Foreign Relations of the United States, 1969–1976, Volume E–14, Part 2, Documents on Arms Control and Nonproliferation, 1973–1976

206. Paper Prepared in the Department of State¹

Washington, September 4, 1976.

STATE DEPARTMENT POSITIONS ON NUCLEAR POLICY REPORT TO THE PRESIDENT

1. Non-Proliferation Restraints. The Department generally supports a firmer policy on restraints in U.S. nuclear cooperation which stresses cooperation with NPT parties or countries accepting full safeguards and with countries prepared to forego or restructure their reprocessing options. We also support an approach which makes a clear distinction between (1) cooperation under new and amended agreements and (2) cooperation under existing agreements. For both categories of recipients we would underscore the general need for a multilateral approach. U.S. leadership in non-proliferation is important and consistent with our past policies and recent initiatives in forming the London Suppliers’ Group. But excessively stringent or rigid unilateral U.S. policies will at best have limited benefits, since we no longer dominate the international nuclear market and will not be able to obtain new restraints without concerted supplier actions.

On the more specific restraint recommendations:

—For negotiating new or amended U.S. nuclear cooperation agreements, we strongly support the recommendation that the U.S. apply these restraints as nonbinding criteria for engaging in new or expanded nuclear cooperation. We should recognize, however, the importance of gaining common supplier policies on these restraints, and be prepared to state that we will apply them as conditions as soon as other suppliers agree to do the same. The President’s public statement would make this basic approach explicit. We support the review group’s conclusion that new restraints should not be mandatory requirements in the absence of multilateral agreement. (In this connection, the options on “retroactive sanctions” must be seen as possible elements of a legislative strategy that must be accomplished in coordination with the Congress.) Even with a Presidential override, such a unilateral policy could impair our flexibility in pursuing non-proliferation objectives with specific suppliers and recipients.

—For cooperation under existing agreements, we strongly endorse the proposal to use diplomacy and a strategy of inducements to persuade the many key target countries in this category to voluntarily renegotiate existing agreements with new restraints. In addition, in connection with our attempts to find an acceptable compromise with the JCAE on its Nuclear Export Bill, we see merit in the recommendation that NRC use the agreed London Supplier Guidelines as criteria in granting export licenses under existing agreements. But even with the proposed Presidential override, we are concerned that such an approach could be viewed as an attempt by the U.S. to impose these guidelines retroactively, to the detriment of our relations with a number of major allies and our overall credibility as a supplier. Finally, we oppose the imposition of new restraints as a condition of further U.S. supply until common supplier agreement is achieved on this point. Even then, such a course of action would contravene the legal terms of our international agreements, thereby risking adverse legal, foreign policy, and even non-proliferation consequences.

As a fundamental point for recipients in both categories, we would emphasize the vital link between gaining new restraints and offering attractive inducements through fuel buy-back and exchange, and possible leasing. All such inducements should be coordinated with other suppliers, since uncoordinated inducements may look to other suppliers as a U.S. attempt to preempt a larger share of nuclear fuel and related reactor markets. In particular, the more attractive and reliable we make our enriched uranium supply using existing and planned facilities within the broad framework of the Nuclear Fuel Assurances Act, the more success we will have in obtaining effective restraints on reprocessing. The President’s public statement should relate inducements to restraints to the degree of specificity judged feasible in light of our ability to consider offering new fuel supply or service arrangements. These issues are discussed further below in the context of our recommendations regarding alternatives to national reprocessing.

In general, nuclear consumers will become less disposed to relying on the U.S. if we arbitrarily impose more stringent conditions on nuclear agreements after their terms have been mutually agreed. We must therefore ensure that the NRC licensing procedures are responsive to national policy as executed by the President, within legislative requirements. Nuclear export licenses should not be used as a lever for obtaining new constraints from countries which live up to their obligations to us. NRC procedures should be perceived instead as a means of predictably implementing our policies of providing inducements, such as guaranteed reactor fuel supply, for countries accepting effective non-proliferation constraints.

2. Alternatives to National Reprocessing. The Department supports the first option, “contain the spread of national reprocessing.” We share the review group’s recognition of the need for strong and specific U.S. initiatives to achieve an international fuel-exchange regime based upon:

—inducements for recipients, in the form of assured and equitable front-end fuel services in exchange for their spent fuel; and

—inducements for suppliers, in the form of joint fuel-service support for reactor sales in non-nuclear weapon states, in exchange for withholding sensitive nuclear technology from further spread under national control.

The Department supports the steps recommended to further these objectives. However, we further recommend that the President call for the exploration by interested nations of an “international nuclear fuel bank” concept, through which the potential benefits of plutonium recycle would be shared under international controls, while the reprocessing activities incidental to achieving those benefits would be confined, initially to a few major supplier countries, but eventually include a few carefully sited multinational plants. The Department has developed further proposals for making significant forward movement in establishing an effective fuel exchange regime. These proposals are consistent with but go further than the review group’s recommendations in relating restraint requirements to fuel inducements. With the President’s approval, the following approaches would be integrated into the fuel-exchange elements already presented in the nuclear policy report.

