Michael Flynn, Russia and a Grand Scheme to Build Nuclear Power Plants in Saudi Arabia and the Arab World

Updated | By the time Michael Flynn was fired as President Donald Trump's national security adviser in February, he had made a lot of bad decisions. One was taking money from the Russians (and failing to disclose it); another was taking money under the table from the Turks. But an overlooked line in his financial disclosure form, which he was forced to amend to detail those foreign payments, reveals he was also involved in one of the most audacious—and some say harebrained—schemes in recent memory: a plan to build scores of U.S. nuclear power plants in the Middle East. As a safety measure.

In 2015 and 2016, according to his filing, Flynn was an adviser to X-Co Dynamics Inc./Iron Bridge Group, which at first glance looks like just another Pentagon consultancy that ex-military officers use to fatten their wallets. Its chairman and CEO was retired Admiral Michael Hewitt; another retired admiral, Frank "Skip" Bowman, who oversaw the Navy's nuclear programs, was an adviser. Other top guns associated with it were former National Security Agency boss Keith Alexander and retired Marine Corps General James "Hoss" Cartwright, a former vice chairman of the Joint Chiefs of Staff whose stellar career was marred when he was prosecuted last year for lying to the FBI during a leak investigation.

In June 2015, knowledgeable sources tell Newsweek, Flynn flew to Egypt and Israel on behalf of X-Co/Iron Bridge. His mission: to gauge attitudes in Cairo and Jerusalem toward a plan for a joint U.S.-Russian (and Saudi-financed) program to get control over the Arab world's rush to acquire nuclear power. At the core of their concern was a fear that states in the volatile Middle East would have inadequate security for the plants and safeguards for their radioactive waste—the stuff of nuclear bombs.

But no less a concern for Flynn and his partners was the moribund U.S. nuclear industry, which was losing out to Russian and even South Korean contractors in the region. Or, as Stuart Solomon, a top executive along with Hewitt at his new venture, IP3 (International Peace, Power and Prosperity), put it in a recent speech to industry executives, "We find ourselves…standing on the sidelines and watching the competition pass us by."

Related: Was Michael Flynn a security risk?

That the oil-rich, sun-soaked Arab Middle East would pursue nuclear energy seems paradoxical. But as The Economist noted in 2015, "Demand for electricity is rising, along with pressure to lower carbon emissions; nuclear plants tick both boxes." And some of the region's major players, like Egypt and Jordan, don't have oil and gas resources and "want nuclear power to shore up the security of their energy supplies," The Economist said.

So the genius idea the Americans advocated was a U.S.-Russian partnership to build and operate plants and export the dangerous spent fuel under strict controls. Flynn's role would be helping X-Co/Iron Bridge design and implement a vast security network for the entire enterprise, according to an internal memo by ACU Strategic Partners, one of the lead companies involved, obtained by Newsweek.

Not only would the project revive the U.S. nuclear industry, but it would cost American taxpayers nothing, its principals asserted. It would be "funded entirely by Saudi Arabia and other Gulf countries," according to the ACU memo. The cost for the kingdom? "Close to a trillion dollars," says a project insider, who asked for anonymity in exchange for discussing internal matters.

Theoretically, the Saudis and other "participating Mid-East governments" would recoup some costs by selling energy "through their utilities," according to the ACU plan. But if the Saudis and other Arab states buy in, it won't be for energy, says Thomas Cochran, a prominent scientist and nuclear nonproliferation proponent involved with the ACU project. "They are buying security," he tells Newsweek. Under the ACU plan, "they're buying a security arrangement involving the U.S., Russia, France, and the U.K., eventually."

Left out of this grand nuclear scheme: Iran (along with Syria, its war-ravaged Shiite proxy). In fact, "it was always part of the project that Russia's involvement...would tilt Russia away from Iran," Fred Johnson, ACU's chief economist, wrote in an email to his advisers obtained by Newsweek. The idea was that Russia, facing what Johnson called an "economic and existential calamity" because of low oil prices, could use the income generated from the partnership. The consortium could then purchase "Russian military hardware" to compensate Moscow for losing military sales to Iran.

