This meeting, jointly sponsored by the Center's Division of International Security Studies and the Los Alamos National Laboratory, was another in the ongoing Nonproliferation Forum series.

Daniel Poneman began the talk by noting that there have been numerous proposals in the past aimed at reconciling the benefits of nuclear energy with the dangers posed by nuclear proliferation, none of which have worked. Before discussing his own proposal for creating a nuclear marketplace, Poneman touched on the history of previous efforts aimed at curbing the spread of nuclear technology. By examining past proposals in order to determine why they failed, lessons can be derived to inform current efforts.

Poneman observed that nuclear energy and proliferation trends had not always traveled along the same trajectory. Saudi Arabia's decision in October 1973 to disrupt oil supplies, for example, caused a crisis of confidence in the international energy market and led to a boom in the construction of nuclear energy plants, while the May 1974 Indian nuclear test marked the beginning of the end of the nuclear energy renaissance and led many to conclude the nonproliferation regime was bankrupt. Yet, Poneman acknowledged, there had also been nonproliferation success stories during the last quarter of the twentieth century, describing the 1992 signing of a comprehensive safeguards agreement by Argentina and Brazil and South Africa's abandonment of its nuclear weapons program as a "rare, wonderful moment in the Pax Americana era." Nonproliferation Treaty (NPT) review conferences also benefited from greater participation during this period. The signing of the Agreed Framework between North Korea and the United States in October 1994 was seen as yet another positive development in the decades-long effort to curtail the spread of nuclear technology. Quiet progress was also being made in the nuclear energy field during this period.

Then, in May 1998, after a twenty-four year hiatus, a major proliferation event in South Asia ushered in a new era in the history of nuclear proliferation. The open testing of nuclear weapons by both India and Pakistan, Poneman argued, showed the bankruptcy of the U.S. policy of "just say no." Poneman characterized the U.S. response to the Indian and Pakistani tests as lacking and said the rest of the world came away with the impression that when it came to proliferation, the United States was a paper tiger. What followed was a series of reversals in international nonproliferation efforts, starting with the increase of uranium enrichment activities by Brazil and North Korea and culminating in the surprise announcement in 2002 by Mojahedine-e-Khalq (MEK) that Iran was building a secret nuclear facility at Natanz. This period coincided with a change of zeitgeist about nuclear energy, the so-called "greening of nuclear energy" brought about by concerns about global warming and rising gas prices. Poneman said the spread of proliferation and nuclear energy during this period occurred on a scale bigger than the 1970s. He warned of a "proliferation Chernobyl" –the transfer of nuclear material to a terrorist group-and said that unless concern is internationalized, "we're headed for a major problem."

After briefly addressing recent nuclear fuel cycle proposals put forth by IAEA Director Mohammed El Baradei and President George W. Bush, Poneman outlined the reasons why a different type of approach was needed. Describing past initiatives as top-down or government-led, Poneman called for a new, industry-led approach to the nuclear proliferation and energy supply problem. Governments alone, he said, lacked the necessary assets and did not understand what it took to make nuclear fuel move from seller to buyer. Moreover, governments were subject to unsteady and unsustainable political forces. Finally, Poneman noted, governments are not driven by self-interest and tend to afford policy considerations primacy. An industry-led approach, on the other hand, would be driven by self-interest and to the extent possible, be insulated from politics. But Poneman was quick to point out that for such an approach to succeed, government must exercise a strong guiding regulatory hand.

Poneman advanced a fuel-leasing proposal that would guarantee cradle-to-grave services to those states that pledged to abide by nonproliferation standards. Under the proposal, companies would sign commercial agreements guaranteeing both nuclear fuel supply and spent fuel removal with individual countries. At its core, the proposal relies on commercial and private sector logic, with industry providing services so that a state doesn't have to. Essentially, Poneman pointed out, the choice is between buying fuel versus making it. Although Poneman's approach is consistent with the NPT, he cautioned against amending the treaty, warning that such an attempt could lead "the whole thing [to] unravel."

Yet the business community remains reticent. "If the private sector doesn't go for this," Poneman acknowledged, "it won't work." The removal of spent fuel, the so-called "backend" problem, is another potential chokepoint. Finally, Poneman said, the plan would only work if countries chose to refrain from obtaining a full fuel cycle. But he acknowledged that a post-Iraq world is a voluntary world, and warned that the world is in danger of reaching a nuclear tipping point. "Unless we get an approach going soon," Poneman said, "it may be too late."