March 5 (Bloomberg) -- Billionaire Warren Buffett’s plan to help the United Nations create a safe supply of enriched uranium is foundering because countries fear it will restrict their development of nuclear technology, officials and diplomats say.

Resistance among some emerging-market countries on the International Atomic Energy Agency’s 35-member board of governors is threatening to derail a $150 million plan that includes a $50 million pledge from Buffett and the rest from donors including the U.S. and the European Union, according to two UN officials and two diplomats with firsthand knowledge of the talks.

A nuclear-fuel bank, monitored by the Vienna-based IAEA, has been under discussion for decades as a way to assure supplies of reactor-grade uranium. The agency has promoted the establishment of a nuclear-fuel bank to dissuade countries such as Iran from setting up uranium programs that could be used to increase enrichment to the level required for atomic weapons.

“I remain convinced that a multilateral approach has great potential to facilitate the expanded use of nuclear energy for peaceful purposes,” IAEA Director-General Mohamed ElBaradei, 66, said this week at the agency’s Vienna offices. “This is a bold agenda and it is clearly not going to happen overnight.”

Rift Develops

A rift has developed between nations that have nuclear programs and those that don’t.

Countries that already enrich uranium favor the fuel bank because it may keep competitors from entering the market. About a third of the 30 countries that run nuclear power stations produce their own enriched uranium. The rest rely on the market for supplies from Europe, Japan and Russia. Those that plan programs say the fuel bank threatens their right to enrich uranium, guaranteed under the nuclear Non-Proliferation Treaty.

Buffett spokeswoman Carrie Kizer referred questions to the Nuclear Threat Initiative, the Washington-based arms control organization handling Buffett’s donation.

To access the money for the proposed fuel bank, countries won’t be required by the NTI to put aside their own uranium- enrichment programs, as originally envisioned, said Charles Curtis, an NTI co-chairman. An announcement by Kuwait that the desert kingdom will also contribute money to the project shows that the plan is gaining support, NTI spokeswoman Cathy Gwin said today by e-mail.

“It’s an issue of trust, and there’s been a lot of fraying of relationships between IAEA states,” said Curtis, deputy secretary of energy under President Bill Clinton. “I’d ask they reserve political judgment until they see what the terms and conditions are.”

The NTI wants ElBaradei to come up with a plan to administer the money, Curtis said. ElBaradei says there won’t be a plan until the board authorizes the agency to accept the money.

Members’ Resistance

Some IAEA member states have resisted giving any more than a token amount of funding because they fear endorsing the fuel bank will eventually place restrictions on their own enrichment programs, the officials said.

When Buffett and the NTI first offered the money in 2006, they envisioned that the enriched uranium would be available to countries “that have made the sovereign choice to develop their nuclear energy based on foreign sources of fuel-supply services and therefore have no indigenous enrichment facilities,” former U.S. Senator Sam Nunn, the other NTI co-chairman, said on the organization’s Web site.

Among the nations under scrutiny by the IAEA is Iran, which has produced enough low-grade enriched uranium to make a bomb if the material was enriched to weapons grade. Iran says it doesn’t seek atomic weapons and needs the uranium to fuel atomic reactors.

“It simply seems a real battlefield,” Iran’s IAEA ambassador, Aliasghar Soltanieh, told reporters yesterday. “Nuclear suppliers and nuclear recipients, nuclear-weapons states and non-nuclear-weapons states” are fighting over the future of the agency, he said.

Russian Plan

On Feb. 23, Russia submitted to the IAEA a separate plan for a nuclear fuel bank that provides for the enrichment of uranium in a shared facility in the Russian province of Angarsk, according to a restricted agency document obtained by Bloomberg News. Armenia, Kazakhstan and Ukraine are participating in the project, which doesn’t require them to give up their own enrichment technologies.

“We hope to see a tangible product emerge before the current era of agency leadership draws to a close,” the U.S. said in a statement to the IAEA board. The U.S. said it supports the Russian proposal and that it’s possible to implement more than one fuel-bank plan.

ElBaradei will retire from the agency in November after 12 years in office.

Buffett called his pledge “an investment in a safer world” when he made the promise to donate in September 2006. The 78- year-old chairman and chief executive officer of Berkshire Hathaway Inc. is the wealthiest American, according to Forbes magazine.

To contact the reporter on this story: Jonathan Tirone in Vienna at jtirone@bloomberg.net.

Last Updated: March 5, 2009 11:07 EST