Blocking Saudi Nuclear Plant Opens Door to China, Perry Says

(Bloomberg) -- A U.S. failure to build civilian nuclear reactors in Saudi Arabia may allow countries that lack nuclear proliferation standards to step in, Energy Secretary Rick Perry told lawmakers.

Perry, testifying Thursday before the Senate Armed Services Committee, was asked about reports the U.S. is considering a nuclear technology-sharing agreement that wouldn’t prohibit the Saudis from enriching nuclear fuel into weapons-grade materials.

"I think it’s really important to look at each of these agreements not in a vacuum," Perry said, without confirming whether the U.S. was considering such a deal. "I always remind people that the alternative is no good -- if Russia, China are who is going to be chosen to do the civil nuclear projects in the Kingdom of Saudi Arabia, there will be no oversight."

Eager to extend a lifeline to Westinghouse Electric Co., Exelon Corp. and other U.S. companies hurt by a domestic downturn in nuclear power plant construction, the Trump administration is in negotiations with the Saudi government as it seeks to build as many as 16 new reactors in the kingdom. Bloomberg first reported the White House was considering an agreement that lacked the so-called "gold standard" agreed to by the United Arab Emirates, prohibiting the enrichment and reprocessing of nuclear fuel and waste.

Perry told the senators that a U.S. deal with the Saudis would not only involve American workers and technology but also provide oversight by the International Atomic Energy Agency.

Such a deal has been criticized by influential lawmakers and nuclear proliferation experts, and recent remarks by Crown Prince Mohammed bin Salman that the kingdom would develop a nuclear weapon if Iran did has further set off alarm bells.

"I think the proliferation dangers are so great that we should be able to wield all of the influence we have which goes way beyond just this one transaction to insist that same standards we applied to the Emirates," said Senator Jack Reed, the top Democrat on panel, who noted that he “and many others" would oppose a nuclear deal with Saudi Arabia that allows enrichment of uranium. “There should be no difference."

In an interview Thursday with Bloomberg Television, Saudi energy minister Khalid al-Falih said negotiations with the U.S. have been "very constructive" and that "our counterparts from the American side have been understanding of the kingdom’s situation." The kingdom will be fully compliant with international treaties and regulations and its nuclear program will be subject to international inspection, he said.

"We want the best technology providers to be with us and the U.S. is on that list," he said. "We hope that the U.S. will join us and be part of the competition that is taking place later on this year and will be with us for the long term."

Iran Ties

In testimony before a House Armed Services panel Wednesday, Henry Sokolski, executive director of the Nonproliferation Policy Education Center, said the Saudis were unlikely to buy reactors from Russia because of the country’s closeness with Iran, and that export reactors made by China and France have yet to operate and are behind schedule and over budget where they are being built.

Instead, Sokolski said, reactors made by South Korea are most likely to win the bid, but since they contain American technical content, Korean officials believe they cannot export it to the kingdom unless the Saudis reach a cooperation agreement with the U.S.

"Washington has serious leverage over Seoul and what nonproliferation conditions it might chose to place on its Middle Eastern nuclear exports," Sokolski said in his written testimony. "It would be remarkable if our government chose not to use this leverage."

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