Next customer,please: The risk in conventional arms sales along with nuclear energy deals

Military needs meet energy needs

The connection between military partnerships and nuclear energy aid dates to the earliest years of atomic energy. President Dwight Eisenhower’s Atoms for Peace program, which began in 1953, was designed to win clients for US nuclear technologies and score a political advantage over Moscow. But in 1955, the Soviet Union followed suit with similar offers to its clients (Sexton, 1955). In fact, many former Warsaw Pact countries received nuclear power assistance from the Soviet Union. The recipients of both the Soviet and US programs often benefited from military partnerships with these two major nuclear suppliers. Today, for example, half of the 28 NATO countries have peaceful nuclear power programs; of these 14 programs, all have received help from either the US or the Soviet Union and now Russia. Also, other major non-NATO US allies such as Japan, South Korea, and Taiwan rely on nuclear power to generate significant portions of their electricity and have benefited significantly from peaceful nuclear energy cooperation with the US.

Partnerships with the US and the Soviet Union offered security benefits from the 1950s to the end of the Cold War. States within a military union pooled resources for common defense. Nuclear-armed members could extend their nuclear deterrents to non-nuclear armed members, thereby reducing the incentive for further nuclear weapons programs within a union. Indeed, many European states had explored these programs but refrained from pursuing them due to the perceived effectiveness of security assurances, the enactment of the 1970 Nuclear Non-Proliferation Treaty, and the economic costs. Since the official dissolution of the Soviet Union in 1991, several former Warsaw Pact states have joined NATO, thereby receiving US assurances of nuclear deterrence. And while the US and Russia are no longer enemies, political tension still exists between them. But the likelihood of thermonuclear war between the US and Russia has substantially decreased.

Today, instead of two superpower-backed military blocs competing against each other, we have a more complex security environment with growing global security concerns about nuclear proliferation and terrorism. And while Russia and the United States are still major providers of commercial nuclear technologies, as well as major sellers of conventional arms (the United States led the world in arms sales with about $100 billion in arms deliveries between 2001 and 2008), other states are now competing in these two lucrative fields (Grimmett, 2009). France, Japan, and South Korea have emerged in the past decade as leaders in the construction of nuclear reactors and provision of nuclear energy services. All three states have leveraged the nuclear technology assistance that they have received from the United States. While Japan and South Korea are not major arms suppliers, France has ranked in the top five global weapons suppliers during the past decade, along with the United Kingdom and Germany.

Global marketplace

While many countries across the globe are buying arms, the major recipients of these sales have been countries with growing nuclear power programs or a renewed interest in nuclear power. From 2001 to 2008, of the total $377.5 billion in arms deliveries worldwide, $116.9 billion worth of arms went to the top 10 recipients, which have or want to have nuclear power programs (Grimmett, 2009). These recipients from greatest to least were: Saudi Arabia, China, India, Egypt, Israel, the UAE, Taiwan, South Korea, Pakistan, and Malaysia. Of these, China, India, Taiwan, South Korea, and Pakistan have nuclear power programs and want to increase their numbers of nuclear plants. The remaining recipients— Saudi Arabia, Egypt, Israel, the UAE, and Malaysia—have all expressed interest in acquiring their first nuclear plants.

Major arms sales to most of these states have preceded by decades the renewed interest in nuclear power plants. Thus, interest in acquiring nuclear power or fears about neighboring states’ nuclear programs cannot account for all arms purchases. Just in the past decade, arms sales worldwide have substantially increased. From 2001 to 2004, there were $156.1 billion worth of global arms transfers, and in comparison, from 2005 to 2008, there were $221.4 billion worth of arms transfers (Grimmett, 2009). While many sales were to countries without little or no interest in acquiring nuclear power programs, sales to, for example, Middle Eastern states, many of which have recently expressed strong interest in peaceful nuclear power, have ramped up significantly. From 2001 to 2004, these states accounted for 42.4 percent ($33.9 billion) of all sales to the developing world, and from 2005 to 2008, their proportional purchases rose to 54.6 percent ($83.3 billion) (Grimmett, 2009). Similar trends have been evident in recent years in Southeast Asia and South Asia, where interest is growing in expanding or starting nuclear power programs.

