Appropriately for atomic physics, the US-Saudi Arabia accord on nuclear co-operation, signed during the last week of July, hovers in quantum uncertainty.
The crucial “123 Agreement”, it was reported, would allow Riyadh to enrich uranium, the issue at the nucleus of decades of Iran-US collision. But US President Donald Trump promptly posted: “There will be no enrichment of material!”
So which is it, and why does it matter?
US civil nuclear co-operation with other nations has a long and tangled history. It requires a 123 Agreement, named after the relevant part of 1954’s Atomic Energy Act, after the US reneged on wartime commitments to the UK and Canada.
The law was intended to allow wider civilian participation as part of President Eisenhower’s “Atoms for Peace” programme. Iran, ironically, was one of the early beneficiaries, signing a 123 Agreement in 1957.
In 1974, Shah Mohammad Reza Pahlavi, a strong American ally, loaned about $1.18 billion to Eurodif, a European uranium enrichment consortium. The Shah believed Iran’s oil and gas reserves were running out and saw nuclear power both as a future source of energy, and a sign of national modernity.
He placed an ambitious set of orders for nuclear power plants with German and French firms, only one of which, at Bushehr, was eventually completed by Russia’s Rosatom after nearly four decades and fierce US opposition. It supplies barely 1 per cent of Iran’s electricity and has been attacked several times by the US and Israel in the latest war.
Eurodif saga
After the 1979 Revolution, the arrangement fell apart. Although Iran was eventually compensated, the Islamic republic continues to point to the Eurodif saga as evidence of why it cannot trust enrichment abroad. Others see its desire to enrich well beyond levels required for civilian power generation as evidence of an acceleration towards at least latent nuclear weapons capability.
By contrast, the UAE was determined to maintain good relations with the US and all other important nuclear suppliers for its own civil programme.
The Barakah nuclear plant’s large quantities of low-carbon baseload electricity have been particularly helpful in the current crisis, when Iran attacked gas installations. Iran also launched a drone towards Barakah in May, but fortunately caused no serious damage..
The UAE reactors were built by the Korea Electric Power Corporation (Kepco), but its APR1400 design incorporates substantial American-origin technology. US firm Westinghouse was also a key contractor for the project.
For these reasons, if nothing else, a 123 agreement was essential. The “gold standard” document signed in 2009 rules out the UAE enriching uranium or reprocessing spent nuclear fuel. These could be pathways to extract weapons-grade uranium or plutonium.
Nuclear ambitions
This brings us back to Saudi Arabia. The kingdom has had nuclear power ambitions since the 1960s. The King Abdullah City for Atomic and Renewable Energy, established in 2010, planned about 17 gigawatts of generating capacity by 2032.
Solar and wind power in those days were relatively expensive and small-scale. Saudi Arabia was burning an increasing share of its own oil output for power and water generation. Like the UAE, it concluded that nuclear power was a big part of the solution.
But Saudi Arabia has had ambitions to enrich uranium on its soil.
In 2023, Energy Minister Prince Abdulaziz bin Salman said the kingdom intended to develop the “entire nuclear fuel cycle,” including “the production of yellow cake [from uranium ore], low-enriched uranium and the manufacturing of nuclear fuel both for our national use and of course, for export”.
The country has substantial uranium mineral resources, although there are doubts about their grade and real commercial viability.
Nevertheless, the wish to retain the option to enrich has greatly complicated Saudi Arabia’s nuclear power project. It has changed the size and site of its planned reactors several times. Its blossoming solar and wind sector, with exceptionally low costs and large-scale deployment, as well as major gas developments, has eased the perceived urgency of building up nuclear generation.
Lead partners
Riyadh has five main options for a lead nuclear partner: the US, South Korea, France, China and Russia. Of these, it obviously needs a 123 Agreement to work with the US.
South Korea would be ideal – politically acceptable, and with a strong track record in the UAE. In January 2025, Kepco settled an intellectual property dispute with Westinghouse, freeing it to export reactors to countries such as Czechia. But because of the APR1400’s entanglement with US technology, Saudi Arabia would still need a 123 Agreement to use it.
France’s ability to build nuclear plants has decayed; recent projects have gone massively over time and over budget.
Rosatom is constructing plants in Egypt and Turkey, but involvement in Saudi Arabia would be politically radioactive while Russia’s war in Ukraine continues. The Gulf has also not missed Russia’s assistance with Iran’s drones in the regional conflict.
China has a tremendous record of reactor construction at home. But abroad it has been successful only in Pakistan. It would face massive US opposition if it took the lead in a Saudi nuclear programme.
Washington is trying to revive its domestic nuclear industry, particularly favouring small modular reactors (SMRs). It needs some overseas orders, and the capital-rich Gulf is an ideal location. The UAE and Bahrain have both expressed interest in SMRs. Nevertheless, if the US continues to stall on an accord, Riyadh could eventually go with one of the other countries.
Confusion prevails
This makes the confusion about what exactly has been signed all the more critical.
After apparently backtracking on enrichment, Mr Trump added that the deal “will be approved, but is totally subject to Saudi Arabia joining the very respected and successful Abraham Accords”.
That is currently not on the cards for the Saudis. Indeed, the mutual defence agreement it signed with Turkey and nuclear-armed Pakistan on Friday goes in a different direction.
The White House has backed itself into a corner. Allowing enrichment for the Saudis would be strongly opposed in Washington and Tel Aviv, and might be seen as undermining non-proliferation efforts.
The Iranians would also exploit it, and it would give them useful ammunition in negotiations to end the conflict in the Gulf. Other countries with 123 agreements might have the right to renegotiate them.
But insisting on no enrichment or requiring Riyadh to normalise relations with Israel, would torpedo the current deal, making the US look unreliable.
The US is short of enrichment capacity itself. It would jeopardise the chances of selling American nuclear technology anywhere else, and set the US back in the international race with China and Russia.
What is clear is that Washington needs to resolve this fission between its goals in business, geopolitics and non-proliferation.
