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U.S. & Russia Agreement On Uses of Nuclear Energy

John C. Rood, Acting Under Secretary of State for Arms Control and International Security
Statement Before the House Foreign Affairs Committee
Washington, DC
June 12, 2008

Agreement Between the United States and Russia for Cooperation in the Field of Peaceful Uses of Nuclear Energy

As prepared for delivery

Mr. Chairman:

Thank you for the opportunity to testify before the Committee in support of the U.S.-Russia Agreement for Peaceful Nuclear Cooperation or so-called "123 Agreement," which is required by Section 123 of the Atomic Energy Act of 1954, as amended.

As you know, President Bush submitted this agreement to Congress on May 13 for review. This agreement satisfies all U.S. legal requirements as set forth in Section 123 of the Atomic Energy Act and elsewhere in U.S. law for an agreement of this type with a nuclear weapon state as defined by the Nonproliferation Treaty. In particular, this agreement contains all of the required nonproliferation measures and controls, including a requirement that adequate physical protection measures be maintained on U.S. exports, a U.S. right of prior consent to retransfers from Russia, and a requirement that no U.S.-origin nuclear material can be enriched or reprocessed without the prior approval of the United States.

The United States has 123 Agreements with almost all countries with major nuclear energy programs, including China, Japan, and the European Atomic Energy Community, which permits cooperation with the 27 EU Member States.

The Administration believes it is important to have a 123 Agreement with Russia both to build a closer relationship as well as to improve our ability to address major challenges we face in the 21st century, such as growing energy needs, nuclear nonproliferation, and combating nuclear terrorism.

Growing energy needs and concerns about greenhouse gas emissions have increased international demand for nuclear power, which in an increasingly globalized nuclear industry places a premium on working with foreign partners. In addition, nuclear nonproliferation and the need to prevent nuclear terrorism are at the top of the U.S. national security agenda, including with Russia, generating strong interest in the development of more proliferation-resistant nuclear technologies and approaches to the fuel cycle that can be advanced through cooperation between the U.S. and Russia.

Upon entry into force, this agreement would establish a legal basis for what we expect to be mutually beneficial peaceful nuclear cooperation between the United States and Russia.

Some U.S.-Russia cooperation is already ongoing on nuclear safety and security, and Russian commercial nuclear fuel sales to the United States under the HEU Agreement. We believe that this existing cooperation will be enhanced by having this agreement in place.

At the same time, the agreement looks to additional possibilities in the future, both commercial and government-to-government. It establishes a framework of nonproliferation conditions and controls for transfers of civil nuclear commodities between the two countries, but in itself it does not deal with specific projects. Implementation of this agreement would take place on the basis of export licenses issued in conformity with the requirements of U.S. law and policy at the time the license is applied for.

For the United States, having the agreement in place will provide a framework for potential commercial sales of civil nuclear commodities like reactor fuel and major reactor components to Russia by U.S. industry. Under Russia’s export system such commodities may be transferred to the United States without such an Agreement (and in fact are taking place right now). Having the Agreement in place will rectify an imbalance between the two countries in terms of the legal structure available to accommodate commercial opportunities for the United States.

The Agreement would facilitate greater U.S.-Russia cooperation in developing technologies that are important to advancing our nuclear nonproliferation objectives under the Global Nuclear Energy Partnership (GNEP), where we are seeking to cooperate with other nations to develop new technologies like advanced reactors that would consume plutonium and new forms of recycling spent fuel that would reduce the risk of proliferation by not separating plutonium that could be diverted for use by rogue states or terrorists for nuclear weapons. In areas like advanced fast burner reactors and advanced nuclear fuel and fuel cycle facilities, Russia possesses experience and facilities not widely available in the United States. For example, the Department of Energy would like to send advanced fuel for testing in Russian fast neutron reactors, but can only do so with a 123 Agreement in place.

The Agreement also advances mutual nonproliferation goals by facilitating the transfer of nuclear materials for forensic purposes in potential nuclear smuggling cases.

The Administration views this agreement as an important achievement. As Ambassador Burns stated when he signed the Agreement in Moscow on May 6, the United States and Russia – once nuclear rivals – today nuclear partners – at last have a basic framework to develop nuclear energy for peaceful purposes and to advance nuclear energy worldwide while enhancing our efforts to prevent nuclear proliferation. By expanding the ties between our governments and our nuclear industries, this agreement will add to the strength and stability of the U.S. -Russia relationship as we confront important global challenges of the 21st century.

Conclusion of the proposed Agreement with Russia has been a high U.S. priority over the past year. The President’s commitment to finalizing it was highlighted in the Declaration on Nuclear Energy and Nonproliferation: Joint Actions, issued together with then-President Putin on July 3, 2007, and more recently in the Strategic Framework Declaration that they issued at the Sochi Summit on April 6 of this year.

