As Iranian Foreign Minister Javad Zarif outlined the proposal to this writer in June, Iran proposed to guarantee immediate conversion of each batch of low-enriched uranium to oxide powder to be used to make fuel assemblies for the Bushehr reactor.
But the plan did not explicitly address how Iran would dispose of the existing stockpile of LEU, and the United States has dismissed any plan in which Iran maintained large quantities of oxide powder, on the ground that it could be reversed. Iran could not negotiate such arrangement with the P5+1 without first reaching agreement with the Russians.
But the problem of shipping LEU to Russia for conversion to nuclear fuel was linked to a larger set of difficult issues in Iran's nuclear cooperation with Russia. Iran and Russia already have a commercial agreement for Russian provision of fuel for Iran's Bushehr reactor until 2021.
But Iran and Russia have been negotiating on the construction of two new nuclear reactors by Russia, and Iran wanted Russia to agree to Iranian participation in enrichment for the fuel as well as in making the fuel assemblies for the reactors.
A "preliminary agreement" on a contract for building the two new reactors was announced Mar. 12, but negotiations on key points involving the additional Iranian demands were still pending.
Anton Khlopkov, director of the Center for Energy and Security Studies in Moscow, told IPS that the Russian acceptance of Iranian LEU would pose serious commercial issues for Russia.
It would lose significant profits it expected from doing the enrichment itself by agreeing to use Iranian LEU for conversion into fuel assemblies rather than uranium available in Russia. Iranian uranium is much more expensive than the uranium to which Russia has access, Khlopkov said.
Iran also wants to do at least some of the enrichment for the new reactors to be built, which would increase the compensation required for the deal.
Explaining the rationale for the Iranian enrichment demand, Ali Akbar Salehi, the director of the Atomic Energy Organization of Iran (AEOI), said in early July that Iran had no desire to "carry out all the enrichment inside Iran" but added that "the other parties must know that if some day they don't give us the fuel for power plants, Iran has the ability to produce it."
The second major commercial issue in the negotiations with Russia is Iran's desire to take over the fabrication of fuel assemblies for Bushehr and other power plants from the Russians after 2021.
In a Sep. 29 interview with this writer, Salehi said that the negotiations with Russia "include a wide spectrum of issues," which include Iran's desire to "share in the technology of the power plants."
Iran is years away from having the capacity to do that, however, and it would need technical assistance from Russia. The United States, meanwhile, has made it clear it believes Iran could and should continue to rely on Russia to provide the fuel for the Bushehr reactor, even after the current contract for the fuel expires in 2021.
Khlopkov did not rule out the possibility of "some kind of partnership for fuel production," but only if Iran is ready to compensate for Russia for its commercial losses. Fuel fabrication is a "big business, which nobody wants to lose," Khlopkov said.
On Jun. 24, the spokesman for AEOI, Behrooz Kamalvandi, announced that the contract for the two nuclear power plants would be signed within weeks during a visit by Salehi to Moscow, but he acknowledged "some elements" in the agreement remained unresolved.
In a sign that Russia and Iran were close to agreement on the unresolved issues connected with the reactor deal, the heads of government were brought into talks. On Sep. 12, Putin's foreign policy adviser Yuri Ushakov said the two presidents would meet on the sidelines of the Shanghai Cooperation Organization in Dushanbe, Tajikistan and that both bilateral cooperation on nuclear power and the Iran-P5+1 talks would be among the topics to be discussed.
On Sep. 19, one week after the Rouhani-Putin meeting, the Associated Press reported that a new U.S. proposal involving a trade-off between reducing the LEU stockpile and the size of the cut in centrifuges had been discussed in bilateral talks between the United States and Iran. Iran was reported to have been "cautiously receptive."
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