Negotiating the ROK-U.S. 123 Nuclear Cooperation Agreement: Strategy, Options, and Second-Best Pathways

Chansong C. Lee

clee@gmail.com

Research Fellow

Sejong Institute

1. Introduction

What strategic options can South Korea pursue to introduce uranium enrichment and reprocessing? The peaceful use of nuclear energy, including enrichment and reprocessing, is an inalienable right explicitly recognized in Article 4 of the Nuclear Non-Proliferation Treaty (NPT). South Korea possesses clear sovereignty over achieving a full nuclear fuel cycle, but, at the same time, it has voluntarily limited the exercise of this right to mitigate proliferation concerns of the United States and the international community. In particular, considering the security benefits of extended deterrence provided by the United States, South Korea has effectively negotiated the scope of its sovereign exercise over enrichment and reprocessing within the framework of cooperation with the United States.

It is possible for South Korea to achieve both the front-end and back-end stages of the nuclear fuel cycle within the framework of the current ROK–U.S. Nuclear Cooperation Agreement. Announced in 2015, the ROK-U.S. Agreement for Peaceful Nuclear Cooperation (hereinafter ROK-U.S. 123 Agreement) allows limited authority over certain front- and back-end activities. It also leaves open the possibility of individual or comprehensive authorization through future bilateral consultations. The two countries have established the High-Level Bilateral Commission (HLBC), a standing vice-ministerial consultative body. The HLBC was designed to include a working group that addresses spent fuel management and the stable supply of nuclear fuel. It also provides a framework for future discussions on pyro-processing and low-enriched uranium.

The HLBC’s prior consent framework is based on the Nuclear Non-Proliferation Act (NNPA) of 1978. Article 11 of the Agreement and its Annex of Understanding stipulate that matters related to enrichment, reprocessing, and other modifications to the form or content of nuclear fuel are to be discussed within the HLBC. If the parties subsequently reach a written agreement, including on facility-related matters, the arrangement can be executed in a manner consistent with treaty obligations, domestic law, and licensing requirements, thereby enabling South Korea to pursue both the front-end and back-end nuclear fuel cycles. This also signifies that the so-called “gold standard,” which requires partner states to forgo enrichment and reprocessing, does not apply to South Korea.

South Korea needs to develop various second-best alternatives or establish a fallback line in its negotiations with the United States. The United States does not favor South Korea pursuing enrichment or reprocessing and seeks to maintain the 1991 Joint Declaration on the Denuclearization of the Korean Peninsula. At the same time, the U.S. aims to prioritize the development of its domestic uranium enrichment service industry and, in the case of reprocessing, prefers that South Korea’s spent nuclear fuel be permanently disposed of. These policies clearly diverge from South Korea’s position, which seeks to actively participate in the uranium enrichment services market to secure stable fuel supply while also pursuing the recycling of spent nuclear fuel.

Fortunately, at the ROK-U.S. summit in late August 2025, the two sides agreed to begin consultations on South Korea’s uranium enrichment and spent nuclear fuel reprocessing issues. This brief seeks to develop options that would allow South Korea to gradually achieve a complete nuclear fuel cycle while overcoming the deadlock with the United States and building U.S. trust. The focus is primarily on enrichment, but the methodology developed can be adapted to the reprocessing domain as well. This study aims both to open a new horizon for Korea–U.S. nuclear cooperation and to contribute to the development of an internationally applicable model for the peaceful use of nuclear energy, as part of efforts to address the challenges facing South Korea’s nuclear energy industry.

