In 2007, Henry Sokolski, Executive Director of the Non-proliferation Policy Education Center, presented testimony before the House Committee on Foreign Affairs which he entitled “Market-Based Nonproliferation.”   In that testimony, Sokolski argued that the full costs of nuclear power would be evidenced in a world without government subsidization of nuclear power, and this change would result in fewer nuclear reactors and associated fuel cycle activities from which proliferation could occur.  Sokolski was not the only one to express concern relating to increased proliferation risks associated with the expansion of nuclear power; this was the subject of a report by the Congressional Re-search Service in 2008 during a period of rekindled interest in new reactor construction.

Under Sokolski’s thesis, there should be fewer proliferation risks now that the “nuclear renaissance” has not materialized to the extent seen in this earlier period.   However, the Sokolski view is not the only or even the best expression of market-based nonproliferation.  Even though nuclear power growth has faltered in the aftermath of Fukushima, it is difficult to discern any change to proliferation risks.  Indeed, the linkage between nuclear power and nonproliferation may be the exact opposite of what Sokolski contends; that is, non-proliferation goals are enhanced when there is more nuclear power, not less.

We would argue that a much better example of using markets to further nonproliferation goals was the HEU deal, where a massive nonproliferation effort depended on sale of blended-down Russian highly-enriched uranium (HEU) into the commercial nuclear fuel market.  This is pretty much the antithesis of the Sokolski view of market-based nonproliferation as fewer reactors would result in a smaller market for transformed nuclear weapons material, and certainly the absence of commercial nuclear power and the associated nuclear fuel market would have meant that no HEU deal was possible.

There is another type of market-based nonproliferation that has emerged today, and that relates to President Trump’s policy of withholding access to markets via sanctions to effectuate nonproliferation goals while at the same time offering expansion of economic growth and prosperity for a country if it foreswears nuclear weapons.  The two main targets of this policy are Iran and North Korea.

Whether or not the Trump approach proves to be a prudent policy remains to be seen, but any such approach must guard against the potential for deleterious effects that could harm specific markets.  In this regard, if tariffs harmed nuclear trade to the point where they caused the premature shutdown of reactors or negatively impacted the commercial nuclear industry, then they may be self-defeating to a degree.

Richard Rhodes, author of Making of the Atomic Bomb, and Michael Shellenberger present an interesting take on this problem in their article, “Atoms for Pyongyang.”   In a position opposite to Sokolski’s, they propose nuclear power for North Korea as a way of abating proliferation risks by substituting, at least partially, the positive impacts of peaceful nuclear power for the pursuit of nuclear weapons.

An expansion of nuclear power would certainly support the promise of economic development and prosperity that President Trump touts.  Even if such a straight trade of foreswearing nuclear weapons in return for nuclear power could not be achieved, such a program would be a success if it resulted in a slowing of North Korea’s nuclear weapons’ buildup.

Further, the second-order effects of such an approach should not be discounted.  Economic development associated with electricity generated by nuclear power would increase the standard of living of the North Korean people and could eventually lead to an improved political structure for the country as the authors note. We would maintain that this maxim is not limited to North Korea but applies to all countries that pursue peaceful nuclear power.

Rhodes and Shellenberger point out that their suggested approach for North Korea would be a literal fulfillment of Eisenhower’s Atoms for Peace speech, in that it would help turn the focus away from nuclear weapons and towards nuclear power and bring much needed electricity to “the power-starved areas of the world,” for which North Korea is the poster child.

While the concept of market-based nonproliferation may mean different things to different people, it can be argued that markets have a powerful role to play in furthering non-proliferation goals on both a micro and macro level.  This proposition is certainly supported by the success of the HEU deal and is currently being tested by President Trump’s market-dependent initiatives.  It is important to think about the linkage between markets and nonproliferation in the correct way and consider creative approaches to make this linkage more productive.  In this regard, formal markets exist to address climate change, another existential threat.  The prospects of such markets when it comes to abating proliferation should not be discounted.

A larger research paper on this subject can be found here.

Portrait: Jeff Combs
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Jeff Combs is founder, owner, and Chairman of UxC, LLC (UxC) and is a leading expert in the nuclear fuel market, with over 45 years of experience providing economic analysis and forecasting for the front-end of the nuclear fuel cycle. He has extensive and varied expertise, overseeing UxC market reports, providing strategic consulting to major commercial companies in the nuclear fuel industry, and advising governments and international organizations on market and policy issues. Under his management, UxC has grown to become the world’s pre-eminent nuclear fuel market information and analysis company, issuing reports and publishing prices for all front-end nuclear fuel markets. In 2007, UxC teamed with CME/NYMEX to introduce the world’s first uranium futures contract. That same year UxC began reporting on the backend of the fuel cycle. In 2018, Mr. Combs created the website to advance understanding of peaceful uses of the atom in today’s world. During his career, Mr. Combs has presented papers at a variety of nuclear industry and energy economics conferences throughout the world. In addition, he has had his work published in academic and public policy journals. Mr. Combs earned a bachelor's degree in Economics at the University of Virginia, where he also completed his doctoral course work in economics. He is a charter member of the International Association of Energy Economics and is a member of the American Nuclear Society.