Lifting the DFC Nuclear Finance Ban Supports US National Security Interests

Lifting the DFC Nuclear Finance Ban Supports US National Security Interests
(AP Photo/Jon Gambrell, File)
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On June 10th, the US International Development Finance Corporation (DFC) announced a 30-day notice and comment period on a proposed change to the agency’s Environmental and Social Policy and Procedures that would remove the DFC’s prohibition on support of nuclear power projects. The DFC states that its effort to modernize its policies “to offer financing for nuclear projects supports the agency’s development mandate, bolsters US foreign policy, and recognizes advances in technology which could make nuclear energy particularly impactful in emerging markets.”

US efforts to bolster access to safe, clean nuclear energy in developing economies is vital to maintaining national security interests abroad and preserving US dominance in nuclear safety, security, and nonproliferation standards vis-à-vis Russia and China, whose leaders are actively using nuclear diplomacy to gain a foothold in emerging markets.

Congress passed the US Better Utilization of Investment leading to Development (BUILD) Act—which created the DFC—largely in response to China’s Belt and Road Initiative. The legislation signaled a recognition among policymakers of the national security implications of China’s growing economic dominance. It also opened an opportunity to mitigate the dangers of predatory state investment and authoritarian regime loan practices in developing countries.

The legislation governing the DFC provides a much broader mandate than that of its predecessor, the Overseas Private Development Corporation (OPIC), to pursue development activities while supporting US foreign policy objectives. As countries such as Russia and China employ infrastructure development and long-term energy projects including civil nuclear program development to increase energy dependence among developing countries, the DFC’s current prohibition on nuclear project finance only exacerbates Russia and China’s growing influence in energy diplomacy.

A potential removal of the DFC’s ban on nuclear project finance provides an opportunity for the US to push back on Russian and Chinese dominance in third-party countries while simultaneously supporting development objectives.

Even as nuclear power plants in Western Europe and North America face premature closures, developing countries and emerging economies are increasingly turning to nuclear energy to meet rising electricity demand, mitigate public health crises exacerbated by poor air quality and greenhouse gas (GHG) emissions, and deploy clean energy solutions in a manner conscious of capital and land resource constraints. This trend presents US leadership with a critical choice: remain at the forefront of nuclear technology and policy or cede leadership to Russia and China, whose leaders are eager to capitalize on demand from emerging markets for nuclear capacity.

The US was once a global leader in the export of nuclear energy exports. Since 1955, the US has signed twenty-three Section 123 agreements that cover 48 countries, the IAEA and Taiwan, to ensure the highest standards of safety and non-proliferation in the transfer of nuclear technology and research.

Despite significant Congressional and public support for civil nuclear projects throughout the Cold War and into the early 2000s, government policies slowly began to reflect public campaigns highlighting perceived financial and safety risks of nuclear energy. Evaporation of federal support occurred a decade ago when OPIC developed its social and environmental policy statement and included an explicit prohibition on nuclear energy projects.

Since then, this prohibition has disadvantaged US corporations that vie for projects against the competitive state-backed financing packages offered by Russia. Although most new-to-nuclear countries have expressed interest in acquiring nuclear energy technologies from the US, many of them (including those that have signed 123 agreements with the US in the past) are turning toward Russia, which is able to provide government-backed financing for civil nuclear projects. The tools and capitalization opportunities offered by the new DFC enable the competitive financing necessary for US companies to level the playing field and uphold global nuclear safety and nonproliferation standards.

Removing the DFC’s ban on nuclear financing is critical to US national security and foreign policy interests. It both unlocks commercial relationships that can last a century, and it aligns US government policy with current initiatives at the Department of Energy that incentivize private companies to continue developing, demonstrating, and deploying cutting edge advanced nuclear technology. The domestic nuclear industry is a key component of US national security, contributing approximately $42 billion to the US national security apparatus annually. The DFC’s promise of financing would play a crucial role in bolstering the domestic civil nuclear industry by supporting participation in a robust export market.

The decision would send a strong signal to the US nuclear industry that the development of advanced technologies such as small modular reactors (SMRs) and microreactors (MNRs), as well as the pursuit of alternative uses for nuclear energy such as hydrogen, desalination, and district heating, would be met with deployment opportunities abroad.

These technological innovations would in turn provide a basis for lasting, meaningful diplomatic relationships with countries that might otherwise turn to Russia or China for their energy needs or economic development. Furthermore, these diplomatic relationships not only ensure a market for US nuclear technology, but also preserve the highest safety standards and strongest non-proliferation and security safeguards in the development of civil nuclear programs.

Russian and Chinese leaders recognize the important role nuclear diplomacy plays in gaining a foothold in countries they deem valuable to their foreign policy interests, which is why their governments provide strong, early financial and policy support for nuclear exports. It’s time for the US to re-assert its authority over global nuclear safety and nonproliferation standards and to value its nuclear energy exports as a top national security priority. Removing the DFC’s ban on nuclear project finance is a critical first step.


Ambassador Thomas Graham is Executive Chairman of Lightbridge Corporation, and Admiral Mies was former commander of US Strategic Command. Both are co-chairmen of the Atlantic Council’s Nuclear Energy and National Security Coalition (@NENSCoalition).

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