The Assured Nuclear Fuel Services Initiative (ANFSI) would ensure that “user states”, states that do not currently posses uranium enrichment or plutonium reprocessing facilities, could obtain cost-effective, guaranteed access to nuclear fuel as well as guaranteed removal of spent fuel waste in exchange for an agreement not to obtain enrichment facilities or related technology. In addition, “fuel cycle states”, countries that possess enrichment facilities and fuel for nuclear reactors, would provide life-time assurances to user states to provide them with fuel and removal of spent fuel.

If a “fuel cycle initiative” is presented there will be a non proliferation “plus” situation rather then a non proliferation “minus” scenario. Such a proposal cannot be framed in the context of “trusted states” versus “other states” as in the Non-Proliferation treaty (NPT). Because of the first three assumptions mentioned above, a new deal must be struck to create a positive-sum game. These deals must be government-to-government agreements, and not necessarily an over arching global government initiative. Agreement must be voluntary, user states must agree to abate for a specified period of time (10-15 years, for example) any plans to pursue uranium or plutonium processing capabilities. Further, every state involved in the program must be a signatory to the NPT.

The primary benefit of this proposal to the user state is the guarantee of fuel access and spent fuel take back. Fuel cycle states which sign on will offer user states nuclear services from “cradle to grave” for any nuclear power plant that they build on attractive terms. These states will benefit from the increased revenue of fuel sales and will have the reassurance that the chances of a “proliferation Chernobyl” - a proliferation incident in a third country – are reduced. Such an accident would create intrinsic harm from a security and human rights standpoint which could mean the end of nuclear energy for decades. This threat emanates anywhere that nuclear energy can be diverted.

There are three major challenges that must be explored before the ANFSI can be put into practice. The largest issue is guaranteeing the security of fuel supply. Further, a transactional setting in which there exists a willing buyer and willing seller needs to be cultivated and developed. There cannot be material movement without a commercial contract. 1.

To create a commercial contract that is secure for all parties, a layered guarantees contract is critical. This is comprised of a commercial contract combined with a national guarantee. Mr. Poneman recommends government-to-government bilateral guarantees to assure confidence in the commercial contracts. To add an additional layer of security, multilateral guaranteed agreements would be used to monitor state behavior, and could potentially “backstop” i.e. level the irregularities of supply. The International Atomic Energy Agency (IAEA) could be the overseeing body to monitor compliance with the initiative.

Poneman added that there is a need for international technological leadership. Some states are using sixty year-old technology. Anxiety and concern over technology loss in user and fuel cycle states can be mitigated through an international cooperative fuel program. This is a temporary agreement and does not necessitate amendment of the NPT. In agreeing to participate in the Assured Nuclear Fuel Services Initiative, states are agreeing to maintain their technology while receiving the benefits supplementary fuel cell technology, preserving their technological options for the future.

There are many incentives to join the program. First, fuel cycle states will guarantee to remove from user states the burden of spent fuel storage, removing any physical liability. Fuel cycle states will not freely distribute fuel cells as most countries, and consumers are weary of something that is freely given and could be equally freely taken. Poneman stresses that all fuel transactions must take place in a commercial marketplace. Additionally the program should capitalize on existing market enhancing programs that create incentives to augment the attractiveness of the offer without compromising the overarching non proliferation goals.

There are situations where this proposal is immediately applicable. There is an opportunity based on recent dealings between the United States, the European Union and Russia to use this program in Iran. In Brazil, too, there is an opportunity for their leadership to capitalize.

There is currently a technological divide that must be acknowledged. Eighty-five percent of today’s nuclear energy capacity is located in China, Europe, India, Iran, Japan and the United. According to research by Ernest Muniz, a professor of Physics and Director of Energy Studies at the Massachusetts Institute of Technology, a nation must produce at least 25,000 megawatts of energy to economically rationalize indigenous enrichment and reproduction facilities. Remarks

Charles Ferguson asked Poneman to explain the relationship between the growth of nuclear power and the reduction in global warming.

Poneman asserted that global warming cannot be reduced without considering a significant expansion of nuclear energy. The Kyoto protocol has not deal with this issue because traditional environmentalists do not consider nuclear energy a safe alternative to incorporate into a solution to global warming.

A representative from the Japan Atomic Industrial Forum remarked that effectively exchanging carbon credits is a complicated and a far-fetched idea, although the United States is interested in increased nuclear energy production as a solution to global warming. Further, the European Union does not recognize nuclear energy as a potential solution to environmental problems, rather they perceive it as part of the non-proliferation challenge.

