[Senate Hearing 111-331]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-331
 
    THE PROPOSED U.S.-UAE AGREEMENT ON CIVILIAN NUCLEAR COOPERATION

=======================================================================

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON NEAR EASTERN AND 
                    SOUTH AND CENTRAL ASIAN AFFAIRS

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 7, 2009

                               __________

       Printed for the use of the Committee on Foreign Relations


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                COMMITTEE ON FOREIGN RELATIONS         

             JOHN F. KERRY, Massachusetts, Chairman        
CHRISTOPHER J. DODD, Connecticut     RICHARD G. LUGAR, Indiana
RUSSELL D. FEINGOLD, Wisconsin       BOB CORKER, Tennessee
BARBARA BOXER, California            JOHNNY ISAKSON, Georgia
ROBERT MENENDEZ, New Jersey          JAMES E. RISCH, Idaho
BENJAMIN L. CARDIN, Maryland         JIM DeMINT, South Carolina
ROBERT P. CASEY, Jr., Pennsylvania   JOHN BARRASSO, Wyoming
JIM WEBB, Virginia                   ROGER F. WICKER, Mississippi
JEANNE SHAHEEN, New Hampshire        JAMES M. INHOFE, Oklahoma
EDWARD E. KAUFMAN, Delaware
KIRSTEN E. GILLIBRAND, New York
                  David McKean, Staff Director        
        Kenneth A. Myers, Jr., Republican Staff Director        

                         ------------          

                SUBCOMMITTEE ON NEAR EASTERN AND        
                SOUTH AND CENTRAL ASIAN AFFAIRS        

          ROBERT P. CASEY, Jr., Pennsylvania, Chairman        

CHRISTOPHER J. DODD, Connecticut     JAMES E. RISCH, Idaho
RUSSELL D. FEINGOLD, Wisconsin       BOB CORKER, Tennessee
BARBARA BOXER, California            JOHN BARRASSO, Wyoming
BENJAMIN L. CARDIN, Maryland         JOHNNY ISAKSON, Georgia
EDWARD E. KAUFMAN, Delaware

                              (ii)        

  


                            C O N T E N T S

                              ----------                              
                                                                   Page

Casey, Hon. Robert P., Jr., U.S. Senator from Pennsylvania, 
  opening statement..............................................     1
McFarlane, Dr. Harold, chairman of the International Nuclear 
  Energy Academy, former president of the American Nuclear 
  Society, and Deputy Associate Laboratory Director for Nuclear 
  Science and Technology, Idaho National Laboratory, Idaho Falls, 
  ID.............................................................     5
    Prepared statement...........................................     7
Risch, Hon. James E., U.S. Senator from Idaho, opening statement.     4
Sanderson, Hon. Janet, Deputy Assistant Secretary for Near 
  Eastern Affairs, Department of State, Washington, DC...........     8
    Prepared joint statement.....................................    10
Van Diepen, Vann H., Acting Assistant Secretary for International 
  Security and Nonproliferation, Department of State, Washington, 
  DC.............................................................     9
    Prepared joint statement.....................................    10

              Additional Material Submitted for the Record

Feingold, Hon. Russell D., supplemental prepared statement.......    26
Responses of Assistant Secretary Vann H. Van Diepen to questions 
  submitted by Senator John F. Kerry.............................    26
Responses of Assistant Secretary Vann H. Van Diepen to questions 
  submitted by Senator Russell D. Feingold.......................    28

                                 (iii)

  


    THE PROPOSED U.S.-UAE AGREEMENT ON CIVILIAN NUCLEAR COOPERATION

                              ----------                              


                       WEDNESDAY, OCTOBER 7, 2009

                           U.S. Senate,    
           Subcommittee on Near Eastern and
                   South and Central Asian Affairs,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Robert P. 
Casey, Jr. (chairman of the subcommittee) presiding.
    Present: Senators Casey, Feingold, Kaufman, and Risch.

        OPENING STATEMENT OF HON. ROBERT P. CASEY, JR.,
                 U.S. SENATOR FROM PENNSYLVANIA

    Senator Casey. Thank you very much for being here this 
morning. The hearing of the Committee on Foreign Relations' 
Subcommittee on Near Eastern and South and Central Asian 
Affairs will now come to order.
    In 2 weeks time, the U.S.-UAE 123 Nuclear Cooperation 
Agreement could go into effect unless Congress takes action to 
block its inception. Today, the subcommittee meets to assess 
the ramifications, both positive and negative, that this 
Nuclear Cooperation Agreement may have on future agreements, 
the international system, and the long-term security of the 
United States and our allies.
    As many of you know, since 1952, more than 2,000 bilateral 
civilian nuclear cooperation agreements have been signed and 
implemented worldwide. Nuclear cooperation agreements 
inherently include certain opportunities and risks--the U.S.-
UAE Nuclear Cooperation Agreement before us today is no 
different. However, what has changed over the past 50 years are 
the stipulations and standards that those receiving 
technological and materiel nuclear assistance must uphold in 
the execution of these nuclear cooperation agreements.
    The U.S.-UAE Nuclear Cooperation Agreement has been hailed 
as the strongest bilateral nuclear cooperation agreement that 
the United States has ever concluded.
    The UAE, already a partner to the Nuclear Non-Proliferation 
Treaty, has voluntarily signed and pledged--signed and 
pledged--to accede to the International Atomic Energy 
Agency's--as we know, is the IAEA--the UAE has acceded to the 
IAEA's Additional Protocol, which allows for short-notice 
inspections of any facility and remote monitoring of declared 
facilities.
    The United States, the IAEA, and the U.N. Security Council 
all agree that the Additional Protocol should be universally 
adopted; and for the first time in a bilateral U.S. agreement, 
the United States and the UAE have agreed that the United 
States will not export nuclear technology until the UAE brings 
its Additional Protocol into force.
    The UAE is now participating in several U.S.-led 
initiatives to strengthen export controls. More importantly, 
the UAE has declared that it will forgo all domestic enrichment 
and reprocessing of nuclear material in its territory. This 
last provision is not merely a pledge, but it is explicitly 
prohibited in Article 7 of the agreement.
    And like other nuclear cooperation agreements, the United 
States may terminate the deal and require the return of all 
nuclear materiel and technology if the UAE fails to adhere to 
any aspect of agreement, especially if it acquires sensitive 
nuclear technology related to enrichment or reprocessing.
    While this may be the strongest nuclear cooperation 
agreement the United States has ever concluded, I also 
recognize that its inception at this moment in history gives 
some pause. At issue is the UAE's legal right to obtain nuclear 
technology for peaceful purposes, as enshrined in the nuclear 
technology--I'm sorry, as enshrined in the Nuclear Non-
Proliferation Treaty, versus the risk incurred by introducing 
nuclear technology in the world's most volatile region.
    The ongoing controversy regarding Iran's nuclear program is 
also relevant here. With the largest oil reserves in the world, 
there's no doubt that Iran's neighbors seriously take Tehran's 
nuclear ambitions into their nuclear security and energy 
calculations. Because some civilian nuclear technology can be 
used for a military nuclear program, there are concerns--there 
are also concerns that the spread of civilian nuclear programs 
to the region may spark a nuclear arms race. While there is a 
possibility that a proliferation domino effect could occur in 
the Middle East, this prospect could happen even without--even 
without--U.S. involvement.
    On January 16, 2008, France and the UAE signed a nuclear 
cooperation agreement. The UAE is also pursuing nuclear 
cooperation agreements with Russia, Germany, China, the U.K., 
Japan, and South Korea. In light of other nuclear suppliers 
moving forward with their agreements, the U.S.-UAE Nuclear 
Cooperation Agreement could help reshape the standard by which 
nuclear agreements are conducted in a world going through a 
nuclear energy renaissance.
    This agreement may very well be the model--the model--
needed to conclude civilian nuclear cooperation agreements with 
Middle Eastern countries and set on obtaining this technology. 
It could also serve as a new standard operating procedure for 
members of the nuclear suppliers group and other export control 
regimes.
    I look forward to hearing from the witnesses on the 
regional implications of the UAE 123 Agreement and how the 
agreement can possibly serve as a model for future such 
agreements.
    The UAE's willingness to explicitly forswear uranium 
enrichment and spent-fuel reprocessing for plutonium production 
is a legally binding standard--a legally binding standard--that 
we should seek in all nuclear cooperation agreements. On this 
point, a few of my colleagues in the Senate and the House have 
expressed their concern that the agreement does not do enough 
to ensure that the UAE strengthen its export controls, and 
we'll be talking about that today. Members of the 
administration have argued that strengthening one's export 
controls must be implemented over time and that the UAE has 
taken significant steps to rectify this problem. As we discuss 
this nuclear agreement today, it will be helpful to know what 
steps the UAE has taken to strengthen its export controls and 
how the United States will continue to leverage its 
relationship with the UAE to reduce the illicit trafficking of 
goods through its territory.
    President Obama continues to express his desire for a 
nuclear-weapons-free world. We know that a nuclear-weapons-free 
world does not mean a nuclear-energy-free world. 
Nonproliferation is not about creating rules that prohibit the 
peaceful use of nuclear energy, but rather nonproliferation is 
about setting rules based on the current threat environment to 
prevent the irresponsible use--the irresponsible use--of 
nuclear technology. To say we will not support the peaceful use 
of nuclear energy by the UAE could support the false Iranian 
charges that we seek to prevent access to nuclear technology in 
Muslim nations--or to Muslim nations, I should say.
    This agreement sends a message that the United States is 
willing to deal with an array of countries on the basis of 
their commitment to peaceful nuclear energy and compliance with 
international norms and safeguards. Therefore, I believe the 
United States must be a leader, not only on nonproliferation, 
but on how to use nuclear energy responsibly. Energy insecurity 
and climate change are problems that will continue to drive 
nuclear energy production. The question before us today is 
whether or not this nuclear cooperation agreement provides the 
United States the opportunity to start reshaping 
nonproliferation norms in an era when countries are seeking 
energy diversification and hedging against external security 
threats.
    We are pleased to have an excellent group of witnesses 
today to explain the dimensions of this nuclear cooperation 
agreement and its effect on nonproliferation regimes as more 
nations explore the need for civilian nuclear programs. Each of 
our witnesses has more than 20 years experience in either arms 
control or Middle East policy.
    Our first panel features the Honorable Vann Van Diepen, the 
Acting Assistant Secretary of State for International Security 
and Nonproliferation. He is joined by the Honorable Janet 
Sanderson, the Deputy Assistant Secretary for Near Eastern 
Affairs, as well as, today, the Idaho National Laboratory 
Deputy Associate Laboratory Director for Nuclear Science and 
Technology, Harold McFarlane. I'm sure that their testimony 
will provide insights into this nuclear cooperation agreement 
and how it can serve as a model for future agreements.
    I want to welcome all of our witnesses and commend them for 
their work, and thank them for their willingness to appear 
today.
    And with that, let me turn to our ranking member, Senator 
Risch, for any opening statement that he might have.

