Part I: Its History, 02 October 2003

Part II: Are Nuclear Reactors Necessary?, 03 October 2003

Part III: The Emerging Crisis, 06 October 2003

Part IV: Economic Analysis of the Program, 07 December 2004

Part V: From the United States Offering Iran Uranium Enrichment Technology to Suggestions for Creating Catastrophic Industrial Failure, 22 December 2004

Part VI: The European Union's Proposal, Iran's Defiance, and the Emerging Crisis, 09 September 2005

Part I: Its History

On February 9, 2003, Iran's program and efforts for building sophisticated facilities at Natanz and and several other cities that would eventually produce enriched uranium were revealed. President Mohammad Khatami announced the existence of the Natanz (and other) facilities on Iran's television and invited the International Atomic Energy Agency (IAEA) to visit them. Then, in late February, Dr. Mohammad El Baradei, the head of IAEA, accompanied by a team of inspectors, visited Iran. Since then, the IAEA's experts and inspectors have visited Iran several more times. A preliminary report was published in July, with a follow up report on August 26. On September 12, 2003, the IAEA gave Iran an ultimatum to reveal all the details of its nuclear activities by October 31, 2003.

Iran's nuclear program and activities, though discussed for many years, have come into sharp focus since the February announcement. The information and data that have been obtained by the IAEA, after visiting the Natanz facility and a few other locations, have surprised the United States, the European Union, Russia, and Japan. Similar to the Clinton administration, the Bush administrtation has been suspicious of Iran's nuclear program, arguing that, having vast oil and natural gas reserves, Iran hardly needs nuclear energy. Hence, the Bush administration argues that the primary purpose of Iran's nuclear program is developing nuclear weapons. The EU, which is negotiating with Iran extensive economic and cultural agreements; Russia, which is completing construction of nuclear reactors in Bushehr and hoping to build many more reactors in Iran, and Japan, which is hoping to sign a lucrative oil agreement with Iran for developing Iran's huge Azaadegaan oil field (the largest oil field in the Middle East), have all pressed Iran hard, demanding that it reveal all the secret details of its nuclear program and facilities.

Note that, according to the original IAEA safeguard agreements, Iran did not have to declare the start of construction of the Natanz facility. These agreements stipulate that, only 180 days before introducing any nuclear material, does Iran have to declare the existence of the facility. Therefore, construction of the undeclared Natanz facility was NOT illegal. In addition, the Nuclear Non-proliferation Treaty (NPT) allows Iran to legally build any nuclear facility, including one for uranium enrichment, so long as it is intended for peaceful purposes. Moreover, the NPT allows the member states to withdraw from the agreement, subject to giving a 90 days notice to the IAEA, if they believe that abiding by the terms of the NPT threatens their national security (in the language of the NPT, if it is in their "Supreme Interest").

Aside from the political confrontation that the revelations about Iran's nuclear program have created between Iran on one hand, and the US and her allies on the other hand, the questions that I believe we Iranians must ask and debate, are: Does Iran need nuclear energy, and is acquiring it in its national interests? Before starting to debate these all-important questions, however, we must first decouple Iran's need for nuclear energy from its alleged or real intentions for producing nuclear weapons.

This article represents the first of a three-part series in which these two important questions are discussed, and Iran's nuclear program is described and analyzed in detail. In the present article, the history of Iran's program for nuclear research and development is reviewed. The significance of this review is twofold. (1) History shows that the US and her allies were in fact the driving force behind the birth of Iran's nuclear program in the late 1960s and early 1970s. (2) It is also particularly important to recognize that since the late 1980s, when Iran restarted its nuclear program, the US and her allies have been given every opportunity to participate in the development and construction of nuclear reactors in Iran, which would have provided them with significant control on the reactors and their products, but that they have always refused to do so.

Although various portions of Part I (the present article) have been published before, it may be useful to put all the pieces together in order to present a cohesive and brief review of the historty of Iran's nuclear program, and to make it available through an easily-accesible web site. In this author's opinion, this may be particularly useful for the young generation of Iranians who may be interested in this history, and the important role that the US played in the birth of Iran's nuclear program.

Part II will discuss why Iran must stop relying almost exclusively on oil and gas as her sole sources of energy, and start developing alternative sources, the most advanced of which are nuclear reactors. There are compelling economical, social, and environmental reasons for seeking alternative sources of energy for Iran, which will be described in detail in Part II.

Part III will describe, in simple terms, how violations of the NPT are detected, and what the major issues are at the center of the dispute between Iran and the IAEA. The dispute - some call it a crisis - is in fact mostly between Iran on one hand, and the US and some of her allies on the other hand, with the IAEA being used as a tool in a political battle.

Before embarking on this task, we must recognize that the development of adequate energy resources is a highly important part of the national interests of every nation which, by their very definition, transcend the political system that governs a nation. Both Democratic and Replublican administrations in the US, and their allies, such as Britain, have waged wars, invaded and occupied oil-producing countries, and engineered coups to overthrow the legal, often democratically-elected, governments of oil-producing countries in order to control the world's oil reserves. They have always justified their deed solely based on protecting their national interests and national security. We only need to recall what happened in Iran in 1953, after Dr. Mohammad Mosaddegh nationalized Iran's oil industry, and the recent invasion and occupation of Iraq by the US and Britain, to understand this. The same principles are also applicable to Iran, namely, that she has a fundamental right for securing adequate energy resources - the engine for her development and advancement.

Iran's foray into nuclear research and development began in the mid 1960s under the auspices of the US within the framework of bilateral agreements between the two countries. The first significant nuclear facility built by the Shah was the Tehran Nuclear Research Center (TNRC), founded in 1967, housed at Tehran University, and run by Atomic Energy Organization of Iran (AEOI). This Center has always been one of Iran's primary open nuclear research facilities. It has a safeguarded 5-megawatt nuclear research reactor that was supplied by the US in 1967. The reactor can produce up to 600 grams of plutonium per year in its spent fuel.

Iran signed the NPT on July 1, 1968. After the Treaty was ratified by the Majles, it went into effect on March 5, 1970. In the language of Article IV of the Treaty, the NPT recognized Iran's "inalienable right to develop research, production and use of nuclear energy for peaceful proposes without discrimination, and acquire equipment, materials, and scientific and technological information." The events of the early 1970s were, however, instrumental in shaping and accelerating the development of Iran's nuclear program. The 1973 war between the Arab countries and Israel, and the subsequent huge increase in the price of oil, provided the Shah's government with considerable resources for Iran's development. At that time, a study by the influential Stanford Research Institute concluded that Iran would need, by the year 1990, an electrical capacity of about 20,000-megawatt.

According to declassified confidential US Government documents posted on the Digital National Security Archive (see the article, "The US-Iran Nuclear Dispute: Dr Mohamed El Baradei's Mission Possible to Iran," by Drs. A. Etemad and N. Meshkati, published on July 13, 2003, in the Iran News), in the mid-1970s, the US encouraged Iran to expand her non-oil energy base, suggested to the Shah that Iran needed not one but SEVERAL nuclear reactors to acquire the electrical capacity that the Stanford Research Institute had proposed, and expressed interest in the US companies participating in Iran's nuclear energy projects. Building these reactors, and selling the weapons that the Shah was procuring from the US in the 1970s, were, of course, a good way for the US to recover the cost of the oil that she was buying from Iran.

Since the Shah never read or heard an American proposal that he did not like, he started an ambitious program for building many (presumably as many as TWENTY THREE) nuclear reactors. Hence, his government awarded a contract to Kraftwerk Union (a subsidiary of Siemens) of (West) Germany to construct two Siemens 1,200-megawatt nuclear reactors at Bushehr. The work for doing so began in 1974. In 1975, the Massachusetts Institute of Technology signed a contract with the AEOI for providing training for the first cadre of Iranian nuclear engineers, and the Iranian-Indian nuclear cooperation treaty was also signed (India is now a nuclear power). In addition, the Nuclear Technology Center at Esfahan (Isfahan) was founded in the mid-1970s with the French assistance in order to provide training for the personnel that would be working with the Bushehr reactors. The Esfahan Center currently operates four small nuclear research reactors, all supplied by China.

According to the same declassified document mentioned above, in an address to the symposium, "The US and Iran, An Increasing Partnership," held in October 1977, Mr. Sydney Sober, a representative of the US State Department, declared that the Shah's government was going to purchase EIGHT nuclear reactors from the US for generating electricity. On July 10, 1978, only seven months before the victory of the Islamic Revolution in Iran, the final draft of the US-Iran Nuclear Energy Agreement was signed. The agreement was supposed to facilitate cooperation in the field of nuclear energy and to govern the export and transfer of equipment and material to Iran's nuclear energy program. Iran was also to receive American technology and help in searching for uranium deposits.

The Shah's government had also envisioned building two nuclear reactors and a power plant in Darkhovin, on the Karoon River, south of the city of Ahvaz. Iran signed, in 1974, a contract with the French company Framatome to build two 950 megawatt pressurized reactors at that site. Framatome did survey the area and began site preparation. However, construction had not yet started when the government of Prime Minister Mehdi Bazargan cancelled the contract after the Islamic revolution in 1979. In 1992, Iran signed an agreement with China for building the reactors in Darkhovin, but the terms of the agreement have not yet been carried out by China. Given the proximity of the site to the border with Iraq, it is probably not prudent to proceed with that project at that particular site.

The Shah's government also obtained uranium materials from South Africa in the 1970s. According to Dr. Akbar Etemad, who was the founder and first President of the Atomic Energy Organization of Iran from 1974 to 1978, the TNRC carried out experiments in which plutonium was extracted from spent fuel using chemical agents (see, A. Etemad, "Iran," in, "European Non-Proliferation Policy," edited by H. Mueller, Oxford University Press, 1987, page 9). Note that the only use for plutonium is in a nuclear bomb. It is also believed that the Shah assembled at the TNRC a nuclear weapon design team. Asadollah Alam, the long-time Imperial Court Minister and the Shah's close confidant, wrote in his memoires that the Shah had envisioned Iran having nuclear weapons.

In February 1979, when the Islamic Revolution toppled the Shah's government, the Bushehr-1 (that is, reactor 1) was 90% complete and 60% of its equipment had been installed, while Bushehr-2 was 50% complete. Had the 1979 Revolution not happened, the Kraftwerk Union would have continued its work in all likelihood with the cooperation of the US corporation Bechtel Power, which was its joint-venture partner in many power plant projects around the world. The government of Prime Minister Mehdi Bazargan then decided that Iran did not need nuclear energy, and therefore the work at Bushehr was halted after the victory of the Revolution in February 1979. The German firm had left Iran earlier, anyway.

During its war with Iran, Iraq bombed the Bushehr site six times (in March 1984, February 1985, March 1985, July 1986, and twice in November 1987), which destroyed the entire core area of both reactors. According to officials of Technischer Ueberwachungsverein, Germany's National Reactor Inspectorate, before the bombings, Bushehr-1 could have been completed in about three years. Note, however, that, at the time of the bombings, none of the main equipments had been installed, and in fact two steam generators (that use the heat from the reactors to produce steam to be used in power generators) were stored in Italy, while the pressure vessel for Bushehr-1 was stored in Germany.

The Revolution and its aftermath, and the eight-year war with Iraq which resulted in colossal damage to Iran's infrastructure, reduced temporarily Iran's thirst for electricity. After the war with Iraq ended, however, Iran began to rethink her position regarding nuclear energy and technology, although it would not be unreasonable to believe that Iraq's savage bombing of Iran's main population and industrial centers, and the missile attacks that it carried out against Tehran during 1986-1987, also motivated Iran's leaders to think about nuclear technology. The first reconstruction and development plan proposed and carried out by President Hashemi Rafsanjani's government, coupled with Iran's chronic shortage of electricity that went back to the early 1970s, and the rapid growth of her population, were three major reasons for Iran to restart her neclear program for obtaining electricity.

Rafsanjani's government first approached Kraftwerk Union to complete the Bushehr project. However, under the US pressure, Kraftwerk Union refused. Iran then asked Germany to allow Kraftwerk to ship the reactor components and technical documentation that it had paid for, citing a 1982 International Commerce Commission (ICC) ruling under which Siemens was obligated to deliver all plant materials and components stored outside Iran, but the German government still refused to do so. In response, Iran filed a lawsuit in August 1996 with the ICC, asking for $5.4 billion in compensation for Germany's failure to comply with the 1982 ruling. The issue is still unsettled.

