Saturday, March 31, 2007

India wants uranium from the outback

Sticking points abound like Kangaroos for the US-India deal

Aussie Prime Minister John Howard expects a group of nations that export uranium and nuclear technology will back a special deal between India and the United States. The backing of the Nuclear Suppliers Group is crucial to the historic deal between India and the US, struck last year and paving the way for a potential turnaround in Australia's nuclear supply policy. India has been lobbying Australia to change its policy which prevents the sale of uranium to the subcontinent because it's not a member of the nuclear non proliferation treaty (NPT). Australia is a major source of uranium in southeast Asia.

Australia has faced pressure from Washington and New Delhi to alter its position after the US struck a deal with India that fell outside the terms of the NPT. In a landmark deal, the US agreed to share its technology and uranium in return for India agreeing to let 14 of its 22 reactors - those used for its civilian needs - to be opened to international inspections. Mr Howard met Indian officials who are reportedly seeking Australian support over the deal with the nuclear suppliers forum.

India rejects US on gas pipeline with Iran

While India was saying hello to Australian prime minister John Howard, it was saying goodbye to US energy Secretary Samuel Bodman. During his three day visit to India earlier this month he lobbied top officials there to stop development of a gas pipeline deal with Iran. This week India's foreign minister Pranab Mukherjee said his country would go ahead with the deal. Bodman also promoted bilateral cooperation on nuclear and clean energy technologies during his visit.

According to Forbes the proposed controversial $7 billion gas pipeline would connect Iran to energy-hungry India via Pakistan, which would also get some of the gas. Mukherjee told the NDTV news network. “When I was in Iran, I mentioned it categorically that we are interested in having this gas pipeline. Now negotiations are going on about the prices.”

The $7B project, which will span 1,600 miles, is expected to deliver 90 million cubic meters of gas per day. US objections to the pipeline are not expected to affect India's bid for uranium from the suppliers' group.

More carrots, more sticks, and more fuelish behavior

Reuters reports the other sticking point is that the US has told India it will scrap the deal if India tests another nuclear weapon. Such an event, an underground nuclear test like the ones conducted in 1998, could also stop India's deal for access to Australian uranium dead in its tracks. The United States pressed India this week to honor its commitments.

U.S. and Indian negotiators are trying to complete an agreement affirming landmark political commitments announced by the two governments in 2005 and 2006 that would let India buy U.S. nuclear fuel and reactors for the first time in 30 years. New Delhi has balked at provisions Washington considers essential, including a U.S. requirement to halt nuclear cooperation if India tests another nuclear weapon or if it reprocesses fuel, U.S. government officials say.

India, Pakistan play chicken with missiles

Perhaps to make the point about its tenacity on the issues, this week, India test fired a nuclear capable missile. India's indigenously developed surface-to-surface ballistic missile Dhanush was on Friday test-fired from a naval ship in the Bay of Bengal off Orissa coast sources said. Dhanush, considered the naval version of surface-to-surface missile Prithvi, was being exclusively developed for the Indian Navy and has a striking range of up to 350 km. It can be deployed as an anti-ship weapon as well as for destroying land targets depending on the range. It can carry both conventional and nuclear weapons in its operational stage.

It seems that we have a number of nations who are becoming or claim to be nuclear states and are test firing missiles capable of carrying nuclear weapons payloads. The Carnegie Endowment counts 30 nations who are playing this dangerous game. Iran test fired a nuclear capable missile only a week before the second round of UN sanctions against that country was voted in unanimously. I don't suppose there is any linkage between Iran's provocative act and the fact that Russia and China both voted for the sanctions. This lesson seems to have been lost on India and Pakistan.

In tit-for-tat response to India's test flight, this week Pakistan also test first a nuclear capable missile. The Hatf II Abdali ballistic missile — which has a range of 200 km and can carry "all types of warheads", was launched from an undisclosed location inside Pakistan. This is the fourth missile test carried out by Pakistan since February 23 and the second of the same missile.