           OPENING STATEMENT OF HON. JAMES E. RISCH,
                    U.S. SENATOR FROM IDAHO

    Senator Risch. Senator Casey, thank you very much.
    First of all, let me say that I had the honor and privilege 
of traveling in the UAE this spring. I met with the sheikh in 
Dubai, and numerous government officials there, and I can't 
tell you how impressed I was with, not only the commitment, but 
the sincerity of the people in the UAE to pursue goals that are 
shared both by the UAE and by this country, as far as the use 
of nuclear energy for peaceful purposes. I was so impressed 
with their commitment and their sincerity to enter into 
negotiations whereby nuclear power would be used and they would 
forsake the enrichment.
    Having said that, I want to say, Senator Casey, thank you 
so much for holding this very important hearing. And I want to 
thank the State Department witnesses, also, who are here to 
testify. I want to welcome Dr. McFarlane, from the great State 
of Idaho. I've had the honor and privilege of working with Dr. 
McFarlane, both when I was Governor of the State of Idaho, now 
as United States Senator, and he is certainly a preeminent 
expert in these areas that we're going to talk about today.
    As we go forward--and, Senator Casey, as you mentioned--the 
agreement with the UAE could very well be a model used, not 
only in the region, but around the world, for the development 
of nuclear energy, which will be important to us as we strive 
to put less carbon into the atmosphere, and as many of the 
other 200 countries in the world strive to convert to nuclear 
energy. And the United States is well-poised to help. The 
United States is well-poised to take the economic advantage 
that's available to us to export that type of technology. And 
we, in Idaho, are excited about, and doing our best to 
encourage, the establishment and construction of a domestic 
enrichment plant, known as the Eagle Rock facility, in 
Bonneville County, ID.
    So, with that, I look forward to hearing all of you 
testify. And again, thank you, Senator Casey.
    Senator Casey. Thank you, Senator Risch. And we're always 
happy to have more Idaho talent in the Nation's Capital. I just 
hope the trip here wasn't too long for the Doctor.
    But, thank you very much, Senator Risch, and thank you for 
your staff's help, as well, in arranging and working on this 
hearing.
    I know that we will have other Senators joining us during 
the question period, but I thought what we would do now is go 
to our witnesses' opening statements.
    Dr. McFarlane, we'll start with you and move from left to 
right.
    If you could keep your statements around 7 minutes, I have 
a gavel, but I'm hesitant to use it on witnesses. [Laughter.]
    We'll have a joint effort on the gavel. But, as best you 
can. Your full statements, if they're longer than that and you 
want to highlight or summarize them, will be made part of the 
record. So, without asking for that, we're making sure that you 
know you can have that as part of the record.
    So, Dr. McFarlane, why don't we start with you, and then 
we'll conclude with our witnesses and get to questions.

      STATEMENT OF DR. HAROLD McFARLANE, CHAIRMAN OF THE 
 INTERNATIONAL NUCLEAR ENERGY ACADEMY, FORMER PRESIDENT OF THE 
   AMERICAN NUCLEAR SOCIETY, AND DEPUTY ASSOCIATE LABORATORY 
  DIRECTOR FOR NUCLEAR SCIENCE AND TECHNOLOGY, IDAHO NATIONAL 
                  LABORATORY, IDAHO FALLS, ID

    Dr. McFarlane. Well, Chairman Casey and Ranking Member 
Risch, thank you for this opportunity today to testify before 
the subcommittee on this U.S.-UAE agreement for peaceful 
nuclear cooperation.
    I believe that this agreement will set a positive example 
for the more than 30 countries that, for the first time, are 
considering nuclear energy as a strategic component for meeting 
their projected growing demand for reliable, clean, baseload 
electricity. It will also establish expectations of strong 
nonproliferation assurance for other nations with nuclear 
energy ambitions in the region. Given the ongoing challenges 
the international community has faced with Iran, the UAE's 
voluntary agreement to forgo the sensitive technologies of 
uranium enrichment and reprocessing while applying IAEA 
safeguards to all nuclear activities will usher in a landmark 
standard of nonproliferation, safety, and transparency in the 
Middle East and other parts of the world.
    The UAE has expressed a willingness to make the investment 
in capital, time, and human resources that is necessary to 
implement a responsible nuclear energy program. The UAE has 
already contributed $10 million toward an international fuel 
bank that will help create a low-enriched uranium reserve as 
insurance against supply disruptions in the global uranium 
market. Preparation for irreplaceable U.S. cooperation and 
advice in developing a robust regulatory safety framework has 
begun with initial discussions about arrangements for technical 
exchanges.
    For 60 years, aspiring and established nuclear energy 
states have turned to the U.S. education system to train their 
future leaders in nuclear research, regulation, and 
commercialization. This is a critical role that the United 
States can serve in nurturing the UAE's development of an 
educational framework for the nuclear workforce that it will 
need to create and sustain a safe and reliable nuclear energy 
infrastructure.
    Among the countries with existing peaceful nuclear energy 
programs, I have found a consistently high level of desire for 
U.S. engagement and leadership in international nuclear 
matters, an interest that has been sustained through periods 
when the U.S. nuclear energy policy was less defined. The 
cooperation agreement with the UAE sends a strong signal that 
the United States is engaging with clear policy objectives for 
nonproliferation, safety, and responsible international 
expansions of the benefits of clean nuclear energy.
    This action will have positive impacts beyond this specific 
agreement. Failure to act would be detrimental to U.S. 
nonproliferation and economic objectives. It has been estimated 
that the UAE will spend some $40 billion over the next few 
years to create and operate their nuclear energy supply system. 
Under the umbrella of the 123 Agreement, U.S. industry will be 
able to compete for some of that business, with a high 
expectation of success. Although some U.S. firms are currently 
providing evaluation and advisory services to the UAE without a 
nuclear cooperation agreement in place, the large supplier 
contracts will depend upon this agreement.
    Given this agreement's affirmation of U.S. policy 
objectives and its apparently broad support from all branches 
of government, the resulting creation of thousands of high-
quality U.S. jobs will be a well-earned outcome.
    The Department of Energy's national laboratories provide an 
unparalleled technical resource that can be called upon to 
assure that terms of this agreement are effectively implemented 
and monitored. The national labs work closely with the 
International Atomic Energy Agency to develop and implement 
effective compliance monitoring technology. For example, Los 
Alamos took the lead in designing and testing equipment for 
assuring safeguards compliance in the soon-to-be-commissioned 
Rokkasho Mura reprocessing plant in Japan. Oak Ridge has helped 
return highly enriched uranium from areas of the world where it 
is no longer--has a viable use. Oregon and Idaho have developed 
low-enriched research reactor fuel to convert both foreign and 
domestic research reactors from high-enriched uranium without 
any noticeable loss of capability.
    National laboratory and Department of Energy personnel also 
work with the IAEA to develop resource information on the 
complex institutional and technical framework needed by nations 
with emerging peaceful nuclear energy ambitions.
    National laboratories work together with their industry, 
academia, and regulatory counterparts on harmonizing 
international nuclear safety standards with the IAEA and other 
international organizations, such as the Organization for 
Economic Cooperation and Development/Nuclear Energy Agency and 
the Generation-IV International Forum.
    National laboratories, universities, and the nuclear 
industry have a large cadre of personnel who actively 
participate in international professional organizations. This 
type of unofficial engagement provides additional insight into 
the ambitions of other countries while projecting our safety 
and nonproliferation values in an effective and positive venue.
    Last year, a UAE representative with a nuclear engineering 
degree from Perdue University explained their approach to 
developing nuclear energy to a meeting of the American Nuclear 
Society. In a healthy, compliant nuclear program, we would 
expect to see this type of engagement by the UAE increase and 
be expanded to include active participation in other relevant 
organizations, such as WANO, the World Organization for Nuclear 
Operators.
    In summary, my 37 years in national and international 
nuclear energy arenas leads me to support the agreement for 
cooperation between the Government of the United Arab Emirates 
and the Government of the United States of America concerning 
peaceful uses of nuclear energy. My international experience 
has convinced me that U.S. engagement and leadership are 
effective tools for positively influencing nuclear programs 
abroad. In the case of the UAE, our assurance of an 
international nuclear fuel supply in exchange for their 
renunciation of sensitive nuclear technologies reinforces that 
conviction.
    This concludes my statement, and I'd be happy to take any 
questions that you have.
    [The prepared statement of Dr. McFarlane follows:]

  Prepared Statement of Dr. Harold McFarlane, Chairman, International 
   Nuclear Energy Academy; Former President of the American Nuclear 
 Society; and Deputy Associate Laboratory Director for Nuclear Science 
       and Technology, Idaho National Laboratory, Idaho Falls, ID

