Nuclear Commerce

Magisterarbeit von Thomas Berndorfer

Abstract Peaceful and non-peaceful applications of nuclear technologies share a common fate: one cannot exist without the other. As the world is about to experience a nuclear renaissance, the nuclear industry has gone through a phase of consolidation. Despite more efficient intra-industry structures and technological advancements it will still not be able to close the increasing gap in energy demand to be expected in the near future. The economic attractiveness and relative absence of emissions still make atomic power an attractive candidate for an energy mix comprising several different ‘clean” technologies.

A renewed interest in nuclear energy will at the same time demand for a robust non-proliferation framework as a safety-guarantee for the market. Export controls have been found to be an effective tool in this regard. The Zangger Committee as the legitimate interpreter of the Non-Proliferation Treaty and the Nuclear Suppliers Group representing the most influential countries in nuclear commerce have established a system of checks and balances that may not halt proliferation altogether, but which has managed to slow it down significantly.

The effect of these control structures on the development of the nuclear market cannot be assessed directly. Political and security concerns particularly attributed to nuclear matters make their application a necessity for the existence of the commerce itself. Recent global efforts such as the United Nations Security Council Resolutions 1540 and 1673 are focusing on the implementation of common set of key elements for strategic trade controls. The success of these measures will have a direct impact on the sustainability of the nuclear renaissance

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THE LEGAL FRAMEWORK BEHIND THE NUCLEAR WORLD ”The first thing about nuclear commerce […] is that it is the most politically regulated commerce in the world, the most politically controlled commerce”. Bearing this in mind, the reader will be able to get a better grasp of the processes within the market.

What in the citation is referred to as politically controlled, is nothing else than a set of international rules that have to be followed within the nuclear sector. This set of rules, split up between different fields of application, form the central element around which nuclear deals are concluded. The nature of each rule varies. Unlike a firmly negotiated contract, internationally agreed understandings on a certain issue, often rely on other tools of enforcement than in international courts. The available means range from concepts like ‘name and shame”, when it comes to dispute in the area of soft law, and economic sanctions, to the ultimate option of military intervention. The emergence of institutions like the United Nations proves the fact, that the international community regards peaceful negotiations as their primary option of solving problems. Looking at the history of human conflicts, this way should be pursued more vigorously, with the goal of having to exhaust multilateral talks on all issues before embarking on the long and tragic way of military conflict. In the spirit of such an understanding, multilateral rules are set up to guide the socially minded world governments, enterprises and citizens.

Raison d’être of specialized legislation:

The apparent answer to the question of why the nuclear sector needs a special framework is imbedded in the double use of nuclear technology. The scenario of a transfer of technology from peaceful into military or rather terrorist channels has occurred before and remains a vision feared by many. To uphold a normal operation of the nuclear market, it has to be assured that there are measures in place that will prevent such a possible transfer.

The United Nations Security Council in its 4956th meeting in April 2004 discussed further co-operation in the field of export controls and affirmed that the proliferation of nuclear weapons, as well as their means of delivery, constitutes a threat to international peace and security. The conclusions made at this specific meeting will be further investigated at a later stage of this work. However, the preamble of the text states its support for the multilateral treaties already established in the context of nuclear proliferation and affirms the need for effective collectivistic actions.

A Security Council resolution is quite often a good indicator for what can be seen as of an urgent security matter. Legal frameworks established to prevent the above mentioned proliferation attempts, have only intermittently produced good results. The number of states which possess nuclear weapons has increased since the conclusion of the non-proliferation treaty (NPT), but it has remained at a comparatively low level. With up to 40 countries possessing the technical know-how to produce nuclear weapons, this can indeed be seen as a qualified success. Nevertheless, the inequalities and loopholes within the existing treaties remain and are continuously causing debate. The new power equilibriums emerging in our world, with developing nations such as China and India on the rise, will mean that those treaties will have to be reexamined and possibly renegotiated. This point of debate will have to be postponed for a little while, though and for now, a look at the existing texts has top priority. The central authority for nuclear affairs, the IAEA will be the starting point thereof.