In the late 1980s, a consortium of companies from Argentina, Germany and Spain submitted a proposal to Iran to complete the Bushehr-1 reactor, but huge pressure by the US stopped the deal. The US pressure also stopped in 1990 Spain's National Institute of Industry and Nuclear Equipment to complete the Bushehr project. Iran also tried, unsuccessfully, to procure components for the Bushehr reactors, but her attempts were blunted by the US. For example, in 1993, Iran tried to acquire eight steam condensers, built by the Italian firm Ansaldo under the Kraftwerk Union contract, but they were seized by the Italian government. The Czech firm Skoda Plzen also discussed supplying reactor components to Iran, but, under the US pressure, negotiations were cancelled in 1994. Iran was also not successful in her attempt to buy nuclear power reactor components from an unfinished reactor of Polland.

After years of searching in the West for a supplier to complete her first nuclear power plant, Iran turned to the Soviet Union and then Russia. She signed, in March 1990, her first protocol on the Bushehr project with the Soviet Union. The agreement called on Moscow to complete the Bushehr project and build additional two reactors in Iran, but financial problems delayed the deal.

China, in 1991, provided Iran with uranium hexafluoride (a uranium compound, which is gaseous state, and used for enriching uranium; see Part III) which is, however, under the IAEA safeguard. In addition, Iran recently acknowleged that she also received (again in 1991) from China 1,000 kgr of natural uranium hexafluoride, 400 kgr of uranium tetrafluoride, and 400 kgr of uranium dioxide, without reporting them to the IAEA. Although the amount of the (until-recently undeclared) uranium compounds is small, what has been done with them is more indicative of the real intentions behind obtaining the materials. In 1993, the AEOI and the Russian Ministry of Atomic Energy signed an agreement for the construction of two Russian reactors at Bushehr, but the contract was never carried out as Iran was facing major financial problems.

Finally, Iran signed, in January 1995, a contract with the Russian Ministry of Atomic Energy to finish the reactors at Bushehr. These reactors will be under the IAEA safeguards, and will be capable of producing up to 180 kgr/year of plutonium in their spent fuel. The agreement called for Russia to complete the first reactor at Bushehr within four years, although it is still unfinished; to provide a 30-50 megawatt thermal light-water research reactor, 2,000 tons of natural uranium, and training for about 15 Iranian nuclear scientists per year. Iran and Russia also agreed to discuss the construction of a gas centrifuge uranium-enrichment facility in Iran. However, in May 1995, the US announced that it had convinced Russia to cancel the centrifuge agreement, although Russia later denied that the agreement with Iran ever existed! The light-water research reactor deal has also been cancelled.

After the 1995 agreement was signed by Iran and Russia, the Clinton administration tried, unsuccessfully, to convince Russia to cancel the agreement, but its entreaties were rebuffed by Russia which saw the Bushehr project as an openning for her ailing nuclear industry to get itself into the international market. Having failed in its attempts, the Clinton administration then began charging that the plutonium that the reactors would produce would be used by Iran for making nuclear weapons. However, this issue is also being addressed by Iran and Russia, since they are negotiating an agreement by which the nuclear wastes from the Bushehr reactors would be returned to Russia which has a large facility for storing the wastes in southern Siberia (although Russian environmental laws appear to forbid storing nuclear wastes of another country in Russia), but no agreement has been reached yet. It was reported recently that Iran has demanded payments for returning the spent fuel to Russia, contending that she pays to buy the fuel from Russia in the first place, and therefore she should also be paid for the spent fuel. If ture, this would be an absurd demand, because if Russia is to pay for Iran's nuclear wastes, she should also be paid for keeping Iran's nuclear wastes! The issue of who should pay whom appears to be the only obstacle to reaching an agreement between Iran and Russia concerning the nuclear wastes.

After it appeared that the plutonium issue would be addressed by Russia, the US, under huge pressure by Israel, began claiming that, while the Bushehr reactors cannot be directly used for making nuclear weapons, they will train a generation of Iranian scientists and engineers for operating the reactor, which in turn will prepare Iran for making nuclear weapons. Is there any merit to this charge? Having a nuclear reactor is NOT necessary for obtaining the necessary know-how for developing a nuclear bomb (although it certainly helps). The best example is provided by Iraq. Israel bombed and destroyed Iraq's only nuclear reactor at Osirak in 1981, before it started operating, yet when its nuclear weapon program was discovered after the 1991 Gulf war, Iraq was only months away from making a nuclear bomb!

Most experts believe that the completion of the Bushehr project by Russia is a highly complex task: As mentioned earlier, the Kraftwerk Union has not provided any technical documents to either Iran or Russia. Since Russia plans to install a reactor, her engineers must modify what Kraftwerk Union had left behind to accomodate the Russian reactor and its support system, which differ in many significant ways from the German reactor. For example, the structure of the steam generators in the Russian reactors is significantly different from the original German reactors. The reactor is supposed to start operating in early 2004.

In addition to the what has been described so far, Iran does have a few other nuclear facilities. One is the Bonaab Atomic Energy Research Center (which is south of city of Tabriz), which is a research center for applications of nuclear technology in agriculture. In addition, Center for Agricultural Research and Nuclear Medicine at Karaj (near Tehran) was inaugurated on in May 1991, and is run by the AEOI. None of these is, however, considered to be for military applications.

This concludes the review of the history of Iran's nuclear program. The review reveals three important facts:

(1) Nuclear research, facilities, and reactors, and even the vision for Iran having nuclear weapons, were all conceived and initiated by the Shah and his government, with the direct assistance and encouragement by the US and her allies. This is very much similar to what happened in Israel, which developed her arsenal of nuclear weapons with the direct help of the US and France. They were not conceived or initiated after the Revolution. In fact, for the first few years after the Revolution, Iran rejected nuclear reactors!

(2) It is clear that the US and her allies have had many opportunities to complete the Bushehr project, or to participate in the construction of other nuclear reactors, and, hence, to have significant control on the reactors, but they have always refused to take part.

(3) In addition, the US and her allies could have participated in the Bushehr project by helping Iran improve the safety of the reactors there and, hence, have influence on their operations. As pointed out by Drs. Etemad and Meshkati (see their article cited earlier), there is good precedence for this: The Temelin nuclear power plant in the Czech Republic, the construction of which began during the Soviet Union, when the former communist government was in power in Czechoslovakia, but was halted in 1992. In 1994, with a $317 million loan guarantee from the United States Export-Import Bank, an American company, Westinghouse Electric Corporation, participated in completing the Temelin's reactors.

Hence, there is no way of avoiding the conclusion that the real goal of the United States is dismantling Iran's nuclear infrastructure, regardless of its orientation, and to despatch Iran to the era of nuclear, scientific and technological illiteracy, which is in violation of the letter and spirit of the NPT.

Part II of this series will discuss why Iran must stop relying exclusively on oil and gas, and develop alternative sources of energy, and in particular nuclear energy.

Original URL: http://www.payvand.com/news/03/oct/1015.html

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Part II: Are Nuclear Reactors Necessary?

In the present article, Part II of a three-part series, the need for building nuclear reactors in Iran is analyzed. As was pointed out in Part I, in the opinion of this author, the questions that we Iranians must ask and debate, are: Does Iran need nuclear energy, and is acquiring it in her national interests? It was also pointed out that one must decouple Iran's need for nuclear energy which, as argued in this article, is completely legitimate on economical, social, and environmental grounds, from her alleged or real intentions for producing nuclear weapons.

Recall that the main argument of the United States against nuclear energy for Iran is that, Iran has vast oil and gas reserves, and hence she needs no nuclear reactor. This argument is, in general, not necessarily valid. Many countries that are rich in fossil energy resources, including Britain and Russia (both oil exporters), rely on nuclear power for a significant portion of their energy needs, while Germany, France, Japan, and many other countries, which have no oil or natural gas reserves, have not abandoned nuclear power in favor of more imported oil and gas, even though they can certainly afford this. There are currently 1118 nuclear reactors in the world of which 280 are for nuclear research, while another 400 are used in ships and submarines for producing power. The remaining 438 nuclear reactors are used for generating electricity, of which 104 are in the US, 59 in France, 53 in Japan, 29 in Russia, and 19 are in Germany. Between 1974, when Iran signed her first agreement for building nuclear reactors, and 2000, use of nuclear reactors for generating electricity has increased by a factor of 12!

In the particular case of Iran, the US argument that Iran needs no nuclear energy has no validity at all. While it is true that Iran does have vast oil and gas reserves, she also needs alternative energy sources. I argue that Iran's needs for such alternatives are glaring and indisputable, and I base my arguments on economical, social, and environmental considerations.

We first, however, consider the case for alternative sources of energy on general grounds:

Most of the world's major oil exporters, such as Iran, are developing nations. Thus, these countries must confront the challenge of their demographic explosion without possessing many of the necessary tools, which are strong state structures, rapidly-growing economies, large amounts of investment capitals, numerous entrepreneurs, engineers and inventors, and infrastructres that are reasonably advanced. In fact, we live in a world in which technology and capital are in the countries that are energy-hungry - those that have no major oil reserves of their own (for example, Germany, France, and Japan) or have at best indeaquate sources (for example, the US) - whereas the population growth and social and political turbulence are in the developing countries that are major oil producers (such as Iran, Saudi Arabia, Mexico, Iraq, etc.).

At the same time, oil is a non-renewable national wealth of Iran (and other oil exporters). Once it is produced and exported, it can never be regenerated. One cannot expect Iran (and other oil-exporting countries) to deplete her non-renewable national wealth recklessly, without receiving any lasting products or benefits in return, but this will happen if Iran's sources for energy are not diversified, and she continues to rely almost exclusively on oil and gas for everything from the only source of energy to her annual budget. Except for Norway, every major oil exporter (including Russia) relies heavily on its revenue from oil sales, so much so that if the oil price stays too low for too long, we may have social instability and even revolution in these countries. What would happen to these countries if all of their recoverable oil and gas are rapidly depleted over a few decades, which would be the case if they rely on oil and gas for everything from their annual budget to energy sources?

In addition, a set of practical issues, which are important to the industrialized nations (notably in the Western hemisphere), must be addressed: What would happen to the West's huge chemical industry that uses oil- and gas-derived materials for its production and is an important source of jobs, if the world's oil and gas reserves are depleted too quickly? What would be the fate of the German plastic factories and the US polymer producers (plastics and polymers are some of the most heavily used materials in the world) that get their raw materials from the same source, and to the enormous petrochemical complexes around the world, if oil and gas resources are quickly depleted? Is it not better to develop alternative sources of energy, and use oil and gas more slowly and in more useful ways, by producing oil- and gas-derived materials and products that have much added values? If the answer to this question is yes, then why can Iran not use this argument?

Next, consider the case for alternative energy sources from an economical view point:

Iran's 60 major oil fields are mostly old, with some being depleted altogether. From 1979 until 1997 no major investment was made in Iran's oil industry. A study in 1998 concluded that, out of the 60 oil fields, 57 of them need major technical studies, repairs, upgrading, and repressurizing which would require, over a 15 year period, $40 billion! Although, since 1997, Iran has had considerable success in attracting foreign capital for its offshore oil and gas reserves, it is still far behind other oil exporting countries of the Middle East in terms of developing her fossil energy resources. Iran has not even been able to increase her oil production to the pre-Revolution level of 5.5 million barrels/day. If Iran cannot upgrade her oil facilities and industry on a timely manner, it will lose her market share. While there is no doubt that the solution to the urgent problem of upgrading Iran's oil industry is partly political, lack of any solution will have deep implications for Iran's future, which are discussed shortly.

At the same time, since early 1990s, Iran's consumption of oil has been increasing at an alarming rate of 8% per year, and her total energy consumption has increased from 1.6 quadrillion Btu (quads) in 1980 to more than 5.5 quads at present - an increase of more than 280%. If this trend continues, Iran will become a net oil importer by 2010, a gigantic catastrophe for a country which relies on oil for 80% of her foreign currency and 45% of her total annual budget. If that happens, how will Iran be able to feed her population, estimated to reach 100 million by 2025, and also spend on her development and national security? The fact is that, despite considerable efforts over the past 30 years, Iran's industrial output, aside from her oil industry, accounts for only 15% of her gross domestic product.

