Atomic Energy Files, Lot 57 D 688

Statement of the Position of the united States and the United Kingdom

top secret

I. We have studied with interest the most recent expression of Belgian views in connection with current American-Belgian-British atomic energy discussions as well as the summary statement describing a Belgian four-year atomic energy program.1

II. We are sympathetically aware that the Belgian Government desires to be in a position as soon as possible to give the peoples of [Page 716] Belgium and the Belgian Congo assurances that their legitimate interests have been adequately safeguarded under the Uranium Agreement of 1944. It is felt, however, that the recent broadening of the Belgian approach to bring under consideration the financing of programs aimed at advancing the social and economic welfare of the Belgian Congo and strengthening the Congo’s military defenses, introduces considerations which would serve only to delay the conclusion of a mutually satisfactory agreement. In this connection, it is believed that the following points should be taken into account:

The present negotiations were originally initiated over a year ago by the Belgian Government to discuss what immediate assistance might be rendered Belgium in the field of atomic energy in view of Section 9 (a) of the Uranium Agreement of 1944.
In the course of the earlier negotiations, it was recognized that because the use of atomic energy for commercial purposes had not yet been achieved, it would be impossible to implement Section 9 (a) for an appreciable time to come. Since this implementation would be delayed for a longer time than was probably anticipated at the time of the signing of the Uranium Agreement of 1944, and in keeping with the spirit of Section 9 (a), we offered to extend to Belgium certain technical assistance which was outlined in an agreed text of a proposed joint communiqué and gave oral assurances that upon the formulation of a definite Belgian atomic energy program, we would give sympathetic consideration to rendering suitable financial assistance toward the support of this program. The object of this preliminary aid was to help Belgium establish herself soundly in the nuclear physics field so that she would be in a more advantageous position eventually to benefit from Section 9 (a).
It was felt that assistance on this basis was justified by circumstances which would be apparent not only to the Legislative Branch of the Belgian Government but also to the Legislative Branches of the American and British Governments, from which funds for such financial assistance would have to be obtained. We feel, however, that we cannot now respond, for the following reasons, in any way which could be construed as agreeing that we are committed to the support of Belgian Congo programs in the social, economic and defense fields:
We recognize the contribution Belgium and the Congo are making to the defense of the Free World in supplying a raw material of such strategic importance as uranium. We believe, however, that a valid comparison cannot be drawn between uranium and other strategic materials such as copper, tin, petroleum, etc., since uranium has no present significant commercial use, and its value is almost entirely dependent upon its military utilization. Given the present world situation, therefore, the benefits to be derived from uranium cannot realistically be measured in social and economic terms, but rather in terms of military advantages not susceptible to exact monetary evaluation.
We have expended a vast effort and the equivalent of many billions of dollars in converting uranium into atomic weapons [Page 717] which, during the last few years of international tension, have acted as the prime deterrent against aggression and as the chief shield of Western democracy. Belgium has thus directly benefited, and the Belgian Congo indirectly, not only from the uranium purchased by us at an equitable price but also from the immense expenditures which have produced atomic weapons for the arsenal of the West. A financial arrangement which singled out Congo uranium as a special source of revenue for the support of social and economic programs benefiting the Congo, would, of course, have as an end result the adding of the cost of such programs to the huge expenditures our taxpayers are already having to meet.
By virtue of the 1944 Agreement Belgium stands to benefit from technical knowledge, which may eventually contribute to making possible the commercial use of atomic energy, gained in the course of the very costly atomic programs which we have been forced to undertake for military and strategic reasons.
While we share with the Belgian Government the desire to see the social and economic advancement of the inhabitants of the Congo, we feel it follows from the foregoing reasoning that expression of this interest should not be specifically associated with uranium but more logically should be handled as a separate matter on its own merits in connection with such programs as Point Four2 and ERP. In point of fact, it is understood that the Belgian Government already has under consideration a program for Congo participation in the technical benefits of Point Four and has made a request for substantial ECA loans for Belgian Congo development.
Although it is true that the strategic importance of the Shinkolobwe mine from a military point of view emphasizes the need for taking all feasible precautions to assure the protection of the Congo, the occurrence there of other raw materials of great economic value, as well as Belgium’s own natural interest in safeguarding the Congo from foreign attack, indicate the fairness in distributing throughout the Belgian and Congo economies the burden of defense costs. It is felt that expenses incurred in this connection can rightfully be regarded as part of Belgium’s contribution to the mutual defense effort.

