2. Nuclear Cooperation - Ukraine

Agreement between the Government of Australia and the Government of Ukraine on Cooperation in the Peaceful Uses of Nuclear Energy

Overview

2.1
The Agreement between the Government of Australia and the Government of Ukraine on Cooperation in the Peaceful Uses of Nuclear Energy (the Agreement) was signed between the two countries in Washington DC on 31 March 2016.
2.2
The Agreement’s purpose is to allow Australian uranium to be used in the Ukraine.
2.3
Australia has a policy of requiring a bilateral nuclear cooperation agreement to be in place before any Australian nuclear materials can be used in another country.1
2.4
Australian nuclear co-operation agreements contain a standard set of provisions intended to prevent Australian nuclear materials being used for nuclear weapons or other military uses.2
2.5
According to the NIA, Australia currently has 24 nuclear cooperation agreements in place, providing for the transfer of Australian nuclear material to 42 countries and Taiwan.

Background

2.6
Ukraine is reliant on nuclear power, operating 15 nuclear reactor units located in four nuclear power plants supplying over half of the country's electricity.3
2.7
The National Interest Analysis (NIA) advises that Ukraine mines enough uranium for about half its requirements, with the rest having previously been supplied by Russia. Ukraine has also been reliant on Russian nuclear technology.4
2.8
Recently, the Ukrainian Government has made an effort to diversify its uranium supply and strengthen its energy security. Ukraine recently concluded contracts with US based company Westinghouse and European companies for uranium fuel assemblies and enrichment services.5
2.9
Ukraine currently has nuclear cooperation agreements with several countries, including the United States and Canada, and with the European Atomic Energy Community (Euratom).6
2.10
Ukraine is a non-nuclear weapons state, having repatriated the nuclear weapons it inherited following the collapse of the Soviet Union. Ukraine acceded to the Treaty on the Non-Proliferation of Nuclear Weapons, commonly called the Nuclear Non-Proliferation Treaty, in 1994.7
2.11
In addition, Ukraine has a comprehensive safeguards agreement with the International Atomic Energy Agency (IAEA) and an additional protocol on strengthened safeguards.8
2.12
According to the Australian Safeguards and Non-Proliferation Office (ASNO), Ukraine has been subject to 570 person days of inspection by the IAEA in the last three years.9

The Agreement

2.13
Australia’s nuclear co-operation agreements contain a standard set of provisions, the most significant of which are:
provision for the transfer of nuclear materials;10
a requirement that the agreement applies to all nuclear materials transferred between the parties;11
an obligation that the nuclear material subject to the agreement shall remain subject to the agreement until it is either: no longer usable for a nuclear activity; cannot be recovered for use by processing; or has been transferred to a third party under the Agreement;12
safety and waste management procedures set out in relevant international treaties must be applied to nuclear material covered by the Agreement;13
security measures required by relevant international treaties must be applied to the nuclear material covered by the Agreement;14
nuclear material cannot be reprocessed or enriched to a standard of 20 per cent or greater content of Uranium 236;15
nuclear material cannot be used for military purposes;16
Australian obligated nuclear materials in the Ukraine will be subject to IAEA standard safeguard procedure. This requires the tracking of Australian obligated nuclear material, along with the capacity for the IAEA to conduct safeguards inspections;17 and
the capacity for the Agreement to be terminated and nuclear materials to be returned to the country of source in the event of a material breach of the Agreement.18
2.14
In addition to standard assurances that apply international standards of physical protection, the NIA advises that the proposed Agreement also contains the following additional clauses designed to minimise security concerns:
allowing Australia to review physical protection measures;19 and
developing a facilities list, approved by Australia, limiting the locations where Australian nuclear material can be processed used or stored (Article VIII).20

Benefits

2.15
The NIA indicates the Agreement will have a number of benefits for Australia:
opening an important additional market for Australian uranium producers;
reinforcing Australia's close bilateral relations with Ukraine;
supporting Australia's efforts in nuclear non-proliferation by applying Australia's stringent safeguards and security standards to another uranium market;
consolidating Australia's position as a reliable supplier of energy resources;
providing opportunities to engage with Ukraine on a range of nuclear matters ( e.g. nuclear safeguards, scientific and technical matters, nuclear safety, radioisotopes, nuclear medicine and environmental research); and
reinforcing Australia's commitment to nuclear and radiation safety by requiring consistency with international standards of nuclear safety and waste management.21

Concerns

2.16
The Committee has received seven submissions in relation to this inquiry. Their main concerns and comments are discussed in the following paragraphs.

