Nuclear Peace Bonds

It’s possible that Russia will have to confront comprehensive defeat in Ukraine, maybe even facing the prospect of losing Crimea. How likely is Putin going to say ‘OK, it’s a fair cop, we lost fairly and squarely, it’s all over.’ and refrain from launching ‘tactical’ nuclear devices to change the course of his war? It could happen; we might get lucky, and we might also get lucky when other nuclear-armed powers throw their weight around. But do we really want to gamble on it? Once any one of these countries breaks that taboo, how long will it be before governments begin to see nuclear weapons as just like any other weapon, despite the likelihood that they will devastate an already parlous planet? There’s little or nothing that the international community can do to lower that probability. National policymaking systems can work well when the relationships between cause and effect are readily identifiable. But for large-scale, complex, global problems like the risk of nuclear catastrophe we need to encourage investigation of a wide range of possible solutions.

You may be familiar with Social Impact Bonds (also known as Pay for Success Bonds), designed to reward investors who achieve socially beneficial goals. Bondholders who achieve an improved outcome receive higher returns. They are limited by their lack of tradeability, whereas the Nuclear Peace Bonds that I propose would be tradeable, which greatly enhances their potential. It allows for bondholders to do what they can to achieve the targeted nuclear peace goal, see the market value of their bonds rise, and then sell their bonds to those best able to take the next steps towards the goal. To make a profit, they do not have to hold the bonds for the decades that such a long-term goal would take to achieve.

Nuclear Peace Bonds would be backed by funds be raised from the public or private sector, or both. These bonds would be floated on the open market for whatever price they fetch. They would be redeemable for a fixed sum only when there has been nuclear peace for a sustained period of, say 30 years. This goal, being remote, would mean that the bonds would sell for very little when first offered to the market. So any activity that increases the likelihood of sustained nuclear peace would see an improvement in the bonds' value. Nuclear Peace Bonds would create a protean coalition of bondholders that would have a powerful incentive to co-operate with each other and to research, refine and implement those measures thought to be, at any given time, those most likely to bring about nuclear peace. With such a big, remote objective, no single approach will work. A Nuclear Peace Bond regime would stimulate a wide range of diverse, adaptive approaches to the threat of nuclear catastrophe. All bondholders’ initiatives would be in service of the one over-arching goal: a sustained period of nuclear peace. The secondary market for the bonds would ensure that, at all times, the bonds would be in the hands of those who believe they can help achieve the goal most efficiently. Inefficient operators, or those who had done their bit, would sell their bonds to more efficient operators, to whom they would be worth more. Unlike some other global problems, the Nuclear Peace Bonds would have a clear and verifiable metric, such as avoidance for 30 years of a military nuclear explosion that kills more than 100 people within 24 hours.

A Nuclear Peace Bond regime would reward those who achieve peace, whoever they are and however they do so. It’s an admittedly unconventional approach. But the conventional approach has brought us to the brink of nuclear catastrophe. The taboo against threatening the use of nuclear weapons has been broken. It now appears inevitable that, unless we rebalance the incentives, the taboo against their use will also be broken. It’s now time to encourage and reward diverse, adaptive and successful ways of dealing with the looming nuclear threat.

© Ronnie Horesh, August 2022