In one of the rare occasions that he said something profound, the Shah once stated that a barrel of oil is too precious (he used the word "sharif" in Persian to describe oil) to be used for generating electricity. Paraphrasing him, I would say that a million cubic feet of gas is too precious to burn; natural gas should be used for generating huge amounts of petrochemical products with much added values, which is precisely what Iran has been trying to do: Iran curently produces about $2.7 billion/year worth of petrochemical products. At the same time, in 40-50 years, when oil will no longer be the major source of energy and will be replaced by gas, Iran (the gas reserves of which will last for at least 200 years) will be in an excellent position to be the main supplier to Asia and Europe. Therefore, why should Iran use her hard-earned oil and gas for generating electricity, if she can develop alternative sources of energy?

Looking at this issue from another angle, it is estimated that Iran's known uranium ore reserves can produce as much electricity as 45 BILLION barrels of oil. This is a huge amount by any criterion, but particularly so if we only recall that Iran's known oil reserves are currently estimated to be about 96 billion barrels. In other words, if we can extract all of Iran's known oil reserves (a remote possibility!) and use about half of them just for producing electricity, we will generate as much electricity as what Iran's presently-known uranium deposits can produce! It would therefore be absolutely foolish not to do this!

Consider this problem from a third angle: Iran's present installed electrical capacity is more than the 20,000 megawatt that had been predicted for 1990. However, Iran's annual growth in demand for electricity is 5-8%. Hence, it is estimated that, by the year 2010, Iran will need another 7,000-megawatt of electricity which, ignoring all other factors (see above and below), and even under the best possible circumstances, namely, immediate lifting of the US sanctions against Iran and flow of vast investment capital into Iran's oil and gas industry, cannot be produced by oil and gas alone. Therefore, the question is: What is Iran supposed to do?

One of the main arguments that some of the experts on nuclear weapons present against Iran having nuclear energy is that, it is not economical for Iran to generate electricity using nuclear reactors, because she has vast gas reserves which can be used for producing electricity. To support their arguments, these experts usually cite studies that estimate that the cost to finish the Bushehr nuclear reactors will be $1,000 per installed kilowatt, while the electricity from natural gas-fired power plants costs $600-800 per kilowatt. However, such arguments are not valid. In addition to the necessity of,

(1) using the gas for producing petrochemical products with much added values (see above);

(2) preserving much of Iran's gas reserves for her future generations and to position Iran in 40-50 years as the main supplier of energy to Europe and Asia, and

(3) avoiding the severe adverse effect of burning gas and the resulting carbon emission which is the major culprit in global warming and the greenhouse effect (see below),

the above estimates are simply wrong, because they do not take into account the huge costs of the medical care for people who suffer from the diseases caused by pollution of the environment by oil and gas, as well as the damage to nature caused by carbon emission and the resulting global warming.

In 1990, in a seminar at Gustave E. von Grunebaum Center for Near Eastern Studies of the University of California in Los Angeles (the complete content of that seminar was published later; see, M. Sahimi, "How Much do We Pay for a Barrel of Oil?" in, "Proceedings of the Third International Conference on Non-Renewable Energy Sources," Tehran, Iran, December 1993; see also, M. Sahimi, "Factors Affecting the Development of Fossil Energy Resources of Developing Countries," in, "United States-Third World Relations in the New World Order," edited by A.P. Grammy and C.K. Bragg, Nova Science Publishers, New York, 1996, page 361), this author stated that:

"Typical estimates for the cost of producing electricity and other forms of energy using oil and gas are only based on their market prices. However, these prices reflect only the cost of producing oil and gas (including the costs of of labor and materials used for their extraction from underground reservoirs) and of transporting them to the consumer. But some of the costs of consuming oil and gas are not directly included in our energy bill, nor are they paid for by the companies that sell us energy. These are the hidden costs of oil and gas that we pay indirectly for the health problems caused by air, water and soil pollution resulting from using oil and gas, environmental degradation caused by carbon emission and global warming, and acid rains. Since the producers and consumers do not pay directly for such costs, society as a whole must pay for them. Thus, although such costs are hidden, they are real. For example, according to the American Lung Association, health costs, including, for example, lost potential income, of air pollution alone are estimated to be about $50 billion a year, and the main culprit for air pollution is the fossil fuels, mainly oil and gas, our primary source of energy. Estimating the possible cost of the damage inflicted on Earth by global warming, caused by carbon emission that is the direct result of burning oil AND gas, is currently impossible."

If we take into account such costs, then the cost of producing electricity from gas (and oil) will be much larger than the commercial estimates usually quoted, and very much comparable with what it costs to generate it using nuclear reactors. A recent study by Professors John Deutch and Ernest Moniz of, respectively, the chemistry and physics departments of the Massachusetts Institute of Technology reached a similiar conclusion (see, the New York Times, the Op-Ed page, Thursday August 14, 2003).

Consider now the case for alternative sources of energy in terms of Iran's population growth and her social dynamics:

Since the 1979 Revolution, Iran's population has more than doubled, from 32 to nearly 70 million, while her oil production is only 70% of the pre-Revolution level. This then begs the following question: Why is it that the US and her allies believed, in the 1970s, that Iran needed nuclear reactors and nuclear energy, when Iran's population was less than half of the present and her oil production was much more than now, but they now argue that Iran does not need nuclear energy? How do the US and her allies suggest Iran should feed, house and educate her population, create jobs for her army of educated people, and develop the country, all with oil and gas alone, while she has very significant uranium deposits that can be used for generating electricity?

Consider the case for alternative energy sources from an environmental view point:

Iran is beset by huge environmental problems that have been caused by oil and gas consumption, problems that are reaching catastrophic scales. Although Iran established a Department of Environment in 1971, and even though Article 50 of her current Constitution states that, "In the Islamic Republic of Iran protection of the environment, in which present and future generations should enjoy a transcendent social life, is regarded as a public duty," 8 years of war with Iraq, economic sanctions, careless (with respect to the environment) development after the War, and the 120% increase in the population, have kept the goal of cleaning the environment and maintaining it that way on the back-burner. However, the environment and its health can no longer be neglected.

Since 1980, carbon emissions in Iran have risen by 240%, from 33.1 million metric tons emitted in 1980 to more than 85 million metric tons at present. Note that, whether we use oil (which causes severe pollution problems) or gas (which, compared with oil and coal, is considered as a relatively clean source of energy), carbon emission cannot be avoided. This emission is one of the main culprits behind air pollution in Tehran and all other major cities of Iran that has reached catastrophic levels, so much so that the elementary schools must be closed on many days. Long term effects of the polluted air are blamed for causing 17,000 deaths every year in Tehran alone, as well as causing severe problems for people with asthma, heart, and skin conditions. The cost of medical care for such illnesses is reaching astronomical levels.

Polluted air also severely damages soil and groundwater resources by contaminating the rain water. At the same time, Iran's industrial base, using oil and gas for energy, generates wastes that contaminate a large number of rivers and coastal waters and threaten drinking water supplies. These are separate from oil spills in the Persian Gulf and pollution in the Caspian Sea that continue to contaminate the waters. These are all caused by the fact that, Iran's renewable energy consumption, including hydropower, solar, wind, tide, and geothermal, account for only 2% of its total energy consumption, with the rest supplied by oil and gas.

What are, or can be, alternative sources of energy for Iran? Surely, given Iran's vast central desert, solar power can potentially be very useful for generating electricity and energy. However, this technology is not yet well-developed. In certain parts of Iran, geothermal sources can also be used for generating electricity, but Iran has just started exploring this possibility, and it will take at least 15 years to develop this at any significant scale. That leaves nuclear reactors, which will not solve her chronic shortage of electricity, nor will they solve all of Iran's pollution problems, but they do represent the first important step in diversifying Iran's sources for energy.

Nuclear reactors do have their own problems. One is their management which has to be at a very high level so that the chances of accidents, similar to those that happened in Three-Mile Island in the US (in 1979) and in Chernobyl in Russia (in 1986), will be minimal. In addition, one must deal with protecting and storing the nuclear wastes produced by the reactors which would be radioactive for at least tens of thousands of years. But, these problems are generally believed to be manageable.

In Part III of this series, the dispute between Iran and the International Atomic Energy Agency will be described and analyzed.

Original URL: http://www.payvand.com/news/03/oct/1022.html

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Part III: The Emerging Crisis

This article is the last of a three-part series on Iran's nuclear program. In this Part, the dispute - many consider it a crisis - between Iran and the International Atomic Energy Agency (IAEA) is described.

Recall that after the February announcement of President Mohammad Khatami regarding the construction of the facilities in Natanz for uranium enrichment, and other associated plants needed for this purpose, Dr. Mohammad El Baradei, the head of IAEA, accompanied by a team of inspectors, visited Iran. Since then, the IAEA's inspectors and experts have visited Iran several more times. A preliminary report was published in July, with a follow-up one on August 26.

Before the revelations about the Natanz facility, there had been reports for years that Iran had sought, albeit unsuccessfully, the uranium enrichment technology, both in the international market and from the Russian Ministry of Atomic Energy. Although not definitively established yet, it now appears that the Natanz facility is similar to what Pakistan had built for its nuclear program in the 1980s. Various reports indicate, however, that the Natanz facility is in fact far more sophisticated than both Pakistan's and what was discovered in Iraq after its defeat in the 1991 Persian Gulf war.

The process of converting uranium ore to enriched uranium is actually long and very complex. It has been known for many years that Iran has natural uranium reserves, in the form of uranium ore. In 1985, the Atomic Energy Organization of Iran (AEOI) located over 5,000 metric tons of uranium ore in the desert in eastern part of Yazd province. This represents one of the largest deposits of uranium ore in the Middle East. The ore must first undergo a semiprocess to be converted to a powder, usually called the yellowcake. Iran is building a facility in Ardakan for this purpose. The yellowcake is then further processed to produce uranium hexafluoride (UF_6) which is in gaseous state. The facility for doing this is being built in Esfahan (Isfahan). Uranium has two important isotopes (that is, two slightly different versions of it with slightly different atomic masses) which are uranium-235 and uranium-238 (the numbers represent the atomic masses). It is uranium-238 that may be used in making nuclear weapons, but also in nuclear reactors. The Esfahan facility will also produce uranium oxide and uranium metal, both of which have civilian as well as military applications.

The Natanz facility is equipped with the instruments for what is currently considered to be the standard uranium-enrichment technique, namely, a large number of centrifuges that spin uranium hexafluoride gas at very high speeds. Under such conditions, centrifugal forces help separate the lighter uranium-235 hexafluoride from the heavier uranium-238 hexafluoride. The facility has a pilot gas centrifuge plant that, by the end of 2003, is supposed to house 1000 centrifuges (at the time of the IAEA visit in February, there were 160 centrifuges in the facility), and a large-scale production plant which will house up to 50,000 centrifuges, the installation of which (which is supposed to begin in 2005) will take up to 10 years. Such a facility would then have the capability for producing enough uranium for annual consumption of a nuclear reactor of the Bushehr-type. Note that only 10 countries have access to the centrifuge technology.

Development of a uranium-enrichment facility is an important step (but not the only one) towards making nuclear weapons. For example, the Natanz facility, when complete and in full operation, could produce 500 kgr/year of weapon-grade uranium. As it typically takes about 20 kgr of enriched uranium to make a single nuclear bomb, the produced uranium would be enough to make about 25 bombs every year. We must, however, keep in mind that a uranium-enrichment facility is also utilized for peaceful purposes it can produce low-grade enriched uranium for use in nuclear reactors.

Since, typically, one first tests whether a single centrifuge with a small quantity of uranium hexafluoride works before installing hundreds (or even thousands) of them, one might suspect that Iran does have at least a small amount of enriched uranium, not declared to the IAEA, which, if true, would imply that Iran is in serious violation of the NPT that it signed in 1968. However, such tests can also be carried out by computer simulations and modelling. Recall that even nuclear explosions are simulated completely realistically, and therefore, in principle, one does not need a physical test to check whether the centrifuges work. Whether this is the case in the present situation is not clear.

It was reported on July 18 that the IAEA inspectors had detected the trace of enriched uranium in the samples taken at Natanz, but Iran said that the source of the trace is the equipments brought to Natanz from elsewhere and bought on the international market. Subsequently, it was announced on September 25 that a trace amount of enriched uranium has also been detected at Kaalaa-ye (Kalaye is usually used in the english press) Electric Company in the northwest suburb of Tehran, a non-nuclear site (the Company produces watches, as well as certain components for the centrifuges) that the IAEA suspects Iran is using for her nuclear enrichment activities. Since Iran had declared to the IAEA that the instruments at Natanz had been stored at the Kaalaa-ye Electric site before being transported to Natanz, and given that no trace of enriched uranium has been detected anywhere else in Iran, the Kaalaa-ye Electric discovery may actually confirm Iran's contention regarding the origin of the enriched uranium. But, once again, the situation is not clear, unless Iran provides the IAEA a list of suppliers that provided her with the instruments and equipments.