Limitations of the IAEA and adequacy of fall-back safeguards

2.17
Submissions raised concerns about the capacity of the IAEA to oversight Ukrainian nuclear facilities.
2.18
The Australian Conservation Foundation considers that ‘the IAEA faces both significant capacity constraints and increasing demands’.22
2.19
People for Nuclear Disarmament WA consider that the IAEA is ‘under-funded, under resourced, unable to fulfil its many duties’ and ‘can barely carry out routine inspections of nuclear facilities’.23
2.20
Friends of the Earth Australia’s (FoEA’s) submission argues that IAEA inspections have been compromised or delayed as a result of the civil war in Ukraine.24
2.21
FoEA note that that the IAEA does not publically release information on inspections, and as a consequence it is not possible to ascertain the extent to which the IAEA has engaged in inspections in Ukraine.25
2.22
Later in the inquiry, witnesses for the Australian Government were able to advise the Committee that Ukraine has been subject to 570 person days of inspection by the IAEA in the last three years.26

Risk of war, civil unrest and criminal activity.

2.23
Ukraine’s recent history has been troubled. Following a flawed election in October 2012, the Ukraine Government decided to pull out of a trade and cooperation agreement with the European Union (EU) in favour of a trade agreement with Russia. Subsequent civil unrest resulted in the resignation of the Government.27
2.24
Russia responded to the appointment of a new, pro EU Government by invading the Crimea and supporting a separatist civil war in other Eastern provinces of Ukraine.28
2.25
A peace agreement between the parties was agreed in 2014, but low level conflict continues along the front lines.29
2.26
The Department of Foreign Affairs and Trade (DFAT) reported that:
…since 2015 and the conclusion of the [first part of the peace agreement] and then, more importantly, the [second part of the peace agreement], you basically have what is often called a 'frozen conflict'. In other words, there has been no great movement.30
2.27
Another region of concern for Ukraine is Transnistria, an independent region along the Ukraine – Moldova border. This region claims nation status, but has not been internationally recognised. The region is ethnically Russian and Russian troops are stationed in the region.
2.28
In addition, the region is, according to the CIA, a source of criminal and underground economic activity.31
2.29
Finally, Ukraine suffers from a corruption problem with its Government services. According to Transparency International’s latest assessment of Europe and Central Asia (dated late 2015), Ukraine ranked amongst the worst countries for corruption in the region.32
2.30
The risks posed by civil unrest and corruption were raised by a number of participants in the inquiry. FoEA quote Ukraine’s report to the 2016 Nuclear Security Summit where Ukraine reported that domestic nuclear inspectors were unable to safely perform their duties in certain areas at certain times in 2014.33
2.31
FoEA argue that a loss of domestic regulatory control may compromise or delay IAEA inspections.34
2.32
Article XI(3) of the Agreement contains a fall-back provision if the IAEA fails to administer its functions. Under this Article, both parties shall immediately consult, co-operate and arrange for the application of a new safeguard system to provide equivalent reassurance.
2.33
There is no information in the NIA as to how these safeguards would work. FoEA believes the fall-back safeguards need to be backed up by realistic plans; noting that this provision is likely to be needed quickly and in a situation of possible conflict or insecurity.35

Safety concerns

2.34
A number of submissions addressed the issue of the age and safety of Ukraine’s reactors.
2.35
FoEA points to a 24 August 2016 article in Nuclear Engineering International that discusses the life extensions of Ukraine’s reactors and growing concerns about the condition of Ukraine’s nuclear processing plants. FoEA advises that until the lifespan extension program started, 12 of the 15 power reactors were scheduled for permanent shut down by 2020.36
2.36
The Medical Association for the Prevention of War (MAPW) also points to the ‘deeply contested’ series of license renewals and European Bank for Reconstruction and Development financing of a program to upgrade safety features.37
2.37
The Australian Government responded that:
Ukraine is engaged in a 1.4 billion euro program. That is a comprehensive safety improvement program for Ukrainian nuclear power plants. Three hundred million euros of this money comes from the European Bank for Reconstruction and Development, 300 million euros from Euratom and other funds from a range of sources. So there is considerable work underway to improve these facilities in relation to safety and to ensure that they are up to standard for the life extension that is planned.38
2.38
Submissions also expressed concerns about Ukraine’s own capacity to carry out regulatory inspections of its nuclear facilities. MAPW points to the Ukrainian’s government actions in January 2015, which it says prevented the national nuclear energy regulator from carrying out facility inspections on its own initiative.39
2.39
The event MAPW is referring to is a suspension of all state regulation in Ukraine, not just nuclear industry regulation, at a time when elections in separatist areas of Ukraine had resulted in an escalation of conflict.40
2.40
MAPW also claims that Ukraine is in breach of international safety-related obligations under the Convention on Environmental Impact Assessment in a Transboundary Context (the Espoo Convention) and the UNECE Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters.41
2.41
According to FoEA, Ukraine was found to be in breach of the Espoo Convention in 2013, and the Convention’s Implementation Committee is currently preparing a report for the June 2017 meeting on Ukraine’s adherence to the Convention.42