Daniel Poneman added that it is imperative to engage heads of state in addition to the nuclear industry in order to move beyond the energy security issue.

A participant asked a scholar from the Carnegie Endowment for International Peace how Russian leadership had responded to their potential role in circumventing back-end fuel cycle proliferation challenges in Iran.

The scholar added that the Russians just put the joint statement on the negotiating table approximately three weeks ago. It is unclear whether the acceleration process outlined by the 2008 deadline can be met. Conclusion by 2012 may be more realistic. Additionally, there is a contrast between Russian public opinion and Russian policy.

Charles Ferguson added that if one carefully examines the recent Bush-Putin agreement, the joint statement does not contribute anything new. UN resolution 1540 calls for an acceleration of securing nuclear facilities in Russia. The timeline for completion remains 2008.

Another expert from the Carnegie Endowment for International Peace asked what the minimum U.S. expectation is from Iran.

Daniel Poneman asserted that processing at the Bushir reactor must stop and that development outside of Bushir must end. UNSCR 123 must be implemented outside of Bushir and ballistic missile development must cease.

The scholar reported that in response to the idea of technological fairness and asymmetry, the Iranians realize that their technological prowess is not on par, but they also realize that although their technology is sixty years behind, it is still appropriate for their status and their country. Nations must recognize that there is a large difference between the technological status in rich countries and in poorer countries and that each country’s technology is different and unique. The leadership in Moscow is generally positive and interested in the constructive role they could play, however, they remain skeptical on supply security.

Poneman believes that the market sharing incentives will not be attractive unless all viable companies are competing and participating. Additionally, care must be taken in interacting with differing technological levels and appropriate technology for different countries. This is imperative is to foster independence among nations in developing technology, so that they do not begin to sell what they develop independently to non-NPT member nations. Poneman reiterates that the current proliferation challenges in Russia and Iran are met perfectly by this proposal.

A former Secretary of Defense agreed that environmentalists should support nuclear energy as a solution to some environmental problems. He believes that the issues raised in this paper are only one element of the problem of proliferation – in a wider scheme greater efforts at reducing nuclear proliferation must be made. To emphasize the threat of nuclear terrorism, he cited recent statements by William J. Perry, former Secretary of Defense and Graham Allison, author of Nuclear Terrorism. In the last six months, both have stressed that “there is a greater than fifty percent chance of a nuclear attack on US soil within this decade.” The Secretary stated that the problem of proliferation is not receiving the attention that it needs, and will not receive this attention until the issue is wrapped up in a much larger issue and is spear-headed by a senior government official whose sole job is to deal with nuclear proliferation. At this juncture, he asserted, the name of the person in government right now dealing with these issues is unknown, implying that he or she is clearly not at a high enough level of government. Proliferation, he stressed, is not under control today.

Charles Ferguson asked if, in the future, countries that develop nuclear energy technology will be able to join programs such as the one proposed in this paper. Poneman responded that there is a political aspect of this program as well. Even the most trusted nations will change their opinions and their dealings when different issues or nations are brought to the table (ex: Japan, North Korea, and the U.S.) Political turnover occurs much slower than nuclear turnover. Potentially, regimes that may not remain in power will outlast nuclear turnover and will remain in power long enough to make a difference in the nuclear balance of power. To keep the program moving we must deal bilaterally or through our existing six-party agreements.

An expert from the Japan Atomic Industrial Forum (JAIF) emphasized that business perspectives and interests should be kept at the forefront to provide incentives to participate rather than simply trying to prevent proliferation charitably.

Poneman agreed, adding four points. First, nuclear proliferation is bad for business. Some companies, however, find aspects of proliferation advantageous. This proposal stresses that every aspect of multilateral agreements be market based. If a reasonably priced solution is provided, there will be no need for a front-end solution because finding the back-end solution will satisfy the primary fuel cycle proliferation challenge. To move forward, one must start with a willing buyer and seller.

Further, the role of government in commerce must be examined. Industry must be attracted to the proposal. If a nation is offered an attractive commercial fuel deal and rejects it, then the burden shifts to the country to explain why the deal or exchange is un acceptable to them. They then must present these arguments to an international body, such as the United Nations Security Council. To put the described scenario in context, in such a circumstance the UNSC could ask Iran to clarify their position and nuclear intentions.