2. Research Background

South Korea needs to secure the right to uranium enrichment from the perspectives of energy security, industrial competitiveness, climate change response, and geopolitics. The nuclear fuel market has been severely disrupted by the war in Ukraine. For instance, the price of uranium concentrate (yellowcake, U3O8) increased roughly 3.6 times compared to 2020, reaching $88.5 per pound in 2024. The price of enrichment services also surged, from $60 per SWU before the war to $166 per SWU in 2024. At the time, Russia’s Rosatom and Tenex controlled 40 percent of the global enrichment services market, but the lack of alternative suppliers meant that the Russian enrichment industry was initially exempt from sanctions. Only in 2024 did the Biden administration announce a ban on Russian fuel through 2028, yet securing alternative fuel remains a complex issue for countries operating 30 Russian-designed VVER reactors in Eastern Europe. This difficulty is compounded by the long-term nature of contracts—typically 10 to 30 years—the potential for resuming business after the war, and the relatively low cost of Russian fuel. Until now, South Korea has relied on lowest-bid public procurement, resulting in over 40 percent dependence on relatively inexpensive Russian or Chinese fuel without considering geopolitical risks. Between 2019 and 2023, South Korea imported a total of 1,947 tons of enriched uranium from France (34%), Russia (34%), the United Kingdom (25%), and China (5%). The country is currently pursuing a policy of import diversification.

Even if imports from Russia decline, the nuclear fuel market will continue to operate as an oligopoly led by Urenco, China’s CNNC, and France’s Orano, and economically viable and stable supply will remain under persistent threat. Although South Korea ranks fifth in the world in nuclear power generation, it cannot access stable nuclear fuel supply networks such as Euratom in Europe or the “Sapporo Five” in Japan. At the same time, because South Korea does not possess the front end of the nuclear fuel cycle, it cannot offer a turn-key competitive model that includes nuclear fuel supply when exporting nuclear power plants.

The expected increase in future demand for nuclear fuel for power reactors may further threaten supply stability. The United States secures 20% of its total electricity through nuclear power and operates 96 reactors. In May 2025, it announced an executive order to expand nuclear power capacity to 400GW by 2050. Through four executive orders, the Trump administration stated that it will quadruple nuclear power capacity by 2050, accelerate reactor licensing procedures, promote the development and expanded use of advanced reactors, and streamline environmental reviews. The IAEA also projects that the global share of nuclear power generation will increase by at least 40% by 2050 compared with 2023, which suggests further increases in nuclear fuel prices.

South Korea is a typical energy-deficit state that depends on imports for 93% of its primary energy. It currently operates 26 reactors, and nuclear power accounts for about 30–33% of total electricity generation. To sustain this level, it imports an annual average of about 415 tons of enriched uranium over the past five years (600–700 tons in 2024). South Korea has an energy-intensive industrial structure that includes automobiles, steel, shipbuilding, semiconductors, and petrochemicals, and electricity demand is expected to rise further due to new industrial needs such as AI data centers, electric vehicles (EV), and Green Steam.

3. Theoretical Framework

Robert Putnam’s two-level game theory provides an appropriate analytical framework for explaining interstate negotiations. The traditional state-actor model in international relations assumes that the state is a unitary and rational actor and explains state behavior mainly through external international environmental factors. Yet to understand the foreign policy decision-making process in a more precise manner, a domestic political analytical framework that can explain the process of interest coordination among diverse domestic actors is relatively more effective.

Putnam’s two-level game theory is grounded in this problem. The theory analyzes how the pressure and coalitions formed by domestic interest groups influence interstate negotiation processes. Governments and leaders try to satisfy the demands of domestic groups as much as possible while also seeking to minimize the negative consequences that external factors may produce.

This process can be understood as a game taking place simultaneously at two levels: the domestic (Level 2) and the international (Level 1). The central concept is the “win-set,” defined as the set of international agreements that are politically acceptable and ratifiable within the domestic context. In other words, the outcome of negotiations at the international level is determined not only by the interests of states but also by domestic political constraints. For analytical simplicity, this brief assumes that variables at the international level are ultimately subsumed within the range recognized by actors at the domestic and state levels.

Therefore, in the course of international negotiations, a negotiator must not focus solely on the counterpart seated across the table but also recognize the presence of leaders, interest groups, institutions, and the public behind them. This captures the essence of diplomacy emphasized by two-level game theory.

