Banking against the new age of nuclear terror

A Q&A with former Energy Secretary Ernest Moniz on Iran, North Korea and a new uranium “bank” to keep peaceful energy programs peaceful.

Arguably, nuclear weapons are now a greater threat to the U.S. and the world than at any time since the end of the Cold War. Actually, it’s not even arguable: North Korea is showering the Pacific with nuclear-capable missiles; South Korea and Japan may in turn pursue their own programs; President Donald Trump is again talking of ripping up the Iran nuclear pact; the Tehran regime is illegally testing its own ballistic arsenal; nuclear-armed Pakistan’s increasingly volatile politics raise a threat to India and beyond; Russia’s Vladimir Putin is eyeing a Soviet-style buildup; China is building nuclear-capable submarines; and there is always the worry that terrorist groups might get their hands on enough radiological material to craft a “dirty bomb.”

Yet here’s some good news: On Tuesday, the International Atomic Energy Agency will officially open the world’s first “bank” for enriched nuclear fuel in Kazakhstan. The LEU facility is an important option for countries that want the benefits of peaceful nuclear energy, without the significant costs of uranium enrichment and without the risks of proliferation. Low-enriched uranium is needed for peaceful reactors, and the bank says it will provide an assured international supply of nuclear fuel on a nondiscriminatory, nonpolitical basis in the event of a supply disruption.

While many nations and groups — including the European Union, Norway, the United Arab Emirates, Kazakhstan and Kuwait — deserve credit for the bank’s creation, special mention goes to two great Americans: former Senator Sam Nunn of Georgia and a fellow from Nebraska more familiar to Bloomberg readers for his success in other fields, Warren Buffett.

Buffett put up an initial $50 million for the bank, which other donors matched two-for-one. Nunn, who for decades was Congress’s leading light on military issues, is the founder, along with Ted Turner, of the Nuclear Threat Initiative, a nonprofit group that has done much of the legwork on efforts to keep nuclear material out of the hands of terrorists. (Take a moment to check out its Nuclear Security Index, an interactive graphic on global risks of theft and sabotage involving fissile materials.)

Another great American, Ernest Moniz, a longtime nuclear scientist at the Massachusetts Institute of Technology who most recently served as President Barack Obama’s secretary of energy, is now the Chief Executive Officer of NTI. (He has also won the coveted “Best Hair at the State of the Union” award from USA Today.) Before Moniz headed off to Central Asia for the big event, we had a wide-ranging chat about the most pressing global threats related to nuclear threats. Here is an edited version of the interview:

Tobin Harshaw: We are going to talk primarily about your new project, the LEU bank, and its role in global nonproliferation. But I think it might help first if we give readers a quick briefing on the role of the Energy Department in the U.S. nuclear weapons program. In a nutshell: When did that start, what does it encompass, and why doesn’t the Pentagon have the entire program under its control?

Ernest Moniz: The history of Department of Energy has two threads, one of which goes back to the Manhattan Project during World War II and then the now-defunct Atomic Energy Commission and eventually DOE. The challenges in nuclear security evolved, and as the Cold War ended, there was a new focus on the security and safety of weapons and nuclear material globally. DOE’s role involved reducing threats as well as maintaining the U.S. military deterrent. Sustaining the stockpile is not in the Pentagon because its stewardship is a science and technology job suited to DoE National Laboratories.

The second major thread came in 1970s with the oil embargoes and other energy crises. That led to official creation of the department in 1977, which took in offices from elsewhere such as the Interior Department while new regulatory structures were established.

TH: So what is the full extent of the department’s role in terms of the nuclear deterrent?

EM: Today about 62 percent of the DoE’s annual spending is considered part of the national security budget. Including clean-up costs, this is about $18.5 billion, of which nuclear security is over $12 billion. This involves maintaining the stockpile — making sure the deterrent is safe, secure and reliable without having to do any testing, which is very important – and securing and eliminating nuclear weapons-usable materials across the world. The department also has a shared responsibility with the Navy to provide the propulsion for nuclear-powered aircraft carriers and submarines.

TH: I want to bring up a paradox: Even as the U.S. hopes to tamp down on the spread of nukes around the world, the Pentagon has started a $1 trillion modernization of its arsenal. This was initiated under President Obama, who famously won a Nobel Peace Prize for efforts to rid the world of nuclear weapons. As a former member of his administration, can you explain why the modernization is necessary?

EM: They are quite different issues. I don’t like to call it a “modernization program,” because it implies in some minds that this is a whole brand new arsenal. For the DoE, this is really about upgrading the facilities and doing life-extension programs for the weapons without having to do any tests. For the military, it’s about improving the delivery systems, not new nuclear bombs.

