Creating U.S.-Korean Cooperation on Saudi Nuclear Energy

The U.S. government is locked in a major political, technical, and security struggle with China. But its China objectives are mismatched with its approach to the international nuclear energy market in which China is a rising power. The most prominent example concerns Saudi Arabia.

The U.S.’ unproductive approach to Saudi Arabia’s Ahab-like quest for civil nuclear power has caused the kingdom to exclude it from its latest reactor RFP. China, along with Russia, France, and South Korea, were included on the Saudi list of approved bidders for the two 1400 MW reactors.

Of course, the worst possible outcome for the U.S. is for China to gain a nuclear power foothold in the Middle East. It raises nuclear security and proliferation concerns as well as impacting U.S. geopolitical authority in the region. And it could influence other nations to embrace China’s nuclear reactors, including smaller technologies suited for developing economy nations.

The threat of intensified China-Saudi cooperation is raising the hackles of key members of Congress.

With President Biden scheduled to travel to Saudi Arabia in July, several House committee chairpersons sent a letter to the White House stating that “We urge you to make clear that [Saudi] partnership with China in ways that undermine U.S. national security interests will have a lasting negative impact on the U.S.-Saudi relationship.”

But it also embraced existing policy that, “any civil nuclear cooperation agreement with the Kingdom must not undermine the ‘gold standard’ contained in the U.S.-United Arab Emirates (UAE) [nuclear cooperation] agreement. We further expect that Saudi Arabia will adhere to the higher standards of transparency required by the [IAEA safeguards] Additional Protocol.”

The disconnect in this letter is that the current U.S. approach to the Saudi nuclear program isn’t working and doubling down on it increases the probability that the reactor award could go to China. This would significantly undermine “U.S. national security interests” in a very dangerous neighborhood for a very long time.

For example, the nuclear proliferation concerns animating the U.S. negotiating approach could be manifested under a Saudi-China deal. China’s export policies are less stringent, and an agreement would allow it to burrow-in deeply as the Saudi’s full service nuclear technology supplier.

If the U.S. is boxed out of the Saudi tender, a popular fallback position is to support the bid from South Korea. But there are significant impediments to that position.

One obstacle is the ongoing fight between the U.S.’ Westinghouse Corporation and Korea’s KEPCO over intellectual property and content in a Korean reactor. This conflict has been elevated from a commercial to a political dispute and been stalemated for over two years. The origin of the conflict is – Saudi Arabia.

KEPCO asserted that there was no Westinghouse content in its APR1400+ reactor and the U.S. company disagreed. The reactor is based on a Westinghouse design.

The reason for the KEPCO assertion was to escape from the requirement that there be a U.S.-Saudi nuclear cooperation agreement and thereby unhook its sale from American policy and politics. Free of Westinghouse’s controlled content, the Koreans could deal unrestricted with the Saudi’s.

If the dispute is concluded in Westinghouse’s favor, however, and the Saudi’s want the Korean reactors that were built in the UAE, they will need to reach an agreement with the U.S. This agreement is necessary for Westinghouse technology to be exported to Saudi Arabia for inclusion in a Korean reactor.

Then there is another hitch. Korea’s past and present presidents have agreed to require the Additional Protocol (AP) as a prerequisite for cooperation with the U.S. on overseas nuclear market opportunities.

In May 2021, former Korean President Moon agreed to “adopt a common policy with the United States to require recipient countries to have an IAEA safeguards agreement Additional Protocol in place as a condition of supply of nuclear power plants.”

Last month, current Korean President Yoon agreed that the U.S. and Korea should “engage in global civil-nuclear cooperation in accordance with the highest standards of nuclear nonproliferation, including the IAEA Additional Protocol as a standard for both international safeguards and for nuclear supply arrangements.”

Saudi Arabia has rejected the U.S. request to accept the AP on the grounds that its inspection mandate is too intrusive. But, that rejection now limits the U.S. and South Korea as potential reactor vendors to the kingdom under their joint statements.

There is good reason to push Saudi Arabia to accept the AP. It is in competition with Iran, the nuclear program of which is unconstrained at the moment. And key officials of the Saudi government have stated that it would match Iran if it produced a nuclear weapon. This volatile situation undermines international confidence in the prevention of nuclear proliferation.

But the ‘gold standard’ is another matter. It forbids uranium enrichment and spent-fuel reprocessing under an agreement with the U.S. However, it has been applied sparingly in U.S. agreements, the UAE being one notable example. It is not a provision in U.S. nuclear cooperation agreements with either China or Russia, or many other nations. The Saudi’s have rejected this limitation.

Both the AP and the gold standard are designed to provide assurances that nuclear weapons are not being developed under the guise of civil nuclear programs. But insisting on both provisions can have unintended consequences.

The deadlock with Saudi Arabia over both of these issues tilts the playing field in favor of China and Russia, which won’t require either limit. That undermines the U.S. national security interests that the Congress has expressed so much concern about.

But there may be another path forward.

Part of the problem with previous nuclear negotiations between the U.S. and Saudi Arabia is that they were conducted by the controversial Trump administration in the shadow of the killing of Jamal Khashoggi. Those poisoned politics created bitter domestic opposition to making a deal.

Now, however, there is a new administration, it recently reversed its position on calling Saudi Arabia a pariah state, and the Korean government has agreed to be a high-standards nonproliferation partner with the U.S. These evolved circumstances could provide a new political foundation for engaging with the Saudi’s, hopefully in a more productive, creative negotiation.

The alternative is to hand China an advantage and a potential nuclear foothold in the Middle East. That is a position it is very unlikely to relinquish and very likely to exploit to its advantage for a very long time.

Ken Luongo, President, Partnership for Global Security