US, India negotiations could lay an egg

The Economic Times of India reports main issue on the table between the US and India is reprocessing of spent fuel with India pushing for access to reprocessing technology and material. US laws ban export of reprocessing technology but has made exemptions for Japan, Euratom and Switzerland. India is pushing to be included in that category. India's Atomic Energy Commission (AEC) chairman Anil Kakodkar had said recently that reprocessing is a “non-negotiable right.’’

This statement reminds me of the famous marketing phrase of the late Frank Perdue, a Maryland farmer, who said, "it takes a tough man to make a tender chicken." Frank sold chickens to Giant supermarkets in the Washington, DC, area. He was a tough negotiator, but people loved his products. He put up a lot of bluster, but delivered the goods just the same. Maybe that's the way the India deal with the US is going?

The issues of fuel supply assurances and nuclear testing are "not stumbling blocks" in the negotiations says Nicholas Burns, the number two man at the U.S. State Department. For its part India is indicating that the differences have been narrowed. Burns' plate also includes the issues include end use monitoring and fissile material control for the India deal. UPI reports that Indian nuclear scientists take a dimmer view saying the issue of nuclear fuel reprocessing will be "the toughest nut to crack.

Burns must have Frank Perdue in mind. He said "We were hopeful that we would be able to make progress to close out all of the issues on the 123 (agreement) talks. Some progress was made, but in our view, not enough. The United States has done its part. We've met every commitment we said we would meet. Right now I would say the ball is in India's court. "

Mr. Burns is a busy man. He's got Iran on his mind. Let's hope the Indian government gets the message while they have his attention. Otherwise, if India plays chicken with Burns, it might wind up with egg on its face.

Postscript - FBI Arrests two from India for violating Arms Export Control Act

The Times of India reports that negotiations between the US and India over a landmark nuclear deal could be derailed, at least temporarily, by the arrest on March 23rd of two Indians in the US for supplying high-tech components to India's strategic establishments in violation of US Arms Export Control Act. Worse, the arrests throw a spotlight on the alleged official involvement of two of India's government defense organizations as the impetus for the allegedly illegal purchases. Even if it doesn't stop negotiations, the arrests could provide rhetorical grist for US congressional opposition to the deal.

There is no news release about the arrests on either the FBI or US Department of Justice websites as of March 31st. However, the Indian press seems to have remarkably detailed information about the arrests and a grand jury indictment suggesting defense lawyers for the accused have shared this information with the news media. Update 4/3/07 the New York Times has a report based on the release of documents from the US Department of Justice.

According to multiple reports in the Indian news media, over the past week, both governments have been trying to resolve the hot potato that has been handed to them. The facts are, as reported by the Indian press, that the FBI arrested Parthasarathy Sudarshan, founder of Cirrus Electronics in Singapore, and Mythili Gopal, head of Cirrus (USA). Reportedly, the FBI alleges the two imported static RAM computer chips manufactured by a Phoenix-based company which are designed to withstand extreme changes in temperature and have applications in missile-guided systems.

The Times of India report quotes a key Indian nuclear analyst in the US who said the incident may have some ambiguous elements to it. Anupam Srivastava said,

"This case will be an embarrassment for both sides, though in and of itself it will not derail the deal. In the non-proliferation business, given the variety of actors and the inherent challenge of controlling for WMD uses in an age when more and more technology is dual-use in nature, there are no absolutes."

"These defense-electronic items are not always precursors to a WMD program. The problem in this case arises from the fact they were supplied to a dedicated Indian weapons complex."

Sources in the Indian government said, according to India media reports, that while dealing with the case of unlawful transfers with private entities is not very difficult, what has put India in a spot is that two Indian government officials have been mentioned as "co-conspirators,"which may put an entirely different spin on the case. It would imply official Indian government involvement in an Arms Export Control Act violation during a time of sensitive negotiations with the US over exchange of nuclear technologies.

According to India media reports one of the officials was reportedly a member of the Indian mission in the US during 2002 and 2005 when the transfers allegedly took place but no longer serves there. The other, says reports, is an official from the Aeronautical Development Establishment (ADE). As a result the Cirrus Electronics supplied critical components to the Vikram Sarabhai Space Centre, Aeronautical Development Establishment and Bharat Dynamics Ltd.