    Chairman Casey, Ranking Member Risch, and members of the 
subcommittee, thank you for this opportunity to testify today before 
the Senate Foreign Relations Committee, Subcommittee on Near Eastern 
and South and Central Asian Affairs, on the U.S.-UAE Agreement for 
Peaceful Nuclear Cooperation. I believe that this agreement will set a 
positive example for the more than 30 countries that for the first time 
are considering nuclear energy as a strategic component for meeting 
their projected growing demand for reliable, clean baseload 
electricity. It will also establish expectations of strong 
nonproliferation assurance for other nations with nuclear energy 
ambitions in the region. Given the ongoing challenges the international 
community has faced with Iran, the UAE's voluntary agreement to forgo 
the sensitive technologies of uranium enrichment and reprocessing while 
applying IAEA safeguards to all nuclear activities will usher in a 
landmark standard of nonproliferation and safety transparency in the 
Middle East and other parts of the world.
    The UAE has expressed a willingness to make the investment in 
capital, time, and human resources that is necessary to implement a 
responsible nuclear energy program. The UAE has already contributed $10 
million toward an international fuel bank that will help create a low-
enriched uranium reserve as insurance against supply disruptions in the 
global uranium market. Preparation for irreplaceable U.S. cooperation 
and advice in developing a robust regulatory safety framework has begun 
with initial discussions about arrangements for technical exchanges. 
For 60 years aspiring and established nuclear energy states have turned 
to the U.S. education system to train their future leaders in nuclear 
research, regulation, and commercialization. This is a critical role 
that the United States can serve in nurturing the UAE's development of 
an educational framework for the nuclear workforce that it will need to 
create and sustain a safe and reliable nuclear energy infrastructure.
    Among the countries with existing peaceful nuclear energy programs, 
I have found a consistently high level of desire for U.S. engagement 
and leadership in international nuclear matters, an interest that has 
been sustained through periods when U.S. nuclear energy policy was less 
defined. The cooperation agreement with the UAE sends a strong signal 
that the United States is engaging with clear policy objectives for 
nonproliferation, safety and responsible international expansion of the 
benefits of clean nuclear energy. This action will have positive 
impacts beyond this specific agreement. Failure to act would be 
detrimental to U.S. nonproliferation and economic objectives.
    It has been estimated that the UAE will spend some $40 billion over 
the next few decades to create and operate their nuclear energy supply 
system. Under the umbrella of the 123 Agreement, U.S. industry will be 
able to compete for some of that business, with a high expectation of 
success. Although some U.S. firms are currently providing evaluation 
and advisory services to the UAE, without a nuclear cooperation 
agreement in place, the large supplier contracts will depend upon this 
agreement. Given this agreement's unprecedented affirmation of U.S. 
policy objectives and its apparently broad support from all branches of 
government, the resulting creation of thousands of high-quality U.S. 
jobs will be a well-earned outcome.
    The Department of Energy's national laboratories provide an 
unparalleled technical resource that can be called upon to help assure 
that terms of this agreement are effectively implemented and monitored. 
The national labs work closely with the International Atomic Energy 
Agency (IAEA) to develop and implement effective compliance monitoring 
technology. For example, Los Alamos took the lead role in designing and 
testing equipment for assuring safeguards compliance in the soon-to-be-
commissioned Rokkasho Mura reprocessing plant in Japan. Oak Ridge has 
helped return highly enriched uranium from areas of the world when it 
no longer had a viable use. Argonne and Idaho have developed low-
enriched research reactor fuel to convert both foreign and domestic 
research reactors from high-enriched uranium without noticeable loss of 
capability.
    National laboratories and Department of Energy personnel also work 
with the IAEA to develop resource information on the complex 
institutional and technical framework needed by nations with emerging 
peaceful nuclear energy ambitions. National laboratories also work 
together with their industry, academia, and regulatory counterparts on 
harmonizing international nuclear safety standards with the IAEA and 
other international organizations such as the Organization for Economic 
Cooperation and Development/Nuclear Energy Agency and the Generation-IV 
International Forum.
    National laboratories, universities, and the nuclear industry have 
a large cadre of nuclear personnel who actively participate in 
international professional organizations. This type of unofficial 
engagement provides additional insight into the ambitions of other 
countries while projecting our safety and nonproliferation values in an 
effective and positive venue. Last year a UAE representative, with a 
nuclear engineering degree from Purdue University, explained the UAE's 
approach to developing nuclear energy to a meeting of the American 
Nuclear Society. In a healthy, compliant nuclear program we would 
expect to see this type of engagement by the UAE increase and be 
expanded to include active participation in other relevant 
organizations such as WANO, the World Organization of Nuclear 
Operators.
    In summary, my 37 years in national and international nuclear 
energy arenas leads me to support the Agreement for Cooperation between 
the Government of the United Arab Emirates and the Government of the 
United States of America Concerning Peaceful Uses of Nuclear Energy. My 
international experience has convinced me that U.S. engagement and 
leadership are effective tools for positively influencing nuclear 
programs abroad. In the case of the UAE, our assurance of an 
international nuclear fuel supply in exchange for their renunciation of 
sensitive nuclear technologies reinforces that conviction.

    Senator Casey. Doctor, thank you very much.
    Ambassador Sanderson.

 STATEMENT OF HON. JANET SANDERSON, DEPUTY ASSISTANT SECRETARY 
 FOR NEAR EASTERN AFFAIRS, DEPARTMENT OF STATE, WASHINGTON, DC

    Ambassador Sanderson. Thank you very much, Mr. Chairman.
    Chairman Casey, Ranking Member Risch, members of the 
subcommittee, I want to thank you very much for the opportunity 
to testify today.
    Mr. Chairman, the proposed agreement under review today 
should be seen in the context of the close and very important 
bilateral relationship that has developed between the United 
States and the United Arab Emirates in the past several years. 
The United States and the UAE have established strong 
partnership, and we share a common vision for a secure, stable, 
and prosperous Middle East.
    The UAE is a strong supporter of the Palestinian authority. 
It was the first Arab State to send an ambassador to Baghdad 
and to support Iraq's engagement and reintegration into the 
neighborhood. It has also committed to cancel $7 billion of 
Iraqi debt.
    The United States and the UAE are working closely to bring 
peace and stability to Afghanistan, where the UAE has deployed 
combat troops. The UAE provides the United States and coalition 
forces access to its ports and territories, as well as other 
critical logistical assistance, and it is working vigorously to 
support Pakistan, pledging $300 million in assistance at the 
Tokyo Conference in April 2009.
    The UAE, we believe, has been a responsible and reliable 
partner of energy to world markets, with the sustained 
involvement of U.S. companies in the UAE oil and gas sector for 
more than 40 years. The UAE has made sizeable investments in 
the development of renewable energy, and, on June 29 of this 
year, was selected to host the headquarters of the 
International Renewable Energy Agency, also known as IRENA.
    The proposed agreement on peaceful nuclear energy further 
strengthens cooperation between our two countries. In addition, 
as Acting Assistant Secretary Van Diepen will note, the 
agreement is a significant nonproliferation achievement.
    Mr. Chairman, in sum, the proposed agreement under review 
today should be seen in the context of our expanding and very 
close bilateral relationship with the United Arab Emirates. By 
signing this agreement, the United States and the UAE will 
continue to strengthen this already vibrant and multifaceted 
relationship, and we believe that the proposed agreement 
deserves the support of Congress.
    Chairman Casey, Ranking Member Risch, thank you very much 
for the opportunity to testify in support of this 
groundbreaking agreement. I look forward to your questions.
    Senator Casey. Thank you, Ambassador Sanderson.
    Mr. Van Diepen.

 STATEMENT OF VANN VAN DIEPEN, ACTING ASSISTANT SECRETARY FOR 
  INTERNATIONAL SECURITY AND NONPROLIFERATION, DEPARTMENT OF 
                     STATE, WASHINGTON, DC

    Mr. Van Diepen. Chairman Casey, Ranking Member Risch, 
members of the subcommittee, I want to thank you for this 
opportunity to testify today in support of the proposed U.S.-
UAE agreement for peaceful nuclear cooperation. And thank you 
for agreeing that our formal testimony will be incorporated 
into the record.
    This proposed agreement is a significant nonproliferation 
achievement. And, as Ambassador Sanderson noted, it represents 
a further strengthening of cooperation between the United 
States and the UAE.
    For the first time in such an agreement, a U.S. partner has 
voluntarily agreed to forgo enrichment and reprocessing. The 
proposed agreement also provides, for the first time, that 
prior to U.S. licensing of exports for nuclear material, 
equipment, components, or technology, the UAE shall bring into 
force the Additional Protocol to its safeguards agreement. It 
also allows the United States to require the removal of special 
fissionable material from the UAE and its transfer either to 
the United States or a third country if exceptional 
circumstances of concern, from a nonproliferation standpoint, 
so require.
    The UAE's expressed commitment not to pursue enrichment and 
reprocessing capabilities represents a marked contrast to Iran, 
which has failed to comply with its international obligations 
and seeks indigenous nuclear capabilities unnecessary for civil 
nuclear power, but critical for the development of nuclear 
weapons.
    It is well known that the UAE has been a transshipment hub 
for sensitive items, and was used by the A.Q. Khan network for 
some of its activities. In the past several years, however, the 
UAE has taken critical steps to address this problem. It helped 
the United States expose and shut down the Khan network by 
taking actions against firms and financial activities on its 
territory. The UAE has declared it the high--at the highest 
levels, that its territory should not be a source of 
proliferation in the future.
    More work remains to be done to implement this decision, 
but the UAE has made considerable progress. Just a few days 
ago, the UAE adopted a civil nuclear energy law that 
domestically prohibits uranium enrichment, creates a Federal 
authority for nuclear regulation, and develops a nuclear 
material licensing and control system. It is taking steps to 
implement U.N. Security Council resolutions against North Korea 
and Iran. It has taken actions to prevent the abuse of its 
financial system by proliferators. It has worked closely with 
the United States to prevent the diversion of U.S.-origin goods 
and technology through its territories. It is taking action 
against companies engaged in proliferation-related activities, 
and it has indicated that it has stopped shipments of WMD-
related goods to countries of concern.
    The United States is committed to working with the UAE on 
further steps toward establishing a comprehensive export 
control regime and effective export control practices. Earlier 
this year we held our annual bilateral counterproliferation 
task force, in which we discussed additional ways to address 
proliferation issues.
    We are assisting the UAE through the Department of State-
coordinated Export Control and Related Border Security Program, 
as well as other U.S. Government programs, in establishing a 
comprehensive export control regime and effective export 
control practices. While the UAE still has work to do, we 
believe that it is taking the necessary steps to implement an 
effective export control system. As a result, the UAE has 
become one of our strongest nonproliferation partners. It 
genuinely shares our concern over the proliferation of WMD, 
their delivery systems, and related materials, as well as over 
WMD financing.
    In closing, I would like to ask the committee and the 
Congress to consider the proposed agreement on its own merits. 
It is in some ways a groundbreaking agreement. It contains all 
the necessary nonproliferation conditions and controls that 
Congress has written into law. It does not commit either party 
to transfer any nuclear commodities, technologies, or services 
to the other. Those are decisions for the future and will be 
handled only on a case-by-case basis according to the usual 
stringent U.S. licensing practices.
    As President Obama has formally determined, the agreement 
will promote, and not constitute unreasonable risk to, the 
common defense and security. By signing this agreement, the 
United States and the UAE have taken an important step in 
building a long and mutually beneficial partnership to enhance 
nonproliferation and energy security in the region. The 
proposed agreement deserves the support of the Congress.
    [The joint prepared statement of Acting Assistant Secretary 
Van Diepen and Deputy Assistant Secretary Janet Sanderson 
follows:]

  Joint Prepared Statement of Acting Assistant Secretary Vann H. Van 
 Diepen and Deputy Assistant Secretary Janet Sanderson, Department of 
                         State, Washington, DC

    Mr. Chairman, Ranking Member Risch, members of the committee, thank 
you for this opportunity to testify today before the Senate Foreign 
Relations Committee in support of the proposed U.S.-UAE Agreement for 
Peaceful Nuclear Cooperation, which President Obama submitted to the 
Congress on May 21 for review pursuant to section 123 of the Atomic 
Energy Act of 1954, as amended. As shown by last month's visit of 
Sheikh Mohammed bin Zayed, the Crown Prince of Abu Dhabi and Deputy 
Supreme Commander of the United Arab Emirates Armed Forces to 
Washington to see President Obama and other officials, this important 
agreement reinforces a particularly strong and mutually beneficial 
political, security, and economic bilateral relationship. The UAE is a 
valued partner, cooperating with us on issues related to the 
Palestinian Authority, Pakistan, Afghanistan, Iraq, and Iran.
    In connection with approving the proposed agreement and authorizing 
its execution, the President made the determination required by section 
123 of the Atomic Energy Act that performance of the proposed agreement 
will promote, and will not constitute an unreasonable risk to, the 
common defense and security.
    Our purpose today is to discuss with the committee the principal 
factors that the President considered before making his statutory 
determination, and to urge the Senate to give the proposed agreement 
favorable consideration.