III. We have also studied the argument that while the price of other raw materials has risen, the price of uranium has only increased relatively slightly, concerning which we would like to reply as follows:

The Belgian Congo has profited from the recent large increases in the price of such commodities as copper, tin, cobalt, etc., in just the same way as Malaya has profited by the rise in the price of rubber. In fact, the terms of trade have recently moved considerably in favor of countries like Malaya and the Belgian Congo, which are exporters of raw materials, and against countries like Britain and the United States, which are large importers of raw materials, because the price of raw materials has increased relatively more than the price of manufactured products. [Page 718] We would like to point out that in keeping with the general rise of world commodity prices, the basic price paid for uranium under contracts with Union Miniere has risen from $1.45 in 1945 to $3.40 at present and will be raised to $3.90 in the middle of 1951.
There is a world market for copper, tin and cobalt, and their prices rise and fall according to the laws of supply and demand. There is no world market for uranium, and some other means of establishing a price has to be found. We believe that the fairest—indeed the only—means of establishing a price is by starting with the cost of production. Throughout the world the prices that we pay for uranium are based on the cost of production. If we use (as we conveniently can) a figure of 10,000 short tons (equals 20,000,000 lbs.) as an indication of the order of magnitude of the output of Congo uranium during the next four years, we shall be paying between $68,000,000 (at the $3.40 rate) and $78,000,000 (at the $3.90 rate) for 10,000 short tons of uranium. Of this $18,000,000 will accrue from the export taxes of $0.90 per lb. and will directly benefit the economy of the Belgian Congo. The remaining $50,000,000 to $60,000,000 represents more than the actual costs of production. A considerable part of this $50,000,000 to $60,000,000 will accrue to the Belgian Government by way of taxation.
At the same time it must be remembered that we have put up (or are about to put up) a large capital sum, totalling $13,000,000 for the development of the Shinkolobwe mine and of the amenities in the mine area. We have, furthermore, created by our demand for uranium, a profitable and prosperous mining industry at Shinkolobwe which would otherwise have been a much smaller and less significant enterprise.

Without wishing to labor these arguments unduly, the point we wish to make is that we are now paying a very good and equitable price for uranium from which the Congo Government is deriving substantial tax revenues. We feel, therefore, that insofar as commercial considerations are pertinent to uranium, its development under present contracts is producing the fair share of benefits that the Congo peoples have a right to expect from their natural wealth.

IV. In view of the foregoing and inasmuch as a change in the present tax would directly affect American and British interests, the Belgian Government is requested to take into consideration:

The equity and the political implications from an American and British point of view of the factors outlined above.
(a) The financial assistance we will render toward the support of a Belgian atomic energy program; (b) the value of the technical assistance we will lend Belgium, which represents know-how built up after long and costly research and development.

V. Even though our views may differ from those recently expressed by the Belgian representatives, we are mindful of the assurances given Foreign Minister Van Zeeland by Ambassador Murphy a year ago [Page 719] that sympathetic consideration would be given to suitable financial assistance toward a formulated Belgian atomic energy program for the purpose described in 2 of I above. In the light of these assurances and of the summary statement of Belgian atomic energy plans for the next four years, we consider that suitable and equitable financial assistance to a Belgian atomic energy program would be in the order of the equivalent of a total sum of Eight Million Dollars. It is our view that this sum should be paid through the producer under the appropriate existing commercial contract and should be expressed as an addition to the payment for the material produced in the four-year period over which the total of the supplementary sum is to be paid. Accordingly, the Buyer, under the commercial contract, would be prepared to discuss with the Seller the mechanics of bringing this about.

In connection with your desire to make a public statement disclosing the amount of revenue accruing to the Belgian and Congo Governments from the sale of uranium, we feel that whatever statement is made should be developed in such a way as to avoid the security implications of this subject and therefore we would appreciate consultation with you on this point. If this proposal were adopted, the total revenue accruing—from the existing export duty and from the proposed additional contribution—directly to the Belgian and Congo Governments from the sale of, say, 10,000 short tons over the next four years, would be about $26,000,000.

VI. We would furthermore provide technical assistance, subject to further talks among American, Belgian and British technical experts aimed at determining how such assistance can best be adapted to the atomic energy program the Belgian Government now contemplates undertaking.

VII. It is understood that any public statements made concerning the foregoing arrangements are subject to agreement among the three Governments.

  1. Reference is to an informal memorandum of March 12, not printed (Atomic Energy Files, Lot 57 D 688).
  2. For documentation on the Point Four Program, see pp. 1641 ff.