WASHINGTON (Reuters) -- President George W. Bush has frozen a lucrative civilian nuclear pact with Russia, the first big penalty imposed on Moscow after its war with Georgia but one that can be reversed.
"The president intends to notify Congress that he has today [September 8] rescinded his prior determination regarding the U.S.-Russia agreement for peaceful nuclear cooperation, the so-called 1-2-3 Agreement," Secretary of State Condoleezza Rice said.
While Bush's decision to withdraw the agreement from congressional review was seen as punitive, it was also meant to preserve the deal, a senior U.S. official said.
That official said the administration wanted to ensure the accord did not go to a vote in Congress, where it could have been rejected following Russia's military action in Georgia. If rejected, it would be difficult for a new presidential administration to pursue the agreement in the future.
"It [the nuclear accord] was likely to be killed simply as a protest in the Senate and so therefore what we are doing is rescinding the certificate that he [President Bush] had to give due to the situation in Georgia," said the senior U.S. official, who spoke on condition of anonymity.
"It is something that we can reverse at any time either by sending a new certificate or lifting this action," he added. "What it does is freezes the status of it."
Bush or a future president could resubmit it for consideration by Congress, which would have 90 legislative days to block it.
Rice also made clear the decision was not final.
"We make this decision with regret. Unfortunately given the current environment the time is not right for this agreement. We will reevaluate the situation at a later date as we follow developments closely," her statement said.
In Moscow, a nuclear official also said it was the only way to save the deal and the White House had explained this.
"We have recently received a letter from the White House where they mentioned that this was the only way to save this agreement for the new administration," the official said.
"Otherwise the agreement would be definitely blocked in the current political conditions which would have meant practically starting the entire work from the beginning again," the source said.
Several U.S. lawmakers came out in support of the move.
"This was a wise decision," said Representative Howard Berman (Democrat, California), chairman of the House of Representatives Foreign Affairs Committee. "Congress has little appetite at the moment for new and sweeping measures that would assist Russia."
Representative John Dingell (Democrat, Michigan), chairman of the House Committee on Energy and Commerce, agreed.
"Even without Russia's incursion into Georgia, Russian support for Iranian nuclear and missile programs alone is enough to call into question the wisdom of committing to a 30-year agreement to transfer sensitive nuclear technologies and materials to Russia," Dingell said.
The deal was aimed at lifting Cold War limits on trade and opening the U.S. civilian nuclear market and Russia's uranium fields to companies from both countries. Lawmakers in Congress had already raised concerns about it before the Georgia war.
The collapse of the deal is the first tangible penalty Washington has imposed on Russia after its war with Georgia over the two breakaway regions of South Ossetia and Abkhazia, which are closely allied with Moscow.
The Bush administration is looking at other ways to show its displeasure with Russia, including moves to scuttle Moscow's attempt to join the World Trade Organization.
However, Washington was very aware it should not take actions that would jeopardize long-term relations with Moscow. In addition, U.S. business interests have warned the White House not to go too far.
"All of our efforts with Russia, we are carefully tailoring to ensure that they are reversible if Russia ... takes actions to show that this is not the beginning of a major turn in Russian global affairs," said the senior U.S. official.
Georgia tried to retake control of South Ossetia in early August but its troops were quickly repelled by Russian forces. In the battle, Moscow's troops drove deep into Georgian territory, drawing international condemnations.
Despite agreeing to a French-brokered cease-fire, Moscow has kept troops on Georgian soil, saying its remaining forces were peacekeepers allowed by the pact to stay behind.