The useful premises of two-level game theory can be adopted as guiding principles to strengthen South Korea’s negotiating position. First, the relative size of the win-set directly affects the outcome of international negotiations. In other words, the wider the range of politically acceptable agreements domestically, the greater the likelihood of reaching a settlement on the international stage, whereas a narrower range constrains negotiating power. Second, it is possible to induce domestic and international stakeholders to view a particular issue from a different perspective through perception restructuring. This can serve as a crucial strategic tool to secure domestic political support or enhance international persuasiveness, ultimately enabling South Korea to occupy a more advantageous position in negotiations.

In principle, a strategy to maximize relative gains is to expand the opponent’s win-set while narrowing one’s own. However, there are clear limits to achieving such adjustments artificially. Therefore, it is necessary to accurately understand the negotiation structure, identify new ideas and incentives, and use them to expand the opponent’s win-set.

Meanwhile, the United States has a track record of providing South Korea with extended deterrence and nuclear technology, which gives it a certain advantage in negotiations. For reasons related to non-proliferation, the U.S. win-set is relatively narrower than South Korea’s. There are both extrinsic and intrinsic ways to expand the U.S. win-set. Yet, it is practically difficult for South Korea to influence the international environment directly to expand it extrinsically. Therefore, an intrinsic approach is more effective. This entails creating negotiation space in which South Korea’s preferences can be reflected by inducing changes within U.S. policy coalitions. Negotiators must not focus solely on the Level 1 counterpart but also recognize the various domestic actors behind them and seek to penetrate Level 2 through persuasion and incentives.

4. Second-Best Alternatives

The authority to enrich uranium can be divided into three separable elements through the slicing-and-dicing method. The first element is territoriality. Article 11 of the 2015 ROK–U.S. 123 Agreement and its Agreed Minute address enrichment, reprocessing, and other alterations to the form or content of nuclear fuel, yet they include no territorial reference to where such activities may be carried out. In other words, under the terms of the agreement, these activities cannot be conducted without U.S. consent regardless of location. However, the agreement contains multiple provisions that specify “territorial jurisdiction” with respect to the transfer of information, materials, equipment, and components. This suggests that enrichment activities may also allow room for a limited authorization through territorial differentiation. Within the category of territoriality, the relevant variables can therefore be organized into three options: South Korea, the United States, or a third country.

The second element is technology. This concerns technological access, including the use and development of uranium enrichment technology. The 2015 ROK–U.S. 123 Agreement states that South Korea may produce enriched uranium with less than 20 percent U-235 if it obtains written consent from the United States. Despite this provision, the United States has maintained a firm position. In enrichment, the critical issue is the level of enrichment rather than the specific type of technology, and it is possible to view this as a continuous spectrum between permission and prohibition. This can take the form of allowing enrichment below 20 percent, allowing enrichment below 10 percent, or allowing enrichment below 5 percent.

The third element concerns the actor responsible for enrichment and can be framed through four models: black-box, independent, bilateral, and multilateral. In the black-box model, South Korea outsources enrichment services without direct participation. The independent model involves South Korea conducting enrichment on its own, while the bilateral model centers on enrichment carried out in cooperation with the United States. The multilateral model, illustrated by arrangements such as Urenco, entails joint enrichment by three or more states, including South Korea and the United States.

Taken together, these elements allow for a broad set of theoretical scenarios. With three variables in the territorial category, three in the technological category, and four in the category of the implementing actor, a total of thirty-six combinations can be derived. This set represents the full range of options that can be assessed at the theoretical level, and it still leaves open the need for further discussion on which of these pathways is most desirable or most viable for South Korea.