                      A GROUNDBREAKING ACHIEVEMENT

    Let us say at the outset that the administration recognizes the 
nonproliferation value of this unique agreement. The UAE has made a 
principled decision that it will abide by the highest nonproliferation 
standards. The U.S.-UAE 123 Agreement recognizes these commitments and 
achievements of the Government of the United Arab Emirates and provides 
the basis to expand our existing cooperation into areas of peaceful 
nuclear energy.
    Consistent with the UAE's commitments to the highest 
nonproliferation standards, the proposed agreement contains some 
unprecedented features for agreements of this type. For the first time 
in an agreement of this type, the UAE has voluntarily agreed to forgo 
uranium enrichment and reprocessing of spent fuel. This will supplement 
in a legally binding international agreement the UAE's recent 
pioneering law to prohibit uranium enrichment and reprocessing of spent 
fuel. Additionally, for the first time, the proposed agreement provides 
that prior to U.S. licensing of exports of nuclear material, equipment, 
components, or technology pursuant to the agreement, the UAE shall 
bring into force the Additional Protocol to its safeguards agreement 
with the IAEA. The agreement also allows for the United States to 
remove special fissionable material subject to the agreement from the 
UAE either to the United States or to a third country if exceptional 
circumstances of concern from a nonproliferation standpoint so require.
    The proposed agreement has a term of 30 years and permits the 
transfer of nuclear material, equipment (including reactors), and 
components for civil nuclear research and civil nuclear power 
production subject to subsequent individual export licensing. It does 
not permit transfers of Restricted Data, sensitive nuclear technology, 
sensitive nuclear facilities, or major critical components of such 
facilities. It limits the special fissionable material that may be 
transferred under the agreement to low enriched uranium except for 
small amounts of special fissionable material for use as samples, 
standards, detectors, targets or other purposes agreed by the Parties. 
If the agreement is terminated, key nonproliferation conditions and 
controls will continue with respect to material, equipment, and 
components subject to the agreement.
     In sum, the robust nonproliferation features of the UAE 123 
Agreement are a significant achievement. The UAE is an example of a 
country that has concluded that indigenous fuel cycle capabilities are 
not needed to fully enjoy the benefits of civil nuclear energy.
    Mr. Chairman, please let us expand on some of the key points I have 
just made.
    Once the proposed agreement enters into force, it will establish 
the necessary legal framework for the United States and the UAE to 
engage in subsequent, individually authorized forms of cooperation in 
the development of nuclear energy for peaceful purposes to assist the 
UAE in meeting its growing energy demand. In addition to being 
indicative of our strong partnership with the UAE, the proposed 
agreement is a tangible expression of the United States desire to 
cooperate with states in the Middle East, and elsewhere, that want to 
develop peaceful nuclear power in a manner consistent with the highest 
nonproliferation, safety and security standards.

             THE UAE'S STRONG NONPROLIFERATION CREDENTIALS

    We have spoken of the UAE's commitment to the highest 
nonproliferation standards. We shall summarize the UAE's strong 
nonproliferation credentials in a checklist form:

   The UAE acceded to the Nuclear Nonproliferation Treaty (NPT) 
        on September 26, 1995, and its IAEA Safeguards Agreement 
        entered into force on October 9, 2003. It has signed the 
        Additional Protocol to its Safeguards Agreement with the IAEA 
        and is committed to bringing it into force.
   The UAE ratified the Convention on the Physical Protection 
        of Nuclear Material on November 15, 2003, and deposited its 
        instrument of acceptance for the 2005 Amendment strengthening 
        the Convention on July 31, 2009.
   It acceded to the International Convention on the 
        Suppression of Acts of Nuclear Terrorism on January 10, 2008.
   The UAE is implementing UNSC 1540--a resolution that, among 
        other things, requires U.N. Member States to take and enforce 
        effective measures to establish domestic controls to prevent 
        the proliferation of weapons of mass destruction, their means 
        of delivery and related materials.
   UAE Federal Law 6 issued in 2009 prohibits uranium 
        enrichment and spent fuel reprocessing, creates a Federal 
        Authority for Nuclear Regulation, and develops a nuclear 
        material licensing and control system.
   UAE Federal Law 13 issued in 2007 provides a strong basis on 
        which to build an effective export control system for 
        commodities that are subject to import and export control 
        procedures.
   The UAE actively participates in the Global Initiative to 
        Combat Nuclear Terrorism, the Proliferation Security 
        Initiative, and the Container Security Initiative.
   The UAE is a key counterterrorism partner and actively works 
        to combat money laundering and terrorist financing.
   The UAE has stated it intends to implement export and import 
        control rules for nuclear and nuclear-related equipment and 
        technology in strict accordance with the Nuclear Suppliers 
        Group Guidelines for nuclear transfers. This will enhance the 
        UAE's current basis for an export control system and assist its 
        government in preventing illicit transshipments of sensitive 
        nuclear technologies through the UAE.

    In March 2008, the United Arab Emirates published its policy for 
the development of nuclear energy in a report entitled, ``Policy of the 
United Arab Emirates on the Evaluation and Potential Development of 
Peaceful Nuclear Energy.'' In it, the UAE committed itself inter alia 
to ``pursuing the highest standards of nonproliferation'' and ``the 
highest standards of safety and security.'' In signing this agreement, 
the UAE has demonstrated its commitment to develop civil nuclear energy 
in a responsible way, in full conformity with its nonproliferation 
commitments and obligations. U.S. cooperation with the UAE will also 
serve as a distinct counterpoint to those countries that have chosen a 
different path, in particular Iran.
    The UAE's commitment not to pursue enrichment and reprocessing 
capabilities is in marked contrast to Iran, which has continued to defy 
its international obligations and is continuing to develop technical 
capabilities that could be applied to nuclear weapons development.
    The UAE recognizes the value of international cooperation for 
establishing a nuclear power program as well as the need to develop 
domestic human resources. The UAE is expected to hire a foreign 
consortium to construct, operate, and perhaps partially own its first 
nuclear powerplants while local expertise is developed. U.S. industry 
is poised to assist with the development of a nuclear power program in 
the UAE, but the Agreement for Cooperation is necessary to allow its 
full participation. U.S. technology in this area is leading-edge, and 
the United States anticipates that the UAE will give it strong 
consideration as the UAE moves forward in implementing its plans.

                  U.S. PRIOR APPROVAL FOR RETRANSFERS

    The Agreed Minute to the proposed agreement provides U.S. prior 
approval for retransfers by the UAE of irradiated nuclear material 
subject to France and the United Kingdom, if consistent with their 
respective policies, laws, and regulations. Such retransfers would 
provide the UAE opportunities for management of its spent fuel, subject 
to specified conditions, including that prior agreement between the 
United States and the UAE is required for the transfer to the UAE of 
any special fissionable material recovered from any such reprocessing. 
Plutonium recovered from reprocessing could not be returned under the 
agreement (with the exception of small quantities for the uses 
described above, but even then only with the further agreement of the 
Parties). The transferred material would also have to be held within 
the European Atomic Energy Community subject to the Agreement for 
Cooperation in the Peaceful Uses of Nuclear Energy between the United 
States of America and the European Atomic Energy Community (EURATOM).
    In view of the fact that this retransfer consent would constitute a 
subsequent arrangement under the Act if agreed to separately from the 
proposed agreement, the Secretary of State and the Secretary of Energy 
have ensured that the advance approval provisions meet the applicable 
requirements of Section 131 of the Atomic Energy Act. Specifically, 
they have concluded that U.S. advance approval for retransfer of 
nuclear material for reprocessing or storage contained in the Agreed 
Minute to the proposed agreement is not inimical to the common defense 
and security. An analysis of the advance approval given in the Agreed 
Minute is contained in the Nuclear Proliferation Assessment Statement 
(NPAS) submitted to Congress with the agreement.

                               CONCLUSION

    For all the above reasons we would ask the subcommittee, and the 
Senate, to consider the proposed agreement on its merits. It is, in 
some ways, a groundbreaking agreement. It contains all the necessary 
nonproliferation conditions and controls that Congress has written into 
law. It does not commit either Party to transfer any nuclear 
commodities, technology or services to the other. Those are decisions 
for the future and will be handled on a case-by-case basis according to 
the usual stringent U.S. licensing procedures. As President Obama 
determined, the agreement will promote, and not constitute an 
unreasonable risk to, the common defense and security. By signing this 
agreement, the United States and the UAE have taken an important step 
in building a long and mutually beneficial partnership to enhance 
nonproliferation and energy security in the region. The proposed 
agreement deserves the support of the Congress.
    Mr. Chairman, members of the committee, thank you. We look forward 
to your questions.

