Nuclear Statecraft: The Saudi Deal and U.S.-China Competition

On August 24, 2026, the Trump administration submitted to Congress a civil nuclear agreement it had signed with Saudi Arabia a month earlier, kick-starting a congressional review process that is required under the Atomic Energy Act. The deal, known as a “123 Agreement,” could give Saudi Arabia the ability and right to enrich uranium. Congress now has 90 days of continunous session to review the agreement and register any concerns or disapproval.

Since the July 22 signing between U.S. Energy Secretary Chris Wright and Saudi Minister for Energy Prince Abdulaziz bin Salman, the agreement has received significant criticism because of potential proliferation risks in the region. For example, Senator Chris Murphy posted, “This agreement will set off a nuclear race in the region, further disincentivizing Iran from limiting its own program.”

But the deal should also be seen in the wider context of great power competition. On the one hand, this deal and other forms of energy partnership are a good idea for competing with China. On the other hand, as the president seems to have realized, the details matter for regional relationships and proliferation risks. Saudi Arabia’s approach to nuclear power reflects a potential trend among U.S. allies to hedge their bets when it comes to security guarantees and keep nuclear options open. Other U.S. allies and partners are also showing a greater interest in developing independent nuclear programs. All to say, nuclear statecraft has returned both as a tool for great power competition and for hedging.

Why Saudi Arabia, and Why Now?

No country has been more synonymous with oil than Saudi Arabia, but the Middle Eastern energy behemoth has been striving to diversify its economy away from its heavy dependence on oil, whether for export revenue or domestic power generation. Nuclear energy is one resource that has captured the Saudi leadership’s attention to enable the shift. Nuclear energy is also an attractive solution for a severely water-restrained nation, as its electricity and heat can be used to desalinate seawater.

In fact, the Saudi interest in acquiring nuclear power technology dates back to around 2010, when a royal decree was released, stipulating that “the development of atomic energy is essential to meet the Kingdom’s growing requirements for energy to generate electricity, produce desalinated water and reduce reliance on depleting hydrocarbon resources.” Since the late 2010s, Saudi Arabia has been soliciting international proposals for what would be the country’s first nuclear power plant, including from the United States.

The July agreement was the result of efforts that had been underway for years by the Trump administration and several of its predecessor administrations. The deal would potentially help revitalize the U.S. nuclear industry. But geopolitics and nuclear safety and security considerations have also shaped the U.S. negotiation.

Saudi Arabia has shown an interest in obtaining the capacity to enrich uranium to develop a domestic industry for years. While the initial announcement about the agreement was vague on the details of Saudi Arabia’s right to enrich or reprocess, the agreement language suggests that the Saudis have decided to not press for an immediate resolution on the issue. This is a welcome step given the known Saudi interest in nuclear weapons capability “if Iran developed a nuclear bomb.”

Specifically, the 30-year commitment entails a two-year Joint Enrichment and Conversion Study to “[identify] appropriate options for the enrichment of uranium . . . for further development or demonstration in . . . [the United States] of relevant technologies that could be deployed in [Saudi Arabia].” Curiously, the agreement text specifies that U.S. equipment and technology on Saudi soil would not be allowed to enrich uranium to “greater than five percent” unless allowed by an additional Joint High-Assay Low-Enriched Uranium Enrichment Study; in that case, enrichment should be “limited to less than 20 percent.” High-assay low-enriched uranium (better known by its acronym HALEU) is a type of fuel that is deemed necessary for many U.S. advanced reactors, but its production is currently limited to Russia and China. Any nuclear activity in Saudi Arabia would be under International Atomic Energy Agency (IAEA) safeguards.

Keeping Beijing Out

In addition to potential benefits to U.S. industry, the deal would also contribute to bolstering the U.S. position in the Middle East amid growing interest and investments by China. The U.S.-Saudi agreement likely fends off China’s overture to partner on the development of the Saudi nuclear power sector—at least for now. The National Nuclear Corporation of China has been among the key international contenders, backed by the nation’s fast-growing nuclear power sector and robust supply chains. It is worth noting that Russia’s nuclear energy powerhouse, Rosatom, has also attempted to establish a civil nuclear relationship with Saudi Arabia in recent years.

