Global Insider: U.S.-Russia 123 Agreement

The Editors
27 Jan 2011

A civilian nuclear agreement between Russia and the U.S. recently entered into force. Signed in 2008, the 123 Agreement was revived by U.S. President Barack Obama as part of the U.S.-Russia reset. In an e-mail interview, Richard Weitz, senior fellow at the Hudson Institute and a World Politics Review senior editor, discussed the U.S.-Russia 123 Agreement.

WPR: What was the impetus for U.S.-Russia 123 Agreement?

Richard Weitz: Russian and U.S. officials wanted to improve their bilateral relationship, while their nuclear industries, two of the largest in the world, wanted to expand their commercial collaboration. Presidents George W. Bush and Vladimir Putin announced their intent to negotiate a U.S.-Russia Agreement for Peaceful Nuclear Cooperation on the sidelines of the July 2006 G-8 summit in St. Petersburg. Section 123 of the U.S. Atomic Energy Act requires the United States to negotiate a framework cooperation agreement (known as a "123 Agreement") with a foreign government before any exchange of U.S.-origin nuclear materials or technologies can occur. Since many nuclear reactors use U.S.-origin uranium or fuel that has been enriched in the United States, or other American-based technologies, these restrictions apply to many foreign nuclear programs.

WPR: What will the agreement mean for each side?

Weitz: This framework agreement establishes the legal basis for Russian and American companies to negotiate specific nuclear deals directly among themselves with limited government intervention. This will expand Russia's role as a provider of international nuclear-fuel services. Russia's nuclear-energy managers seek in particular to encourage the reprocessing of spent nuclear fuel that originated in the United States and was then used in third countries to generate electricity. Russia's government and nuclear industry could earn an estimated $10 billion to $20 billion from supplying additional nuclear-fuel-cycle services now that the 123 Agreement has established the legal foundation for such transfers.

U.S. officials hope the new partnership will enhance bilateral cooperation against nuclear proliferation. For example, they want to work with Russia's government and nuclear industry to develop advanced nuclear fuel cycles less prone to misuse in making weapons. They also hope to give Moscow some financial benefits from cooperating with Washington in the nuclear field in compensation for the recent reduction in Russian-Iranian nuclear and arms collaboration. The hope is that Russia's nuclear industry and government would not want to jeopardize a lucrative relationship with the United States by working too closely with Iran or taking other disruptive actions. American companies hope to partner with Russian firms to develop new products and also hope to sell Russia U.S.-made nuclear technologies.

WPR: How will the agreement affect U.S.-Russia energy and broader diplomatic relations?

Weitz: The 123 Agreement may prove even more important over the long term for the relationship than the better-known New START Treaty. Whereas the New START treaty looks backward and addresses the Soviet-U.S. Cold War legacy, the 123 agreement looks forward. It aims to create a foundation for future bilateral civil-nuclear cooperation and open new business opportunities that might expand the currently narrow constituencies in both countries that support close Russian-American economic and energy relations.