Ability to realistically repatriate material

2.42
If Ukraine breaches its obligations under the Agreement, Australia has the right to suspend or cancel the supply of further items, require the Ukraine to take corrective steps, or require the return of items subject to the proposed Agreement.43
2.43
This is a standard clause in nuclear cooperation agreements, and is one of the principal pillars of Australian control over the use of its nuclear material. However concerns have been raised by submitters to this inquiry, and in previous Committee inquiries, as to the practicality of implementing any return of nuclear material.
2.44
In his submission, Mr Noonan argues that because there is no feasible capacity for returning nuclear material to Australia–particularly in an emergency or conflict situation–the Agreement is essentially without sanction.
2.45
The NIA does not discuss how such return would occur. Mr Noonan gives a number of problems with how any return would work in practice; including matters such as the import, domestic carriage and storage of radioactive materials, the amount of lead time that would be required for such an undertaking, and how much it would cost.44

Summary

2.46
To maintain the supply of electricity to its citizens, the Ukrainian Government must source nuclear materials from countries other than its traditional supplier, Russia.
2.47
The evidence before the Committee appears to show that, in order to source nuclear materials, the Ukrainian Government is prepared to engage with regulators in Europe and the IAEA to improve the safety and security of its nuclear energy program.
2.48
The Ukrainian Government’s engagement includes: sourcing funding from the European Bank of Reconstruction and Development and Euratom to extend the life and improve the safety of its current reactors; and negotiating safeguards and security agreements with the IAEA.
2.49
A reliable supply of uranium fuel providing a reliable supply of electricity will contribute to the stability of a region with a recent history of unrest.
2.50
The Ukrainian Government is engaged in developing a safety and security environment that will facilitate the supply of uranium fuel, and Australia is well placed to be a reliable supplier.
2.51
The Committee notes that Australia’s nuclear safeguards and security regime is based on the continuous regulatory control of Australian nuclear material to prevent its misuse.
2.52
While the Ukrainian Government is putting in place a safeguards and security regime of the standard necessary for the sale of Australian nuclear material, the most significant risks to Australian nuclear material in Ukraine– war, civil unrest, and corruption–are not mitigated by safeguards inspections and security agreements.
2.53
The Committee believes that Australian nuclear material should never be placed in a situation where there is a risk that regulatory control of the material will be lost.
2.54
If regulatory control of Australian nuclear material is at risk in Ukraine, then Australia should be prepared to have the material removed to a safer location.
2.55
The Agreement does contain provisions for the repatriation of Australian nuclear material in the event of a material breach of the Agreement. Nevertheless, it is unlikely that war, civil unrest or corruption would constitute a material breach of the Agreement.
2.56
In other words, the repatriation provision in the Agreement is not in the Committee’s view sufficient to ensure Australian nuclear material can be safely removed from Ukraine in the event that regulatory control is threatened.
2.57
The operational challenges of doing so are significant. Properly meeting them would require a detailed examination of risks in advance. This includes consideration of both the difficulties in securing Australian nuclear material, and the limitations of our ability to successfully repatriate it if required to do so during a time of war or unrest.
2.58
Such a plan, amongst other objectives, should seek to credibly operationalise additional safeguards in the treaty, including:
the right under Article VI.3 to review the adequacy of the physical protection measures put in place with respect to material and equipment transferred pursuant to the Agreement, and
the maintenance of an up to date list of facilities that process, use or store Australian nuclear material pursuant to Article VIII.
2.59
The Committee believes that the Australian Government can permit the supply of Australian nuclear material to Ukraine only if Australia has a suitable contingency plan for the removal of Australian nuclear material if the material is at risk of a loss of regulatory control.