"Further plans to sideline Iran," Johnson wrote, included "the development of X-Co," the Hewitt company that Flynn was advising, "with its very visible deployment of Sea Launch," a Russian company "that would provide a platform for rockets" to put surveillance satellites in orbit.

Flynn was "not involved" in the negotiations with Sea Launch, Cochran says. The former general, now being pursued by federal investigators probing contacts between Russian officials and Trump's inner circle, did not respond to an inquiry from Newsweek. People associated with the Middle East project say they thought Flynn's involvement was limited to sounding out the Egyptians and Israelis on security aspects of the enterprise. He listed no income from X-Co/Iron Bridge on his financial disclosure form.

"To the best of my knowledge," Flynn was not being paid for his expertise, as was the case with many advisers to the project, Cochran says, but the former general's travel expenses were picked up by ACU, as were his own. (The cost of business-class round-trip airfare and exclusive hotels for the trip would have ranged between $10,000 and $15,000.)

Hewitt denied that isolating Iran was part of the plan. "X-Co wasn't created to simply 'sideline Iran,'" he responded to Johnson and their associates in an email. "It was designed to set the conditions for stability which were the precursors to building 40 plants" and to "solidify the [Gulf Corporation Council], Jordan, Egypt under a security construct, led by two superpowers, using state of the art capability."

But the project faced opposition from the Obama administration, Cochran says. "They didn't want to do it with the Russians and didn't want to do it while they were negotiating the Iran [nuclear] deal," he tells Newsweek.

Trump's embrace of Russian President Vladimir Putin, on the other hand, offered an attractive possibility. And when Flynn, who had connections to the Russians, became the candidate's national security adviser, the ACU team, led by British-American dealmaker Alex Copson, suddenly seemed to have an inside man. Last year, Copson was touting such connections when he tried to persuade the Tennessee Valley Authority to transfer an unfinished Alabama nuclear plant to the ACU in exchange for shares in the consortium that would build reactors in the Middle East, telling a Huntsville reporter that "Alabama's two senators"—both Republicans, and one, Jeff Sessions, then a top Trump campaign adviser—"can help the next administration move this project forward." The plant was eventually sold to another company.

When reports surfaced that the FBI was investigating possible collusion between the Russians and the Trump campaign, however, some of Copson's partners and advisers decided it was time to walk away. "When Copson decided he was going to saddle up with the Trump team, that was the last straw for me," the insider says. "I said it's time to regroup."

The Saudis hadn't shown much interest anyway, the insider says. "Copson was promising the advisers lots of money if the Saudis put up money," but it failed to materialize. "And so there's nothing that anyone was going to gain unless the project was a success," he tells Newsweek.

Hewitt and his associates also split from ACU to pursue their own path toward a nuclear-powered Middle East, one that would swap in China for Russia as a nuclear partner, two sources close to the project say. (Hewitt declined to discuss plans for IP3, telling Newsweek he was "working hard to create our public persona right now.")

But the highly regarded Cochran stayed with ACU. A longtime senior scientist at the Natural Resources Defense Council, where he was director of its nuclear program, Cochran was the author of countless studies and articles over the decades and had initiated with Moscow the U.S.-Soviet nuclear test ban verification project in 1986. He "has extraordinary chutzpah," a writer for Scientific American observed in 1998. "He is willing to take on what most people wouldn't bother with because they assume it's hopeless."

Or nuts. In 2001, a writer for the left-wing In These Times weekly got hold of a draft proposal for a 1990s-era project that Cochran was involved in, the Non-Proliferation Trust (NPT), which envisioned taking control of spent fuel from reactors around the world and shipping it to Russia "on large ships mounted with an arsenal of weapons designed to ward off nuclear pirates," wrote Jeffrey St. Clair. "The big question is what happens to the waste after it arrives in Russia."

