Iran Wanting What Argentina Got Shows Nuclear Market Precedent

War with an industrial power and nuclear technology developed under military rule doesn’t preclude a country from enriching uranium.

Just ask Argentina.

As world powers reached an impasse with Iran over the Persian Gulf country’s nuclear work, Argentina said it will become just the 11th nation to begin large-scale enrichment of the heavy metal used for industrial, medical and energy applications. It’s been producing enriched uranium on an experimental scale since the 1980s, the government said in a June 25 statement to the 48-nation Nuclear Suppliers Group meeting in Buenos Aires.

Rafael Mariano Grossi, Argentina’s International Atomic Energy Agency ambassador, said negotiators at loggerheads in Vienna should pay more attention to cases like his country, where scientists used nuclear research as a base to develop other technologies such as radar and satellites.

“In the mid-1980s, due to financial restrictions, the domestic nuclear program was paralyzed,” Grossi said in an interview from the Austrian capital, where he also chairs the Nuclear Suppliers Group that guards against unfettered access to atomic materials and technology. Key for the longevity of Argentina’s nuclear program was its ability to identify “products and expertise which were marketable,” he said.

Diplomats who haggled with Iran for 16 days in Vienna were hesitant to apply lessons from Argentina’s nuclear rehabilitation following its defeat by the U.K. in the 1982 Falkland War and subsequent transition to civilian rule. Nuclear dilemmas the globe is facing in Argentina and Iran are Sui Generis, or unique unto themselves, said a U.S. official at the Iran talks who asked not to be named.

Nuclear Lessons

“We’ve always been weak in learning the lessons from other nuclear cases,” the U.K.’s former ambassador to Iran, Richard Dalton, said in a telephone interview. Without a blueprint to go by, “dealing with Iran is very difficult.”

The Middle East nation says that international nuclear markets can’t be trusted to supply the fuel it needs. World powers point to Iran’s inconsistent history on issues of nuclear transparency to argue for higher verification standards before Iran can be trusted to wield the technology.

While touting promised access to more advanced nuclear technologies and the substantial economic benefits that a long-term accord would yield for Iran, the U.S. official said the Islamic Republic should under no condition be allowed to mount industrial-scale enrichment for at least a decade.

Rosatom Delivers

While Iran has mastered uranium-enrichment technology that can be used both to generate power and build weapons, it’s contractually bound until 2022 to buy high-precision fuel for its sole nuclear plant in Bushehr from Russia’s state-owned Rosatom Corp. Global nuclear vendors such as Rosatom, Areva SA (AREVA) and Toshiba Corp.’s Westinghouse Electric Corp. make money not only by selling reactors, but also by supplying the complex low-enriched-uranium fuel assemblies that power them.

After cracking the enrichment code in the 1980s, Argentina decided to forgo immediate expansion to industrial-scale enrichment, opting to concentrate resources on developing intellectual property around research reactors and fuel design, Grossi said.

“The strategy paid off and turned Argentina into a credible middle-size actor in the nuclear market with a clear niche and a growing capacity,” said Grossi, who also negotiated with the Islamic Republic as a former IAEA diplomat.

‘Generic Problem’

Argentina has sold, built and serviced reactors in Algeria, Australia, Egypt and Peru. Iran awarded Argentina a contract to modify its Tehran Research Reactor in 1987.

Frank von Hippel, a Princeton University physicist who has been advising U.S. nuclear policy makers for three decades, says negotiators risk missing another opportunity with Iran if they don’t start paying attention to historical precedents.

“Uranium enrichment is a generic problem, it’s not an Iranian problem,” von Hippel said in an interview. “It’s been recognized since 1946 as a dangerous technology. The Iran issue is more about national pride and not wanting to get gouged on prices by the Russians.”

When production begins at Argentine’s Pilcaniyeu enrichment facility, 60 kilometers (37 miles) outside Bariloche, it will use the gaseous diffusion enrichment technology that had been exclusively used to manufacture nuclear weapons when it was built.

Intelligence Failures

That shouldn’t necessarily worry the international community, according to William Miller, the U.S. diplomat appointed by President Jimmy Carter who was set to become America’s new ambassador to Iran before the 1979 Islamic Revolution intervened. Just as Argentina’s government transitioned from military to civilian rule, the nature of the Iranian regime has changed too, he said in an interview.

“Iran has developed from a revolutionary society into a stable democratic theocracy,” Miller said in an interview. “Today they’re the most stable country in the Middle East.”

The surprise revelation of Argentina’s enrichment program was one of history’s most “startling and dismaying failures of intelligence gathering,” according to a report published by the U.S. Department Energy. The threat of potential similar intelligence failures in Iran is driving concern among policy makers who want to prevent a secret Iranian breakout from its commitments and a race to nuclear weapons.

Amid the clamor around the Iranian nuclear program, world powers are learning how to regulate adversarial entry into the global enrichment-services market, said von Hippel, who was a science and technology adviser to President Bill Clinton.

“We shouldn’t let this kind of opportunity go to waste,” he said.

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

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Karl Maier, Leon Mangasarian

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