UN Nuclear Watchdog Risks Running Out of Money on US, China Standoff

(Bloomberg) -- The International Atomic Energy Agency may soon run out of money to monitor the world’s nuclear stockpiles because the US, China and others aren’t paying their dues, marking the latest frontline in the tug of war between Washington and Beijing for influence.

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Draft documents seen by Bloomberg show a hole of about €220 million ($235 million) in the watchdog’s €650 million budget for this year, with the US and China being the biggest debtors. The Vienna-based agency ensures that nuclear fuel used to generate electricity isn’t diverted for weapons, regulates global nuclear-safety standards and provides developing nations with access to technologies.

The US and China — also the biggest donors at a more than a combined €137 million — are increasingly at loggerheads over issues such as Japan’s release of treated wastewater from the crippled Fukushima nuclear plant and Australia’s intention to buy nuclear-powered submarines. Countries traditionally exert pressure on the United Nations’ agency’s purse strings to sway its decision-making.

Both the American and Chinese missions to the IAEA declined requests for comment. In a diplomatic note circulated late Wednesday, the Chinese government said the IAEA was at risk of privatization by Western nations that have control over its board of governors.

“The ‘independent role’ of the secretariat in fulfilling its duties must be based on the understanding and support of member states,” China’s envoy, Li Song, said in a separate statement posted on the embassy’s website.

It’s the second time in a month IAEA governance issues have bubbled to to the surface, with the cash crunch exposing another potential weak link for a nuclear industry that leans heavily on regulators. With atomic power growing rapidly in China but struggling in Western nations, Beijing’s government is fighting for IAEA influence commensurate with its rising profile in supply chains.

Although the arrears are relatively small — the US owes €77 million and China €60 million — they’re undercutting the work of agency inspectors trying to account for stockpiles of fissile material that could arm more than 300,000 nuclear weapons.

“We may be grinding to a halt in a month if we don’t get the money that is owed,” IAEA Director General Rafael Mariano Grossi said Monday. “It’s time for some important countries to walk the walk.”

A full 44% of members are in some state of arrears, Grossi said. Full figures are expected to be published next week, ahead of the agency’s annual general conference

“There’s a relatively small group of countries that are the largest contributors and this is where the problem lies,” he said. “We were getting contributions even during the lowest point of the Covid crisis. It is a peculiar thing that is happening.”

The last time the IAEA was in such dire financial straits was in the mid-1990s, Grossi said. Back then, some member states suffered a crisis of confidence in the agency because its safeguards proved inadequate in detecting Iraq’s nuclear-weapons work prior to the 1990 Gulf War. That failure led to new rules making it harder for countries to cheat.

“Every year the quantity of nuclear material under IAEA safeguards is increasing, as are the number of nuclear facilities,” said Tariq Rauf, the agency’s former policy chief, calling it “essential” for the delinquent payments to be made.

Under the motto “Atoms for Peace,” the IAEA was founded by President Dwight Eisenhower in 1957 to commercialize nuclear-energy technologies first developed for weapons. Historically, Washington has funded about a quarter of the agency’s budget in installments, tending to wait until the end of the year for transfers to clear.

Beijing’s contributions have more than tripled in the past decade on the back of a $400 billion program to expand nuclear generation.

(Adds IAEA director general in the tenth paragraph)

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