    Senator Casey. Thanks very much.
    Let me start. We'll do 7-minute rounds, and probably 
several rounds.
    Let me start with both of our State Department witnesses 
with questions from two different areas. First of all, if 
you're making a determination about something as grave and as 
serious as this, obviously there's a cost-benefit analysis that 
has to be undertaken. And I know both the Obama administration 
as well as the Bush administration engaged in some level of 
cost-benefit analysis to make determinations about how to 
proceed here. I'd ask you first to make the case for this 
agreement, in terms of our own national security interests, in 
particular, as well as concerns beyond the scope of our own 
security to delve into the concerns that we have about 
nonproliferation and what that means for the rest of the world. 
Make the case in terms in terms of proliferation and to use 
this agreement to leverage other strategies.
    And then I want to ask you some questions about major 
concerns that I and others have about another aspect of the 
agreement.
    Mr. Van Diepen. Thank you, Mr. Chairman. I think that it's 
a pretty straightforward thing, from our standpoint.
    As noted in your opening statement and in my statement, 
this agreement has some very important nonproliferation 
features--the requirement to accede to the Additional Protocol, 
forgoing enrichment and reprocessing technology--that not only 
handles well the nonproliferation issues involving the UAE, but 
serves as a positive example for the responsible development of 
civil nuclear power throughout the Middle East. And it 
underscores our objective of limiting the spread of 
proliferation-sensitive enrichment and reprocessing 
capabilities in favor of promoting reliable international 
nuclear fuel supply arrangements.
    In addition, as Ambassador Sanderson noted, this agreement 
reinforces the already strong relationship between the United 
States and the UAE, including on nonproliferation, and 
including on nonproliferation issues involving not just the 
UAE, but regionally and globally, such as the Proliferation 
Security Initiative and the Global Initiative to Combat Nuclear 
Terrorism.
    And then, finally, as Dr. McFarlane noted, the agreement 
will provide a framework for potential commercial sales of 
civil nuclear commodities to the UAE by U.S. industry under 
agreed nonproliferation conditions and controls, good both for 
the United States--and again, setting the standard for safe, 
secure, and safeguarded peaceful nuclear cooperation that we 
hope countries around the world will follow.
    Senator Casey. Ambassador Sanderson, do you want to add to 
that, or----
    Ambassador Sanderson. I would just add that this is part 
and parcel of our overall relationship with the UAE, which--as 
I noted and I think that the Senator, during his trip to the 
UAE, saw firsthand--that the very cooperative and collaborative 
relationship that we have had over the last--I'd say the last 5 
to 7 years--it's a very different place, in many ways, the UAE, 
than it was 25 years ago, when I was the desk officer. It's a--
they are taking charge of their future. They have very 
seriously looked at what their energy needs will be down the 
road--the fact that they do not want to be totally dependent on 
their oil and gas resources; the fact that in 20 years or so, 
they're going to have their energy needs--they're going to see 
their energy needs almost triple--and they have decided to make 
a safe and secure choice, and do it within a framework which is 
acceptable, they believe, to their own needs as well as to the 
international community.
    Senator Casey. Thank you. I'll get into further aspects 
surrounding making the case, because one of the things we have 
to do here is make the case to the American people; and they're 
hearing a lot about proliferation issues right now, especially 
in the context of the controversy as it relates to Iran's 
nuclear program.
    Let me move, in the few minutes I have left in this round, 
to raise an important concern that I and others have about 
export controls. And I know we've addressed it. I know, for 
example, that, in the joint testimony, you have several pages 
worth of examples of how the UAE has engaged--or has, I should 
say--strong nonproliferation credentials, and I know, on page 
7, you refer, at least in two parts, two sections, to export 
controls.
    Here's the concern. And there are a lot of ways to express 
it. But, the Port of Dubai is a major transshipment point for 
illicit goods bound for Iran. In the past, A.Q. Khan used the 
UAE to trade nuclear black-market goods to Iran. If this 
agreement goes into effect, the United States may--some would 
argue--may lose some of the leverage that it currently has to 
push the UAE to further strengthen export controls.
    Tell us how you deal with that concern. And, in particular, 
is there a risk that entities that will use this cooperation as 
a cover for proliferation shipments through the UAE to other 
countries? Please address that question. And we may have one 
more before my time is up.
    Mr. Van Diepen. Well, on the last issue, Mr. Chairman, I 
don't think there's any substantial risk of any cooperation 
that we conduct under this agreement being misused and finding 
its way outside the UAE. Not only is the U.S. export control 
licensing system very thorough, including the potential for on-
site end-use checks, and not only do we have very close 
intelligence coverage of nuclear-related matters, but the 
substantial items that we would provide to the UAE under this 
agreement would be under International Atomic Energy Agency 
safeguards. And so, I think the complex of those various 
measures, taken together, would really deal pretty effectively 
with that possibility.
    On the larger question of dealing with illicit activity 
going through places like Dubai, obviously, given the 
geographic proximity of Iran to the UAE, to a longstanding 
history of smuggling that goes back decades, if not centuries, 
in that area, it's always going to be difficult to completely 
control that problem. But, as Ambassador Sanderson noted, over 
the past several years the UAE government has taken these 
issues especially seriously. They've passed new export control 
legislation, they've been extremely cooperative with us on 
specific cases of problematic shipments, they've shut down 
companies, they've monitored problem entities, they've done a 
lot of concrete activity, and we are working with them to help 
them go the rest of the way that they need to go.
    Senator Casey. Well, I'll push you a little more on that to 
get more detail on those steps, but my time is up.
    Senator Risch.
    Senator Risch. Thank you. Thank you, Senator.
    First of all--Ambassador Sanderson and the administration 
generally--really, to see that the administration has reached 
the same conclusion, I guess, I did, personally, after my 
discussions there, that indeed these people are dealing with us 
in good faith. I mean, this is not one of these gamesmanships 
things, or--where they're taking us to the brink, and what have 
you. I mean, they are, in very good faith, wanting to do just 
what they're telling us they want to do, and that is develop, 
for the future and to meet their energy needs, this nuclear 
power.
    As far as the proliferation issue, I think that that's one 
of the things that encourages me about all this, is that in our 
dealings with the UAE, we've really gone beyond proliferation. 
I think all of us in America have been rightfully consumed by 
the proliferation issues, because of things that happened in 
other countries. But, this really takes us beyond that. And 
indeed, the conclusion I reached, Senator Casey, in response to 
your question, was that yes, indeed, the trade between Iran and 
the UAE, long before it was the UAE or anything else, goes 
back, as you pointed out, centuries. But, I think that the 
agreement, indeed the contract, that we're going to enter into, 
will give us a better insight into what's happening there, and 
probably better control as to what's happening there, when it 
comes to nuclear issues.
    So, that was the conclusion I reached, and I'd be 
interested to hear the response of the people from the State 
Department for that.
    But, I have one minor question. I don't want this to be a 
stumbling block or make it appear partisan, but I noted that 
the negotiations were completed in November, I think, of 2008, 
and an agreement was signed January 15, 2009. But, then the new 
administration went to renegotiate, and there was a 
renegotiation, and a reexecution, in May 2009. And I never 
really did understand the reason for that, or the niceties of 
it. Could one of you maybe enlighten me on that? Again, I don't 
want to make more--I don't want to make more of this than what 
it is. I'm glad the agreement is here. But, I do have little 
more than a curiosity as to steps to how it got here.
    Mr. Van Diepen. Yes, Senator. Basically, the reason for the 
renegotiation was to add into the agreement the provisions 
under which the UAE would forgo enrichment and reprocessing 
capability, and specifying that there would not be transfers 
until its Additional Protocol had entered into effect. So, the 
key nonproliferation features that had been noted in the 
chairman's statement basically were the things that we added in 
that renegotiation.
    Senator Risch. So, was it more procedural than substantive? 
Is that what you're telling me, about the add-on to the 
contract?
    Mr. Van Diepen. Well, they were very substantive, but I--
you know, they weren't problematic. Maybe that's a good way to 
answer your question.
    Senator Risch. All right. As I close out my time here, 
maybe both of you from State could comment on my view that we 
may be better off with the agreement, when it comes to 
proliferation, than we would be without the agreement with the 
UAE.
    Ambassador Sanderson. Well, let me, if I may--let me, if I 
may, Senator, tell you that your sentiments, I think, have been 
replicated, time and time again, in dealing with the UAE. They 
have assured us that they want to go forward in this process in 
the most transparent, safe, and secure manner. And we are 
hopeful that this will open doors for us, in terms of our 
dealings with the UAE.
    I must tell you that we have a very frank, useful, and 
collaborative dialogue on proliferation issues, on 
transshipment issues, on the issues that we are talking about 
today, with the UAE. But, I hope that this will give further 
context to those discussions.
    Senator Risch. Mr. Van Diepen, could you comment on that?
    Mr. Van Diepen. And again, just to echo what Ambassador 
Sanderson has said, I think that both the specific 
nonproliferation provisions of the agreement itself, as well as 
the strengthening of the overall bilateral relationship that 
the agreement represents, both of which will help us pursue 
more effectively this nonproliferation issue that we have with 
the UAE, and I think it'll prompt the UAE to do more, and it 
would also make our ability to assist them more effective.
    Senator Risch. Thank you very much.
    Thank you, Mr. Chairman.
    Senator Casey. Thank you, Senator Risch.
    Senator Feingold.
    Senator Feingold. Thank you so much, Mr. Chairman, for 
holding this hearing. It's an important issue that needs to be 
publicly debated.
    There is no clear line between a civilian nuclear energy 
program and a nuclear weapons program. So, I think it's vital 
that Congress exercise its oversight power and hold hearings to 
carefully consider the terms and implications of every nuclear 
cooperation agreement that comes before us.
    The United Arab Emirates and the United States have an 
important relationship, one that I hope will continue to 
strengthen. I also understand the growing energy needs that all 
countries face, and appreciate the interest of the UAE in 
seeking alternative and diversified sources of energy.
    However, I do have strong concerns about expanding the use 
of nuclear energy, particularly in this volatile region, before 
we have an international regime in place to ensure that 
countries will not export enrichment and reprocessing 
technologies. And if an effective international agreement 
prohibiting the transferring of these technologies is not 
forthcoming, I think we do have to have a serious discussion 
about whether we should continue following the current course 
of promoting nuclear energy and entering into these cooperation 
agreements.
    I am concerned that an increased reliance on nuclear energy 
will lead a growing number of countries to seek the ability to 
produce nuclear fuel. While we may receive assurances today 
that this is not the intent, the history of nations relying on 
foreign fuel supplies is not an encouraging one. We need to 
look no further than Iran to find a country which the United 
States used to provide nuclear fuel, that now insists on having 
its own fuel supply for what it claims are civilian purposes.
    Any nation with enrichment or reprocessing capabilities 
poses two threats. First, it can spark what amounts to an arms 
race as regional adversaries seek to have their own 
capabilities. Second, it increases the risk that weapons-grade 
materials could fall into the hands of terrorists.
    In the case of this particular agreement, we must also be 
certain that the UAE is committed to ensuring that its 
territory is never used again as a transit point for illicit 
nuclear trade. This will require ensuring that adequate export 
controls exist. And I want to emphasize that my concerns are 
obviously not just targeted at the UAE. Rather, I have serious 
