Saudi Arabia May Not Buy What White House is Selling

Can the US Regain Its Leadership in the Nuclear Market?

What the headlines said: “White House May Share Nuclear Power Technology With Saudi Arabia.” What they actually meant: White House looks to restart negotiations for a bilateral agreement with Saudi Arabia, which would simply allow US companies to compete for nuclear tenders in Saudi Arabia.

This is controversial because the Saudis want the bilateral agreement to leave open the possibility for fuel enrichment, which is a weapons proliferation concern. Everyone from the US Secretary of Energy to Saudi Arabia’s Energy Minister has warned that if the US fails to reach an agreement, Saudi Arabia has many other options for importing nuclear technology: China, Russia, and South Korea, for example. What’s gone unsaid is that the Saudis will most likely choose another country for the tender even if the US has a bilateral agreement in place.

US nuclear vendors are simply not competitive in the global market. Specifically, US nuclear vendors cannot compete with state-owned companies that have a recent history of successful commercial nuclear projects. Foreign vendors from China and South Korea can offer attractive financing packages and worker training programs. Russia offers to take back spent fuel, which reduces the regulatory obstacles for new nuclear countries. Even for a wealthy nation like Saudi Arabia, these generous support packages make a nuclear project much less risky, and much easier to complete.

When the United Arab Emirates (UAE) went shopping for their first nuclear power plant in 2009, they were finalizing their bilateral agreement with the US, including a pledge not to enrich uranium or reprocess plutonium. Yet the bid from South Korea proved more attractive than those from the US or France. Besides generous financing and risk-sharing, South Korea had a proven record of building large nuclear projects on-time and on-budget. Also, South Korean firms have a history of building natural gas power plants in the middle east, giving them more industrial and business connections in the region. Similarly, in Saudi Arabia, South Korea already has agreements in place to collaborate on small modular reactor technology for power generation and desalination. South Korea is already engaged in Saudi Arabia in a way that other nuclear vendors, like US companies, are not.

Fifty years ago, the US was one of the only countries exporting nuclear technology, and that technology was in high-demand. Up through the early 1970s, the US made up over 90% of nuclear sales worldwide.1 They could leverage exports as soft power to get foreign countries to agree to stricter safety and security standards, even improved human rights. This is no longer the case. Today, if a country doesn’t like the US terms, they can easily import nuclear technology from Russia, China, France, or South Korea. In addition, American technology is usually more expensive, making it difficult for emerging economies to import.

There are plenty of good reasons for the US to pursue a nuclear joint venture in Saudi Arabia, and the risks of signing a less stringent bilateral agreement may well be worth it. The reasons are not primarily economic — although struggling Westinghouse could certainly use a $20 billion boost. A project of this scale represents a significant partnership between the two countries that would be in place for 40-80 years, with increased trade, diplomacy, worker training, and regulatory support. However, if the US forgoes the gold standard for Saudi Arabia (i.e. allows fuel enrichment), but fails to win any tender for nuclear projects, there could be increased instability in the region and greater risk of proliferation without any tangible diplomatic benefits.

While it can seem simple to loosen the standards for a bilateral agreement, it’s much more challenging to create innovation and export policies than make American nuclear products attractive to foreign buyers. As we’ve seen with recent bids in the UAE or Bangladesh, the US may be losing its biggest carrot — having the best nuclear technology for sale — and doesn’t yet have a plan for how to maintain influence in a rapidly changing global market.

For the US to get back in the game, they will need a combination of better financing for projects such as the ExIm bank and increased support for nuclear R&D through commercial demonstration. More importantly, US companies need to have a stronger record of building plants on-time and on-budget, which may take decades to demonstrate. Having a novel reactor design demonstrated, such as an SMR, might stimulate renewed interest in US technology that can overcome some of the financial burdens of partnering with the US. The bottom line is that the US needs strong policies that support nuclear exports in a variety of ways if it wants to stay competitive.


1. Yager, Joseph. International Cooperation in Nuclear Energy. (1981) The Brookings Institution, Washington. Pg. 31.