160. Memorandum From David Elliott of the National Security Council Staff to the President’s Assistant for National Security Affairs (Scowcroft)1

SUBJECT

  • Meeting with Jim Cannon on US/Iran Nuclear Agreement

You are scheduled to meet with Jim Cannon to discuss the question of reaching an agreement with Iran on nuclear cooperation. This agreement would be a vehicle for selling between 2 and 8 nuclear reactors and the associated enriched uranium fuel and for a possible 20% Iranian investment in the private UEA gaseous diffusion uranium enrichment plant that may be built in the US.

Status of Negotiations with Iran

As detailed in Action–7742,2 our negotiations with Iran have faltered on two points:

—Whether Iran would be allowed to stockpile large quantities of its surplus UEA fuel in Iran, or whether we would hold the stockpile here to insure that Iran did not transfer that fuel to unacceptable third countries.

—Whether the spent fuel coming out of the US supplied reactors could be reprocessed in Iran. Based on our policy to discourage the proliferation of independent national reprocessing facilities, we have told Iran that we would approve such reprocessing only if the plant were multinationally owned and operated. We would accept, as a minimum [Page 478]commitment, a binational plant, if a company of one of the major nuclear supplier nations, including ourselves, was the partner with Iran.

Since our last negotiating session, the head of the Iranian AEC has told us that not only are the above conditions unacceptable, but that the Shah has, as a matter of principle, indicated his unwillingness to accept any restraints that go beyond his obligations as a Non-Proliferation Treaty party. In other words, Iran should be free to reprocess and retain plutonium in any amounts it chooses, as long as IAEA safeguards are applied.

Current US Non-Proliferation Policy

The two essential features of our non-proliferation policy, which all agencies support, are to guarantee that all nuclear facilities supplied by the US are under international safeguards, and to control the spread of independent national reprocessing facilities. Reprocessing facilities are difficult to safeguard (see below) and provide any nation with ready access to weapons-useable plutonium. Our main idea is to keep access to plutonium limited to a few states, and those states should either be weapons states or highly stable politically.

We cannot, however, deny reactor owners the ability to reprocess their fuel and to use the recovered plutonium for refueling. Therefore, it has been our position that reprocessing services—when they are needed on a world-wide basis 10 to 20 years from now—should be provided at a few sites spotted around the world; e.g., US, Japan, Iran, and Europe. The plutonium, mixed with uranium, would be returned to the reactor owner as new fuel rods only when needed for refueling. This arrangement would satisfy many states who simply want reprocessing services to be available on a commercial basis. However, there are other countries who may feel that they want to be involved technically and financially in all aspects of the nuclear fuel cycle. (This desire has led to certain states becoming investors in the 3 or 4 enrichment plants that are planned or under construction.) In order to satisfy the same desire with regard to reprocessing, the US and others have proposed that when the large reprocessing facilities are finally needed, there should be an opportunity for other countries—besides the host country—to be investors and play a role in the management and operation of such plants. This is the multinational region fuel center concept now under study in the IAEA and within our government. Such multinational facilities have an added non-proliferation advantage since foreign participation tends to make it more difficult for the host country to carry out a program of undetected clandestine diversion, and would be an inhibiting factor in considering the abrogation of safeguard agreements and expropriation of a plant and its plutonium stockpile.

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Our non-proliferation position has been developed over the past year-and-a-half, and was the subject of three NSSM’s and two NSDM’s. (Contrary to the implication in Cannon’s memorandum (Tab A),3 all agencies support it strongly. This includes State, Defense, ACDA, ERDA, and CIA.) Besides our suppliers conference agreement, we have had two recent successes of our policy. Korea has agreed to cancel its national reprocessing plant, and intelligence sources indicate that Giscard has placed a moratorium on further French exports of reprocessing technology. This latter is particularly satisfying since France has been the slowest to appreciate the proliferation dangers in international nuclear commerce.

Finally, some people contend that the application of safeguards is adequate protection in reprocessing plants, and we need not try to deny access to reprocessing technology. However, safeguards were devised to protect reactors and have never been applied on a large scale to a reprocessing facility. There are many experts that are dubious that safeguards can be effectively applied to reprocessing plants and that the risk of sizeable undetected diversion of plutonium is a real concern. This is another factor motivating our policy to control the spread of reprocessing plants, until we can gain some knowledge by trying out the safeguards in US reprocessing plants that are coming on line.