reservations about committing to any nuclear cooperation 
agreement until there is an international agreement that 
effectively prohibits the transfer of enrichment and 
reprocessing technologies.
    Mr. Van Diepen, I'm pleased that the UAE has promised to 
forgo developing enrichment or reprocessing capacity pursuant 
to the proposed agreement. But, since the agreement also 
provides for renegotiation in the event that we sign a more 
generous agreement with a regional neighbor, I'm curious 
whether we're having success in extracting similar promises 
from other countries. For example, are we likely to get a 
similar commitment from Jordan, with whom we have signed a 
Memorandum of Understanding?
    Mr. Van Diepen. Thank you, Senator. I think that--excuse 
me--all of these things are works in progress, and they're 
country-specific negotiations. But, if, in fact, this agreement 
goes into effect and we have a legally binding provision such 
as this with the UAE, it will certainly serve as an example 
that will make it easier for us to try and get similar 
provisions with other countries.
    The critical thing, I think, is--more critical is the idea 
of coming up with whatever practical and appropriate limits we 
can on the spread of enrichment and reprocessing technology, 
which you've made a very articulate case for, than the specific 
form of that agreement with any specific country. With Jordan, 
for example, we already have a Memorandum of Understanding that 
contains that provision.
    In terms of the UAE, in addition to the legally binding 
provision in this agreement, the UAE has just passed domestic 
legislation that would--in a domestic legal way, would have 
them forgo enrichment or reprocessing capability. So, that's 
another potential tool.
    And in terms of your larger question about controlling 
exports of enrichment and reprocessing capability, again, to 
the extent that we have provisions in--we have commitments from 
countries like the UAE not to have enrichment and reprocessing 
at all, that then provides a safeguard in terms of any 
shortcomings in our ability to get controls over exports of 
E&R, because the UAE has committed not to import E&R from 
anyone, not just from the United States.
    And it's these very provisions in this UAE agreement that 
we think help establish another example, another method, 
another brick in the wall, of this overall effort of trying to 
get constraints on enrichment and reprocessing technology, both 
from the supply side, if you will, and the demand side.
    Senator Feingold. Thank you. When can we expect the Nuclear 
Suppliers Group to vote on a final agreement to limit the 
transfer of enrichment and reprocessing technologies? And are 
you optimistic that they will approve such an agreement?
    Mr. Van Diepen. I'm optimistic that one will ultimately be 
approved, but it's going to take continued time. The couple of 
countries that have raised objections have raised objections 
of, kind of, broad sovereignty principle at very high levels 
that it's going to take us some time to work around. But, these 
same countries are very much committed to nonproliferation, and 
so, I'm optimistic that we can work that through.
    In terms of a time prognosis, I'm really not in a position 
to give one at this point.
    Senator Feingold. The criteria-based approach under 
consideration by the NSG does not appear to significantly limit 
the number of countries eligible to purchase enrichment and 
reprocessing technologies. How many countries would be eligible 
under this approach, and what is the administration's position 
on a criteria-based approach?
    Mr. Van Diepen. Well, we support a criteria-based approach, 
in part because that's realistically what's achievable in the 
NSG, as the history of the past few years has demonstrated. 
But, we think that that is an effective way.
    But, more importantly, beyond the specifics of the 
criteria, it's important to look at the history, and there 
basically have been very, very, very few authorized exports, by 
NSG countries, of enrichment and reprocessing technology.
    So, we're already operating in an environment characterized 
by a high degree of constraint and restraint. And so, I think 
that we have to take that into consideration in working this 
issue.
    Also, it's important to note that the G8 countries have 
agreed to go ahead and abide by that not-yet-agreed NSG policy, 
even though it is not agreed----
    Senator Feingold. Let me just follow up. The UAE arguably 
satisfies the criteria included in past proposals, despite the 
potential presence of a terrorist threat within its borders. 
Would it trouble you if a final agreement permitted the 
transfer of technologies to produce weapons-grade material to 
countries where al-Qaeda might operate? And how can we 
strengthen the potential NSG agreement to better safeguard 
against the risk posed by al-Qaeda?
    Mr. Van Diepen. Again, Senator, I think we've got to make a 
distinction between whatever the specific words in the 
agreement ultimately say and the actual behavior of Nuclear 
Suppliers Group countries. And again, there's a long history of 
a great deal of constraint and restraint by NSG countries. 
There's, you know, clear understanding amongst NSG countries of 
the sensitivity of this technology, and the fact that the 
United States and other countries would look askance and engage 
in counterpressure against any interest in selling that 
technology in an irresponsible way, which again, historically, 
has not been the case.
    Senator Feingold. Thank you very much.
    And thank you, Mr. Chairman.
    Senator Casey. Thank you, Senator Feingold.
    Senator Kaufman.
    Senator Kaufman. Are there any--currently any plans for 
peaceful nuclear cooperation with other gulf states?
    Mr. Van Diepen. We've concluded Memoranda of 
Understanding--not 123 Agreements, Memoranda of 
Understandings--with a number of gulf states. The UAE is really 
the farthest along, in terms of their degree of interest and 
commitment and preparation for peaceful nuclear activity, as 
Dr. McFarlane noted. We don't have any concrete plans right now 
to engage in such activities with other countries in the gulf. 
But, I think, frankly, it--their processes on this are probably 
too early along to get to the point where that really becomes a 
realistic consideration.
    Senator Kaufman. And I assume that this 123 Agreement with 
UAE is a model for what you'd be thinking for, for other 
countries?
    Mr. Van Diepen. Well, the words that we've been using are a 
``positive example,'' again recognizing that, once you start 
getting into specific negotiations with specific countries in 
specific contexts, you may not be able to skin the cat exactly 
the same way each time. But, certainly the idea that we want to 
have the best possible controls on enrichment and reprocessing 
technology will absolutely be part of the mix.
    Senator Kaufman. Can you talk a little bit about the--I 
know the UAE signed an agreement with France. How is their 
agreement different from our agreement?
    Mr. Van Diepen. I'm not familiar with all the details, but, 
in general, it does not contain a lot of the nonproliferation 
protections that ours do, because many of our provisions were 
pursuant to United States domestic law, for which there's not a 
counterpart in France.
    But, in terms of French policy, and in terms of the sort of 
commercial framework, it's not part of that envisaged 
commercial framework that there would be any transfers of 
enrichment and processing technology by France to the UAE.
    Senator Kaufman. And I know Chairman Casey talked about the 
benefits--cost benefits of this, and one of them is--Is there 
any discussion about talking to the UAE in regard to this, 
about the promotion of democracy, human rights, women's rights, 
freedom of the press, all those issues?
    Ambassador Sanderson. Senator, if I may, I'll take that 
question.
    Senator Kaufman. Sure.
    Ambassador Sanderson. Those are discussions that we have 
with the UAE all the time. They're part and parcel of our 
broader dialogue. We have not done them in specific reference 
to this agreement. We look at this agreement as standing alone. 
But as we pursue our diplomatic discussions with the UAE, we 
discuss a wide variety of issues, and they have a very forward-
leaning young leadership in the UAE now, very determined to 
ensure that this country remains a modern stabilizing element 
in the region. And so, we are able to talk about what's next 
with regard to opening up the political process, what's next 
with regard to democratization in the region, and in the UAE in 
particular. It's a good dialogue, and we continue that.
    Senator Kaufman. Thank you, Mr. Chairman.
    Senator Risch [presiding]. Thank you.
    Senator Casey had to step out to cast another vote, but 
will be back rather quickly.
    I wish Senator Feingold had remained, because I was hoping 
we could have a dialogue about some of the remarks that he's 
made.
    I think--first of all, let me say that I think everyone 
shares the objectives that Senator Feingold stated, and that is 
to prevent proliferation. But I think--one of the disagreements 
I had was, I don't think that you can in any way compare UAE's 
view of using nuclear material with that of Iran's. I think 
that they are--you're talking about the difference between 
night and day, the attitude of the regime, the attitude of the 
people toward the United States, the attitude of using nuclear 
for peaceful purposes versus nonpeaceful purposes.
    And I wonder, Ambassador, if you could comment on that, 
briefly, as far as the attitude of the two nations toward the 
use of nuclear material.
    Ambassador Sanderson. Senator, I would agree with you 
wholeheartedly. On one hand you have Iran, which has not lived 
up to its international obligations, has not lived up to 
requests from the international community to give it a sense of 
where Iran intends to go with its nuclear program; in fact, has 
not given the international community the confidence that it is 
not going to engage in further proliferation and development of 
nuclear weapons or other items.
    You have, on the other hand, the UAE, that is trying to do 
this in a very transparent manner. It has made a conscious 
political decision to go with peaceful nuclear power. But, it 
wants to do it right. And I think that's something that the UAE 
leadership deserves a great deal of credit for. They are 
working with us very closely. They understand our concerns 
about proliferation, about issues related to transshipment, 
about issues related to terrorism. They are working very much 
to clean up their own system and to put into place regimes 
necessary to deal with those issues. But, they want to do it 
right. They've seen the example of Iran. And frankly, as Mr. 
Van Diepen said, they are offering the international community 
an alternative example of how to move forward on peaceful 
nuclear power.
    Senator Kaufman. Senator, can I just follow up?
    Senator Risch. Yes, please.
    Senator Kaufman. Yes, and I think that's right, and I think 
that's clear, and I think it's a good comment. But, I think--I 
know Senator Risch has raised this before--if Iran gets, and 
has, a nuclear weapon, and everybody in the gulf knows they 
have a nuclear weapon, then these attitudes about whether a 
country cannot develop nuclear weapons is going to become more 
and more important, and proliferation is going to be more of a 
problem.
    So that, right now, I think the UAE is right where we would 
like them to be, but you have--I mean, I think that if Iran has 
a nuclear weapon, the whole gulf state situation, with all the 
states in the gulf state, changes. Is that a correct analysis?
    Mr. Van Diepen. Well, I think, to the extent that becomes a 
possibility, it's all the more important that we try and lock 
countries into the proper path now. And so, the kinds of 
legally binding--internationally legally binding constraints 
that we have in this arrangement are exactly the kind of thing 
we'd want to have in place to deal with that potential 
contingency and help us manage it better.
    Senator Kaufman. Thank you.
    Senator Risch. Senator Kaufman and I have discussed this at 
length, about the fact that he--it becomes a real game-changer 
in region if indeed Iran does develop a nuclear weapon.
    One--another comment I have about Senator Feingold's 
questions or--and statement--and I'm not exactly sure what he 
meant by this, but he said there was no bright line, or no--the 
line between peaceful domestic use of nuclear material, versus 
nonpeaceful use, was not very clear. And I'm not exactly sure 
where he was going with that.
    But--maybe, Dr. McFarlane, you could comment on this--but 
it seems to me the step between highly enriched--the step 
making highly enriched uranium, versus simple enrichment of 
uranium for development of power, is indeed a very bright line 
that inspectors can determine quite quickly if a country is 
stepping over that line. Am I right or am I wrong on that, 
Doctor?
    Dr. McFarlane. Senator Risch, I think, given the type of 
technology that UAE is going to have, which is commercial 
nuclear reactors with low-enriched uranium fuel, I think that's 
very easy, yes, to monitor and account for, and it is quite far 
removed from having highly enriched uranium or separated 
plutonium that could be used in a nuclear weapons program. So, 
I think there's a lot of room there. Even if we don't know 
exactly where the line is, we do know that the technology that 
they're going to have available will be quite far removed from 
that line. And the safeguards that should be in place, I think, 
will be completely effective for that.
