01 November 2009

Iran position on nuclear deal no surprise

If there is any official involved in the recent nuclear negotiations with Iran who is surprised or disappointed by the Iranian rejection of the deal, they really should find some other way of earning a living. It is no surprise at all.

What has been under negotiation has been a proposed arrangement under which, rather than undertake further enrichment of its current stock of low-enriched uranium, Iran would export that uranium for enrichment to about 20% in Russia, after which it would be fabricated in France and returned as fuel elements for a high flux research and medical isotope production reactor. Details of the grounds for rejection are sketchy, but it seems that the issue turns on the fact that the U.S., Russian and French governments want the Iranians to export about three quarters of their current inventory of low-enriched uranium and await its return in fabricated form (see 29 October New York Times report here).

In the mind of the American officials involved in the negotiations, this will give the United States a year or so to seek a broader nuclear agreement with Iran while defusing the possibility that Israel might try to attack Iran’s nuclear installations before Iran gained more fuel and expertise.

Iran’s response seems to be to demand that fabricated fuel elements be handed over at the same time as it exports its low-enriched uranium. This is unacceptable to the other parties because to them the whole point of the exercise is to remove most of the Iranian inventory from Iran’s control.

Iran’s attitude to any proposal for dealing with its emerging nuclear technological capability will be governed by three headline considerations:

(1) Iran will not agree to any proposal which accords to it a status that is inferior to that of other nations. As is the case with China, Iran regards itself as the heir to one of the world’s great civilisations, and a country which was very much put upon by the West at a time when it was militarily weak. Over the last century or so it has known foreign military occupation (Britain and Russia), resource theft (the Anglo-Iranian Oil Company, now known as BP), intervention in its internal affairs (the 1953 overthrow by the CIA of the Mossadeq government), military invasion (Iraq, assisted in a variety of ways by the United States), and of course economic and financial sanctions (ongoing). Accordingly, it will not settle for any arrangement which it regards as humiliating, even if there are costs in rejecting what might look like an attractive deal.

(2) Iran lives under the constant threat of attack by Israel and will not do anything to limit the development of its military response options. I believe for a variety of reasons that Iran has not yet made a decision to move to a military nuclear capability, and is unlikely to do so if it feels it can avoid it, but the ambiguity about the extent of its nuclear capability is part of its deterrence strategy and it certainly will not make it explicit that most of its enriched uranium is beyond its reach.

(3) Iran has absolutely no reason to trust the West on this matter. In 1974, during the Shah’s time, Iran lent $US 1 billion to the French Atomic Energy Commission (CEA) to build its Eurodif enrichment facility (not a “reactor” as stated in the New York Times account referenced above), and acquired a 10 per cent indirect interest in Eurodif through the Franco-Iranian company Sofidif – a stake that still exists. Iran paid another $180 million for future enrichment services to fuel its nuclear power plants.

After the 1979 Islamic Revolution, the Khomeini regime cancelled the Shah’s nuclear program and sought refund of this investment. There followed a decade of bitter litigation, as a result of which Iran was reimbursed a total of $1.6 billion for its 1974 loan plus interest. It remains an indirect shareholder in Sofidif, but under the 1991 agreement which settled the litigation it has no access to technology and no right to take enriched uranium. It has the shareholder’s right to dividends, but financial sanctions against Iran mean that it cannot receive these dividends.

Iran also has a 15% stake in the Rossing uranium mine in Namibia, the world’s fifth largest uranium mine, of which the main other owners are Rio Tinto (68%) and the Government of Namibia (10%). This 2005 Reuter's report indicates that the Iranians regularly attend Directors’ meetings but do have not contracts for the purchase of uranium. It is ironic that a company partly owned by Iran, which sells uranium to the United States, would not, according to this report, sell uranium to Iran.

So a country which has for thirty years had a stake in one of the world’s largest uranium mines and in a uranium enrichment plant, but has seen those stakes effectively frozen all that time, is being asked to believe that it can “trust us” to look after its civil nuclear power needs. Iranian President Mahmoud Ahmadinejad has referred explicitly to this situation in his recent public comments.

When we buy a house, we meet the vendor and let go of the cheque as our hand closes around the title deed. No wonder Iran is not prepared to relinquish its uranium on the basis of a promise.

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