What We are Trying to Accomplish in Iran

Iran is considered to be a possible site for a regional multinational reprocessing center for the Middle East. This position is not devoid of risk since Iran appears stable only by comparison with its neighbors, and its political complexion could change overnight. However, all of the agencies agree that we should be prepared to accept Iran as a potential reprocessing site, with the caveat that the facility should, as a minimum, be co-owned and co-managed by at least one of the major supplier nations. There is a possibility (or hope) that since Iran’s need, and certainly its neighbors’ needs, for reprocessing will not develop for at least 10 years, and in the meantime reprocessing services may be available elsewhere on an attractive basis, that Iran may choose not to exercise the option of constructing a multinational facility within its own boundaries. On the other hand, regardless of the economics, Iran might choose to go ahead for reasons of prestige.

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The Current Proposal for Further Negotiations with Iran

All agencies now agree that (if Iran will restrict its reexports to countries with which we have agreements for cooperation)4 the risk connected with permitting Iran to stockpile low enrichment uranium is acceptable, and the proposed decision memorandum would permit our negotiators to offer that concession at an appropriate time in the negotiations. All agencies also agree that we need to ascertain as clearly as possible the Shah’s views on these nuclear issues, and that we should explain to the Shah the reasons for wanting to control the spread of independent national reprocessing facilities. It is hoped that such a dialogue would either remove his objection to our position, or possibly lead to another alternative which would be mutually acceptable.

We have received indications from Tehran that they want to hold further discussions, and we are therefore pushing to get the decision approved sanctioning a high-level meeting with the Shah. Both HAK and Robinson have made the point recently that this unresolved nuclear issue is having a souring effect on other aspects of our relations with Iran, and they would like to see quick action.

Enter the Domestic Council and Jim Connor

In trying to forward this package to the President, we have run up against some objections on the part of the Domestic Council and Jim Connor personally. Jim Cannon’s views are expressed in a memorandum at Tab A, but I have not been exposed to Connor’s position. I must say, frankly, that neither of them have been involved in our work on non-proliferation or the Iran negotiations, so their views in this matter will necessarily be limited and quite possibly overly influenced by the nuclear industry view—particularly that of UEA who has been in fairly constant contact with Connor regarding the President’s pending Nuclear Fuel Assurance Act. The general thrust of their objection is that our attitude toward reprocessing is unrealistic and inhibiting to the conclusions of Iran’s commitment to UEA, which is vital to the successful achievement of private enrichment and reprocessing in the US. I am not sure what they would propose as a substitute, particularly since the President has enunciated our non-proliferation policy through NSDM 2555 and 292; the Secretary of State has committed the US to this policy in the UNGA in September; we have just concluded an agreement between major suppliers to discourage national reprocessing plants and to encourage a few multinational facilities; and finally, the Administration witnesses (Ingersoll, Iklé, and Fri) are ap[Page 481]pearing today to testify on S. 1439 to reiterate the US policy toward international reprocessing.6 We are not free to fall off this policy on the whim of two people in the White House.

One theme that Cannon may stress is that since the multinational concept is only now under study, we cannot expect US business interests or Iran to commit to an arrangement when it is so undefined and possibly impractical. We agree. But no such commitment is needed now or for many years to come—during which time the concept may be proven feasible or not. If a few multinational plants are not workable, we would then probably have to fall back to permitting reprocessing only in certain national plants in the US, Europe and Japan. It is because of uncertainties like this and others that we want to avoid an unqualified agreement that would permit reprocessing in Iran. We want to retain a right of future approval so that we can cope with unforeseen events.

It is the view of the agencies that an Iranian agreement for cooperation which contains no special control on reprocessing would be disapproved by Congress, and the President would be criticized as being irresponsible in nuclear matters. Since the prospect for obtaining reactor business in Iran, and a UEA investment, depends on obtaining Congressional approval of an agreement, Cannon and Connor should be siding with us rather than fighting us.

Also involved in this issue is the broader question of the extent to which foreign policy should be shaped by domestic considerations, and you may want to address this problem.

  1. Source: Ford Library, NSC Institutional Files, Box 60, Log Number 7600599, Scowcroft Meetings. Secret. Sent for information. Scowcroft initialed the memorandum
  2. Document 159.
  3. Not attached. Connor forwarded a memorandum by Cannon to Scowcroft, January 28, that reads: “There seem to be legitimate questions in the nuclear industry and in domestic agencies as to whether the concept [of a multinational reprocessing plant] is workable, how it would be carried out, and its impact on domestic policy and objectives.” (Ford Library, NSC Institutional Files, Box 60, Log Number 7600599, Scowcroft Meetings)
  4. The phrase in parentheses was added by hand.
  5. NSDM 255, “Security and Other Aspects of the Growth and Dissemination of Nuclear Power Industries,” June 3, 1974.
  6. The Senate Committee on Organization was holding hearings on S. 1439, Export Reorganization Act of 1976.