The India Express provides additional details. It reports that according to the grand jury indictment, the FBI has cited faxes, e-mails, telephone records and documents alleging that these point to involvement of Indian government officials — not identified by name — certifying the purchase of special microprocessors for the Tejas Light Combat Aircraft project

The FBI has alleged that in February 2004, an Indian government official posted at the Indian embassy in Washington signed an “Inspection & Acceptance Certificate" on behalf of the Government of India. This certificate was meant for a vendor in Newburyport, Massachusetts, from whom Cirrus Electronics purchased the microprocessors.

Forget about herding cats. These arrests appear to be another issue bouncing across the political landscape of the India US nuclear deal like a wild kangaroo in the Australian outback.

April 3, 2006 Reuters has an update.

CIA says N. Korea is not a nuclear state

Atomic bomb test was a dud

North Korea's nuclear test might have been a failure according to Michael Hayden, the Director of the US Central Intelligence Agency (CIA). He reportedly told the South Korean defense ministry this week that the blast was a "fizzle." This means that while the conventional explosives used to implode the bomb's core went off, the expected chain reaction that creates the energy of an nuclear weapon did not occur.

"Either this was a deceit using a few hundred tons of chemical high explosives or it was a nuclear device that did not go as intended," said Bob Puerifoy, a former Sandia National Laboratories weapons executive. "I won't call it a dud -- a few hundred tons of explosives is not a dud -- but a fizzle. And the designer probably has been shot by now."

Nuclear weapons experts told the news media and bloggers that atom bombs that implode a ball of plutonium demand careful calculations and manufacture but are easiest to make in a "sweet spot" of 12 to 18 kilotons. Below that range is a paradox of nuclear weaponry: Smaller bombs are tougher to design.

Weapons designers and experts in the field told the news media it took dozens of nuclear tests for advanced nuclear nations to miniaturize their atom bombs to a kiloton or less. That's because smaller nuclear explosives are closer to the point of failure, where it is easier to err on materials, manufacture or design.

"To have intentionally set off sort of a miniaturized weapon on your first test would be pretty difficult," said seismologist Thorne Lay, a professor of earth sciences at the University of California, Santa Cruz who advises the Air Force on detections on foreign nuclear tests.

There is precedent for labeling a nuclear fizzle as something more politically palatable. In May 1998, India conducted a series of nuclear tests, some at lower yields than claimed and two that never registered on seismic instruments around the world. On May, 11, 1998, three simultaneous detonations were conducted, which consisted of a 15 kiloton fission device (atom bomb), a 45 kiloton device and a 0.2 kiloton device. The detonations of May 13, 1998 were in sub-kiloton range of 0.5 kiloton and 0.3 kiloton. Afterward, India declared those as "subcriticals" experiments, a term used by the United States for experiments using plutonium but never intended to reach critical mass and produce nuclear yield.

Dud or not the North Koreans still are a dangerous and largely unknown commodity on the world weapons scene. They have an intercontinental ballistic missile and they've shared that technology with Iran which had its own ambitions. US Air Force anti-missile efforts in Alaska are designed to counter the N. Korean threat.

Talks with North Korea to give up its nuclear weapons in return for food and energy aid are in an on-again, off-again mode over disputes about N. Korea's bank. China's Macau Monetary Authority froze North Korea's foreign currency accounts soon after the U.S. Treasury blacklisted the Banco Delta Asia in 2005, labeling it a ``money-laundering concern'' under the U.S.A. Patriot Act. The action triggered a run on the bank, leading authorities to take it over and freeze the North Korean funds. China has refused to release the money. China claims the funds are linked to official support of organized crime by N. Korea. About $25M is at stake.

North Korea has avoided discussing the Feb. 13 deal that demands the country shut down its main nuclear reactor by mid-April in return for aid, demanding that $25 million frozen in a Macau bank first be transferred to a bank in Beijing. Reuters quoted the exasperated U.S. envoy, Christopher Hill, as saying the delay in the transfer from Macau's Banco Delta Asia (BDA) needed to be overcome.