Nuclear commerce is inherently geopolitical in nature in that a nuclear power project is a multidecadal endeavor—including construction, fuel provision, and maintenance—that generally strengthens bilateral ties. Such depth and length of engagement can accord the supplier country insight into and influence over nuclear power programs of a recipient country. The United States has been particularly sensitive to growing Saudi-China partnership, as China has emerged as its primary geopolitical rival. The relationship between Riyadh and Beijing has been growing strong. For example, Saudi Arabia led as the top Middle Eastern destination for Chinese defense exports between 2016 and 2025.

The prolonged war with Iran has arguably elevated China’s standing as a steady global stakeholder whose energy system has shown a great deal of resilience to global market turbulence. China has been diplomatically vocal in its opposition to the war in Iran, including by expressing concern and arguing that “force cannot truly solve problems.” But Beijing has done little substantively to oppose the war or support Iran aside from providing some dual-use technologies and satellite support, which predates the war. Nor has Beijing used its diplomatic capital—at least publicly—to urge Tehran to relinquish control over the Strait of Hormuz despite its reliance on the oil and gas supply through the strait. Moscow has taken a similarly restrained position.

One potential explanation for this is the transactional nature of the China-Russia-Iran-North Korea partnership, but in China’s case, this may also reflect a broader strategy. Beijing wants to portray itself as a stable, noninterventionist partner for countries in the region. In contrast, the war and the complicated attempts to bring it to an end could cast a cloud over U.S. influence in the region and its global standing. The backdrop of the war, indeed, might have generated a new impetus for Washington to seal the deal with Saudi Arabia.

The Future Is Hedging

Despite the deal’s potential to hold off Chinese pressure in the region, it nonetheless comes with at least three proliferation risks. The first risk is Saudi Arabia using nuclear fuel access to develop an independent nuclear weapons program. Since 2018, Saudi leadership has indicated it is open to developing nuclear weapons if Iran does. The risk of Iran developing an independent nuclear weapons program will heavily depend on the details of the final agreement between Iran and the United States to end the ongoing conflict. The risk of Saudi proliferation will also depend on whether Saudi Arabia can independently enrich, the extent of inspections by the IAEA, and whether or not Saudi Arabia eventually acquires additional nuclear technologies such as reprocessing, which could give it a full fuel cycle. From this, a country could expand its enrichment capacity, divert nuclear fuel, or reject inspections. Many of these details may depend on the outcome of the two-year joint enrichment study by the United States and Saudi Arabia.

Saudi Arabia may not take a decisive step toward a nuclear weapon program, but instead might develop independent components that can be quickly assembled in a sprint to a bomb. This is often referred to as “nuclear latency” or “hedging,” whereby a state keeps open the option of developing nuclear weapons if the security environment worsens or security guarantees are no longer credible. Nuclear hedging is much more difficult to verify and inspect as it hinges on intent, and states are entitled access to nuclear technology for civilian purposes as long as they are in good standing with their Nuclear Nonproliferation Treaty (NPT) obligations. While other U.S. allies have expressed a growing interest in independent nuclear programs, including Poland and South Korea, a significant milestone on the path to nuclear weapons is a hedging strategy that allows states to remain in compliance with their NPT obligations.

A second risk is that the agreement could lead to a regional proliferation cascade, whereby a failure to fully dismantle Iran’s nuclear program could lead Saudi Arabia to divert nuclear material for a nuclear weapons program, inspiring other states in the region to follow suit. Any end to the Iran war must account for its 440 kg of stockpiled uranium, enriched to 60 percent; the operational status of its nuclear facilities, to include the Bushehr reactor; and more regular and in-depth IAEA inspections. If Saudi Arabia does develop any domestic enrichment or reprocessing capacity, it could open up the existing U.S. civil nuclear agreement with the United Arab Emirates for renegotiation. Under the U.S.-UAE agreement of 2009, the UAE waived the right for domestic uranium enrichment and spent fuel reprocessing; however, the agreement does allow for the right to request a renegotiation of the agreement if another state in the Middle East gets a better 123 Agreement.

