Energy & Mining

A Deal Too Far?

US-Saudi nuclear cooperation

What does potential US involvement in Saudi Arabia's nuclear program mean for regional peace?

The Kingdom of Saudi Arabia is currently in discussions with officials in the US about the possibility of transferring nuclear technology.

The world’s top oil exporter claims it wants to tap atomic power to diversify its energy supply.

Though this is not new news in itself—Saudi Arabia has been periodically bringing up its nuclear ambitions for the best part of a decade—the Minister of Energy, Industry and Mineral Resources has been keen to emphasize that its ambitions are solely related to energy generation.

However, it wasn’t long ago that Saudi officials were hinting that if rival Iran’s nuclear capacities were not reined in, there would be nothing to stop them building their own arsenal.

Negotiations between the US and Saudi Arabia on an agreement for civil nuclear cooperation are ongoing. This type of agreement is often called a “123 agreement,” named after the section of the Atomic Energy Act that mandates such agreements for nuclear cooperation. If this contract is signed, it would enable US companies to participate in the Kingdom’s program by providing expertise or by directly getting involved in the construction process.

But the prospect of US technology being used to develop Saudi Arabia’s nuclear energy ambition will not go down well in Tehran.

Tension between Saudi Arabia and Iran is rising, with aggressive rhetoric escalating into proxy wars, bombs over Riyadh, and the not-so-subtle arms race developing between the two. The share of GDP spending on military budgets is not shrinking on either side.

And while allowing US companies to get involved in the Saudi nuclear industry would be emblematic of the

Trump administration’s transactional approach to foreign business, it is also indicative of its rather short-term memory.

Just two weeks ago Trump praised visiting President Nursultan Nazarbayev, “Together, we dismantled Kazakhstan’s nuclear weapons infrastructure and ensured a safer and healthier future for the children of Kazakhstan and for the world at large.”

Nazarbayev went on: “I think Kazakhstan has the moral right to talk to nations that are seeking nuclear weapons. And this is the way we’re talking to Iran, and this is the way we will be talking to North Korea.”

But it is unlikely that Iran will be dissuaded from developing nuclear energy infrastructure by Kazakhstan, particularly if Saudi Arabia continues to pursue the technology. Iran will only be antagonised by these US discussions.

It is worth noting that Saudi Arabia already has agreements with China, Russia, and France, meaning that each nation will be competing for Saudi nuclear contracts alongside the US.

Nonetheless, the ambition of Saudi Arabia to build at least 16 nuclear reactors is raising serious security concerns. The Institute for Science and International Security (ISIS) has noted that as nuclear technology is being scaled back in Iran, it is advancing in Saudi Arabia.

And for an industry that’s been struggling since the 2011 nuclear disaster in Japan, the prospect of 16-18 new reactors being built in Saudi Arabia is more than enticing.

With 17.6GW of nuclear capacity envisaged for 2032—the equivalent of 16 to 18 reactors—the kinds of annual losses recently suffered by firms like Westinghouse could be reduced.

Though nuclear energy is a contentious issue, particularly in Europe, US Energy Secretary Rick Perry sees American participation in the potentially lucrative Saudi nuclear energy market as a route to revitalizing a moribund US nuclear industry.

He visited Riyadh in December and indicated that he expected US-Saudi negotiations on a 123 agreement to get underway shortly.

It is likely that the US will risk upending the regional applecart for the sake of these business prospects, naturally making the possibility of lower tensions decidedly low.