How are nuclear facilities monitored and violations of the NPT discovered? Inspections of nuclear facilities include the use of a powerful technique, called the isotopic detection, which, in essence, is a method for monitoring the environment and anything that might contaminate it. This technique is based on the facts that, (1) extremely small quantities of a material always escape a process or an industrial plant, and (2) that an equipped laboratory can readily identify the isotopic ratio of a sample that contains extremely small, albeit measureable, amounts of a material, even if it is as small as a billionth of a gram.

Nuclear physics predicts that the ratio of uranium-235 to uranium-238 is essentially the same everywhere. Therefore, when the isotopic detection technique is applied to samples containing uranium, those with ratios lower than the theoretically-predicted value would most probably indicate illegal (from the NPT stand) uranium-enrichment activity. The same technique can be used for detecting any amount of plutonium that is in excess of what is (theoretically) expected, which would then suggest the existence of a reprocessing program for nuclear wastes generated by nuclear reactors, from which plutonium is extracted. This technique is used, under the NPT, in the declared nuclear facilities of the NPT signatories.

As a reaction to the discovery of Iraq's program for developing nuclear weapons, that was discovered by the United Nations inspectors in 1991 after Iraq's defeat in the second Gulf war, the IAEA decided to develop and implement additional procedures for enhancing nuclear safeguards. At the time, the IAEA hoped to have these additional procedures or protocols in place two years later, hence the name "93+2" that is sometimes used to refer to this matter. The Additional Protocol was developed in 1996, and has since been signed by 78 countries (out of the 183 countries that have signed the NPT). Thirty three of these countries, mostly small nations, have also ratified the signing of the additional protocol by their national parliaments, and hence implementing it, although these countries cannot really afford to develop nuclear bomb! Most importantly, the Additional Protocol has not been adopted by the US, its most forceful advocate when it comes to OTHER countries!

The Additional Protocol also gives the IAEA the authority to inspect any facility of any nation that has signed the Protocol, even those that, seemingly, have nothing to do with a nuclear program, any time that the IAEA wishes. This is a problematic aspect of the Additional Protocol, as inspection of non-nuclear facilities may be interpreted as an infringement on the national sovereignty of a country under inspection. However, since Iran's facilities have been under inspections for years, this should be a minor issue.

On Friday September 12, 2003, the 35-member governing board of the IAEA gave Iran an ultimatum until October 31 to prove that her nuclear program is strictly for peaceful purposes, by providing all the deatils of her nuclear program. Iran's reaction was mixed: On one hand, she reacted with indignation, calling the ultimatum "premature" and "unfair," while stating, on the other hand, that she will continue working with the IAEA.

It should be pointed out that even Ms. Melissa Fleming, the spokeswoman for the IAEA, conceded that the ultimatum was "highly unusual" in that it was adopted WITHOUT A VOTE. At the same time, the IAEA itself had conceded that Iran had expanded her cooperation with the Agency, even allowing many sites that are not covered by the NPT, such as the Kaalaa-ye Electric Company, to be inspected. Therefore, the ultimatum has much to do with Iran's poor international standing and isolation, which are, of course, justified.

At the same time, the US is once again using an important international organization to advance her agenda, damaging in the process the credibility and effectiveness of the organization, only a few months after doing the same to the United Nations during the debate over invasion of Iraq (and now going back to it asking for help!). France and Germany, at odds with the US over invasion and occupation of Iraq, but eager to mend their relations with the US, also have joined her in calling on Iran to immediately sign the Additional Protocol, and to reveal all of the details of her nuclear program.

Before analyzing the present situation between Iran and the IAEA, we must keep in mind that,

(1) according to the original IAEA safeguard agreements, Iran was not obligated to declare the start of construction of the Natanz facility. These agreements stipulate that, only 180 days before introducing any nuclear material, does Iran have to declare the existence of the facility. Therefore, construction of the undeclared Natanz facility is NOT by itself a vilation of the NPT.

(2) The NPT does allow Iran to legally build any nuclear facility, including one for uranium enrichment, so long as it is declared to, and safeguarded by, the IAEA, and is intended for peaceful purposes.

Keeping these important points in mind, the problematic aspects of Iran's nuclear program, so far as the IAEA is concerned, are as follows.

(a) The origin of the trace amounts of highly-enriched uranium at Natanz and Kaalaa-ye Electric Company near Tehran is not yet clear. This was already described and discussed above.

(b) Iran declared to the IAEA that since approximately seven weeks ago, she has begun some uranium enrichment activities at Natanz using a single centrifuge. Since this was declared to the IAEA, and because the Natanz facility is now monitored by the IAEA, this activity does not represent a violation of the NPT (although, given the current international conditions, some may regard the timing of this as unfortunate). The important point of contention is: How can Iran be so sure that the centrifuges at Natanz work with high levels of reliability, if no prior (undeclared) tests have been carried out? Iran has countered that she has used modelling and simulation, mentioned above, which is plausible, but does not, of course, exclude the possibility of actual physical tests.

(c) The IAEA has demanded that Iran provide it with all the details of the work at Kaalaa-ye Electric Company. Iran has provided some (but presumably not all) of the details, and has allowed the facility to be visited by the IAEA inspectors, even though this inspection is not covered by the NPT, although, at first, Iran refused to grant the IAEA the permission to visit this site. If Iran does sign the Additional Protocol, then she would have to completely open the facility to the IAEA inspectors.

(d) As mentioned in Part I, in 1991, Iran received from China 1,000 kgr of natural uranium hexafluoride, 400 kgr of uranium tetrafluoride (UF_4), and 400 kgr of uranium dioxide (UO_2), without reporting them to the IAEA. The question then is: What happened to these uranium compounds? Iran has declared that some of the compounds have been converted to other uranium compounds, some of which have medical applications, while others may be of dual use. Given that Iranian medical scientists who work in Iran have published the results of their research involving such uranium compounds, Iran's explanation is plausible, but does not provide an explanation for the fate of all the undecalred uranium compounds.

In this author's opinion, none of these problems is intractable, and so far as their scientific and technological aspects are concerned, can be addressed to the satisfaction of the IAEA. The main problem, in this author's opinion, is that much of the dispute with the IAEA is political, rather than scientific or technological. To see this, consider the following indisputable facts:

(1) As recognized by the NPT, peaceful use of nuclear technology, and in particular nuclear energy, is Iran's fundamental right, so long as her nuclear program is completely transparent to the IAEA.

(2) Article 22 of the agreement between Iran and the IAEA allows for an "arbitral tribunal," if there is still any dispute after Iran provides sufficients details of her nuclear program to the IAEA. Therefore, October 31, 2003 is not necessarily a rigid deadline.

(3) The United States has a selective non-proliferation policy. She allows Pakistan, a country that created the Taliban and her population has provided sanctuary to Osama bin Laden and his terrorisat group; a country whose military is still controlled to a large extent by extremist elements, to develop nuclear weapons. The US has assisted Israel to develop an impressive arsenal of nuclear weapons; has exported nuclear technology to China, and has offered a deal to North Korea regarding her nuclear reactors. The US does not pressure Pakistan, India and Israel to sign the NPT and its Additional Protocol. A little-known fact is that, in early 1995, the German government proposed a plan whereby Kraftwerk Union (a subsidiary of Siemens) would complete construction of the Bushehr reactors (see Part I of this series), subject to Iran's agreeing to extra non-proliferation verification procedures similar to those that the United States negotiated with North Korea, and Iran agreed with the plan. But, once again, immense pressure by the United States scuttled the plan, after which Iran turned to Russia for completion of the Bushehr reactors.

A few other important points must be mentioned here:

(a) In this author's opinion, if acquiring nuclear reactors is in Iran's national interests (see Part II), so is signing the Additional Protocol. However, it is completely reasonable to expect that, in return for signing the Protocol and openning the nation to the IAEA inspections, Iran should obtain access to advanced nuclear technology, which should, however, be monitored and safeguarded by the IAEA. The fact remains that Russian nuclear reactors are inferior to those made in the West. Britain, France, and Germany have already promised to help Iran.

(b) However, in this author's opinion, signing the Additional Protocol, while necessary, may not be sufficient by itself to protect Iran's nuclear assets since this author believes that, unless the US invades and occupies Iran and installs a completely puppet regime in Tehran, she will continue pressuring Iran, using her nuclear program as a pretext, regardless of the future political developments in Iran. Thus, Iran's aim, in this author's opinion, must be addressing the demands of the IAEA with which the European Union also agrees, and to open up all of her facilities to inspections.

(c) The present Iranian leadership, both elected and unelected, must recognize that it has been given no mandate to deprive Iran's furure generations of the most advanced technology, namely, nuclear technology, by acting against Iran's national interests, including resisting stubbornly the legitimate demands by the IAEA. While giving Iran, a sovereign nation, an ultimatum is repugnant, there are many legitimate issues that must be addressed.

(d) It is highly important how Iran responds to the IAEA reasonable demands. She can react by dragging her feet, without having any active, efficient, and logical diplomacy, which will eventually result in agreeing to all the IAEA demands but under highly unfavorable circumstances, hence bringing about severe set backs to Iran's nuclear program, if nothing else (which could include economic sanctions and military threat). Alternatively, Iran can come forward with all the details of her nuclear program, while being firm in demanding assistance for acquiring advanced nuclear technology, in which case the EU, Russia, Japan and the non-aligned countries may help Iran.

(e) Unless Iran addresses the issues that the IAEA has raised, and signs the Additional Protocol on nuclear inspections, she will not only fail in her goal of building a network of nuclear reactors, but will also be under severe international pressure. Iran has already felt this pressure: Japan has slowed down negotiations for development of the Azaadegaan oil field (the largest field in the Middle East with estimated reserves of 26-30 billion barrels of oil), and the Shell Oil Company has withdrawn from negotiations for developing the same field. Under severe international pressure, the task of building a network of nuclear reactors will be set back for many years, if not decades.

With Israel's help, the apartheid regime of South Africa developed extensive nuclear facilities, and even made 16 nuclear bombs. The sixteen nuclear bombs could not, however, prevent the demise of the South African racist regime. While after establishment of a democratic system, the South Arfican government of President Nelson Mandela gave up volunteerly its nuclear bombs, the nuclear technology and know-how, developed during the apartheid regime, now belong to a democratic country and all South Africans.

Nothing protects Iran's national security and interests better than acceptance of her political system and government by Iranian people, which would happen only if a truly democratic system is established in Iran. At the same time, Iran's nuclear infrastructure is part of her national asset, belonging to all Iranians, regardless of their political inclinations. It is ultimately up to Iranian people, like their South African counterparts, to decide the fate of their country's nuclear technology, once such a democratic system is established.

Original URL: http://www.payvand.com/news/03/oct/1039.html

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Part IV: Economic Analysis of the Program

Introduction

Over the past two years, Iran's program for constructing the complete cycle for producing enriched uranium - the fuel for nuclear reactors and nuclear power plants (NPPs) - has been the subject of intense discussions. Over this period, the experts and inspectors of the International Atomic Energy Agency (IAEA) have been visiting Iran on a regular basis to inspect its nuclear facilities. The information and data that have been collected by the IAEA on Iran's nuclear energy program have revealed sustained and determined efforts by Iran since 1985 for developing an advanced program for producing enriched uranium. The Bush administrtation has been arguing that the primary purpose of Iran's nuclear program is developing nuclear weapons. The European Union (EU), which has very extensive commercial relations with Iran; Russia, which is completing the construction of a NPP in Bushehr (on the shores of the Persian Gulf), and Japan, which has signed a lucrative oil agreement with Iran for developing Iran's giant Azaadegaan oil field, have all pressed Iran hard, demanding that it reveal all the details of it nuclear program.

The Board of Governors (BOG) of the IAEA has had periodic special meetings to review the progress in assessing Iran's nuclear program. In its latest special meeting on Iran, which was held on Monday November 29, 2004, the IAEA reported to the BOG its latest findings on Iran's program, and due to the agreement that Iran recently signed with the EU troika - Britain, France, and Germany - for suspending its uranium enrichment program, no further special meeting of the BOG of the IAEA has been scheduled; that is, Iran's case before the BOG has gone back to being a normal, un-urgent case for now.

In a series of articles that were posted on Payvand in early October 2003, the author prsented a brief history of Iran's nuclear program (Part I); described the general outlines of the arguments that may justify Iran's nuclear energy program as economically viable (Part II), and explained the crisis that was emerging at that time in the relationship between Iran and the IAEA (Part III). This article and Part V continue the discussions that were begun in the first three parts of the series and expand on them.