Faced with simultaneous increases in purchases of conventional weapons and interest in nuclear power, leaders of states in the Middle East, Southeast Asia, and South Asia will have to make tough decisions about how to respond to these events. As the following overview of recent developments in these regions indicates, these leaders are acquiring conventional weapons usually to deter their neighbors from conventional or nuclear attack, and sometimes for power projection to control strategic bodies of water, such as the Persian Gulf, the Indian Ocean, and the South China Sea. The latter development could lead to greater probability of conventional armed conflict. And disparities in conventional military strength could increase neighboring states’ rationales for acquiring nuclear weapons.

UAE

The UAE illustrates the fierce competition for conventional arms, closer military relations, and nuclear reactors. In January 2008, Sarkozy traveled to Saudi Arabia, Qatar, and the UAE. At all three stops he received expressions of interest in French nuclear energy. The glittering gem was the UAE, because it was most eager to move forward with buying nuclear power plants. The UAE also offered the prize of a military base for France. The Abu Dhabi visit appeared to give Sarkozy both a lucrative nuclear energy deal and a military stronghold in the Persian Gulf through which 40 percent of the world’s oil travels. But while Sarkozy rejoiced in May 2009 when opening a military base dubbed Peace Camp, the UAE ultimately accepted South Korea’s offer to build four nuclear power reactors for up to $40 billion. Areva, the French nuclear energy corporate giant, had offered the Evolutionary Power Reactor (EPR), but its higher cost gave the Koreans the edge.

The United States, the UAE’s primary arms supplier and a major ally, also lost out on the reactor sales. US nuclear energy companies Westinghouse and General Electric have in recent years formed consortia with, respectively, the Japanese companies Toshiba and Hitachi. These two consortia also underscore the close ties between allies established over decades of cooperation in military partnerships and nuclear energy development.

Saudi Arabia

Just as France has attempted to make both nuclear and military inroads with the UAE, Russia has tried to do the same with Saudi Arabia, a longtime major buyer of US military equipment. Moscow has so far only received strong Saudi interest in military assistance ( Agence France Presse, 2009); in 2008, Riyadh signed a military cooperation agreement with Moscow and in 2009, moved to sign a deal worth more than $2 billion to buy Russian arms that could include advanced S-400 air defense missiles (Handley, 2009). These missiles would help shore up Saudi defenses against Iran. As yet, Russia has not delivered this missile system to Saudi Arabia.

Russia has also signed a deal to deliver advanced air defense systems to Iran, which clearly wants them to protect its nuclear sites. But under diplomatic pressure from Washington, Moscow has put this deal on hold. Russia has had extensive involvement in Iran’s nuclear sector in building and supplying fuel for the Bushehr Nuclear Power Plant. Saudi officials reportedly want Russia to apply more pressure on Iran to stop its nuclear program in exchange for more arms deals (Brooks, 2009). But Moscow has not moved forward on these discussions and, for now, appears content to play the two countries against each other.

Despite the Saudi tilt toward Moscow, Riyadh still relies on the United States for most of its arms. All three major nuclear suppliers—France, Russia, and the United States—have signaled interest in providing nuclear power to Saudi Arabia. While it has not chosen a nuclear reactor provider, it has decided to build the King Abdullah City for Nuclear and Renewable Energy in Riyadh and has hired foreign consulting firms to lay the foundation for a nuclear power program.

Arab states

Saudi Arabia and other Arab states near Iran are pursuing three conventional defense paths: increasing arms purchases from a variety of suppliers, reaffirming alliances with the United States, and forming or exploring new military relationships such as the one between France and the UAE. But these paths may not provide adequate security to counter a potentially nuclear-armed Iran. As a consequence, the Arab states may in addition seek protection via two nuclear routes. First, they may eventually use peaceful nuclear power programs to make nuclear weapons. But this route is politically arduous because these states would have to violate their nonproliferation agreements. And it would take years to decades for these states to acquire the technical wherewithal to build nuclear weapons.

Second, to achieve faster nuclear defenses, they may request nuclear-armed allies such as the United States to provide formal extended nuclear deterrence agreements. But unlike NATO states, which have such an agreement with the United States, the Arab states are undemocratic regimes. Any US administration may therefore have a difficult time garnering congressional and public support for offering a credible nuclear deterrent agreement to these states. The United States would likely not want to risk an attack on Washington for the nuclear defense of Abu Dhabi or Riyadh. But without such an agreement, these states may eventually decide to develop nuclear weapons programs to protect themselves against Iran, if it acquires nuclear arms. They could emulate India, Israel, or North Korea and obtain a “starter kit”—a research reactor with a thermal power rating of at least 20 megawatts. Such a reactor could produce about one bomb’s worth of plutonium annually.