The U.S.-Saudi agreement could also affect the scope of U.S. civil nuclear cooperation with South Korea. Seoul has long sought the right to enrich and reprocess, arguing that domestic enrichment is a matter of energy security, as the nation currently relies on imported uranium fuel to run its 26 commercial reactor units. Yet the right to enrich is thus far out of reach for South Korea under the 1972 civil nuclear cooperation agreement, as well as its 2015 revision.

The final proliferation risk is to the wider nuclear regime, which is already under strain. Saudi Arabia rejected the “Additional Protocol,” an arrangement for additional IAEA inspections, and instead agreed to a bilateral verification arrangement to monitor the U.S.-provided sites. An agreement that does not include the Additional Protocol or an in-depth role for the IAEA could be perceived as undermining international institutions and norms.

The agreement highlights the enduring importance of the IAEA, particularly if nuclear energy becomes another battleground for great power competition. The IAEA at present would likely struggle to provide the necessary resources—funding, technology, and workforce—to deliver on an expanding mission. At present, the IAEA is working diligently to ensure safety and security at five nuclear sites in Ukraine, including the Zaporizhzhia Nuclear Power Station, which has now lost power on 17 occasions. The IAEA may soon have a mandate to return to on-site inspections in Iran; however, this may prove to be an unprecedented mission requiring digging out old nuclear facilities and ensuring the safety of IAEA personnel in the process. To excavate Fordow, which is buried at least 80–110 meters underground and remains sealed under rubble from U.S. “bunker buster” bombs, would require ground-penetrating radar, hard-rock excavation equipment, and neutralization of unexploded ordinance. The IAEA likely lacks such capabilities as it is not funded, equipped, or staffed to provide this level of activity, and each of these capabilities would require coordination with national military engineering units and specialized deep-mining firms.

The IAEA currently has a budget of approximately €442.1 million, but it has observed zero real growth for decades, and as of November 2025, it was €135 million in arrears. The United States has historically paid 25 percent of its budget. But much of the IAEA’s support is tied up in the UN payment system. While the United States is billions of dollars in arrears with the United Nations, China portrays itself as the “de facto No. 1 financial contributor.” Supporting the IAEA’s mission and reducing proliferation risks of the agreement with Saudi Arabia, or any other partners, will require a greater commitment by the United States to meet its financial obligations in support of the implementing organizations.

These risks will need to be accounted for in the deal’s final terms. The two-year study into enrichment options might also buy the United States some time to convince Saudi Arabia to sign the Additional Protocol, and to sort out regional implications of the deal. Chief among these is whether the agreement triggers a race to develop enrichment and reprocessing capabilities across the Middle East.

Conclusion

A day after the signing of the agreement in late July, President Trump injected confusion into the process by claiming the agreement would not allow for enrichment, contradicting the Saudi understanding, and saying the deal depended on Saudi Arabia joining the Abraham Accords. Normalizing ties with Israel is a position that the Saudis have steadfastly refused unless Israel agrees to the creation of an independent Palestinian state. Neither Riyadh nor Washington has budged in the last month. Now that the agreement text is with Congress, Congress has 90 days in continuous session to consider the agreement; it could be brought into force unless Congress adopts a joint resolution of disapproval. Members will have to weigh the potential benefits of competing with China for influence in the region, including but not limited to competition in the energy sector, against potential proliferation risks. Many of these risks can be mitigated with detailed terms of agreement, to include limits on enrichment and reprocessing under well-resourced IAEA inspections. A more challenging determinant of the agreement’s success, however, will be the outcome of the Iran conflict and the long-term status of its nuclear program.

Heather Williams is director of the Project on Nuclear Issues and senior fellow in the Defense and Security Department at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Jane Nakano is a senior fellow in the Energy Security and Climate Change Program at CSIS.