Idaho nuclear funding gets a boost

U.S. Rep Mike Simpson (R-ID) got the attention of a key Department of Energy official this week at a hearing of the House Appropriations Subcommittee on Energy & Water. He told Dennis Spurgeon, DOE Assistant Secretary for Nuclear Energy, that the revitalization of the Idaho Nuclear Laboratory (INL) is one of his top priorities. The INL is located in Simpson's district. Simpson wants DOE to have "new buildings rise in the place of old buildings being torn down."

In a related development the Department of Energy released $15M to the INL for new equipment designed to support the Global Nuclear Energy Partnership (GNEP). The equipment will be used to evaluate spent nuclear fuel after it is removed from a reactor. It is expected to speed up the evaluation process and at a lower cost than current methods. The money is immediately available to the lab as part of FY2007 funding.

EnergySolutions files a $500M IPO

The deal is aimed at paying off debt

EnergySolutions Inc., a Salt Lake-based company that handles nuclear waste, has filed with the Securities and Exchange Commission (SEC) for an initial public offering (S-1) of up to $500 million in stock CIK - 1393744 ) The company said it intends to apply to list on the New York Stock Exchange under the symbol "ES." It didn't disclose how many shares will be offered, nor did it provide an estimated price range for the offering. The company said it intends to use the net proceeds from the offering to pay employees and to repay outstanding debt, with the remainder being used for general corporate purposes.

According to wire service reports as of March 2007 the firm has net income of $34M on sales of $427M,and $764M in debt. The firm was formed last year by the merger of BNG America, Durtek, Envirocare of Utah, and the D&D division of Scientech.

EnergySolutions operates a low-level radioactive waste management disposal site in Tooele County about 80 miles west of Salt Lake City. It handles nearly all of the commercial low-level waste in the US. It has a major presence in the cleanup of the Hanford, WA, nuclear waste site. It raised its public profile last year by acquiring the name rights for the sports arena that houses the Utah Jazz NBA basketball team.

Also, EnergySolutions is the lead firm for three proposed GNEP sites at Atomic City, ID, Barnwell, SC, and Roswell, NM. It has competitors for similar site proposals in all three states.

Washington Group expands nuclear business

The Washington Group, a Boise-based firm, announced this week that it has been working with GE Energy since November 2006 to provide nuclear engineering and related services in support of the commercial deployment of GE's most advanced reactor design, the ESBWR. General Electric has opened a new advanced nuclear technology center at Wilington, NC. It will support new nuclear power plant construction and provide services to existing plants worldwide.

The ESBWR is one of only two Generation III+ reactor designs being considered by U.S. utilities and has already been selected for several proposed projects. The new reactor, which features a passive safety system, natural circulation, and other significant design simplifications, was submitted to the U.S. Nuclear Regulatory Commission for final design certification review in August 2005.

In another nuclear development for the Idaho firm, Washington Group added a new partner from Japan to its proposal to build facilities for the federal government's Global Nuclear Energy Partnership (GNEP) program. A U.S. industry team formed by AREVA Inc., Washington Group International, and BWX Technologies added a new team member, Japan Nuclear Fuel Ltd. (JNFL). The addition of JNFL's expertise in developing and operating its Rokkasho Reprocessing Plant in Japan is the key element of the deal.

There are two proposed GNEP sites in Idaho both on the Arco desert about 50 miles west of Idaho Falls, ID. The first is proposed by EnergySolutions, a Salt Lake City, UT, firm which this week announced plans for an IPO. The second is sponsored by the Regional Development Alliance (RDA), an economic development organization based in eastern Idaho. Washington Group and AREVA are partners for the RDA's proposed site.

Idaho Power plan for 1,300 Mw includes nuclear

More toaster ovens, hair dryers, TVs, computers, and air conditioners for the mountain state

The Idaho Public Utilities Commission has accepted a 20-year plan from Idaho Power that calls for adding 1,300 megawatts of new generation capacity from wind, geothermal, coal, and nuclear resources to meet the demands of a growing customer base. Idaho Power projects its customer base will increase from 455,000 to more than 680,000 over the next 20 years.