Most observers, including Cochran, believe countries developing nuclear power should be responsible for disposing of their own spent nuclear fuel. What St. Clair failed to appreciate, he says, is the difficulty of doing so for many countries, either because of geology (Taiwan, in the earthquake-prone Pacific), costs (Mexico) or a weak security environment, as in the Middle East, "where the buildup of spent fuel represents a significant proliferation risk." Had the NPT project not failed, Cochran says, "we probably would have a spent fuel repository underway in Russia" and now under strict oversight—instead of a looming crisis. As for the danger of shipping spent fuel across the oceans, Cochran says it's been done safely for decades.

All the more reason to partner with the Russians today in an ironclad security arrangement, Hewitt says. "We're always going to be engaged in the security of the Middle East," he told a May gathering at the Nuclear Energy Institute. "It is in our best interests to ensure that nuclear power is introduced with all of the safety [standards of the U.S.]."

Cochran urges critics not to lose focus on the big picture, which he alternately likens to launching the U.S. Marshall Plan, which rebuilt Europe after World War II, and the Tennessee Valley Authority, which tamed rivers and brought electricity and industrial development to the American South in the 1930s. "It would provide energy and jobs and so forth for countries like Egypt and others in the region," he says, "so that these young men have got something more useful to do than go out and shoot each other."

For a project fraught with such diplomatic and logistical minefields, however, Copson is perhaps an odd choice to lead ACU into the Middle East. Widely reported to be "a sometime bass player with the British rock band Iron Butterfly," (though not an official member), Copson once famously "described the natives of the Marshall Islands as 'fat, lazy fucks' when they nixed one of his nuke dump schemes" in the Central Pacific Ocean, muckraking journalist Greg Palast wrote in 2001. (The islands are now disappearing under rising seas.)

Copson did not respond to several calls, emails and written questions asking for comment. But it's not likely the Trump team, many of whom are under close scrutiny for their undisclosed Russian contacts, will be any help to Copson now. And the Saudis aren't "taking the kind of steps that would be required to really get serious about setting up a civil nuclear-energy infrastructure," says Tristan Volpe, a fellow in the Nuclear Policy Program of the Carnegie Endowment for International Peace in Washington, D.C.

Others suspect the Saudis are up to something more nefarious because of the U.S.-led nuclear deal with Iran. The Saudis "have big ambitions for nuclear," says David Albright, president of the Institute for Science and International Security in Washington, D.C. "The issue is whether they cross over into any processing or enrichment" with secret partners like Pakistan or China.

Flynn once expressed deep worries about a Saudi-Iranian nuclear arms race. In a January 2016 interview with Al-Jazeera, he sounded like Cochran, the elder statesman of the nonproliferation movement. "An entirely new economy is what this region needs," he said, especially for the millions of unemployed young men living under corrupt autocracies and tempted by extremism. "You've got to give them something else to do. If you don't, they're going to turn on their own governments."

But that was before he hitched up with Trump, who has embraced the Saudi monarchy and ratcheted up his rhetoric against Iran. Talk of a grand scheme to create jobs in the Middle East, meanwhile, has evaporated, with the Russia scandal enveloping not only Flynn but Trump's entire presidency.

Correction: A previous version of this story failed to adequately explain the potential security benefits of the ACU plan to bring nuclear power plants to the Middle East via a proposed consortium of the U.S., Russia, France and potentially the U.K., in an arrangement that would also control the disposition of spent fuel under strict international supervision. Newsweek has afforded nuclear scientist Thomas Cochran, an adviser to the ACU group, more space to explain the plan's potential benefits.

In addition, an earlier effort Cochran was involved in was called the Non-Proliferation Trust, not Nuclear Proliferation Trust. Cochran also clarified that he only "believes" that Michael Flynn was compensated for his travel expenses as an unpaid adviser to the project but cannot be certain. The earlier version of this story also said it was "unclear" whether Flynn was involved in the negotiations to bring Sea Launch into the project. It has been changed to include Cochran's statement that Flynn was "not involved" in that arrangement.