The International Atomic Energy Agency:

It will be the aim of this sub-chapter to bring to the readers’ attention what the agency that is frequently called the world’s nuclear watchdog, actually is, how it evolved, in which fields it is engaged and finally how its decisions are made. The way the IAEA works is crucial for the understanding of treaties and groups that will be discussed later on. This is especially true for the governments which operate under its umbrella, but through the results of the policies and guidelines issued, the whole market in turn is shaped. The exploration of this interdependence constitutes the basic motivation for this work.

The IAEA, according to its own definition, is an independent intergovernmental, science and technology-based organization and part of the United Nations family with the status of a related organization, which serves as the global focal point for nuclear cooperation. The 143 nations that have become members are a clear sign that there was and still is a wish for such an authority. In fact the IAEA authority has expanded over the years. Consequently, member states have willingly accepted its role in fields as important as issues related to the nuclear arms race, an area that is not included in the statute. The history and the start of the evolution of the IAEA can all be tracked down to one important event in the past.

The Atoms for Peace speech:

The circumstances of the time during and after WW II shaped the idea for and the intention of the speech delivered by the then American President Dwight D. Eisenhower before the UN General Assembly on 8th December 1953. Particularly the famous series of four Einstein letters sent to President Roosevelt between 1939 and 1945, indicating the need for a coordinated government policy approach, has created new dynamics in the process. Already during the development of the nuclear bomb, there were major concerns about possible proliferation leaks within the system. For this reason the Manhattan project was kept at such a high security level that not even Vice-President Truman was informed about is establishment. However, it was at this time that the world saw or rather did not see its first nuclear proliferation accord, a secret agreement concluded in Quebec 1943 between the closest war allies, namely the United States, Great Britain and Canada. The main aim was not to communicate any atomic information or share any sensitive technology with third parties without mutual consent.

The measures were successful and prevented a dissemination of crucial data about the undertaking. As a result of their efforts, the Americans managed to build the first nuclear bomb and consequently, after destroying the two cities of Hiroshima and Nagasaki in August 1945, finally won the Pacific war. This did not solve the nuclear dilemma however. A commission was established to design an international control plan. The result of it was the Acheson-Lilienthal report which recognized the interchangeability and interdependence of atomic energy and atomic weaponry and concluded that trust in other countries should not be of an implicit nature, as even a primarily peaceful program could be used to construct nuclear weaponry. This version was revised under the proctorship of Bernard Baruch and was presented to the United Nations in June 1946. The plan known as Baruch-Plan suggested the following arrangements and thereby established the basis for many strategies which are still being followed today:

-international managerial control or ownership of all potentially dangerous atomic energy activities; -an international organization which would have the power to control, license, and inspect all peaceful atomic energy activities; -an international organization which would have the duty of fostering the beneficial uses of atomic energy; -an organization which would perform research and development tasks in order to keep it in the technical vanguard of atomic energy, so as to enable it to recognize misuse of atomic energy.

However, the Soviet Union rejected the proposal due to irreconcilable differences between the parties and therefore negotiations ceased. The US reaction of implementing a rigid system of export controls and buying up all available uranium and thorium in order to restrict worldwide proliferation ultimately could not be kept up continuously. The Soviet Union had caught up in the development of their nuclear capabilities and was also about to catch up on its ability to manufacture weapons grade uranium. The change of thought in the US was incorporated in the Atoms for Peace Speech and formed the starting point for the first successful international agreement to control the spread of nuclear weapons. The vision presented was not a disarmament plan but much rather a way to exploit the peaceful use of nuclear technology. The corner stones were to:

-encourage a global study of the most beneficial uses of atomic energy for peaceful purposes; -foster the view that the spread of nuclear weapons could be contained more appropriately by international cooperation in the peaceful uses of atomic energy under an international safeguards system; and -reduce the destructive capacity of the existing nuclear weapon stockpiles and promote positive dialogue on the central issues confronting humankind.

The response to the speech was considerable. The subsequent institution of the IAEA, but also the greater emphasis on the positive aspects of nuclear power, meant a reform of the way the topic was handled. Even though the agency did not come into life exactly as planned in the speech, mostly due to political reasons, it was this set of ideas which still reflect the agency’s fundamental ambitions