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83. Action Memorandum From the Assistant Secretary of State for Near Eastern and South Asian Affairs (Atherton) to Secretary of State Kissinger1

Nuclear Energy Agreement for Cooperation with Iran

We are committed to transmit to the GOI a draft Agreement for Cooperation on the Peaceful Uses of Atomic Energy but have delayed transmittal to avoid linking the agreement with Iran in any way, including timing, with the Egypt/Israel agreements. We have signed two fuels contracts with Iran and six more provisional contracts are expected to be signed before your arrival in Tehran.

The Shah plans a major program in nuclear energy to replace oil as an energy source and looks upon our assistance as a significant element in the new Joint Commission on Cooperation.

The AEC is currently preparing a draft agreement which will include the same stringent bilateral provisions as in the Egyptian/Israeli drafts in order to meet the clear Congressional concern over the spread of nuclear energy technology. We have no information on the Shah’s attitude toward additional provisions but, as a party to the NPT, he may protest being treated similarly to the non-signatories, Egypt and Israel.2 If a protest is made, we could at that time perhaps negotiate a slightly softer agreement. On the other hand, there is an outside possibility that the Shah would see his acceptance of tough controls as enhancing his leadership in the effort to keep nuclear weapons out of the Middle East (e.g., Iran’s Middle East NFZ proposal).3

The question on which we need your decision now is the timing of sending the agreement to the GOI.

Option 1. Send it now, before you arrive.

Advantages: We would have met our commitment and removed any suspicion on the Shah’s part that we are holding back for political [Page 252]reasons. The draft would be firm evidence of our intent to cooperate fully with him in the nuclear energy field.

Disadvantages: The Shah may not welcome the stringent bilateral provisions and may take up some of your limited time together on this subject. The Egypt/Israel agreements are still to be negotiated and the outcome is not clear. If negotiations collapse, the Shah could also reject our proposal on the grounds that he was not going to be the first to accept additional constraints.

Option 2. Delay sending the draft until we are further along in negotiations with Egypt/Israel.

Advantages: We will have had more time to let Congress adjust to the idea of nuclear cooperation with Middle East countries. If Egypt/Israel accept the stringent provisions, we will be in a somewhat better position to negotiate with the Shah. Also, the Shah will not be able to argue with you over the terms of the agreement.

Disadvantages: The Shah may be annoyed over the delay in submitting a draft to him and may be concerned that we are reconsidering cooperation with him in this field.

Recommendation:

That we send the draft agreement to Iran as soon as it has been completed by the AEC.4

Attachment

Nuclear Energy Agreement for Cooperation with Iran

Standard Agreement tightened to degree of Egypt/Israel Proposals

Basic:

a. Standard IAEA safeguards

b. U.S. agreement on reprocessing of U.S.-origin SNM.

Additions:

1. Agreed physical security measures for U.S.-supplied SNM and equipment and SNM produced through the use thereof.

2. Specific prohibition on use of U.S.-origin SNM and equipment for PNE’s.5

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3.a. U.S. veto over where U.S.-origin SNM and any foreign-origin SNM used, processed or produced in U.S. reactors and other designated materials and equipment would be fabricated and stored.

b. through accompanying note require reprocessing of any SNM and storage and fabrication of U.S.- or foreign-origin plutonium be performed outside Iran and require that any U.S. plutonium for fueling be transferred to Iran only in fully fabricated form.

4. 20 percent U.S. fuel enrichment limitation.

5. U.S. option to buy any produced SNM regardless of origin.

  1. Source: Library of Congress, Manuscript Division, Kissinger Papers, Box CL–153, Iran Trips, 1–3 November 1974. Confidential. Drafted by Naas and cleared by Sober. Sent through Sisco.
  2. Helms predicted such a protest in telegram 9039 from Tehran, October 25. He asked whether the Department had a contingency plan in case the conditions alienated the Shah and led him to “pass up UEA proposal for alternative investment in some foreign uranium enrichment plant” and “award the bulk of nuclear power plant contracts to non-American firms.” (National Archives, RG 59, Central Foreign Policy Files, D740305–0137) Uranium Enrichment Associates was an American company set up by Bechtel.
  3. See footnote 3, Document 63.
  4. There is no indication of Kissinger’s decision on the recommendation. He wrote at the top of the first page: “I’ll discuss with Shah,” but there is no indication that he did so.
  5. The tightened Egypt/Israel proposals presently include a binding PNE prohibition in the accompanying diplomatic notes which are integral parts of the agreements. [Footnote in the original.]