The Duck of Minerva

Potentialities and possibilities

7 December 2007

By now you’ve probably read about the new NIE saying that Iran almost certainly halted its nuclear weapons program some time in 2003. There are, of course, bound to be people who disagree with this assessment–after all, it is an “estimate”, which is another way of saying “our best guess”. Although the report indicates varying levels of confidence associated with each piece of the report, it’s not like we know for sure. Disagreeing with some parts of the report (or even the entire report) is a legitimate position.

However, I am disappointed that the New York Times would published an op-ed discounting the NIE that is just filled with screaming howlers. Such as:

And why, by the way, does Iran even want a nuclear energy program, when it is sitting on an enormous pool of oil that is now skyrocketing in value?

Someone should send poor Valerie Lincy and Gary Milhollin back to freshman year, so they can take Economics 101 and learn about “opportunity cost”. The main argument that is generally made against the interpretation of a civilian purpose for Iran’s nuclear program is that the economics don’t make sense. Although generating costs for nuclear power are very low, the capital costs are extremely high. The cost of electricity generated with fossil fuels (generally, by the way, natural gas, not oil, though Iran does have substantial natural gas reserves), on the other hand, is driven largely by the cost of fuel, since fossil fuel plants are comparatively cheap to build. Thus, as the cost of fossil fuels goes up (natural gas contracts generally track the price of oil), nuclear power makes more and more economic sense. Whatever Iran doesn’t burn in their generating plants can be sold on the world market for higher and higher prices. If you understand this basic economic fact, it starts to become very plausible that Iran’s nuclear program is best understood as a successful bet on rising energy prices.

The authors of this piece also argue that Tehran’s uranium-enrichment program can’t possibly have a civilian purpose because “all of Iran’s needs for enriched uranium for its energy programs are covered by a contract with Russia.” Here again they get the facts plain wrong. Although Russia and Iran did sign a deal to supply the Bushehr reactor with Russian-produced fuel rods, construction on the Bushehr plant and delivery of the fuel has been long delayed by a dispute between the two parties over payment. Russia claims that Iran is behind on its bills and is declining to deliver the fuel. It is unclear when this dispute will be resolved and when the Bushehr plant will go into operation. Under these circumstances, especially given Russia’s growing interest in using its energy wealth to extend its sphere of influence, it is more than plausible that Iran would continue to develop domestic enrichment capabilities in order to avoid becoming dependent on Russia to maintain its electrical generating capacity.

By no means am I arguing that these factors cited above are proof that Iran’s program is entirely civilian in nature. And surely the Iranians are aware of the usefulness of a civilian program in developing nuclear expertise that could be put to military use at some point in the future. However, Lincy and Milhollin are wrong on so many counts when they claim that military purpose is the only possible explanation.

Note: Edited very slightly for style.

Image Source: