U.S. freezes civilian nuclear deal with Russia over Georgia

The news was announced on Monday in a statement by U.S. Secretary of State Condoleezza Rice that read: "The president has notified Congress that he has today rescinded his prior determination regarding the U.S.-Russia agreement for peaceful nuclear cooperation."

"We make this decision with regret. Unfortunately, given the current environment, the time is not right for this agreement," the statement went on.

The so-called 1-2-3 Agreement will now not be sent to Congress for a vote as planned. However, analysts have suggested that the move, while to be seen as an expression of dissatisfaction with Russia over Georgia, will also make sure that the accord is not killed outright.

The agreement would have opened up possibilities for widespread commercial nuclear trade, transfers of technology, and joint nuclear research between Washington and Moscow. It would also have cleared the way for Russia to make headway with importing and storing spent nuclear fuel from U.S.-supplied reactors - a highly profitable business.

Bush's letter to Congress said that the deal could not go through at present in light of Russia's actions with regard to its "democratic neighbor Georgia."

"In view of recent actions by the Government of the Russian Federation incompatible with peaceful relations with its sovereign and democratic neighbor Georgia, I have determined that the determination regarding the proposed Agreement in Presidential Determination 2008-19 is no longer effective," read the letter.

The letter also said that the fate of the deal would be determined by further developments.

A Russian first deputy prime minister said on Tuesday that he considered the peaceful cooperation of Russia and the U.S. in the nuclear sector essential, and that the two countries would continue their work in this sphere in the future.

"For Russia and the U.S., as two great powers, it is very important to develop cooperation in the sphere of the peaceful use of the atom, which should be mutually beneficial," said Igor Shuvalov.

"Maybe not now, but in the future, Russia and the U.S. will undertake mutually beneficial cooperation [in the nuclear sphere]," he added.

The move to freeze the deal comes shortly after the U.S. announced a $1 billion aid package for Georgia, and on the same day that French President Nicolas Sarkozy held talks in Moscow with Russian President Dmitry Medvedev on Georgia.

After the talks it was announced that Moscow had promised to pull all troops out of Georgia, but not South Ossetia or Abkhazia, within one month.

The current crisis began when Georgian forces launched a ground and air attack on the town of Tskhinvali, the capital of breakaway South Ossetia, on August 8. Most of the residents of the republic hold Russian citizenship, and Russia subsequently launched an operation to "force Georgia to accept peace."

Two weeks after the conclusion of the operation, Russian recognized South Ossetia and Abkhazia as independent states, despite warnings by Western leaders not to do so. So far, only Nicaragua has followed suit, although Belarus seems likely to do so later this month.

Both South Ossetia and Abkhazia split away from Georgia in the early 1990s. Thousands were killed in the ensuing conflicts.

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