer toward cooperation in the field of nuclear energy under the auspices of the landmark U.S.-India deal.

Yet while progress is being made toward implementing the agreement, a few steps remain before U.S. firms such as Westinghouse Electric and G.E. Hitachi can begin nuclear trade with India…

On September 6, 2008, India, with the strong support of the U.S., secured a rare exemption from the 45-member Nuclear Suppliers Group (NSG) allowing it to conduct civilian nuclear trade despite not being party to the Nuclear Non-Proliferation Treaty (NPT).  A little over a month later, on October 6, President Bush and Indian Prime Minister Manmohan Singh signed the United States-India Nuclear Cooperation Approval and Non-proliferation Enhancement Act.

Supporters of the cooperation agreement argue that U.S. backing for the exemption indicated “a new chapter of engagement with India.” During the Cold War the world’s two largest democracies were often at odds, as India was the leader of the non-aligned movement and at times sided with the Soviet Union.  President Obama has noted that the agreement “will increase American exports and create jobs in both countries.”

Another argument made in defense of the deal is that because India has limited domestic uranium reserves, it needed the ability to trade with other nations to ensure a steady supply.  Moreover, it requires India to place its civilian nuclear reactors under IAEA safeguards for the first time.  The State Department argues that the initiative “will help meet India’s growing energy requirements and strengthen the non-proliferation regime by welcoming New Delhi into globally accepted nonproliferation standards and practices.”

Critics of the agreement, however, note that by providing India with additional nuclear material, New Delhi could choose to divert more of its domestic supply of uranium toward its weapons program, thereby fueling a potential arms race not only with Pakistan, but with possibly China as well.  

They also cite concerns that it could do serious damage to international efforts to curb the spread of dangerous nuclear weapons technologies.  While Article IV of the NPT affirms that all state parties in good standing under the Treaty have a right to benefit from the peaceful uses of nuclear energy, the deal allows India to reap rewards without being a signatory to the Treaty.  Moreover, India has not stopped producing nuclear weapons-usable fissile material or signed the Comprehensive Test Ban Treaty.  Critics fear that extending special rights to India without simultaneously requiring it to make meaningful commitments toward disarmament could undermine the shaky bargain upon which the NPT is based.    

India, for its part, continues to insist that all action, including application of IAEA safeguards to civilian nuclear facilities, is voluntary and that its military facilities will remain exempt from inspection.

A few obstacles remain before the U.S. and India can commence nuclear trade.  First, India is demanding that the two sides complete an agreement regarding a nuclear spent fuel reprocessing facility.  The terms of the U.S.-India deal grant India reprocessing rights under the condition that it establishes a facility to safeguard nuclear material monitored by the IAEA.  Indian officials have expressed concern that the U.S. is trying to re-open discussion on the conditions under which it can suspend reprocessing consent rights to India. Current estimates are that such an agreement will be finalized by August of this year.  

In addition, New Delhi must agree to join to the Convention on Supplementary Compensation for Nuclear Damage, lest U.S. firms balk at engaging in nuclear trade with India.  The Convention would shield U.S. and international suppliers from liability in the event of a nuclear accident and make plant operators responsible for damages from any accidents.  While the Indian cabinet has approved the necessary legislation, the national legislature has yet to consider the proposal.  Competitors to U.S. firms such as France’s Areva and Russia’s Rosatom are not similarly constrained because they are covered by liability protections from their home governments.

India is aggressively pursuing deals with other nations worldwide, especially those with large uranium reserves. Last week it was reported that Russia planned to follow-up the nuclear cooperation pact it already signed with India last December with a deal next month which would enable Moscow to construct additional power plants.  In addition to the U.S. and Russian deals, India has inked agreements with the UK, France, Mongolia, Kazakhstan, Argentina, Namibia, and Canada.

As nuclear trade between the U.S. and India comes closer to becoming a reality, the Obama administration should be concerned that the U.S.-India deal, as well as agreements between India and other nuclear suppliers, could weaken the nonproliferation and disarmament regime at a time when strengthening this regime is a top Obama administration priority.