American interests in the Gulf region, including advancing an accommodation between Saudi Arabia and Israel, have been undermined by the present quagmire. The Saudi priorities include protecting its infrastructure and addressing the danger posed by an Iranian nuclear weapon. The latter helps explain the kingdom’s pursuit of a nuclear program, including fuel reprocessing and enrichment, as a potential route to its own weapon. While China can probably do little to address the kingdom’s present security concerns, it looms large over Saudi nuclear ambitions.
In a recent piece, I explained why China would have been a significant beneficiary of the now-dead U.S.-Iran memorandum of understanding. Unfortunately, the fallout with Saudi Arabia over the nuclear deal creates yet another opportunity for Beijing to expand its influence — this time by supplying nuclear technology to the kingdom if there is no deal with the United States.
First, some background on the Saudi power sector. About 65% of Saudi power comes from natural gas, with most of the balance from oil. The kingdom’s Vision 2030 initiative calls for virtually all the oil firing to be replaced by natural gas and renewables by 2030. So, any post-2030 nuclear power would displace natural gas, which could be exported as LNG or petrochemicals. However, to do this, the kingdom would need about 35 GW of nuclear generation, which is over five times the capacity installed by the United Arab Emirates under its Barakah project, which took 15 years and roughly $30 billion. While the Saudis have time and money, it appears that nuclear power would be far more costly than the gas energy it would replace.
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As a result, national ego, regional rivalry with the UAE, or other factors are driving the kingdom’s nuclear aspirations, not economics.
The 2009 UAE-U.S. nuclear agreement (the 123 Agreement) required the UAE to renounce uranium enrichment and fuel processing and committed the UAE to the Nuclear Non-Proliferation Treaty Additional Protocol. Given these provisions, this agreement constitutes the “gold standard” for how to expand civilian nuclear power and represented an important step toward confidence-building between the countries, which later supported the UAE becoming a signatory to the Abraham Accords.
One would assume that the Saudi deal started with the UAE template, but at the end of the day, it included virtually none of these safeguards. Why? In principle, if Saudi leadership wishes to obtain a nuclear weapon, it can do so through Pakistan. Therefore, as the UAE did, it could have agreed to give up enrichment and reprocessing without precluding the acquisition of a weapon. Having the Saudi 123 Agreement follow the UAE example would also have eliminated a trigger for potential renegotiation of the UAE deal. However, these considerations were apparently not sufficient in the minds of Saudi leadership.
So, what is the China connection? Well, some 16 modern nuclear plants have been deployed in China based upon U.S. technology. In so doing, it has created the world’s leading nuclear supply chain and would likely be the most cost-competitive contractor for any Saudi nuclear program, absent any buy-America obligation. As a result, the Saudis know that they can look to China as an alternative. Further, it is far more likely that the Chinese will place little to no restriction on reprocessing and enrichment. So why not play hardball with the Trump administration on the nuclear deal and use the specter of Chinese nuclear supply to lever U.S. concessions?
The play almost worked until President Donald Trump demanded that the kingdom join the Abraham Accords, but this is a nonstarter. Article 2 requires that any signatory agree to mutual recognition and respect and “sovereignty.” While there could be support within the Saudi religious establishment for peace with Israel, the terms would probably require some obfuscation as to its permanency and it would need to avoid explicit recognition of Israeli sovereignty over former Muslim lands (i.e., Saudi Arabia is not going to become a party to the accords as presently constituted).
TRUMP IS RIGHT: GIVE SAUDI ARABIA NUCLEAR TECH BEFORE CHINA DOES
With all of this in mind, it is in the interest of the U.S. to solidify economic and security arrangements with the kingdom, including a Section 123 Agreement, and to create a pathway to peace with Israel. To this end, we should make clear that while the U.S. is supportive of a Saudi civilian nuclear program, we do not support fuel reprocessing or enrichment, and we require the kingdom to adhere to the International Atomic Energy Agency’s Additional Protocol or something equivalent. None of these provisions would block or otherwise undermine any legitimate Saudi effort to develop civilian nuclear power.
Finally, while a Saudi-Israeli accommodation should continue to be on the table, it appears impractical for any kind of peace agreement. However, the kingdom’s focus on nuclear power gives the administration some leverage in moving toward an acceptable framework that can be an adjunct to the accords and will prevent further Chinese inroads into the Gulf by ensuring that any Saudi reactors are supplied by the U.S. We should not undermine these negotiations with unrealistic demands. While it has never been more important for the U.S. to stand firm on key principles, it is necessary to ensure that we have flexible and innovative strategies.
Michael Schwartz is an energy sector executive and former Gerhard R. Andlinger Visiting Professor in Energy and Environmental Studies at Princeton University.
