Iran Nuke Odyssey 1: Under the Shah

 

      The genesis of Iran’s nuclear program can be traced back to 1957. Ironically, it was the United States—then Tehran’s key strategic patron—that sowed the seeds of nuclear development by signing an agreement with Iran under the auspices of President Dwight Eisenhower’s Atoms for Peace initiative. The American Machine and Foundry Company supplied Iran’s first nuclear facility at Tehran University with a 5 megawatt (MW) reactor at the cost of $1 million. Another American firm, General Dynamics, provided 5.15 kilograms of weapons-grade highly enriched uranium to Iran for fueling the Tehran Research Reactor. Initial progress, however, was slow, with the reactor only becoming operational in November 1967.

 

            In 1968, Iran was among the first countries to sign the NPT, which was ratified by the Iranian parliament two years later. Tehran completed its safeguards agreement with the IAEA in 1974. In the same year, the Atomic Energy Organization of Iran was established, and Akbar Etemad, a French- and Swiss-educated reactor physicist, was appointed its president.

 

            Boosted by the 1974 oil boom, Shah Mohammad Reza Pahlavi abruptly decided to make nuclear energy a priority for his government. The official narrative was that oil, “a noble material,” should not be wasted, and thus Iran’s energy portfolio should be diversified. For the shah, nuclear technology was not only essential to modernity, but it also symbolized Iran’s newly attained power and prestige.

 

            An American firm, the Stanford Research Institute, determined that if Iran were to achieve energy autonomy fit for a “great power,” it needed to generate 23,000 megawatts electrical (MWe) from nuclear power by 1994. Partly based on this advice, the shah then announced an ambitious plan to rapidly develop several full-fledged nuclear reactors in record time. Although no decision was made on the total number of reactors, the unrealistically ambitious goal was to develop one reactor per year.

 

            Meanwhile, Iran’s nuclear cadre was being trained. The Atomic Energy Organization of Iran signed special contracts with prestigious universities and technical centers around the world to cultivate the human capital for its nuclear program. Among these institutions was the Massachusetts Institute of Technology, which received a $20 million endowment from Iran in return. Many of the future decisionmakers in the Islamic regime’s nuclear program, including Ali Akbar Salehi, the current foreign minister and former head of Iran’s Atomic Energy Organization, were among the trainees of this program.

            By 1977, with exceptional royal support, the Atomic Energy Organization of Iran had undergone a stunning expansion and employed more than 3,800 experts, engineers, technicians, and interns. Students sent abroad for training returned home as nuclear experts. The organization witnessed a twelve-fold increase in the number of its nuclear scientists, from 67 in 1974 to 862 in 1977. In the last years of the Pahlavi monarchy, the organization had the second-highest budget in the country following the National Iranian Oil Company. Its employees were among the highest paid in Iran. Etemad had the monarch’s carte blanche for his agency’s expenditures, and the annual budget skyrocketed from $30.8 million in 1975 to $1.3 billion in 1976 and over $3 billion (corresponding to more than $11 billion in 2012 dollars) in 1977.

 

            Recently declassified documents reveal striking details about the bitter U.S.-Iranian nuclear negotiations from 1974 to 1978. Surprisingly, the same issues that have caused the current nuclear showdown between Iran and the West—access to sensitive technology, fuel stockpiles, and additional safeguards—were in contention then. When no agreement could be reached, the U.S. government barred American companies from selling nuclear technology to Iran. The shah reciprocally decided that, “unless it was clear that Iran was not being treated as a second-class country,” he would look for alternative vendors.

 

            France and West Germany filled the gap. The Atomic Energy Organization of Iran commissioned the German firm Kraftwerk Union (a joint venture of Siemens AG and AEG Telefunken) to build two 1,196 MWe pressurized water reactors. The turnkey contract, which would deliver the power plate in a completed state, was worth $4.3 billion (nearly $21 billion in 2012 dollars). Construction began in August 1975, with a planned completion date of 1981. The choice of location, the southeastern city of Bushehr, rendered the enterprise particularly costly, as it was prone to seismic activity and located in an underdeveloped region that lacked essential physical infrastructure. Yet Bushehr was chosen mainly due to its location on the shores of the Persian Gulf to facilitate shipping of the nuclear power plant’s machinery and equipment.

 

            The shah also had an extensive plan for acquiring nuclear fuel. In 1975, he provided a $1 billion (and another $180 million in 1977) loan for the construction of the Eurodif nuclear consortium enrichment plant in France. As part of the agreement, Sofidif  enterprise was established with Iran and France holding 40 and 60 percent of its shares, respectively. Subsequently, Sofidif acquired a quarter of Eurodif stocks, which gave Iran a 10 percent share of the enriched uranium produced. Furthermore, Iran signed a $700 million contract to purchase 600 tons of uranium yellowcake from South Africa and obtained a 15 percent stake in the RTZ uranium mine in Namibia. In parallel, Iran started an extensive uranium exploration effort both inside and outside the country. 

 

            An agreement was also reached with French company Framatome to build two 900 MWe nuclear power generators valued at $2 billion at Darkhoveen, near the city of Ahwaz on the banks of the Karun River. Moreover, France indicated its willingness to build eight additional plants for Iran if the United States continued to bar American firms from selling Iran nuclear power plants at an estimated price of $16 billion.

 

            Finally, in 1978 there was a breakthrough in nuclear negotiations between Tehran and Washington. The shah agreed to forego plans to build a plutonium processing plant, to put Iran’s nuclear activities under enhanced monitoring, and to send spent nuclear fuel to the United States. Reciprocally, the Carter administration agreed to allow American companies to sell reactors to Iran. The coming political tumult in Tehran, however, would render these agreements moot.

 

            Income disparity and economic malaise had begun to fuel domestic discontent with the shah’s rapid modernization programs, which many Iranians perceived as profligate and corrupt. The monarch was forced to rein in his atomic dreams. The storm of an Islamic revolution was brewing on the horizon, and the government of Prime Minister Jamshid Amouzegar began a review of the nuclear program. In 1979, Prime Minister Shahpour Bakhtiar began to roll the program back. When the country descended into revolutionary turmoil later that year, one of Bushehr’s reactors was 85 percent complete and the other was half constructed.

 

Click here for the full report.

 

Click here for Ali Vaez's article "Iran Sanctions: Which way out?"

 

Click here for Karim Sadjadpour's chapter on Supreme Leader Ayatollah Ali Khamenei.