When Part II of this series was first posted in October 2003, many colleagues and readers of the article urged the author to quantify the arguments presented in that article that were supportive of Iran's nuclear energy program as an economically viable program. The goal of the present article is just that: analyzing Iran's program for generating nuclear energy in the context of its energy needs over the next two decades, and carrying out an economical analysis to quantify and support the arguments that were first presented in Part II, using the latest and most accurate statistics on Iran's energy consumption and production currently available.

Another goal of the present article is to debunk - hopefully for the last time - the "argument" that the US neo-conservatives have been making, namely, that given Iran's vast oil and gas reserves, it does not need nuclear energy. The neo-conservatives and their allies, ranging from Israel to Iran's anti-democratic forces (from the group that makes new "discoveries" on Iran's program on a weekly basis to the monarchists), are the last group that are still hanging onto this argument! The analysis and arguments presented in Part II (and its short version published in the International Herald Tribune on October 14, 2003), as well as those presented by numerous others, have already made their impact: Iran's nuclear energy program has been transformed from one not needed by, or suitable for, Iran to a one for which the EU is willing to GUARANTEE the supply of nuclear fuels, provided that Iran "suspends" indefinitely its uranium enrichment program!

At the same time, it should be pointed out that when, under the US encouragement (some say pressure), Iran's nuclear energy program was started by the Shah in 1974,

(a) Iran's population was less than half of the present 70 million;

(b) its oil production was about 5.8 million barrels (MB) per day, compared with the present average daily production of 3.9 MB/day;

(c) it exported about 5 MB/day of oil, compared with the present average daily export of 2.6 MB/day;

(d) its energy consumption was less than one-fourth of the present;

(e) the Shah's government was burning Iran's natural gas for elimination, simply because it had no use for it, and,

(f) unlike now, Iran's oil reservoirs were not in decline, needing re-pressurization (see below) by natural gas injection.

In short, Iran did not need AT THAT TIME to generate electricity using NPPs. This then begs the question: Why is it that, given its present conditions which can justify use of NPPs for producing electricity (see below), the neo-conservatives and their allies believe that Iran does not need nuclear energy, whereas the US strongly pushed the Shah in the 1970s to build NPPs when Iran had no need for them (see Part V)?

In Part V of the series, the important role that the US and its European allies played in starting Iran's nuclear program will be discussed in considerable details. In particular, we will review the history of the US involvement with Iran's nuclear program to show, based on the newly accessed documents, that not only the US strongly encouraged the Shah to buy NPPs from the US, but was also willing to offer Iran, as a sweetener for the deal, the complete facilities for uranium enrichment if Iran agrees to buy eight US-manufactured NPPs! This should be compared with the present state of affairs whereby the US and the EU are trying to stop Iran from utilizing its uranium enrichment facilities and offer, instead, to supply Iran the enriched uranium for its NPPs! In addition, we briefly review the positions of some of the leading neo-conservatives in the US regarding Iran's nuclear energy program which reveal the extent to which they are willing to go, in terms of inflicting on Iran civilian casualties and economic destruction, to stop it from starting to operate the Bushehr reactor. In the opinion of the author, giving wide exposure to this position of the neo-conservatives is particularly important, since Iran's anti-democratic forces are the neo-conservatives allies.

To begin the discussion, we must first decouple Iran's need for nuclear energy from its perceived or real intentions for producing nuclear weapons, since constructing NPPs does not necessarily indicate any intention for making nuclear weapons. Recall that when Iraq's program for making nuclear weapons was discovered by the IAEA after the Persian Gulf war of 1990-1991, it did not have a single nuclear reactor; its only reactor, under construction at Osirak, had been demolished by Israel's bombing in 1981. The apartheid regime of South Africa produced 16 nuclear bombs in the 1980s, without having a single nuclear reactor!

More specifically, the goal of the present article is twofold.

(a) We describe Iran's energy needs over the next two decades when its population may reach 100 million, and the resources that it will and must have in order to secure adequate energy supplies. It is universally recognized that energy security, which includes securing adequate and DIVERSIFIED energy resources, is a highly important part of any nation's national interests which, by their very definition, transcend the political system that governs a nation. Iran, as a sovereign nation, has a fundamental right to diversify and develop its energy resources - the engine for its economic and social development.

(b) Why Iran must stop relying on oil and natural gas as its main sources of energy, and begin developing alternative sources, is discussed next. We show that, in addition to being in its long-term national interests, there are compelling economical, environmental and technological reasons for Iran to seek out alternative sources of energy, instead of relying so heavily on the fossil fuels. Moreover, we argue that a nuclear energy program has many other benefits for Iran in terms of the necessary technology that must be imported into the country, and the educated class of people that will run Iran's nuclear industry.

Whether Iran is trying to make nuclear weapons is beyond the scope of this article and, therefore, will not be discussed.

Iran's Energy Consumption and Resources

Iran's population is currently estimated to be close to 70 million, about 70% of which is below the age of 30. This should be compared with Iran's population of 30 million when the Shah started Iran's program for building NPPs in 1974. Most estimates indicate that Iran's population may reach 100 million by 2025.

According to reliable statistics (provided by not only Iran's Ministry of Power, but also by International Energy Agency, the British Petroleum Annual Statistics, etc.), between 1977 and 2003, Iran's rate of energy consumption has on average increased 5.5% per year, from an equivalent amount of 181 MB to about 740 MB of crude oil. Moreover, since the end of Iran-Iraq war in 1988, Iran's oil consumption has had an annual growth rate of about 8%, while the supply of energy from all of its sources has had an annual growth rate of 6%, hence barely keeping up with energy consumption. Between 1977 and 2001, the electricity production has been experiencing an average annual growth rate of 8.5%. Iran currently produces 31,000 megawatt (MW) of electricity. Most importantly, in 1977 Iran consumed 29.6 MB of crude oil to generate electricity, whereas 265 MB of oil were used in 2003 for the same purpose, representing an average annual growth rate of 8.8%.

If the above trend continues and crude oil is not replaced by another energy source, and if Iran does not increase its oil production significantly, it may become a net IMPORTER of oil over the next decade, a huge catastrophe for a country that obtains 80% of its total export earnings, 45% of its total annual budget, and about 15% of its GDP from exporting oil. It is estimated that during 2004 the average price of Iran's crude oil will be about $30/barrel. It is noteworthy that Iran earns about $900 million/year for every $1/barrel increase in the price of its oil. We now describe in more details Iran's various energy sources.

Oil Reserves

Over the past decade, major discoveries by the National Iranian Oil Company (NIOC) have increased Iran's proven and recoverable oil reserves to about 131 billion barrels, up from 93 billion barrels in 1993. This represents about 11.4% of the world's proven oil reserves, making Iran second only to Saudi Arabia. During the first six months of 2004, Iran produced about 4.1 MB/day, up from an average of 3.9 MB/day in 2003. Iran's SUSTAINABLE oil production is about 4 MB/day. About 70% of Iran's oil (2.8 MB/day) is produced by 9 giant onshore fields, with the offshore fields (in the Persian Gulf) producing another 0.675 MB/day (17% of the total production). Note that Iran was producing about 5.8 MB/day of oil during the last two years of the Shah in 1977-78, but has never exceeded, on an average basis, 3.9 MB/day since the Islamic Revolution, while its population has increased by 130%. Iran's OPEC quota is 3.817 MB/day. Its oil exports average about 2.6 MB/day, mainly to China, Europe, Japan, and South Korea.

Iran spends $3 billion/year to subsidize the price of oil products for its domestic consumption. Another $2-3 billion/year is spent on IMPORTING some oil products (mainly gasoline). To counter the rising rate of consumption of gasoline (10.5% per year), Iran has doubled its price over the past 2 years.

Iran plans to increase its oil production to 7 MB/day by 2025. This would need about $60 billion in foreign investment. Since President Khatami was elected in 1997, Iran has succeeded in attracting about $20 billion in foreign investment for its oil and gas sectors, with its lion share going to the natural gas sector (see below). Since Iran's Constitution prohibits granting of oil rights on a concessionary or direct equity basis, Iran's main mechanism for granting contracts is the Buy-Back scheme, whereby the contractor pays for all the investments, receives compensation from NIOC in the form of an allocated production share, and transfers the operation of the field to NIOC after a fixed period. This arrangement has been criticized domestically (mainly for its guaranteed high rates of return, which is typically 15-18%, and was over 20% for the first 2-3 contracts), and has not made many foreign oil companies very happy either, as they may not be allowed to develop their discovery, let alone operating them. In addition, the short terms of such contracts (typically 5-7 years) are disliked by oil companies. As a result, in January 2004, Iran announced major modifications to the Buy-Back scheme by extending the length of such contracts to as many as 25 years, while allowing for continued involvement of the oil companies after a field's operation is transferred to NIOC.

Natural Gas

Iran possesses about 942 trillion cubic feet (TCF) in proven natural gas reserves - 15.2% of the world's proven reserves - second only to Russia. Of these, about 62% are in mostly undeveloped non-associated fields (associated gas is what one finds in oil reservoirs). Iran's major gas fields include the giant South Pars (with reserves of 280-500 TCF) in the Persian Gulf which is the largest gas field in the world. This field also contains over 17 billion barrels of gas condensates (liquids). In addition, many of Iran's oil fields produce large amounts of (associated) gas. Iran's natural gas production in 2002 was about 2.7 TCF.

Natural gas has increasingly become the main source of energy in Iran. Whereas in 1977 it represented only 8.4% of Iran's energy consumption, it now accounts for more than 53% and is rapidly increasing. This statistics alone should debunk the argument of opponents of Iran's nuclear energy program that it has not tried to use its natural gas a source of energy.

Iran has given the highest priority to development of South Pars field, since it shares it with Qatar. The field is supposed to be developed in 28 phases; 16 phases are currently active. Developing South Pars has attracted over $15 billion in foreign investments, and has generated at least 30,000 new engineering and supporting technical jobs in Iran. In addition to natural gas, gas condensate production from the field should reach about 220,000 barrels/day by 2005, and 630,000 barrels/day by 2015. When South Pars is fully developed, Iran will earn over $11 billion/year for at least 30 years from this field ALONE.

Between 35% to 40% of all the produced natural gas is injected into many of Iran's giant but aging oil fields for pressure maintenance and secondary oil production (see below). The rest is either exported by pipelines or as liquefied natural gas, or is consumed domestically. Iran exports natural gas to Turkey, and has signed agreements, or is negotiating, to sell gas to Armenia, Azerbaijan, China, Georgia, India, Pakistan, South Korea, Taiwan, and the United Arab Emirate. It is also actively seeking to export gas to Europe through Turkey and Greece (an agreement with Greece has been signed), hoping to export 300 billion CF/year of gas by 2007.

Iran also uses its natural gas as feedstock to develop its petrochemical industry, which currently produces nearly $2.7 billion in petrochemical products for domestic consumption and exporting. This generates much added values for Iran's natural gas, hence justifying its use for a set of projects for downstream and commodities production, rather than just burning it as a source of energy. We will come back to this point shortly.

Electric Power

Currently, Iran has a capacity of about 31,000 MW of electricity, of which more than 75% is generated by natural gas plants, 7% by hydroelectric, and 18% by oil-fired plants. The corresponding percentages worldwide are, respectively, 17%, 17% and 8% [1]. Iran currently consumes about 28,000 MW of electricity (the rest of the electrical capacity is exported). The demand for electric power is growing at an annual rate of 8%. Thus, Iran projects needing 70,000 MW of electricity by 2021, of which it plans to produce 7,000 MW by NPPs, representing 10% of its electric power. Currently, 19% of the world's electricity is generated by NPPs, and the IAEA estimates that this will reach 27% by 2030 (see below for further discussions).

Iran does have large potential for hydroelectric power generation, estimated to be about 20,000 MW/year. It is currently building 7 hydroelectric power plants, representing over 63% of its current power generation projects, that will generate by 2007 over 8020 MW of electricity. By 2021 some 14,000 MW of electricity will be generated by hydroelectric power, projected to represent 20% of Iran's electrical capacity. In addition, Iran has some potential for generating electricity from geothermal sources, with its first geothermal power plant going online recently near Ardabil, in northwestern Iran. Several small photovoltaic units that generate electricity are operating in rural areas of Iran.

Nuclear Energy Program

As mentioned above, by 2021 Iran wishes to generate at least 10% of its electricity by NPPs. However, constructing the NPPs is only part of the plan. Iran also wishes to possess the full nuclear fuel cycle for producing enriched uranium, as its has very significant natural uranium reserves in the form of uranium ore. The main reserves are in Saaghand, 300 miles south of Tehran in the Yazd Province (representing one of the largest deposits of uranium ore in the Middle East), and near Bandar Abbas. During 1993-1994, the Beijing Research Institute of Uranium Geology of China aided Iran with uranium mine exploration and operation, but Iran appears now to be self-sufficient in the required expertise.

It is estimated that Iran's known uranium ore reserves can produce as much electricity as 43 billion barrels of oil. This is a huge amount by any criterion, but particularly so if we only recall that if we extract ALL of Iran's known recoverable oil reserves (a remote possibility!) and use fully one-third of them only for generating electricity, we will generate as much electricity as what Iran's presently-known uranium deposits can produce!

The uranium ore is first converted to a powder, usually called the yellowcake. Iran is building plants in Ardakan and Bandar Abbas for this purpose. The yellowcake is then further processed to produce gaseous uranium tetra- and then hexafluoride. The facility for doing so is in Isfahan, which can also produce uranium oxide and uranium metal, the main components of nuclear fuel.

The Natanz facility is to be equipped with the standard uranium-enrichment instrument, namely, a large number of cascaded centrifuges that spin uranium hexafluoride gas at very high speeds and separate the lighter uranium-235 hexafluoride from the heavier uranium-238 hexafluoride. Of every 1000 uranium atoms only 7 are uranium-235. It is uranium-235 which is used in nuclear reactors and also nuclear bombs. Hence, one must have a large number of cascaded centrifuges to produce enough uranium-235. The Natanz facility has a pilot gas centrifuge plant that currently houses nearly 1300 centrifuges, and a large-scale production plant which will house up to 50,000 centrifuges, the installation of which (to begin in 2005) will take up to 10 years. Such a facility would then have the capability for producing enough uranium for annual consumption of a nuclear reactor of the Bushehr-type (producing 1000 MW of electricity). We note that about 20 countries around the globe are active in uranium enrichment.

Three companies, Kaalaa-ye Electric, Pars Taraash, and Faraayand Technique, can produce parts for the centrifuges that are to be used for enriching uranium. Iran also has nuclear waste disposal sites near Qom (Ghom), Karaj, and Anarak. There are three other nuclear facilities in Iran which represent research institutions, and are not directly related to uranium enrichment. It must be emphasized that the IAEA has been monitoring all of Iran's known nuclear facilities.

The Case for Nuclear Energy

The main argument of the critics of Iran's nuclear energy program is that, it has vast oil and gas reserves, hence needing no nuclear energy. The argument is mostly hot rhetoric. Canada and Russia, both major oil exporters, rely on NPPs for a significant portion of their electricity needs. Russia has vast oil and gas reserves (its gas reserves represent about a quarter of the world's known reserves), and Canada exports 1.5 MB of oil to the US every day, yet they both continue building NPPs. Between 1974, when Iran signed its first agreement for building NPPs, and 2000, use of NPPs for generating electricity in the world has increased by a factor of 12! In particular, France is now producing most of its electricity using NPPs.

At the same time, construction of NPPs in Iran is completely consistent with the general trends in Asia. According to the IAEA [2], 23 of the last 31 NPPs connected to the world's power grid have been built in Asia. Of the NPPs currently under construction, 18 of 27 are located in Asia, generating 78% more electricity by 2015 than 1995. In addition, according to the IAEA analysis [2], subject to certain reasonable assumptions, by 2030 27% of the world's electricity will be generated by NPPs, compared with the current rate of 19%. Even in the US, the Bush Administration has been talking about a nuclear power renaissance, and the US nuclear industry has been calling for construction of 50 NPPs by 2020 [3].

However, aside from the above general arguments, one can completely justify Iran's nuclear energy program based on economic, environmental, NUCLEAR EXTERNALITIES, and Iran's long-term national interests. In what follows we discuss each of these aspects.

The Economics of Iran's Nuclear Energy Program

If oil is to be used for generating electricity, then, for every 1000 MW of electricity, Iran must use between 20 to 25 MB of crude oil per year, depending on the oil quality. This implies that, for an average price of $25/barrel (currently the oil prce is much higher, and will presumably remain so for many years to come), Iran will lose $500-625 million/year in oil exports, which should be compared with the operating cost of about $140 million/year for a NPP generating the same amount of electricity. In 2003 alone, Iran used 265 MB of crude oil to generate 18% of its electricity. With a 2003 average price of $26/barrel, this represents $6.89 billion worth of oil exports for A SINGLE YEAR, a staggering figure that can pay for complete construction of at least two Bushehr-type (1000 MW) reactors and their operations for several years at the current prices! When we consider this over the useful life of a NPP (say, 50 years), not only Iran can replace the oil-generated electricity with that generated by NPPs, it will save tens of billions of dollars. Note that constructing NPPs in Iran should, under normal circumstances, be considerably cheaper than in the US or the EU, as the labor force is much cheaper in Iran, and many expensive legal and regulatory aspects of constructing a NPP in the US [4] do not simply exist in Iran.

Burning oil to generate electricity also creates severe environmental problems, as it has been doing in Iran, with very significant economic consequences which will be described in the next section.

Now consider natural gas power plants. As we already pointed out, Iran has already made great strides in using natural gas for its energy needs, with 75\% of its electricity, and 53% of all of its energy consumption being supplied by natural gas, hence debunking, once again, the main argument of the neo-conservatives and other opponents of Iran's nuclear energy program that Iran has not made the necessary effort to use its natural gas for its energy needs. At the same time, there are other areas of needs for natural gas that have priorities that may even be higher than using it for generating electricity, some of which are as follows.

(a) The author has been involved in computer modelling of oil and gas reservoirs for over 25 years [5]. A study in 1998 concluded that, out of Iran's 60 oil fields (at that time), 57 of them needed major technical studies, repairs, upgrading, and repressurizing by natural gas (the author was a member of the group that studied this issue and reached the above conclusion). A typical Iranian oil reservoir is fractured, and is of carbonate-type with a very tight rock matrix. It is well-known that injection of huge amounts of natural gas into almost all of Iran's oil reservoirs is practically the only way of maintaining their pressure to produce oil (a process called secondary recovery). Water injection, another common method of pressure maintenance in oil reservoirs, is not suitable for most of Iran's oil reservoirs [5]. Since, over time, the pressure will decline, the amount of injected gas must also increase to keep pace (at some point gas injection alone will not be effective anymore, and one must start what is usually called the tertiary recovery process). Currently, 35%-40% of all of Iran's natural gas production must be injected into its giant but aging oil reservoirs, without which the production of most, if not all, of them will rapidly decline.

At the same time, consider the following: If the natural gas that one burns annually to produce 1000 MW of electricity (the amount that the Bushehr reactor will produce) is injected into a typical Iranian oil reservoir, it will increase the reservoir's production by at least a few thousand barrels/day, depending on the reservoir's geology and history of production. The earning from exporting the extra oil can pay for and cover part of the operating cost of a 1000 MW reactor ($140 million/year) and reduce its operating cost to a level that makes it economically competitive with the cost of a gas power plant, estimated to be $60-70 million/year, while not polluting the environment by burning oil or natural gas.

We must also remember that, (1) the natural gas that is injected into Iran's oil reservoirs is largely recovered, hence making it even more economical to use NPPs to produce electricity and use the gas for pressurizing the oil reservoirs, and (2) NPPs have ZERO emission of carbons and other pollutants into the air, whereas fossil fuels, including natural gas, emit large amounts of carbon.

(b) As pointed out above, most of Iran's gas fields contain also huge amounts of liquefied natural gas (LNG). Natural gas can also be easily converted to LNG, which is sold at a price much higher than that of natural gas itself. However, the OPEC treats LNG similar to crude oil when determining quota for its members, and as a member of OPEC Iran cannot exceed its quota. Therefore, natural gas production cannot be increased arbitrarily to compensate for the gas that used domestically [6].

(c) As mentioned earlier, Iran is already exporting natural gas to several of its neighbors, and is actively seeking exporting very large amounts of gas to Europe. This is all part of a new emerging global market - natural gas - which is going to have [7] great impact on the world economy with geopolitical implications. By saving as much natural gas as possible for export, Iran will be in a very strong position in this emerging market to play a role similar to that of Saudi Arabia in the oil market, given its gas reserves.

(d) Iran is developing its petrochemical industry, for which the main feedstock is natural gas. The added value generated by producing petrochemical products (which can be up to 100%, depending on the products) - not to mention the jobs and industrial base that it creates, and the foreign currency income that it generates - is much greater than what Iran may gain by simply burning huge amounts of gas to generate electricity. In fact, the world's $500 billion petrochemical industry has been developed precisely for this reason: The added value that one gains from converting natural gas to downstream petrochemical products which, in Iran's case which has vast gas reserves and cheap labor force and energy resources, cannot be ignored.

(e) Unlike the popular belief, burning natural gas does contribute to degradation of the environment - by producing and releasing carbon into the atmosphere and contributing to the Greenhouse effect and global warming. This will be further discussed in the next section.

Environmental Problems Caused by Fossil Energy Usage

"The more we look to the future, the more we can expect countries to be considering the potential benefits that expanding nuclear power has to offer for the global environment and for economic growth...."

The above are what Dr. Mohamed ElBaradei, IAEA Director General, said [2] in advance of a gathering of 500 nuclear power experts in Moscow from 27 June - 2 July, 2004, marking the 50th anniversary of the start of the first NPP. Dr. ElBaradei points out an important fact: NPPs DO NOT POLLUTE THE ENVIRONMENT ON A REGULAR BASIS, but that is exactly what oil and other fossil fuels have been doing to Iran for years. If one is to obtain a true estimate of the cost of using oil, and even natural gas, as sources of energy, one must take into account the huge cost of the medical care for people who suffer from the diseases caused by pollution of the environment by oil and natural gas, as well as their damage to Nature. As early as 1990, in a seminar at Gustave E. von Grunebaum Center for Near Eastern Studies of the University of California in Los Angeles the author stated that [8],

"Typical estimates for the cost of producing electricity and other forms of energy using oil and gas are only based on their market prices. These prices reflect only the cost of producing oil (and gas) and of transporting them to the consumer. However, some of the costs of consuming fossil energy are not directly included in our energy bill, nor are they paid for by the producers. These are the HIDDEN, but real, costs that the society pays indirectly for the health problems caused by air, water and soil pollution r esulting from using fossil energy, environmental degradation caused by carbon emission and global warming, and acid rains. For example, according to the American Lung Association, total health costs, including lost potential income, of air pollution alone are estimated to be about $50 billion/year. The main culprit for air pollution is the fossil fuels, mainly oil, our primary source of energy. Evaluating the economics of the damage inflicted on Earth by global warming, caused by carbon emission that is the direct result of burning oil and natural gas, is currently impossible."

Supplying energy to the world releases six billion metric tons of carbon into the atmosphere every year, with Iran contributing her share. Iran is beset by huge environmental problems, caused by oil and gas consumption, that are reaching catastrophic scales. Although Article 50 of Iran's current Constitution states that, "In the Islamic Republic of Iran protection of the environment, in which present and future generations should enjoy a transcendent social life, is regarded as a public duty," various reasons kept in the back-burner the goal of cleaning the environment and maintaining it that way.

Since 1980, carbon emission in Iran has risen by 240%, from 33.1 million metric tons emitted in 1980 to more than 85 million metric tons at present. Note that, whether oil or natural gas is used, carbon emission cannot be avoided. This emission is one of the main culprits behind air pollution in Tehran and all other major cities of Iran that has reached catastrophic levels, so much so that the elementary schools must be closed on many days. According to Iran's Ministry of Health, and the Organization for Protection of the Environment, long-term effects of the polluted air are responsible, directly or indirectly, for causing 17,000 deaths/year in Tehran alone, as well as causing severe problems for people with asthma, heart, and skin conditions. The cost of medical care for such illnesses is reaching, by Iran's standards, astronomical levels. Generating electricity by NPPs does not directly address such problems, but it does reduce the pollution and environmental degradation caused by burning oil and (in the long-run) natural gas.

Polluted air also severely damages soil and groundwater resources by contaminating the rain water. At the same time, Iran's industrial base, using fossil fuels for energy, generates wastes that contaminate a large number of rivers and coastal waters and threaten drinking water supplies. Iran is actually reaching the stage which is characterized by chronic shortage of clean water - believed by many to be the cause of many future wars in the Middle East.

