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NUCLEAR PR OLIFER ATION, TERR ORISM, AND THE TR AGEDY OF THE COMMONS

You know that the best you can expect is to avoid the worst1

D E S P I T E T R E ATIES, AGREEMENTS, AND BILLIONS SPENT FOR NONPR O-


L I F E R AT I O N , NUCLEAR PR OLIFER ATION IS ALIVE AND WELL
After 50 years of nonproliferation efforts and many billions spent, it is has become apparent
that nonproliferation, as presently developed, is not a winning strategy.2 Why? I propose that
nonproliferation has been a failure to date because it is essentially a Band-Aid approach to
overcome the deep flaws of two strategic initiatives: (1) Mutual Assured Destruction (MAD) as
an alternative No First Use deterrence strategy to preventive war: First Use of the H Bomb 3 and
total annihilation of the enemy; and (2) the proliferation of nuclear technology for the pur-
ported purpose of boiling water to turn turbines in order to produce electricity.

M U T UA L A S S U RED DESTRUCTION AS A FAILED STR ATEGY THAT AS-


S U R E S P R O L I FER ATION & INCREASES THE POTENTIAL FOR ATTACK
This strategy has two primary assumptions: (1) approximate parity so that neither side has an
advantage for First Use, and (2) the players in this game are rational.4 Provided these assump-
tions hold, MAD was thought to place the parties in a Nash Equilibrium5 where neither party
would choose First Use. By 1955, MAD may have become a prisoners dilemma with no Nash
Equilibrium. Even though a nuclear exchange would potentially produce an unwinnable war,6
all parties had an incentive to cheat; to break the equilibrium state, gain an advantage, and
launch a First Strike that would be decisive. Thus, an arms race ensued, with ever escalating
choices that were supposed to produce an advantage to one player over the other. If the oppos-
ing player does not keep up, they fall behind and become vulnerable to a First Strike. Countries
that do not now posses nuclear weapons, seeing the landscape of strategic and economic
decision-making now seek to acquire nuclear weapons or, at a minimum, the capacity to build
nuclear weapons in order to secure their position in this precarious world order and as deter-
rence against invasion by an opposing force.7 More nuclear weapons means less security.

1 Italio Calvino, If on a Winter’s Night a Traveler (1979) in William Poundstone, Prisoner’s Di-
lemma (New York: Doubleday, 1992), 53.

2In 1950, 2 states possessed a few dozen nuclear weapons. Today, 8 nuclear states possess
12,000 nuclear weapons, 40 states are capable of going nuclear at anytime and there is enough
HEU (highly-enriched uranium) for building 240,000 more nuclear weapons. Plus, today, we
have low level nuclear wastes from nuclear power plants that could be used to construct 1
million RDDs (radiological dispersion device; a dirty bomb).

3 Nuclear fusion weapons even today remain potentially the most destructive weapons ever
invented and the greatest threat to global security. See Lifting the nuclear shadow: Creating the
conditions for abolishing nuclear weapons, Foreign & Commonwealth Office, UK.

4John von Neumann’s minimax theorem: as long as the two rational players’ interests are com-
pletely opposed, they can settle on a rational course of action going forward in a zero sum
game. Equilibrium arises from an interplay of self interest and mistrust (Poundstone, 97).

5 John Nash showed that minimax theorem applied to non zero sum, non cooperative games.
Cooperative games arise when players can form coalitions and know each other’s strategy.
Non cooperative games involve each player formulating their strategy without knowing the
other’s strategy (Poundstone, 96-99).

6A game state where it is impossible for the player to win the game. The only options are re-
starting the game or stopping and deciding to play another game with different rules. Playing
an unwinnable game is a zombie situation (Wikipedia).

7 See Kurt Campbell, et. al., The Nuclear Tipping Point: Why States Reconsider Their Nuclear
Choices (Washington, D.C.: Brookings Institution Press, 2004). The U.S. 2003 preventive war in
Iraq only served to cement this new incarnation of MAD strategy.

