U.S. Markets close in 4 hrs 17 mins

U.S. Says Saudis Must Forgo Enrichment for Nuclear Sharing Deal

Ari Natter

(Bloomberg) -- Saudi Arabia will be required to forgo enriching or reprocessing spent uranium if it wants to secure a nuclear-technology-sharing deal with the U.S., Energy Secretary Rick Perry said in a letter to the kingdom that addresses bi-partisan non-proliferation concerns about the proposal.

The U.S. has been in negotiations with the Saudis for an agreement that could benefit Westinghouse Electric Co. and other American companies that want to construct or sell nuclear reactor technology to the kingdom. But that prospect has been met with increasing alarm by Congress and others concerned that the Saudis could enrich nuclear fuel into weapons grade material. Those concerns were heightened after the Trump administration said it might not insist on the so-called “Gold Standard” barring such activities.

Perry seemed to address those concerns in a letter sent earlier this month to the previous Saudi energy minister, Khalid Al-Falih obtained by Bloomberg.

“The terms of the 123 Agreement must also contain a commitment by the kingdom to forgo any enrichment and reprocessing for the term of the agreement,” Perry wrote, referring to the section of the U.S. Atomic Energy Act that discusses transfers of nuclear equipment and material to other nations.

Perry had been scheduled to meet with with Saudi Arabia’s new energy minister, Prince Abdulaziz bin Salman, at a gathering of the International Atomic Energy Agency in Vienna on Monday, but the meeting did not take place in the aftermath of attacks on the kingdom’s key oil facilities.

Perry also addressed the concerns during a roundtable with reporters while in Vienna, saying the baseline for any agreement between the U.S. and Saudi Arabia would be tougher inspections by the International Atomic Energy Agency.

The kingdom must adopt the IAEA’s so-called Additional Protocol, a set of monitoring rules followed by more than 100 countries that give inspectors wide leeway in accessing potential atomic sites, Perry added.

Perry has long argued that an agreement with Saudi Arabia could give a lifeline to American companies that have been struggling through a downturn in the construction of nuclear power plants, and pointing out that barring those companies might allow countries that lack nuclear proliferation standards to step in.

In his letter, Perry said the Trump administration wouldn’t authorize U.S. companies to share information and expertise involving the sale of reactors from South Korea to the Saudis. South Korea has proposed to sell a nuclear reactor to the Saudis “that the United States believes is based on U.S. technology,” the letter said.

“The United States remains committed to supporting Westinghouse in the competition to sell its reactor to the kingdom,” Perry wrote.

Henry Sokolski, executive director of the Nonproliferation Policy Education Center in Washington, cautioned that the letter’s language was ambiguous enough to leave the Trump administration some wiggle room.

“You got to hope that this means they’ve adopted the gold standard and will stick to it, but given the history on this point it would be wise to distrust and verify on this,” Sokolski said in an interview.

The Energy Department did not immediately respond to a request for comment.

The letter, which was dated Sept. 4, comes amid mounting criticism of the negotiations, including new scrutiny over the 2018 murder of journalist Jamal Khashoggi, and revelations the Trump administration approved the transfer of American nuclear expertise to Saudi Arabia -- a precursor to a broader deal -- 16 days after his death last October.

“If the Trump administration turns a blind eye to the kingdom’s behavior at home and abroad while concluding an agreement that could fast-track its potential pursuit of a nuclear weapon, Congress will reject any such agreement,” Ed Markey of Massachusetts and Jeff Merkley of Oregon, both Democrats and members of the Foreign Relations Committee, wrote in a letter Wednesday to Perry and Secretary of State Michael Pompeo.

(Updates with letter from Democratic critics. A previous version corrected account to say that Perry meeting with energy minister had not taken place.)

To contact the reporter on this story: Ari Natter in Washington at anatter5@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, John Harney

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.