    Senator Risch. You would agree, then, that something like 
that is relatively easily monitorable, if, indeed, they allow 
international inspectors into the country to review what's 
going on. Am I right or am I wrong there?
    Dr. McFarlane. Yes, Senator Risch, you are correct. For the 
technology they have, it's very simple, and monitoring 
techniques for simply counting--it's just unit accountability--
and then, there are more sophisticated techniques that are 
available through the IAEA and with inspectors on the ground, 
so it should be very straightforward.
    Senator Risch. Thank you.
    I wonder if maybe I could get each of you to comment on 
the--and again, I think Senator Feingold raised some very 
legitimate, debatable points, and one of those has to do with 
our participation in this. And after going there, it seemed to 
me--and discussing with the people in the UAE, where they want 
to go--it seems to me it would be very, very naive for us to 
believe that if we just walked away from this, the UAE would 
abandon their efforts to do this. It seems to me the French are 
ready to jump in, and other countries are ready to jump in to 
take advantage of a financial situation. So, it seems to me 
that our better place is at the table, versus being a critic of 
what's going on.
    Could you comment on that? Mr. Van Diepen, perhaps starting 
with you.
    Mr. Van Diepen. I think that's right. In particular, given 
the fact that, although the agreement we have with the UAE is 
bilateral, it governs UAE activity across the board. And so, 
the UAE commitment not to possess enrichment and reprocessing 
technology applies not just to E&R technology it might get from 
the United States, but to any E&R technology from any source. 
Likewise the requirement that it have in force the Additional 
Protocol, once that protocol is in effect it will give the 
U.N.--give the IAEA inspection rights not just on U.S.-provided 
nuclear equipment, but nuclear equipment provided from any 
source.
    And so, this bilateral agreement actually has a broad 
global applicability, vis-a-vis the UAE, that would be, you 
know, very useful in terms of dealing with the issue that 
you've raised.
    Senator Risch. Ambassador.
    Ambassador Sanderson. I certainly would agree. I would also 
note that this project of the UAE has attracted a great deal of 
commercial interest around the world; and so, there are 
countries out there that are looking at this as a commercial 
possibility. And the fact that, as they go with the 123 
Agreement, there will be a regime in place that will help 
govern where they end up, it's certainly very useful. But, yes, 
it's going to be a competitive market.
    Senator Risch. Dr. McFarlane.
    Dr. McFarlane. I believe that they will go forward, and I 
think if we look at the risk to the United States, we are far 
better off to be engaged and understand what is going on and 
have some say in what they're doing, versus being disengaged 
and not having an influence on how they go forward. So, it's a 
fairly simple equation, I think, and it is important, I think, 
that the United States be a player.
    Senator Risch. Thank you. Let me just conclude, Mr. 
Chairman.
    I think that--after this hearing and after my trip and what 
have you, I think all of us should compliment the UAE, No. 1, 
for being a friend of America in the region, being as open and 
transparent as they are, and including the United States in 
their efforts to do what they are trying to do. So, I think we 
should embrace that. I think certainly we should continue to 
negotiate and work in good faith with them, to help them 
accomplish what they want to, because what they want appears to 
be in the best interest of the United States also.
    Thank you, Mr. Chairman. Thank you for holding the hearing.
    Senator Casey [presiding]. Thank you Senator Risch. And I 
appreciate your insight, having spent some time in the area, 
and also the insight you bring to this hearing today.
    And I don't know if Senator Risch asked for this, in my 
absence, that Idaho be represented at every subcommittee 
hearing henceforth, but we'll see what we can do about that.
    And thank you for your patience. I had to run down the 
hallway to vote in another committee.
    I wanted to go back to some of the concerns that have been 
raised, just to highlight a few more questions.
    A related concern, in terms of the movement of goods or 
services commerce, really through the region, involves 
financial institutions and financial--for lack of a better 
phrase, financial flows--to Iranian banks with important ties 
to the Iranian proliferation efforts including Bank Melli, that 
carries out activities in UAE. I guess I'd ask you to restate, 
or enunciate further, steps that the UAE has taken to deal with 
these concerns about Iran, but also about the region.
    And I think Senator Risch made a good point about the fact 
that an agreement like this could provide better opportunities, 
strengthened opportunities for us to be able to pay even closer 
attention, and get even more intelligence and more information.
    But, I wanted to have you address that again, our State 
Department witnesses.
    Mr. Van Diepen. Thank you, Mr. Chairman.
    The UAE has taken a number of concrete steps to implement 
the U.N. Security Council resolutions that impose sanctions on 
Iran. And these are really the international legal basis that 
they and other countries have to try and deal with the problem 
of Iranian banking and proliferation finance.
    For example, the UAE was one of the first gulf states to 
alert its financial institutions this year to the perils of 
doing business with Iran. This is consistent with the 
statements of the so-called Financial Action Task Force, an 
international financial body. And it's our understanding that 
these actions have resulted in increased scrutiny, by the UAE's 
financial sector, of transactions with Iran.
    And as I noted before also, the UAE has passed and has 
started implementing new export control legislation, and we see 
them taking steps to enforce this law, and they've actually 
been prosecuting cases under that law.
    And again, as you've noted, the improvement in our 
bilateral relationship that'll be facilitated by this 123 
Agreement will, I think, give us a better basis to assist them 
to do even more in trying to deal with this very thorny 
problem.
    Senator Casey. Ambassador.
    Ambassador Sanderson. Senator, if I may?
    I would also note that over the last 5 to 7 years the UAE 
has put into place a series of laws and regulations that are 
regulating the movement of money through and in its territory. 
That includes a money laundering law, that includes adhering to 
the Middle East North Africa Financial Action Task Force that 
Mr. Van Diepen referred to. They have implemented a 
counterterrorism law; they have set up a sensitive financial 
intelligence unit to look at money laundering and the passage 
of money through banks; they have worked very closely with 
the--the government has worked very closely with the Central 
Bank of the UAE to train and to put the banking system under 
increased regulation and scrutiny.
    It's still a work in progress, but these have been 
significant efforts by the UAE government, and they're--also 
been complimented by the fact, in certain instances, they have 
shut down financial entities, as well as companies that are 
involved in transshipment and the diversion of dual-use items.
    Senator Casey. So, you're confident that they've taken, to 
date, all the necessary and appropriate steps to deal with the 
broader question of export controls, as well as any other 
related concern that have been raised here.
    Ambassador Sanderson. Mr. Chairman, it certainly remains a 
work in process, and as we've noted earlier, we are helping 
that through training, through exercises, and other endeavors 
as part and parcel of our partnership. But, they are putting 
into place the legal framework, and they are going after 
individuals and entities that they believe are involved in 
proliferation, transshipment, and other money-laundering-
related issues.
    Senator Casey. Thank you.
    Dr. McFarlane, I didn't have a chance to ask you a question 
before. I wanted to ask you--based upon your significant 
experience in the national and international nuclear energy 
arena--can you--and you've referred to this, I know, but I 
wanted to have you review or amplify--can you give us your 
sense of the commercial opportunities for U.S. companies here, 
in terms of, not just the opportunity, but the ability to 
compete as a result of this agreement.
    Dr. McFarlane. Well, as I mentioned in my testimony, there 
are some small contracts in place for consulting that currently 
is to help the UAE get into position to be able to start 
importing nuclear reactors for power and to regulate them 
effectively once they have them.
    But, these are fairly minor, compared to the opportunity 
that the U.S. companies will have to compete for both being 
major suppliers of components for the nuclear powerplants, as 
well as the fuel for the plants. And I'm very confident that 
U.S. technology is highly competitive in the world market and 
that there is a very high probability of success for some 
significant portion of those contracts.
    Senator Casey. And what would the component parts that you 
see potential in, in terms of what we could export be? Can you 
list or identify some of those?
    Dr. McFarlane. Well, for one thing, we have--as I'm sure 
you're aware, Senator--we have nuclear reactor vendors, such as 
Westinghouse from your State----
    Senator Casey. Right.
    Dr. McFarlane [continuing]. Home State. And we have--in 
addition to the reactor itself, there are many different, kind 
of, hardware components, such as steam supply systems and 
generators and things, which can be part of that export--on 
that export list. I mean, there's quite a lot of hardware, and, 
in addition, there is engineering and construction expertise 
available from the United States that I think is a good 
opportunity to compete for some of that--some of that design 
work.
    Senator Casey. Thank you.
    I wanted to highlight one last thing, one last theme that 
we've heard before. But, it's interesting that--every once in a 
while in Washington, it's good to point to a source outside of 
the four walls, so to speak, of the Senate.
    I was looking at a July Congressional Research Service 
report that was very informative on this agreement, and the 
background, and the process. But, I thought it was interesting, 
on page 6 of the report, it did highlight the two new 
provisions that are significant. And we mentioned these before, 
but I think it bears repeating, because when the American 
people are asked to review, or to at least be aware of, what 
this agreement means for the country--and it's obviously not in 
the headlines every day we need additional assurances that I 
think these two provisions provide.
    ``First''--and I'm quoting from the Congressional Research 
Service Report, on page 6, ``First, the agreement provides that 
the UAE bring into force'' the Additional Protocol to its IAEA 
safeguards agreement before the United States licenses, 
``exports of nuclear material, equipment, components, or 
technology,'' pursuant to the agreement. That's significant. 
And we can't highlight that enough, especially for Americans 
who are just beginning to tune into the ramifications of this 
agreement. So, it's important that Additional Protocol is 
highlighted on the record.
    Second, as the CRS report notes, the agreement states that 
the UAE--and I'm quoting here from the report--``shall not 
possess sensitive nuclear facilities within its territories or 
otherwise engage in activities within its territory for or 
relating to the enrichment or reprocessing of material, or for 
the alteration in form or content of plutonium, uranium 233, 
highly enriched uranium, or irradiated source or special 
fissionable material.''
    So, those two new provisions are significant. And I know 
you've highlighted those, or our witnesses have. But, I think 
it's critically important that the American people know the 
lengths to which both administrations--the Bush administration 
and the Obama administration--have gone to insist upon as 
substantial and as airtight an agreement that we could 
negotiate, because it's vitally important that we do this the 
right way.
    And I thought it was interesting that both administrations 
have used--in one way or another, have used the word ``model'' 
to describe this. Because it's not enough for us to be able to 
make the case against what the Iranian regime has been doing. 
We have taken steps, and we'll take more steps, to hold them 
accountable. And I think the international community will, as 
well. It's also important that we can point to another model--
not just a theory, not just a hope--but another model that 
other governments can try to live up to.
    So, it's not by way of a question, but it's by way of an 
observation, that these new provisions are vitally important.
    And with that, let me ask any and all of our witnesses if 
you'd like to add anything or to make any final remarks before 
we conclude.
    Anyone?
    [No response.]
    Senator Casey. OK.
    And we will leave the record open for other Senators on the 
subcommittee, or even beyond our subcommittee, to submit 
questions, and we would ask that our witnesses do your best to 
reply to those in writing.
    Senator Casey. Thank you very much.
    We're adjourned.
    [Whereupon, at 11:15 a.m., the hearing was adjourned.]
                              ----------                              