LYLE A. BRECHT DRAFT 410.963.8680 - - - C A P I T A L M A R K E T S R E S E A R C H - - - MARCH 10, 2009 Page 1 of 2


NUCLEAR PR OLIFER ATION, TERR ORISM, AND THE TR AGEDY OF THE COMMONS

T H E P R O M O T I ON OF NUCLEAR ELECTRICIT Y AS A FAILED STR ATEGY


T H AT A S S U R E S PR OLIFER ATION & INCREASES TERR ORIST THREAT
The proliferation of nuclear electricity facilities alters the probability of terrorists obtaining
nuclear material for RDD or direct attack of a nuclear facility. Nuclear facilities include nuclear
power plants, cooling ponds for spent nuclear fuel rods, nuclear reactors used for research or
other non-electricity purposes, nuclear reprocessing facilities, and nuclear waste sites. Instead
of a few, highly guarded military sites, suddenly there are thousands of sites where nuclear
material is available. Although the low-level nuclear materials available at these site are not
capable of being fashioned into nuclear weapons, they can be used for spreading radioactivity
in places where this would cause major economic disruptions, both short and long-term.

NO N P R O L I F E R ATION: SMART STR ATEGY, WR ONG STR ATEGY, OR JUST


P U R E L U C K T HAT NUCLEAR TERR ORISM IS STILL IN THE FUTURE?
If present nonproliferation strategy is really a prisoner’s dilemma and does not have a Nash
Equilibrium, is there any optimal way to play this game? Might nonproliferation, as presently
played, constitute a strategy for an unwinnable game where the only objective is not to lose?
But, if nuclear terrorism produces a world destroyed, what does not losing look like? Could it
be that nonproliferation strategy, as presently constituted, is obsolete?

W H Y NO N P R O LIFER ATION IS IMPORTANT FOR ECONOMIC RECOVERY,


A D D R E S S I NG CLIMATE CHANGE, AND CREATING A GOOD FUTURE8
One of the foundational policy decisions made at the end of and after WWII was to employ
MAD as the nation’s nuclear strategy. The resulting nuclear deterrence might be considered a
forcing function9 that resulted in the expenditure of $45,000 billion (in 2009 dollars) for defense
by all the world’s economies.10 Nuclear power was supposed to bring low-cost electricity to
the nation’s of the world and free them of polluting CO2. But, both of these strategies are pro-
hibitavely expensive if the opportunity costs of nuclear terrorism is factored into the ROIC
(return on invested capital) of these strategies. Today, we are at a similar crossroads of choice.
We can choose strategies that lead to a sustainable future or we can choose strategies that, in-
stead, foster resource wars and nuclear terrorism and result in abrupt climate change hostile to
the continuance of all life on earth. A reckoning is underway. The collapse of the normal func-
tioning of global markets and international finance reflect this inflection (tipping) point.11 These
strategic choices of how to achieve economic recovery and how we continue to accomplish
future economic stability may be the most critical choices for national security. Rethinking
nonproliferation strategy may be a primary requirement to accomplish these objectives.

8Nuclear war “cannot be won and cannot be fought” (President Ronald Reagan). Today it is
conceivable for a poorly thought-out strategic policy choice, the result of which makes a nu-
clear terror attack more probable could produce circumstances whereby, for example, instead
of global GDP going from $60 to $240 trillion (in $2005 purchasing power parity) by 2050, it
declines to $6 trillion (global GDP estimate is from U.S. Central Intelligence Agency).

9A forcing function is the process that moves a dynamical system from one state to another
state. An interesting game theory question is whether this amount of capital was productively
spent to avoid nuclear war between the USSR and the U.S. or was it instead necessary to spend
this amount because the MAD strategy was inherently unstable?

10 Global military spending has averaged about $1,000 billion a year in constant dollars since
WWII, give or take a few hundred billion dollars each year. The point is that this is a very, very
large amount of capital allocated for the purpose of keeping the world safe from aggression, all
the while starving investments in freshwater availability, wastewater treatment, soil conserva-
tion, food availability, climate change preparedness, development of renewable energy, etc.

11All systems have a tipping point, a set of stresses (an overload beyond a threshold rate of
change of inputs) beyond which they breakdown (loose complexity and cease to function
within normal ranges) and sometimes collapse (recovery is uncertain). As failure proceeds,
moments of contingency arise.

LYLE A. BRECHT DRAFT 410.963.8680 - - - C A P I T A L M A R K E T S R E S E A R C H - - - MARCH 10, 2009 Page 2 of 2