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The economics of nuclear proliferation
By Jeffrey Robertson

SEOUL - Nuclear non-proliferation can readily be compared to basic economics. Like the regulation of any functioning market, it's about influencing demand and supply. But what the failure of the May review conference of the parties to the nuclear Non-Proliferation Treaty (NPT) has shown, regulating demand has been quietly neglected in favor of regulating supply.

On the demand side of proliferation there is the largely theoretical question as to why states decide to acquire nuclear weapons. On the supply side, there is the more practical question as to how states go nuclear.

Why do states acquire nuclear weapons? The widest-held understanding comes from what is known as the "realist" school of international relations. This theory, simply put, posits that states acquire a nuclear capability for the sole purpose of increasing their power relative to other states, in what can be understood as a rational decision to ensure their survivability in the anarchic system of international relations. Adaptations to the theory cite domestic concerns such as national prestige or perceived isolation, as adding to a state's desire to go nuclear.

Other more neutral approaches put forward the notion that proliferation is more a question of scientific determinism - states acquire nuclear know-how because the intellectual threshold to achieve a weapons capability has steadily eroded over time. Today, the knowledge required to build a Hiroshima-type device is available with an undergraduate education from a half-decent university, a personal computer and access to the Internet. In the 1940s, it required the finest scientific minds (at least several Nobel Prize winners among them) backed by top-of-the-line facilities.

But theories that aim to explain why states seek nuclear weapons remain piecemeal at best. Why did South Africa seek a nuclear capability, given the weakness of its neighbors, and then later give up its capability? Why did the Ukraine return its arsenal to the Soviet Union, which unarguably represented the gravest threat to its newfound independence? Why have states such as Japan, South Korea, Argentina and Australia, that have all the industrial, technical and intellectual capacity to do so, remained non-nuclear weapon states?

Controlling the demand for nuclear weapons remains a theoretical problem, as much a problem of philosophy as politics. This is why international efforts to counter proliferation have increasingly focused on the supply side of the equation.

On the ground, the International Atomic Energy Agency (IAEA), the United Nations' nuclear watchdog, has been focused on how states acquire nuclear weapons. The NPT requires non-nuclear weapons state signatories to undertake a safeguards agreement with the IAEA. Only India, Pakistan, Israel and North Korea remain outside the NPT (although arguably, the legality of North Korea's hasty withdrawal in early 2003 could be questioned under international law). The safeguards agreement allows for IAEA verification that nuclear programs are not used for non-peaceful purposes.

Weaknesses in the safeguards system became apparent after the first Gulf War in 1991 and the discovery of Iraq's extensive clandestine efforts to acquire a nuclear weapons capability under the noses of IAEA inspectors. Traditional safeguards had relied on inspections to verify only declared facilities - Iraq had been busy readying undeclared facilities to produce highly enriched uranium.

Reform of the safeguards system has closed such loopholes. This has included more rigorous use of existing powers, such as environmental sampling and ad hoc inspections, as well as an enhanced information collection and analysis system to aid safeguards inspections. In addition, states are encouraged to implement an additional protocol, which increases IAEA information collection and analysis powers, enables further short-notice inspections of declared or non-declared facilities and requires signatories to streamline entry and processing of IAEA inspectors. While traditional safeguards verified that nuclear programs were not used for non-peaceful purposes, the additional protocol verifies the absence of non-peaceful nuclear programs.

Efforts to influence the supply side are ongoing. The Nuclear Suppliers Group (NSG) maintains strict controls on the export of dual-use materials and technologies that could be used in a nuclear program. The Proliferation Security Initiative (PSI) goes even further to curtail the supply of materials used in clandestine nuclear programs. The US-led coalition to interdict suspect shipments, disrupting the proliferation supply chain, contains 16 states, including Japan, Singapore, the United Kingdom and Russia.

Global counter-proliferation efforts have previously weathered spikes in proliferation demand and supply. The breakup of the Soviet Union and the immediately subsequent period of corruption, profiteering and lawlessness flooded regional rare-metal black markets with promises of easy access to radioactive materials, treatment and processing machinery - even complete nuclear devices. This occurred when demand surged as non-state actors with access to substantial finance and global networks planned and prepared prior to the global clampdown that occurred with September 11. As it became clear that black markets were primarily composed of con-men peddling inferior goods and undercover police stings, the reality set in that the proliferation market, like any other, also feeds on expectation and fear.

But could even a complete suite of initiatives to limit the supply of materials stop what occurred with the network of Abdul Qadeer Khan? The network of the founding father of Pakistan's nuclear program exchanged expertise, technology and materials, allegedly providing the basis of the North Korean, Iranian and Libyan clandestine nuclear programs. It stretched from North Korea to Europe, sullying Libya, Iran, the United Arab Emirates and Malaysia on the way. Expertise, technology and materials were sourced from various states and sent to intermediate front companies, making it impossible for any single state to know the scale of the operation. Importantly, the network flourished under supply constraints, driven only by the insatiable demand of determined proliferators.

Addressing the demand side of the proliferation question will always remain more difficult. But like any functioning market, if demand remains great, even a strictly limited supply can still result in a discernible, albeit small volume of trade. The problem with proliferation is that even this level is too much.

Jeffrey Robertson is a political affairs analyst focusing on international relations in Northeast Asia, currently residing in Seoul, South Korea.

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