The first option is for South Korea to seek the right to enrich uranium while setting an upper limit of 5 percent U-235. This approach focuses on producing fuel solely for the current fleet of large, third-generation reactors. Most reactors operated by Korea Hydro and Nuclear Power use low-enriched uranium in the 4 to 5 percent range. South Korea would therefore pursue enrichment rights below 5 percent U-235 as an initial claim that reflects its present energy security needs and industrial interests, creating space for a compromise with the United States.

The second option is for South Korea to conduct enrichment of less than 10 percent domestically and on an independent basis. Korea Hydro & Nuclear Power and the broader nuclear sector are advancing the development of high-efficiency light water reactor (High-Burnup LWR, Advanced LWR) that use fuel enriched to the 6–7 percent U-235 range. This effort includes plans to reestablish the full set of safety analyses, fuel design standards, and regulatory criteria. The central issue is that refueling every 18 to 24 months reduces economic efficiency, while low U-235 utilization leads to high volumes of spent fuel. There is also the constraint imposed by current burn-up limits. Using fuel enriched to 6–7 percent would allow longer operating cycles, reduce the amount of spent fuel, and lower generation costs while improving capacity factors.

The third option is for enrichment service providers from the United States or other countries to build and operate an enrichment facility in South Korea under a black-box model that prevents any Korean technical access. In this arrangement, enrichment would take place on Korean territory, yet all handling of special fissionable material and byproducts would be carried out in strict accordance with the procedures and requirements set by the ROK–U.S. 123 Agreement. In other words, the enrichment plant would be constructed and operated in South Korea, but the Korean government and Korean firms would not have access to the technology, and Korean companies would hold ownership only of the material produced.

The fourth option is to permit South Korea’s enrichment activities only within the United States while allowing Korean and American firms to operate the facility bilaterally and recognizing a defined ownership share for South Korea in the material produced. In this arrangement, Korean nuclear companies would have full access in the United States to gas-centrifuge and laser-enrichment technologies and would be able to claim ownership of the output. Although the production site would be limited to U.S. territory, Korean firms would retain the ability to adjust production in response to market conditions and would secure both technological access and managerial authority, which constitute major advantages. In particular, this model would guarantee Korean firms the autonomy to conduct research and production in the United States on future nuclear fuels—such as LEU+, HALEU, TRU, and ATF (Accident Tolerant Fuel)—regardless of fuel type.

A final option is to consider trilateral cooperation on uranium enrichment among South Korea, the United States, and Japan. In view of South Korea and the emerging nuclear market in Southeast Asia, one can envision locating the facilities in Japan and adopting a model in which South Korea, the United States, and Japan each hold a 33 percent stake, similar to URENCO. Through joint investment, this model could support the expansion of JNFL’s capabilities and raise the current enrichment limit from 5 percent to 20 percent. South Korea would gain access to enrichment technology, but the actual enrichment would take place only in Japan, and South Korea would import the fuel produced there on the basis of its ownership share.

5. Policy Recommendations

The various options outlined in this brief are provisional and process-oriented in nature. At the same time, the principles applied to the front-end cycle can be extended in a similar manner to the back-end fuel cycle, including reprocessing (recycling). In determining South Korea’s negotiation preferences, multiple criteria must be considered, including economic efficiency, safety, environmental impact, non-proliferation, and energy security. One of the critical tasks in pursuing the completion of South Korea’s nuclear fuel cycle is conducting a thorough study of the U.S. nuclear policy ecosystem and formulating a responsive strategy. It is essential to identify in detail the actors within the United States who oppose South Korea’s fuel cycle completion, understand their preferences, and present alternatives that either address their concerns or shift their positions. In addition, South Korea must continue to strengthen its nuclear industry and negotiation capabilities. Establishing a national-level nuclear fuel cycle policy can provide a political basis for pursuing enrichment and reprocessing, while measures such as enacting a basic non-proliferation law may help alleviate U.S. concerns. Enhancing negotiation capacity also requires organizational restructuring and the development of network capabilities. Finally, South Korea should invest in diplomatic efforts to address regional concerns and in building knowledge networks to support the development of creative strategies and tactics.