The July 2007 Declaration makes plain how concrete, wide-ranging and ambitious the U.S.-Russia partnership is in this area so crucial to national and global security. In the Declaration, the United States and Russia jointly state their determination to play an active role in making the advantages of peaceful use of nuclear energy available to a wide range of interested countries, and in particular developing countries, provided that the common goal of prevention of proliferation of nuclear weapons is achieved. The two leaders state their common vision of growth in the use of nuclear energy, including in developing countries, to increase the supply of electricity, promote economic growth and development, and reduce reliance on fossil fuels, thus leading to a decrease in pollution and greenhouse gasses.

They state their firm belief that the expansion of access to nuclear energy should be conducted in a way that strengthens the nuclear nonproliferation regime. They also voice their strong support for the Treaty on the Non-Proliferation of Nuclear Weapons, as well as for the International Atomic Energy Agency and in particular the IAEA Additional Protocol.

They further state their readiness to support expanded access to civil nuclear energy, consistent with national law and international legal frameworks, by working together and with other nations in the following ways:

* Facilitating the supply of a range of modern, safe, and more proliferation resistant nuclear power reactors and research reactors appropriate to meet the varying energy needs of developing and developed countries.

* Facilitating and supporting financing to aid construction of nuclear power plants through public and private national and multinational mechanisms, including international financial institutions.

* Providing assistance to states to develop the necessary infrastructure to support nuclear energy, including development of appropriate regulatory frameworks, safety and security programs to assist states in meeting international standards, and standards for training of personnel.

* Developing solutions to deal with the management of spent fuel and radioactive waste, including options for leasing of fuel, storage of spent fuel, and over time development of new technologies for recycling spent fuel.

* Ensuring that the IAEA has the resources it needs to meet its safeguards responsibilities as nuclear power expands worldwide.

* Supporting expanded IAEA Technical Cooperation to help states build the necessary infrastructure for safe, secure, and reliable operations of nuclear power plants.

* Assisting development and expansion of regional electricity grids, to permit states without nuclear reactors to share in the benefits of nuclear power.

* Providing nuclear fuel services, including taking steps to ensure that the commercial nuclear fuel market remains stable and that states are assured of reliable access to nuclear fuel and fuel services for the lifetime of reactors, including through establishment of international nuclear fuel cycle centers, and provision of nuclear fuel cycle services, including uranium enrichment, under IAEA safeguards, as an alternative to developing indigenous capabilities.

* Supporting negotiation of long-term contracts for power reactors and research reactors, including assured supply of fuel and arrangements for management of spent fuel.

This is the ambitious civil nuclear partnership agenda that the United States and Russia have set for themselves as a common undertaking. The proposed U.S.-Russia Agreement for Cooperation will serve as the cornerstone of the U.S.-Russia civil nuclear relationship across the whole range of these activities for many years to come.

The 123 Agreement provides a comprehensive framework for U.S. peaceful nuclear cooperation with Russia based on a mutual commitment to nuclear nonproliferation.

* It has a term of 30 years, and permits the transfer of technology, material, equipment (including reactors), and components for nuclear research and nuclear power production, subject to stated nonproliferation conditions and controls.

* The agreement does not permit transfers of any Restricted Data, and permits transfers under the agreement of sensitive nuclear technology, sensitive nuclear facilities (such as facilities for enrichment or reprocessing), and major critical components of such facilities only by amendment of the Agreement.

* The Agreement permits enrichment of uranium subject to the agreement to less than 20 percent. It permits reprocessing of nuclear material subject to the Agreement only by further agreement of the Parties. For the United States, giving such consent would entail a “subsequent arrangement” pursuant to section 131 of the Atomic Energy Act, including an opportunity for Congress to review the intended approval for 15 continuous session days under ordinary circumstances.

* In the event that the proposed Agreement is terminated, key nonproliferation conditions and controls continue with respect to material and equipment subject to it.

Please allow me to enumerate a few of the many areas where the United States and Russia are working together in a concrete way to prevent the spread of nuclear weapons. These areas include:

Global Nuclear Energy Partnership

The United States and Russia are working with a wide range of other states to develop the next generation of civil nuclear capability that will be safe and secure, improve the environment, and reduce the risk of nuclear proliferation. GNEP is aimed at accelerating the development and deployment of advanced fuel cycle technologies, including recycling, that do not involve separating plutonium. Such advanced technologies, when available, will substantially reduce nuclear waste, simplify its disposition, and draw down existing inventories of civilian spent fuel in a safe, secure and proliferation resistant manner.

International Uranium Enrichment Center

Russia has announced, and the United States has expressed support for, an initiative to create a global nuclear energy infrastructure that will provide for effective access to the benefits of nuclear energy without need on the part of aspiring countries to acquire their own enrichment and reprocessing capabilities. As a first step, Russia and Kazakhstan have established on the territory of Russia the International Uranium Enrichment Center.