Thailand and Vietnam

While Southeast Asian states do not face an overt nuclear threat, they still confront a daunting geopolitical reality. Like the Middle East, Southeast Asia may be on the verge of a conventional arms race. Vietnam has recently made large arms purchases from Russia, a patron during the Cold War. The most worrisome aspect of the arms sale is the advanced capability of the weapons systems. In particular, Hanoi has bought a squadron of SU30 fighter jets and six kilo-class diesel submarines ( Agence France Presse, 2010). With these weapons, Vietnam can project power into the South China Sea to the disputed shoals and offshore islands of the Paracels and Spratlys. The waters surrounding these islands are rich in oil and natural gas. China also lays claim to these territories. Thailand, which has resisted buying submarines, is starting to feel the pressure to match Vietnam’s new capabilities ( Bangkok Post, 2009).

Thailand and Vietnam are already vying for nuclear power plants. Russian military assistance has given Moscow the edge in securing a nuclear power deal with Hanoi. Their memorandum of cooperation on nuclear energy came at the same time as the military purchase agreement. China, France, Japan, South Korea, and the United States have also expressed interest in supplying nuclear technology to Vietnam. In addition, Russia and the United States are competing for nuclear deals in Thailand.

Burma

Perhaps more worrisome than weapons sales to Thailand and Vietnam, Russia has engaged in nuclear and military deals with Burma. The military junta that controls Burma recently bought 20 MiG-29 fighter jets from Russia. Earlier in the decade, Moscow agreed to sell a 10-megawatt research reactor to Burma. Although late last year and earlier this year concerns were raised that Burma had begun a nuclear weapons program, that country appears to lack the needed infrastructure and highly trained engineers and scientists. Reports indicate, however, that since 2001, Moscow has educated hundreds of Burmese scientists and engineers about nuclear technologies (Albright et al., 2010). There is no evidence that Moscow made the nuclear and military sales contingent on each other. Nonetheless, it is disturbing that Russia would peddle either nuclear or military technologies to Burma.

India and Pakistan

In neighboring South Asia, a highly controversial nuclear deal has also occurred in parallel with increased arms sales. In late 2008, India was finally exempted by the Nuclear Suppliers Group (NSG)—the multinational body that attempts to secure and control the movement of materials used in nuclear weapons—from the group’s guidelines requiring all countries receiving nuclear technologies to employ full-scope safeguards. The NSG was formed in the mid-1970s largely in response to India’s 1974 nuclear test, which used plutonium produced from a Canadian-supplied research reactor. (Today, states may still try to use this route but would have to subvert nuclear safeguards and monitoring by the International Atomic Energy Agency). Because of India’s nuclear weapons program, the NSG had blocked New Delhi from nuclear commerce.

From 2005 through 2008, the Bush administration spent considerable diplomatic capital making India eligible for commercial nuclear technologies while retaining its weapons program. Administration officials justified this initiative partly on the grounds that India needed additional nuclear power plants and that US nuclear companies would likely gain a significant slice of any deals. But this year, the Indian parliament refused to back a nuclear liability agreement that US vendors needed to provide adequate legal protection for their work in India. Consequently, US nuclear companies may not sell any reactors to India. But US defense contractors have already made billions of dollars in arms sales, including sales of Boeing’s advanced aircraft (Wax, 2009). While lucrative for these companies, the strategic objective of selling US conventional arms to India is to balance a rising China.

Pakistan, in response, has asked for its own nuclear and conventional weapons deals. China has renewed support for Pakistan’s nuclear power sector although Islamabad has not been granted an exemption from the NSG. Although Washington has provided military assistance to Islamabad, Pakistan’s military is caught between the Scylla of Indian military superiority and the Charybdis of Afghan terrorists and instability. Thus, Pakistan seeks increased nuclear weapons capabilities to at least counter India’s strength.

Conclusion

Nuclear energy deals will likely result in changing security perceptions and shifting security alliances. Military and nuclear suppliers have incentives to sell conventional arms and nuclear technologies to clients. But both suppliers and clients need to be aware of the potential security consequences. Neighbors, for instance, may feel compelled to acquire more advanced weapons and move toward latent nuclear weapons programs. A conventional or nuclear arms race may not result in armed conflict, but would divert scarce resources— especially in the developing world— from the civilian economy.