              Additional Material Submitted for the Record


      Supplemental Prepared Statement of Hon. Russell D. Feingold,
                      U.S. Senator From Wisconsin

    Mr. Chairman, thank you for holding today's hearing on the U.S.-UAE 
nuclear cooperation agreement. It is important to vigorously debate 
whether this agreement--and our practice of pursuing this type of 
agreement with other countries--is a sensible policy from a 
nonproliferation perspective.
    Today's hearing made clear that there are many willing buyers and 
sellers of the technology needed to make nuclear fuel and weapon-grade 
materials. We should not pretend that a bilateral agreement with one 
government will change that fundamental reality. We must directly 
address this problem if we want to prevent terrorists from one day 
gaining the materials they need to acquire a nuclear weapon.
    I would like to address two issues that my colleagues raised at 
today's hearing:
    The first issue is whether it is appropriate to compare the risks 
of nuclear cooperation with the UAE to the danger posed by Iran's 
nuclear program.
    I do not believe that the UAE poses an Iran-style proliferation 
threat right now. I am concerned, however, that if we continue to 
encourage countries to pursue nuclear energy, it is only a matter of 
time before one of them decides to acquire an enrichment or 
reprocessing capacity to guarantee a nuclear fuel supply. It is common 
sense that any country relying on nuclear energy will want its own fuel 
supply notwithstanding any promises that it is willing to make today. 
Iran is just one of several countries that have illustrated this 
danger.
    While I applaud the UAE's promises to forgo an enrichment and 
reprocessing capacity, there is a risk that a future regime could walk 
back that promise. The Iranian example is particularly relevant here: 
after all, the United States helped launch the Iranian nuclear program 
under the Atoms for Peace program, only to see it turn in a dangerous 
direction after the Iranian Revolution.
    Finally, I am not convinced that the UAE has taken the necessary 
steps to restrict illicit transfers to Iran. I understand they have 
passed a national export control reform law, but that implementation 
has been slow.
    The second issue is whether there is a clear line between a 
civilian nuclear energy program and a nuclear weapons program.
    I am not suggesting that the nuclear cooperation that would occur 
under the proposed agreement would be sufficient to support a nuclear 
weapons program. I am concerned, however, that this agreement--and 
others like it--may facilitate or encourage a nuclear weapons program. 
Even a civilian nuclear energy program involves dual-use technology, 
which can also be used to support a weapons program.
    Further, countries that depend on nuclear energy may eventually 
covet a domestic enrichment and reprocessing technology to ensure a 
reliable nuclear fuel supply. Lack of progress on an agreement in the 
Nuclear Suppliers Group that would meaningfully restrict the transfer 
of these technologies suggests that countries want to retain the right 
to transfer and receive enrichment and reprocessing technology for the 
financial and energy benefits that technology may bring. Given this 
reality, the promises in this bilateral agreement provide little 
comfort.
                                 ______
                                 

Responses of Acting Assistant Secretary Vann H. Van Diepen to Questions
                   Submitted by Senator John F. Kerry

    Question. The proposed U.S.-UAE agreement breaks new ground by 
requiring the UAE (a) not to construct uranium enrichment or plutonium 
reprocessing facilities on its territory; and (b) to bring into force 
an Additional Protocol to its safeguards agreement with the IAEA before 
the United States will permit exports. But what happens if other 
countries in the region refuse to accept these conditions, and other 
nuclear supplier countries nevertheless agree to engage in cooperation?
    What is the administration doing to keep the United States from 
being isolated and undercut as it tries to establish these standards 
for cooperation?
    Press reports indicate that Jordan has already signed agreements 
for nuclear cooperation with France, the United Kingdom, China, and 
Russia. Do any of those agreements have conditions similar to the U.S.-
UAE agreement?

    Answer. The U.S.-UAE agreement obligates the UAE not to assume 
enrichment or reprocessing facilities from any suppliers, not just the 
United States. While we cannot control the specific conditions in 
bilateral nuclear cooperation agreements that other nuclear supplier 
states make with other countries, we are working actively in the 
Nuclear Suppliers Group (NSG) to institute stricter guidelines for the 
transfer of civil nuclear technologies, including that recipient 
countries have put in place an Additional Protocol to their safeguards 
agreements with the International Atomic Energy Agency (IAEA).
    We also have ongoing discussions with bilateral partners regarding 
appropriate supply conditions. For example, we work regularly with 
France, the United Kingdom, China, Russia, and with all Nuclear 
Suppliers Group (NSG) participating governments to ensure that all 
nations maintain stringent standards for any transfer of proliferation-
sensitive technologies. And we are focusing our efforts on furthering 
agreement among supplier states about the importance of encouraging 
customers to rely the market rather than developing their own 
enrichment or reprocessing capabilities. With specific regard to 
Jordan, we applaud the fact that Jordan has brought into force the 
Additional Protocol to its safeguards agreement with the IAEA.

    Question. What specific actions has the United States taken to get 
other supplier countries--particularly including France and Russia--to 
ask for the same conditions in the bilateral agreements that they sign?
    Doesn't United Nations Security Council Resolution 1887 require 
this, when it ``Calls upon States to adopt stricter national controls 
for the export of sensitive goods and technologies of the nuclear fuel 
cycle?''
    Will this be an issue at the next meeting of the Nuclear Suppliers' 
Group?

    Answer. As a result of U.S. efforts in the Nuclear Suppliers' Group 
(NSG), NSG participating governments (including France and Russia) will 
discuss the adoption of stricter export control measures for sensitive 
enrichment and reprocessing technologies in November 2009, and will 
continue to press the NSG to reach consensus on appropriate guideline 
amendments. We also have ongoing discussions with bilateral partners 
regarding appropriate supply conditions. (If you would like additional 
information regarding these discussions, we would be pleased to brief 
you and your staff in a classified setting.) Additionally, all 
enrichment and reprocessing technology holders in the NSG already apply 
stringent export controls to these technologies, and the de facto 
commercial standard for enrichment transfers requires ``black box'' 
conditions; that is, transfers that do not provide the recipient 
country with access to technology enabling replication of such 
facilities.
    United Nations Security Council Resolution 1887 reflects the 
international community's agreement about the importance of adopting 
stricter national export controls on sensitive nuclear fuel cycle 
technologies, and Resolution 1887 calls on states to increase their 
efforts in this regard. We are working both bilaterally and 
multilaterally in the Nuclear Suppliers Group to limit the spread of 
these technologies. We have also worked bilaterally with many states to 
strengthen their nuclear export control regimes.

    Question. Both the United States and, now, the U.N. Security 
Council have called for universal application of the IAEA Additional 
Protocol. Will the administration make this a requirement in all future 
cooperation agreements, including with countries outside of the Middle 
East, before U.S. nuclear exports commence?

    Answer. We do support the universal adoption of the International 
Atomic Energy Agency (IAEA) Additional Protocol (INFCIRC/153) and are 
working actively to achieve that objective. The majority of countries 
that are potential nuclear trading partners of the United States have 
already brought an Additional Protocol to the IAEA safeguards 
agreements into force, and we will consider whether a state has an 
Additional Protocol in force when negotiating any future nuclear 
cooperation agreements.

    Question. What other agreements for nuclear cooperation are 
currently being negotiated, or have been completed and are awaiting 
submittal to Congress?
    What new Memoranda of Understanding on nuclear cooperation are 
being negotiated or have been completed in the last few months?

    Answer. A nuclear cooperation agreement with Jordan remains under 
negotiation, and we continue to work to finalize the agreement. A 
nuclear cooperation agreement with Russia was signed in 2008, but 
former President Bush made a subsequent determination that effectively 
terminated Congressional review of that agreement following the Russia-
Georgia conflict. President Obama and Russian President Medvedev have 
issued statements indicating that both sides plan to work together to 
bring the agreement into force; however, no decision has been made on 
its resubmission to Congress.
    No nuclear cooperation Memoranda of Understanding (MOUs) have been 
completed within the last few months. The text of a nuclear cooperation 
MOU with Vietnam has been agreed upon at the expert-level. It awaits 
only final approval of senior officials within both governments.
    Additionally, the United States proposed a draft civil nuclear 
cooperation MOU with Qatar in June 2008. This MOU is still under review 
by the Government of Qatar.
                                 ______
                                 

Responses of Acting Assistant Secretary Vann H. Van Diepen to Questions
                Submitted by Senator Russell D. Feingold

    Question. If the UAE were to back out of this agreement and seek 
its own enrichment or reprocessing technology, isn't it true that other 
nations are not bound to cut off technological assistance or fuel 
supplies?

    Answer. As a general rule, bilateral international agreements 
cannot bind third parties to take particular actions if one party 
withdraws from an agreement. However, a UAE withdrawal from this 
agreement and subsequent pursuit of enrichment and reprocessing, 
despite its numerous public pronouncements to the contrary, would 
potentially have extremely significant economic and political 
consequences on future cooperation between the UAE and other supplier 
nations.

    Question. What efforts are being made to coordinate with our allies 
to ensure that they place similar restrictions on enrichment and 
reprocessing capacity in their bilateral nuclear cooperation 
agreements, both with the UAE and with other prospective countries?

    Answer. While we cannot control the specific language in bilateral 
nuclear cooperation agreements made by other nuclear supplier states, 
we work regularly with bilateral partners and with all Nuclear 
Suppliers Group (NSG) participating nations to ensure that all nations 
maintain rigorous standards for any potential transfers of enrichment 
and reprocessing-related technologies. Further, the UAE has committed 
to follow strictly the NSG Guidelines, the application of which will 
provide it with stronger tools to prevent proliferation and illicit 
transshipments of sensitive nuclear technologies through the UAE.

    Question. What are the security implications if numerous additional 
countries were to acquire enrichment or reprocessing capabilities? Does 
it increase the danger that terrorists will acquire the materials 
needed to make an improvised nuclear device or a dirty bomb?

    Answer. We recognize these potentially significant security 
implications of numerous additional countries acquiring enrichment and 
reprocessing capabilities. As a consequence, we are seeking to limit 
the spread of enrichment and reprocessing technologies through 
strengthening Nuclear Suppliers Group controls over such transfers and 
through bilateral consultations with key technology holders.

    Question. I am concerned about the role that the UAE may play as a 
hub for the illicit transfer of nuclear materials to Iran or as a 
financial conduit for terrorist organizations. I understand that the 
UAE has passed a national export control reform law, but implementation 
had been slow. Has the regulatory regime been made operational with 
implementing regulations yet? And has the national control body 
established by the law been fully staffed?

    Answer. The UAE has made significant progress in the area of export 
controls and preventing transshipments of proliferation concern. The 
national export control law is being enforced. The UAE, as part of its 
enforcement efforts, formed the ``UAE Committee on Commodities Subject 
to Import and Export Control,'' an interagency committee chaired by the 
Minister of State for Foreign Affairs that reports directly to the 
Council of Ministers. This committee has already met and its goal is to 
facilitate effective implementation of the export control law. The UAE 
is also adding additional staff to the export control office and is 
working to complete implementing regulations; we are actively engaged 
with the UAE on these issues.

    Question. Mr. Van Diepen, you suggested that our memorandum of 
understanding with Jordan on nuclear cooperation includes a provision 
requiring Jordan to forgo an enrichment or reprocessing capacity. But 
it is my understanding that the delay in proceeding with the 123 
Agreement centers on Jordan's unwillingness to give up its right to an 
enrichment and reprocessing capacity, which it considers to be 
nonnegotiable. Have there been recent developments in negotiations, or 
new language in the agreement, that suggest otherwise?

    Answer. During the hearing, we attempted to convey that the United 
States-Jordan Memorandum of Understanding contains language noting 
Jordan's intent to rely on the international markets for fuel services 
as an alternative to developing sensitive enrichment or reprocessing 
technologies. We continue to discuss with the Government of Jordan the 
possibility of concluding a nuclear cooperation agreement, and we 
intend to employ those mechanisms that are most appropriate to achieve 
our goal of limiting the spread of enrichment and reprocessing 
technologies.

                                  
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