A recent study by John Deutch and Ernest Moniz of the Massachusetts Institute of Technology [9] argued that even in the US, if certain technological advances are made (expecting to achieve these advances is entirely reasonable), and subject to a modest tax on the carbon emitted into the atmosphere, the cost of generating electricity by NPPs will become competitive with that of gas power plants.

Finally, strict environmental regulations and public opposition have prevented development of significant oil reserves in the US (for example, in Alaska). At the same time, Western European countries have been discouraging use of oil and gas, with some moving towards NPPs. Since 1980, France has increased its production of electricity from NPP by 80% and reduced its oil consumption by 10%. But, the same countries that are reluctant to use oil and gas because they fear damage to their environment, demand Iran to burn oil and gas to generate electricity!

Nuclear Externalities

Externalities are said to arise when decisions of some economic agents affect the interests of other economic agents [10]. A good example is provided by the US space program in the 1960s. Although the program was intended for (and succeeded in) landing men on the Moon, it also resulted in tens of thousands of inventions and technological advances that we now use in our every day lives. What are the externalities of nuclear technology for Iran? One can list at least four major catagories [11]. Iran's nuclear program will result in,

(a) development and nurturing of new and unprecedented capabilities for building technological infrastructures;

(b) cross-fertilization and diversion of nuclear-related know-how, research and development, and supply chain to Iran's other industries, and other branches of science, such as medicine and agriculture;

(c) added-value and versatility of nuclear technology-related training, and

(d) creation of new cadre of managers of technology, technocrats, and organizational system culture.

In the author's opinion, nuclear externalities alone justify a nuclear energy program for Iran. Our contention is perhaps best described by Perkovich who declared that [12],

"Nuclear establishments can be seen as avatars of modernity, national prowess, and power, and the leaders of these establishments are well-positioned to pursuade (political) leaders and public to give them rein and bring greatness to their nations."

Iran's Long-Term National Interests

Iran must confront the challenge of its demographic explosion without having access to many of the necessary tools, which are strong state structures, large amounts of investment capitals, and industrial infrastructres that are reasonably advanced. At the same time, oil and natural gas are Iran's non-renewable national wealth. Once they are burned, they can never be recovered. One cannot expect Iran to recklessly deplete its non-renewable national wealth without receiving any lasting benefits in return, but this will happen if Iran's energy sources are not diversified, and it continues to rely almost exclusively on oil and natural gas as almost the only sources of energy.

Since the 1979 Revolution, Iran's population has more than doubled, from 30 to nearly 70 million, while its present oil production is only 70% of the pre-Revolution level. As pointed out in the Introduction, the question is: Why is it that the US and its allies believed in the 1970s that Iran needed NPPs, when its population was less than half of the present; its oil production was much more than now; its natural gas was being burned uselessly; its energy consumption was about a quarter of the present, and when, unlike today, its oil reservoirs were not in desperate need of natural gas injection, but that, now, Iran does not need alternative sources, including nuclear energy? How should Iran feed, house and educate its rapidly growing population, create jobs for its army of educated people, and develop its infrastructure and industrial base, mostly based on its income from exporting oil and gas, but also use the SAME resources to satisfy its ever increasing energy needs?

The Challenges of Nuclear Energy

To be fair, we must also recognize that NPPs do have their own problems:

(a) Nuclear power plants require high initial capital cost and investment. However, given nuclear externalities and other benefits of nuclear energy described above, the high cost is completely justified in Iran's case.

(b) The second problem of NPPs is their safety which must be at a very high level so that the chances of accidents, similar to those that happened in Three-Mile Island in the US (in 1979) and in Chernobyl in Ukraine (in 1986), will be minimal. The aforementioned MIT report [9] called for maintaining the current standards of "less than one serious release of radioactivity accident for 50 years from all fuel cycle activity," which "should be possible with the new light-water reactor plants" (that is, the reactors that use the heat from nuclear reactions in a nuclear reactor to generate steam for use in a power plant). The fact is that the safety of NPPs is a recurring problem. Even J apan, an advanced industrialized nation, has had many nuclear accidents. Therefore, the nuclear industry can no longer ignore this problem, or claim that it has addressed it in a satisfactory manner.

(c) One must also address the problem of safely storing the nuclear wastes produced by NPPs which will be radioactive for at least tens of thousands of years.

Renewable Energy Sources for Iran?

Iran does have potential for generating significant amounts of electricity using renewable sources (although, in some way, nuclear energy may also be considered as a renewable source). One is hydroelectric which, as pointed out above, should provide 20% of Iran's electricity by 2021. Iran's central desert has the potential to produce some energy using solar technology, but the technology is not advanced enough to act as a major supplier, at least not yet or in the near future. There is also some potential for geothermal energy, but its extent is limited. Altogether, such alternative methods cannot provide more than 25% percent of Iran's energy needs, at least over the next two decades.

Conclusion

Iran's goal of generating, by 2021, 10% of its electricity by NPPS, 20% by hydroelectric, 65% by natural gas, and 5% by other sources is rational and economically justified. The benefits of diversifying Iran's energy sources, and in particular resorting to nuclear power plants for a fraction of Iran's needed electricity, far outweight any possible drawback that it might have, although the author cannot conceive one.

References

[1] The Role of Renewables in Future Energy Directions, International Energy Agency report (October 2002).

[2] See the IAEA Press Release

[3] See, Physics Today (April 2002), p. 54.

[4] G. Rothwell, Triggering Nuclear Development: What Construction Cost Might Prompt Orders for New Nuclear Power Plants in Texas, Public Utilities Fortnightly (May 2004), p. 47.

[5] M. Sahimi, Flow and Transport in Porous Media and Fractured Rock, 1st ed. (VCH, Weinheim, Germany, 1995); 2nd ed. (to be published in 2005).

[6] See also W.O. Beeman and T.R. Stauffer, Is Iran Building Nukes? An Economic Analysis, Pacific News Services.

[7] D. Yergin and M. Stoppard, The Next Prize, Foreign Affairs, vol. 82 (No. 6), 103 (2003).

[8] For expanded content of that seminar see, M. Sahimi, How Much do We Pay for a Barrel of Oil? in, Proceedings of the Third International Conference on Non-Renewable Energy Sources, Tehran, Iran (December 1993), p. 127, and, M. Sahimi, Factors Affecting the Development of Fossil Energy Resources of Developing Countries, in, United States-Third World Relations in the New World Order, edited by A.P. Grammy and C.K. Bragg (Nova Science Publishers, New York, 1996), p. 361.

[9] J.M. Deutch and E. Moniz, The Future of Nuclear Power; see also, Physics Today (December 2003), p. 34.

[10] J. Hirshleifer, Price Theory and Applications, 2nd ed. (Prentice Hall, Englewood Cliffe, 1980).

[11] N. Meshkati, The Nuclear Question, paper presented at symposium on, Politics and Governance in a Changing Iran, Hoover Institution, Stanford University, Stanford, California (November 31, 2003).

[12] G. Perkovich, Nuclear Power and Nuclear Weapons in India, Pakistan, and Iran, in, Nuclear Power and the Spread of Nuclear Weapons: Can We Have One without the Other, edited by P.L. Leventhal, S. Tanzer, and S. Dolley (Brassey's, Washington, 2002), p. 196.

Original URL: http://www.payvand.com/news/04/dec/1056.html

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Part V: From the United States Offering Iran Uranium Enrichment Technology to Suggestions for Creating Catastrophic Industrial Failure

Introduction

In a series of articles that were posted on Payvand in October 2003, the author provided a brief history of Iran's nuclear program (Part I); described the general outline of the arguments that justify for Iran nuclear energy as an economically viable source of energy (Part II), and explained the crisis that was emerging at that time in the relationship between Iran and the International Atomic Energy Agency (IAEA) (Part III). In Part IV, posted on Payvand on December 7, 2004, the author presented a detailed economical analysis of Iran's nuclear energy program.

The goal of the present article is twofold:

(a) We describe in detail the key role that the US played in the 1970s in starting Iran's nuclear program. We show that not only did the US push the Shah to buy nuclear power plants (NPPs) from the US, but was also willing to offer Iran the technology for uranium enrichment if Iran agrees to buy eight US-manufactured NPPs. This should be compared with the present state of affairs whereby the US and its European allies are pressuring Iran to refrain from utilizing its uranium enrichment facilities and, instead, import enriched uranium for its NPP.

(b) We then compare what we describe in (a) with the present positions of the US neoconservatives and their sympathizers, which reveal the extent to which they are willing to inflict CIVILIAN casualties and economic damage on Iran to stop it from starting the Bushehr reactor.

Giving wide public exposure to the neoconservatives' and their sympathizers' thinking is, in the author's opinion, particularly important since, as the author has pointed out in his articles over the past three years, Iran's main antidemocratic forces - the monarchists and cultists - have aligned themselves with these groups. Therefore, it is essential to learn more about the fantasies of the neoconservatives and their sympathizers, which in turn will help us become more informed about the true face and colour of their Iranian allies who are willing to do anything to grab power in Iran.

The United States-Iran Nuclear Relations in the 1970s

It was presumably 1955 when the first discussions on developing a nuclear program for Iran took place. The first concrete step, however, was taken in 1957 when the US signed an agreement with Iran [1] on civilian nuclear cooperation. This was promoted as part of the US Atoms for Peace Program that was supposed to provide technical assistance to the signatories, as well as leasing them enriched uranium, and carrying out joint research on the peaceful use of nuclear energy. In the same year, the Central Treaty Organization (CENTO), that consisted of Iran, Pakistan, Turkey, Iraq, Britain, and the US moved its Institute of Nuclear Science from Baghdad to Tehran (after General Abdolkarim Ghassem's military coup d'etat in 1958, Iraq withdrew from CENTO).

In 1959 the Shah ordered establishment of a nuclear research center at Tehran University, Tehran Nuclear Research Center (TNRC), and began negotiating with the US to purchase a 5-megawatt (MW) reactor for the Center. To this date, the Center remains one of Iran's main nuclear research organizations.

In the late 1950s the US Joint Chiefs of Staff wanted to store nuclear bombs in Iran (presumably due to the victory of the Cuban revolution, the rise of Fiedel Castro to power, and the support that he began receiving from the Soviet Union). In February 1961, shortly after President John F. Kennedy took office, the US State Department opposed the JCOS suggestion; it was never carried out [2].

In September 1967 Iran received from the US 5.54 kgr of enriched uranium, of which 5.16 kgr contained fissile uranium isotopes (which could, in principle, be used in a nuclear bomb), to use in its research reactor at TNRC. In addition, Iran received 112 kgr of plutonium, 104 kgr of which were fissile isotopes [3]. The safeguarded 5 MW nuclear research reactor, a pool-type, water-moderated reactor that was supplied to Iran by the US firm GA Technologies started full operations at TNRC in November 1967, using 5.58 kgr of 93% enriched uranium. The fuel was provided by the US firm United Nuclear Corporation. In addition, the US supplied Iran hot cells which are [4], "heavily shielded rooms with remotely operated arms used to chemically separate material irradiated in the research reactor, possibly including plutonium laden 'targets'." On July 1, 1968, the first day that the Nuclear Non-proliferation Treaty (NPT) was opened for signature, Iran signed the Treaty. It was ratified by the Majles (the Iranian parliament) on February 2, 1970.

The US-Iran agreement, Cooperation Concerning Civil Uses of Atoms, that had been signed in 1957 (see above) was extended on March 13, 1969 for another 10 years. The first announcement on Iran's intention for obtaining NPPs was made in December 18, 1972 [5], when Iran's Ministry of Water and Power began a feasibility study for constructing a NPP in southern Iran.

The 1973 war between the Arab countries and Israel, and the subsequent huge increase in the price of oil, provided the Shah's government with considerable resources. In fact, 1974 proved to be a very busy year for Iran's atomic energy program! The Shah had originally envisioned Iran to produce, by 1990, 10,000 MW of electricity by NPPs. However, a 1974 study by the Stanford Research Institute concluded that Iran would need, by 1994, to produce 20,000 MW of electricity by NPPs. Thus, in March 1974 the Shah announced [6] plans for generating 23,000 MW of electricity, "as soon as possible," using up to 23 NPPs, with a target date of 1994. To achieve his goal, the Shah established the Atomic Energy Organization of Iran (AEOI), appointed Dr. Akbar Etemad, a Swiss-trained physicist, as its first chief, and announced that the AEOI, like everything else, would be run directly under his command.