It is expensive, and the Energy Department cost is expected to be about $80 billion over decades. But as secretary of energy, I had a hard time accepting our workers going into 50- to 60-year-old buildings doing high-hazard work. There are tremendous safety issues. Even now, we won’t be able to adequately replace the uranium facility at Oak Ridge, Tennessee, until 2025.

We fully support and endorse working toward the vision of a world without nuclear weapons, and we want to continue the lowering of their profile in our national security posture. But no serious person feels we can reach that goal in less than decades. As long as they are our fundamental deterrent, we have to make sure they are safe and reliable and that the workforce is in a safe environment.

TH: OK, let’s move on to the new project. Give us a brief explanation of the LEU bank, and how it can help in trying to keep a lid on global proliferation and keep nuclear material from getting in the wrong hands.

EM: The issue, particularly as nuclear power emerges in different countries that have not had it, is the security of the fuel supply. And that is where the bank comes in. The IAEA owns the bank, and any country in good standing on its nonproliferation agreements is eligible to use the material in the bank for its energy program if there is a breakdown in the commercial supply chain. This gives nations no reason to pursue a concerning — and economically nonsensical — development of indigenous enrichment capacity.

TH: Where will it come from?

EM: The IAEA is going out for proposals, and countries will make bids. Under the schedule, we hope to have all the material in hand by the end of year. It will come from commercial fuel suppliers or consortia. Kazakhstan is hosting the bank and has been an enormously positive influence on nonproliferation efforts worldwide since its independence from the Soviet Union.

TH: So the big worry is that, otherwise, nations would start enriching on their own?

EM: It’s that there could be a lot of claims from these countries that they need their own enrichment programs because of insecure supplies. With the availability of the bank, and the clearly bad economics of developing an enrichment program for a small nuclear program, it would be an obvious concern now if a country went ahead anyway. The question they will face is: Why are you doing this?

TH: What are some of the nations with nascent energy programs the bank is geared to?

EM: For example, Mexico has a very small program. The UAE is now building South Korean reactors. The Russians are selling to Eastern Europe and elsewhere. And now in the Middle East, there are at least nominal agreements with Egypt, Saudi Arabia and Turkey for building Russian reactors. The Russians would prefer to be the sole fuel suppliers for those plants going forward, but a country could be concerned if it’s tied to just one supplier, which is where the fuel bank comes in — as a backup should there be any cutoff in supply.

TH: Congratulations, then, on the bank, and on NTI’s other efforts to lower future threats. Now let’s talk about current concerns. First, how much does the idea of terrorists getting their hands on a weapon or a so-called “dirty bomb” worry you?

EM: There is a special risk of terrorists and dirty bombs. Indeed it’s another area where NTI focuses, because it’s not only a question of power and weapons, there is also a very large use of radioisotopes in medicine, industrial work, oil and gas. These radioisotopes could be very dangerous in the wrong hands.

One of the areas NTI has been working on with success is to encourage governments — especially mayors and governors — to work toward the replacement of cesium-137, which is used for blood irradiation and other treatments, with X-rays, which do not provide this sort of risk. The costs of replacing the cesium sources with X-rays are reasonable once you consider you don’t need the type of security you need to ensure the radioisotopes stay where they are. You may have seen the stories about when ISIS had control of Mosul, which had a substantial cobalt-60 source that could have been used for a dirty bomb. Perhaps they didn’t know how to handle it. Some counties in Europe have moved to eliminate these materials, and we should do so as well.

TH: You were a big supporter of the Iran nuclear deal. At its second anniversary, have things turned out as you hoped?

EM: They have, in the sense that the IAEA continues to provide the data that indicate full compliance. That is where I hoped we would be and are. But we are not there in terms of a lot of the political discussion, particularly in terms of the possibility of Trump withdrawing, which would be a very bad decision. It would ironically isolate the U.S. Because as long as Iran complies, the Europeans and others will continue to deal with Iran, but it will have justification for wriggling out of one or more of the stipulations.

TH: Last, before you rush to the holiday hotspot of Astana, Kazakhstan, let’s briefly talk North Korea. The consensus among experts seems to be that we will just have to live in a world where Kim Jong Un has nukes. Do you agree?

EM: Well I think certainly a lot of the language being used today is not helpful. But I think we cannot let go of the vision of a denuclearized peninsula, just as we cannot give up on the vision of a denuclearized world.

Going back to 1990s, I do not believe we have addressed the North Korea situation in a broad enough way — that is, I don’t think we can have security and stability there unless we address in a serious way the legitimate security concerns of North and South Korea, China and Japan. And also the Russian and U.S. postures. At its core, we need to broaden discussion beyond nukes to the full security discussion of those four neighbors. Until there is stability and a feeling of full trust there of all the regional parties, progress on denuclearization will be difficult at best.

Courtesy Bloomberg