Except for a firm with stock that trades for less than $1.00/share (AEHI), there are no proposals for new commercial nuclear plants in Idaho. Idaho Power has plans to increase its wind power portfolio to nearly 400 Mw by the end of 2008. Also, Idaho Power plans to buy another 250 Mw in coal-fired electric power possibly from the Jim Bridger plant in Rock Springs, WY.

According to the PUC filing Idaho Power recently named U.S. Geothermal Inc. as the successful bidder for an approximate 45.5 MW of geothermal resources from a plant in eastern Oregon and one under construction near Raft River, Idaho. Idaho Power is seeking to add a total of 100 MW of geothermal resources over the next 20 years.

The company also plans to acquire 150 megawatts through the use of combined heat and power, or industrial cogeneration. Many manufacturers, such as lumber plants, produce steam as a byproduct of their manufacturing process and can sell that steam generation to electric utilities.

Taken together these investments equal at least half of a new nuclear power plant and are expected to be online in half the time. According to the PUC filing, Idaho Power does not expect to acquire electricity from nuclear energy until 2023 when it "anticipates" that it will get up to 250 Mw from a nuclear plant at the Idaho National Laboratory.

The U.S. Energy Information Administration reports that Idaho has the cheapest electricity in the U.S. According to the 2005 data the average price of electricity in Idaho is 5.12 cents per Kw/hr. The top five highest states in terms of cost of electricity are Hawaii at 18.33 cents per Kw/Hr, New York at 13.95, Rhode Island at 11.97, Alaska at 11.72, and California at 11.63.

In February 2007 in Idaho Falls, ID, my all electric 37-year old house with 3,000 sq ft used 3,166 KWH for an average of 109 KWH per day and a bill of $182 for the 29 day period or 5.75 cents per KwHr. If I lived in California my bill would have been $368 and in New York it would have been $442. By the way it is cold in Idaho in February.

Sunday, March 25, 2007

UN rolls a second set of sanctions on Iran

It Faces a 7-10 Split in Latest Round

The ability of the UN Security Council to deal successfully with Iran's nuclear program is similar to the dilemma faced by a pro-bowler coming up on a seven-ten split. The prospect of a pin-clearing strike is out of the question having been settled with the first ball. While the likelihood for a spare is fair-to-good, few bowlers are able to get both pins. Indeed conventional wisdom on the subject is short and sweet. Here are the instructions. 1. Throw the ball hard, 2. Hit one of the pins, and 3. Get lucky as hell.

This is pretty much where the UN is with Iran over its nuclear program. Round two imposing political and financial sanctions on Iran for failing to halt its uranium enrichment program took place at the United Nations on Saturday. In a unanimous vote the UN Security Council imposed new penalties on Iran. The sanctions include limits on access to international financial markets by Iran's banks and bans on arms exports & imports. It is aimed at stopping Iran's nuclear activities.

1st Round No Strike

Last December the UN imposed the first round of sanctions, but were rebuffed by a series of angry and fiery speeches from Iran's President Mahmoud Ahmadinejad. His short message to the UN about the 1st sanctions was "stuff it." This guy would be right at home in a New Jersey bowling alley. Despite some saber rattling from the US, there isn't a near-term threat of military action in response.

Circumstances haven't changed much since then. There is a lot of diplomatic talk about Iran's nuclear program going on in the world center for relationships among nations. Both the western powers and Iran had at it on Saturday, verbally that is, right after the vote. Nicholas Burns, a senior US State Dept. official, made a sweeping assessment of the impact of UN vote and he wants to raise the ante.

"It is a significant international rebuke to Iran and it's a significant tightening of pressure on Iran. If Iran does not comply there is no question the US will seek a third and tougher resolution."

Snooze Button Need Not Be Engaged

Burns probably doesn't need to hit the snooze alarm function on his clock which has just 60 days to run. The UN resolution instructs the International Atomic Energy Agency (IAEA) to report back to the UN Security Council in two months whether Iran will halt its nuclear programs. It probably won't which sets up the third frame.