Recommendation 1

2.60
The Committee supports the Agreement between the Government of Australia and the Government of Ukraine on Cooperation in the Peaceful Uses of Nuclear Energy and recommends that binding treaty action be taken providing the Australian Government undertakes a proper assessment of risks, and develops and maintains a suitable contingency plan for the removal of Australian nuclear material if the material is at risk of a loss of regulatory control.

  • 1
    National Interest Analysis [2016] ATNIA 12, Agreement between the Government of Australia and the Government of Ukraine on Co-operation in the Peaceful Uses of Nuclear Energy [2016] ANTNIF 30 (hereafter referred to as the NIA), para 6.
  • 2
    NIA, para 12.
  • 3
    NIA, para 8.
  • 4
    NIA, para 8.
  • 5
    Dr John Kalish, Assistant Secretary, Australian Safeguards and Non-Proliferation Office (ASNO), Committee Hansard, Monday 21 November 2016, p 11.
  • 6
    NIA, para 10.
  • 7
    NIA, para 13.
  • 8
    NIA, para 13.
  • 9
    Dr Kalish, ASNO, Committee Hansard, Monday 21 November 2016, p 12.
  • 10
    Agreement between the Government of Australia and the Government of Ukraine on Co-operation in the Peaceful Uses of Nuclear Energy [2016] ANTNIF 30 (hereafter referred to as the Agreement), Article II4k.
  • 11
    The Agreement, Article IV.1a.
  • 12
    The Agreement, Article IV.3.
  • 13
    The Agreement, Article V.1.
  • 14
    The Agreement, Article VI.
  • 15
    The Agreement, Article IX. Twenty per cent content of Uranium 236 is the point beyond which the uranium becomes useful in the production of nuclear weapons.
  • 16
    The Agreement, Article X.
  • 17
    The Agreement, Article XI.
  • 18
    The Agreement, Article XVI.
  • 19
    The Agreement, Article VI.3.
  • 20
    The Agreement, Article VIII.
  • 21
    NIA, para 7.
  • 22
    Australian Conservation Foundation (ACF), Submission 2, p. 2.
  • 23
    People for Nuclear Disarmament WA, Submission 1, p. 1.
  • 24
    Friends of the Earth Australia (FoEA), Submission 5, p. 21.
  • 25
    FoEA, Submission 5, p. 20.
  • 26
    Dr Kalish, ASNO, Committee Hansard, Monday 21 November 2016, p 12.
  • 27
    CIA, World Fact Book: Ukraine, < https://www.cia.gov/library/publications/the-world-factbook/geos/up.html>, Accessed 30 November 2016.
  • 28
    CIA, World Fact Book: Ukraine, < https://www.cia.gov/library/publications/the-world-factbook/geos/up.html>, Accessed 30 November 2016.
  • 29
    CIA, World Fact Book: Ukraine, < https://www.cia.gov/library/publications/the-world-factbook/geos/up.html>, Accessed 30 November 2016.
  • 30
    Mr Kevin Magee, Assistant Secretary, Northern, Southern and Eastern Europe Branch, Department of Foreign Affairs and Trade (DFAT), Committee Hansard, Monday 21 November 2016, p 16.
  • 31
    CIA, World Fact Book: Moldova, < https://www.cia.gov/library/publications/the-world-factbook/geos/md.html>, accessed 30 November 2016.
  • 32
    Transparency International, Europe and Central Asia, < http://blog.transparency.org/2016/01/27/europe-and-central-asia-why-anti-corruption-laws-are-not-stopping-the-corrupt/>, accessed 30 November 2016.
  • 33
    FoEA, Submission 5, p. 21.
  • 34
    FoEA, Submission 5, p. 21.
  • 35
    FoEA, Submission 5, p. 22.
  • 36
    FoEA, Submission 5, p. 16.
  • 37
    Medical Association for Prevention of War (Australia) (MAPW), Submission 4, p. 4.
  • 38
    Mr Kevin Magee, DFAT, Committee Hansard, Monday 21 November 2016, p 15.
  • 39
    MAPW, Submission 4, p. 5.
  • 40
    BBC, Ukraine Profile – Timeline, < http://www.bbc.com/news/world-europe-18010123 >, accessed 30 November 2016.
  • 41
    MAPW, Submission 5, p. 16.
  • 42
    MAPW, Submission 5, p. 15.
  • 43
    NIA, para 28.
  • 44
    David Noonan, Submission 3, p. 3.

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