Reliable Access to Nuclear Fuel

Recognizing the need for an assured fuel supply as an incentive for countries that do not currently possess enrichment and reprocessing capabilities to forgo acquiring them, the United States and Russia are committed to measures aimed at establishing reliable access to nuclear fuel. Russia is working on the establishment of a stockpile of low enriched uranium to be available to the IAEA for ensuring reliable nuclear fuel supply. The United States is downblending 17.4 metric tons of excess HEU from its defense programs for use as an enriched uranium reserve to support reliable fuel supply, and is pledging $50 million to the IAEA to support establishment of an international fuel bank for this purpose.

Global Initiative to Combat Nuclear Terrorism

The Global Initiative launched by the United States and Russia in July 2006 has grown to include 71 partner nations, ranging from all EU member states to, more recently, the United Arab Emirates and Saudi Arabia. Partner nations are cooperating in strengthening their individual and collective capabilities to prevent terrorists from acquiring nuclear materials, to deny them safe haven and financial and other support, to share information on terrorist activities, to cooperate on law enforcement matters, and to deal with the consequences of an attack. The United States and Russia are committed to expanding and strengthening this initiative and to fully implementing the agreed program of work.

Nuclear Security

The United States and Russia expect to complete agreed-upon nuclear security upgrades under the Bratislava Nuclear Security Initiative by the end of 2008. The two countries look forward to these upgraded systems continuing to serve their purpose reliably for years to come. A Senior Interagency Group will report annually on implementation of the agreed actions under the Bratislava Initiative on emergency response, best practices, security culture, research reactors, and nuclear security upgrades. The United States and Russia will continue to work together to share nuclear security best practices with other nations, including through international fora.

Proliferation Security Initiative

The United States and Russia remain committed to the Proliferation Security Initiative, which constitutes an important means to deter and prevent trafficking in nuclear, biological and chemical weapons, their delivery means, and related materials. Our two countries are working cooperatively to prevent and disrupt proliferation finance in furtherance of the objectives of UNSCR 1540.

Mr. Chairman, let me address concerns that some have raised about how the United States and Russia are working together to deal with nuclear challenges like those posed by North Korea and Iran.

With respect to North Korea, the United States and Russia fully support the Six-Party Talks and will continue to cooperate in accordance with the agreements reached at them as well as the provisions of United Nations Security Council Resolution 1718 in order to achieve the ultimate goal of the denuclearization of the Korean Peninsula.

With respect to Iran, Russia and the United States are both committed to political and diplomatic efforts to find a negotiated solution under which Iran's nuclear program is exclusively for peaceful purposes and which prevents Iran’s acquisition of nuclear weapons. Both Russia and the United States agree that Iran must comply with its NPT, United Nations Security Council, and IAEA obligations. In particular, both our governments agree that Iran must suspend its proliferation-sensitive nuclear activities as required by UN Security Council Resolution 1737 and reiterated in Resolutions 1747 and 1803. Both countries are committed to a dual track strategy with respect to Iran of offering negotiations and incentives, and increasing pressure on Iran to take the steps necessary to begin those negotiations as expressed in the March 3, 2008 statement by the P5+1 Foreign Ministers.

As is the case with any two nations, the United States and Russia can and sometimes do differ on the means for accomplishing these shared goals.

With respect to the Bushehr issue in particular, which some have raised as an objection to bringing this agreement into force, the Administration examined this issue closely and determined that the steps Russia has put in place in its agreement with Iran mitigated our concerns. These measures included Russia’s supply and take back of spent fuel from Iran. These measures underscore the larger point that Iran does not need to possess the complete nuclear fuel cycle – including the proliferation risks posed by enrichment and reprocessing – to take advantage of the peaceful uses of nuclear energy.

Moreover, the Administration has reason to believe that U.S. willingness to enter into negotiations that Russia had long sought, as well as the U.S. decision to carry them forward to a successful conclusion, had a definite and positive impact on the way Russia came to regard certain nonproliferation issues and take steps to deal with them. I cannot go into the details here, but would note that the classified annex to the Nuclear Proliferation Assessment Statement, which the President has submitted to Congress together with the Agreement, covers these matters thoroughly.

In conclusion, let me say that this is a good, solid agreement. It contains all the necessary nonproliferation conditions and controls that Congress has written into law. This agreement helps us build a stronger relationship and areas of cooperation with Russia in mutually beneficial ways, advances our ability to combat the critical challenges of nuclear proliferation and nuclear terrorism in the 21st century, aids development of new nuclear energy technologies, and allows commercial opportunities for U.S. industry.

Mr. Chairman, thank you again for the opportunity to testify before the Committee. I would be happy to take any questions you have.

Released on June 12, 2008

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