The sanctions resolution threatens to impose a third round of measures against Iran's international and domestic interests if it fails to stop its nucelar programs. This resolution also requires Iran to provide "verifiable assurance" it is not secretly pursuing the development of nuclear weapons.

The IAEA report probably could be written this coming week without waiting. After the UN Security Council vote Iran's foreign minister dismissed the sanctions as "unlawful, unnecessary, and unjustifiable." His rhetorical broadsides could be summed up in a phase commonly heard right across the river from the UN in that New Jersey bowling alley along the lines of "what is you don't understand about 'no'.

Now I'm pretty sure that Manouchehr Mottaki, the Iranian foreign minister, has never been to Jersey City or Asbury Park, but he sure sounds like it. He said, "Even the harshest political sanctions or other threats are far too weak to coerce the Iranian nation to retreat . . ." OK, so it isn't garden variety, or garden state, rhetoric. The guy is not convinced his country has to worry about the UN actions or at least that's what he wants the UN to believe.

Mottaki may be taking a swipe at the practical impacts of the sanctions. The Washington Post quotes Abbas Milani, director of Stanford University's Iranian Studies program, as characterizing the sanctions as "rather limited and toothless." Milani said the primary "impact is political rather than practical." He added that the sanctions have a "profound psychological impact on investors and will "erode" the political standing of Iran's President Mahmoud Ahmadinejad.

No Reactor Fuel Even for Ready Money

The real impact on Iran will be to limit it access to hard currency need to pay for maintenance and expansion of its oil industry. Also, the Russians turned down Iran's efforts to pay for reactor construction at Bushehr using euros instead of dollars. The NY Times reported on 2/20/07 Russia claimed that Iran had not made the last two $25 million monthly payments, in a dispute about whether it could pay in euros instead of dollars.

The Russians later climbed on board the UN sanctions train a month later telling Iran it would not deliver nuclear fuel for the Bushehr plant unless Iran stops enriching Uranium. The prospects of a nuclear weapons, and missiles to deliver them up to 1,000 miles or more, on its southern border are apparently enough to convince Moscow that it doesn't matter what currencies the Iranians have in their bank accounts.

Are There Shifting Sands in the Persian Empire?

Reuters reported that both Nicholas Burns and Javier Solana, the European Union's foreign policy chief, think there are elements within Iran that feel Ahamdinejad's over-the-top nuclear tipped rhetoric has isolated the country and that the economic impact of sanctions on the country's oil industry could destabilize the government. Solana said he would contact Iran's chief negotiator, Ali Larijani, "to see whether we can find a route to negotiations." Burns apparently agrees with Solana. He said told wire service reporters that because of a "tumultuous political environment" in Iran, he suspects there is a faction within Iran's government that might be open to new negotiations.

The Real Gorilla in the Room?

Iran's loudly defiant rejection of the second round of UN sanctions may be generated by its perception about their real objective. While the language of the UN measure addresses Iran's nuclear program, the political intent, according to Nicholas Burns, is to put limits on the country's drive to become a major military power in the Persian Gulf threatening access to oil supplies needed by the world economy. Burns said,

"We are trying to force a change in the actions and behavior of the Iranian government. The sanctions are immediately focused on nuclear weapons research, but we also are trying to limit the ability of Iran to be a disruptive and violent factor in Middle East politics."

Burns has mighty fine ambitions, but he is unlikely to achieve both objectives. Pro-bowlers have advice for the 7-10 split that could be useful for the UN and for Mr. Burns. In terms of taking aim at one pin or the other, the advice is basically, don't bother trying to get both pins. Aim for the one you must make. Also, take the 7-10 split from your first ball as a warning sign that either your release on that shot was deadsville, or you are playing the lanes pretty wrong.

This is good advice. The first UN resolution produced no results except a second one. So, the UN having rolled a dead ball down the alley on the first round is now faced with which pin to aim at - Iran's nuclear program or its regional political ambitions. Frankly, my preference is go for the nukes because without them, Mahmoud Ahmadinejad is just another crackpot despot with conventional arms.

Get your bowling shoes on Nick.