The Shah had proposed to the US for many years the establishment of a Joint Economic Commission (JEC) for regulating and expanding Iran's commercial relations between the two countries. Up until 1974, the US had always turned down the Shah's suggestion on the ground that, having a free-market economy, the US government had no role to play in the commercial relations with Iran. Instead, the Shah had established many such JECs with the communist countries. However, after the severe increase in the price of oil during 1973-1974, the US was looking for a way to recoup billions of dollars that it was spending on importing oil and, therefore, it suddenly became very interested in establishing a JEC with Iran! In a SECRET letter, dated April 13, 1974, to Amir Assadollah Alam, the long-time Imperial Court Minister and confidante of the Shah, Mr. Richard Helms, the then US ambassador to Iran, wrote [7]:

"On March 14 and April 4, 1974 I discussed in audience with His Imperial Majesty my Government's genuine interest in finding ways to deepen and broaden the already strong ties between the Imperial Government of Iran and the United States. I am pleased to describe to you in more comprehensive detail my Government's views on ways in which we can mutually enrich the relationships between our Governments. I would Greatly appreciate this message being forwarded to its High Destination..... Secretary [of State Henry A.] Kissinger looks forward yo discussing these matters personally with His Imperial Majesty at a fairly early date...."

Mr. Helms then went on to suggest the establishment of a JEC, the same commission that the US had resisted for years (!):

"There is considerable scope for expanded cooperations between our countries in the economic field. In order to provide proper focus and suitable high-level official guidance, we suggest the establishment of a Joint Economic Commission at the Cabinet level. For our part, we contemplate that the United States member of the Commission would be the Secretary of Treasury...."

Mr. Helms then proposed the formation of several working groups that "could address general areas of concern or specific projects," including technology transfer, petrochemical development, communications, and political and security matters. But the first and most important working group that he proposed was the NUCLEAR ENERGY PRODUCTION GROUP, for which he wrote,

"We have noted the priority that His Imperial Majesty gives to developing alternative means of energy production through nuclear power. This is clearly an area in which we might most usefully begin on a specific program of cooperation and collaboration. Accordingly, we suggest that this be the first working group under our Joint Economic Commission. The Chairman of the Atomic Energy Commission is prepared at an early date to visit Tehran with a team of experts to discuss ways and means by which we can most actively cooperate in this field based on our own experience."

As pointed out in detail in Part IV of this series, the fact is that constructing NPPs in Iran in the 1970s had no economic justification whatsoever. This had made the Shah very sensitive to the critics' criticism - which had considerable validity - that nuclear contracts were being imposed on Iran by the US. Mr. Alam, the Shah's confidante, also expressed his grave concerns to him by telling him that [8],

"It is not in the interest of Shahanshah's Independent National Policy that such suggestions [Mr. Helm's] be proposed and be called a contract," to which the Shah responded [8], "We will expand our relations that we already have, and nothing more,"

just as Mr. Helms had suggested to the Shah in their private meeting and mentioned in his letter to Mr. Alam (see the next paragraph). Even from the US perspective, although the Shah was its close ally at that time, selling Iran nuclear technology was also a very sensitive subject, hence the secret nature of Mr. Helms' letter to Mr. Alam. The sensitivity can be seen in a paragraph of his letter where, under the title PUBLIC ANNOUNCEMENTS, he stated that,

"In the ordinary course of events, our joint initiatives in the fields mentioned above will naturally receive a certain amount of attention. Some general reference to our expanded cooperation might well take place during Secretary [of State Henry A.] Kissinger's next visit, but it is my personal view that we should handle these joint endeavors as natural outgrowths of the already close and friendly relations between the Imperial Government of Iran and the United States....."

At the end of his letter, Mr. Helms emphasized the US eagerness to participate in Iran's nuclear program:

"The Secretary [of State Henry A. Kissinger] has asked me to underline emphatically the seriousness of our purpose and our desire to move forward vigorously in appropriate ways...."

In May 1974, Dr. D.L. Ray, the Chairman of the US Atomic Energy Commission, travelled to Iran during which he mentioned the possibility of establishing REGIONAL uranium enrichment and reprocessing facilities for Iran.

The next month, the Shah declared that Iran will have nuclear weapons, "without a doubt and sooner than one would think" [9]. The Shah first backed off [10], but later on qualified his earlier statement, saying [11] that Iran has

"no intention of acquiring nuclear weapons but if small states began building them, then Iran might have to reconsider its policy"!

According to Dr. Akbar Etemad (the first Chief of the AEOI from 1974 to 1978), the TNRC carried out experiments in which plutonium was extracted from spent fuel using chemical agents [12]. Note that the most important use for plutonium is in a nuclear bomb. It is also believed that the Shah had assembled at the TNRC a nuclear weapon design team. According to Mr. Alam [13], in the mid 1970s the Shah ordered the establishment of a ``University of Military Sciences and Technology.'' The mission of this university, which was supposed to be in Esfahan and controlled solely by Iran's armed forces, was to carry out research and development in the area of chemical and nuclear weapons. The Shah had even authorized stealing the necessary science and technology from other countries, if need be, in order for Iran to fully acquire the know-how of making chemical and nuclear weapons. None of these activities did, of course, provoke any reaction by the US.

On March 3, 1975, Iran and the US signed an agreement worth about $15 billion, according to which the US was, among other things, to build EIGHT NPPs in Iran with a total capacity of about 8,000 MW. The agreement was signed by the US Secretary of State Henry A. Kissinger, and Iran's Finance Minister Mr. Houshang Ansari. The fuel for the reactors was to be supplied by the US.

On March 14, 1975, in National Security Study Memorandum 219 signed by Mr. Henry A. Kissinger, President Gerald R. Ford directed [14]

"a study of the issues involved in reaching an acceptable agreement with the Government of Iran which would allow nuclear commerce between the countries - - specifically, the sale of the U.S. nuclear reactors and materials, Iranian investment in the U.S. enrichment facilities, and other appropriate nuclear transactions in the future."

About a month later, President Ford instructed the US negotiators to offer Iran uranium enrichment and reprocessing facilities. Specifically, National Security Decision Memorandum 292, dated April 22, 1975 and signed by Mr. Kissinger, stated [15] that the US shall

"- - Permit U.S. materials to be fabricated into fuel in Iran for use in its own reactors and for pass-through to third countries with whom we have Agreement."

In addition, the US was willing to allow Iran to invest in the US uranium enrichment facility (Iran had proposed investing $2.75 billion in an enrichment facility in the US [16]). This is stated in the Memorandum [15]: The U.S. shall

"- - Agree to set the fuel ceiling at a level reflecting the approximate number of nuclear reactors planned for purchase from the U.S. suppliers. We would, as a fallbak, be prepared to increase the ceiling to cover Iran's full nuclear reactor requirement under the proviso that the fuel represents Iran's entitlement from their proposed investment in an enrichment facility in the U.S...."

The US was also willing to allow Iran to reprocess the spent fuels [15] (whic produce plutonium): The US shall

"Continue to require U.S. approval for reprocessing of U.S. supplied fuel, while indicating that the establishment of a multinational reprocessing plant would be an important factor favoring such approval...."

Around the same time, the Massachusetts Institute of Technology signed a contract with Iran for providing training for Iranian nuclear engineers. At that time, the AEOI had a staff of about 150 nuclear physicists, about half of whom were from Argentina. The Shah increased the 1976 budget of Iran's AEOI to $1 billion from about $31 million in 1975.

In National Security Decision Memorandum 324, dated April 20, 1976 and signed by General Brent Scowcroft, President Ford authorized the following negotiation position for the US with Iran. The US side should [17]:

"Seek a strong political commitment from Iran to pursue the multinational/binational reprocessing plant concept, according the U.S. the opportunity to participate in the project....."

Note that when President Ford was offering Iran such nuclear concessions, Dick Cheney, the present Vice President, was the White House Chief of Staff, and Mr. Donald Rumsfeld was the US Defence Secretary. Therefore, the same Donald Rumsfeld who was closely involved with pursuing a nuclear deal with Iran in the 1976, and the same Donald Rumsfeld who went to Baghdad in December 1983 to inform Saddam Hussein that the US, although officially neutral in the Iran-Iraq war, was going to tilt towards Iraq (after which the US provided strong military and intelligence support to Saddam Hussein), now has a leading role in the invasion of Iraq and threatening Iran with military strikes.

Around the same time, Mr. Jeffrey Eerkens, a US uranium enrichment expert, travelled to Iran to obtain funding for an invention of his for a special laser that could be used for uranium enrichment. In fact, Mr. Eerkens obtained in 1978 a license from the US Department of Energy to sell four lasers to Iran [18]. The lasers were shipped to Iran in October 1978 (only five months before Islamic Revolution's victory!). The IAEA reported recently that Iran had experimented with this technique about 10 years ago. However, apparently, the Eerkens lasers proved to be unworkable as a uranium enrichment instrument [19].

On April 12, 1977, Iran and the US signed an agreement to exchange nuclear technology and cooperate in nuclear safety. In an address to the symposium [20], "The US and Iran, An Increasing Partnership," held in October 1977, Mr. Sydney Sober, a representative of the US State Department, declared that the Shah's government was going to purchase EIGHT nuclear reactors from the US for generating electricity.

During his now-famous trip to Tehran on January 1, 1978, President Jimmy Carter and the Shah reached a new bilateral agreement for nuclear cooperation. The US agreed to grant Iran "most favored nation" status for reprocessing of spent nuclear fuels. Iran agreed to buy 6-8 light-water nuclear reactors from the US (subject to approval by the US Congress).

On July 10, 1978 (only 7 months before the Islamic Revolution's victory) the draft of the US-Iran Nuclear Energy Agreement was signed. The agreement was supposed to facilitate cooperation in the field of nuclear energy and to govern the export and transfer of equipment and material to Iran's nuclear energy program. Iran was also to receive American technology and help in searching for uranium deposits [21]. On October 18, 1978, James R. Schlesinger, the US Energy Secretary, sent the agreement to President Carter for his signature. By then, however, Islamic Revolution had swept Iran, and the Shah had informed the US Ambassador Richard Sullivan that his plans for NPPs were on hold. Finally, in early 1979, the US stopped its supply of highly enriched uranium to Iran. Since Iran started its nuclear energy program in the early 1980s, the US has been completely hostile towards it.

The Neoconservatives' Fantasies for Dealing with Iran's Nuclear Program

We now move the clock forward for about 30 years to the present times to see what the neocons and their sympathizers are saying about Iran's nuclear energy program. We begin with a quote about the neocons [22]:

"The neocons hate two things: To be wrong and to be ignored."

It is now an indisputable fact that Iraq did not have any weapons of mass destruction, including nuclear weapons. But, that never stopped the neocons and their sympathizers from advocating invasion of Iraq, which ultimately succeeded when the invasion began in March 2003. The disaster in Iraq has not, however, discouraged the necons and their sympathizers. They now have fantasies about Iran as if Iranians are not already suffering enough in the hands of Tehran's right wing. Too many articles are being published by the necons and their sympathizers describing their fantasies about Iran. All one has to do is taking a look at what such publications as the Weekly Standard, the National Review, the editorial pages of the Wall Street Journal, the Times of London, the Washington Times, and many other publications and websites contain about Iran, or do a Google search on Messrs Michael Ledeen, Michael Rubin, Reuel Marc Gerecht, and others. The goal of this part of the article is not to review what they write about Iran - it will take books to do so - but only to provide clues to neocons' and their sympathizers' thinking and their "action plans" for Iran's nuclear energy facilities, and compare them with the US policy towards Iran's nuclear program in the 1970s.

Before doing so, however, the author would like to point out that, having been a member of the Union of Concerned Scientists for nearly two decades - an organization dedicated to educating the public about the dangers of weapons of mass destruction, including nuclear weapons - he is only too aware of the danger that such weapons pose against the world, if they are in the hands of extremists. Therefore, the question is NOT whether Iran, under its present political conditions, should or should not have nuclear weapons. Rather, the point of this part of the article is to give wider public exposure to the neocons' and their sympathizers' fantasies about Iran, particularly among Iranians. Since they know very well that Iran is not Iraq to be overrun, and because they were bitten by "allies" such as Ahmad Chalabi and are well-aware that their Iranian allies - the monarchists and cultists - have no base of support inside Iran, they have begun having fantasies!

Exposing the neocons' and their sympathizers' fantasies is also important from another perspective: When it comes to opposing the spread of nuclear weapons (and it is not even certain yet whether Iran