—As a matter of national policy, the President would express:

(i) For recipients accepting our tightest non-proliferation restraints, notably no national reprocessing and enrichment facilities, U.S. willingness to acquire some or all spent fuel of U.S. origin, at the customer’s option, in exchange for fresh enriched uranium under attractive terms (i.e., guaranteed feed and enrichment services).

(ii) For recipients who do not agree to renounce national reprocessing and enrichment facilities but are not constructing such facilities now and are prepared to place all spent fuel under international storage, future enrichment guarantees at market rates but repurchase of spent fuel only at U.S. option.

(iii) For recipients unwilling to accept our restraints in new or amended agreements, including storage under international auspices, U.S. insistence on a purchase or exchange option for U.S. supplied or derived spent fuel. All suppliers would be urged to offer such options.

—To lend multilateral impetus to the foregoing arrangements, the President would express publicly U.S. readiness to explore with interested supplier nations possible arrangements for pooling fuel-exchange capabilities through such means as tie-in fuel sales, cross-investment in enrichment and reprocessing facilities, joint enrichment and reprocessing facilities, joint enrichment guarantees, spent fuel storage as needed to support such arrangements, and an eventual international fuel bank.

Finally, the Department supports the review group’s recommendations for strengthened fuel assurances, increased enrichment capacity which could support fuel exchange arrangements, and an appeal for passage of the NFAA as an essential ingredient in our non-proliferation strategy. It strongly supports strengthened high-level diplomatic approaches to other supplier governments, on a confidential basis in the first instance, seeking a one-to-two year moratorium on exports of sensitive facilities and pursuing possible fuel pooling arrangements as a means of minimizing commercial competition in fuel cycle services.

3. Domestic Reprocessing Options. The Department is not in a position to make a comprehensive judgment on the domestic benefits of the various reprocessing options presented in the report. As the report notes, the economic benefits of domestic reprocessing are uncertain and possibly marginal.

From the point of view of our international and non-proliferation interests, domestic decisions on reprocessing and recycle may have an important impact in two respects:

—A perception internationally that the U.S. has taken a decisive step toward plutonium recycle may make national reprocessing appear both more respectable and more economically attractive. We could argue that such a step is justified because of the size of the U.S. nuclear program, but it is not clear whether this would overcome such perceptions, particularly when announced as a Presidential initiative.

—The possession or lack of a U.S. reprocessing capability may have an important effect on our ability to negotiate workable joint fuel-exchange arrangements with other suppliers.

Negative international perceptions could probably be reduced to an acceptable level if the U.S. were to begin a limited program, but only if its size, substance, and rationale were consistent with a larger U.S. non-proliferation program which received general international credence. In sum, our domestic and international choices must be part of an integrated whole.

Provided that an international policy along the lines we have recommended is also adopted, the Department can support adoption of Option 1, to “assist industry to gain experience with reprocessing,” with certain modifications, along the following lines:

—The program should be identified from the outset as experimental in nature without prejudging its outcome, and its content should justify this description;

—We do not object to a demonstration project as proposed, consisting of government support for the AGNS plant plus design of a larger plant with no near-term commitment to construct this second facility;

—The possibility of substantial Government involvement in any second plant should, however, be held open;

—There should be aggressive pursuit of alternative technologies to reprocessing and recycle as an element of the program;

—The program should explicitly allow for financial participation by other nations (both suppliers and consumers) and joint exploration of service arrangements, but should specifically exclude service commitments or technology transfers except as part of agreed arrangements among suppliers.

—The program should be presented as an integral part of our overall strategy, with emphasis upon its potential role in improving safeguards, supporting joint fuel-exchange arrangements, developing alternative technologies, and possibly as a future element of an international fuel bank.

—The program should be reviewed at the end of two years to assess the economic and technological benefits of reprocessing in the light of what has been learned, and the advisability of proceeding with construction of a plant beyond AGNS, in the light of progress made toward an international fuel-exchange regime.

4. Strengthened Sanctions. We support a publicly articulated sanctions policy along the lines proposed as a means of balancing our non-proliferation and overall foreign policy objectives. The proposed approach includes at least automatic cut-off of U.S. nuclear supply if our safeguards are clearly breached, reaffirms the seriousness with which the U.S. would view any safeguards violations, and stresses the need for consultations among suppliers and consumers to determine what collective actions should be taken. We do not believe that a U.S. policy should go further than these steps, either in terms of incorporating explicit non-nuclear responses or in terms of adopting more rigid unilateral policies.

The Department will consult in advance of a public statement with other countries, and in particular seek to elicit comparable statements from other key suppliers. We will also pursue diplomatic efforts to gain multilateral supplier support for IAEA-related initiatives in this area and seek supplier agreement to curtail nuclear cooperation with any non-nuclear weapons state hereafter testing a nuclear device, regardless of whether safeguards obligations are violated (recognizing that it is unlikely that France would agree).

5. IAEA Storage Regime. We support promotion of this concept, with particular near-term emphasis on storage arrangements for spent reactor fuel. A Presidential statement endorsing this concept and expressing a willingness of the U.S. to participate, can provide impetus to our on-going diplomatic efforts in the context of the London Suppliers’ Group and in the IAEA to translate the international storage objective into reality. We will consult in advance of such a statement with key suppliers and the IAEA Director General. In both public statements and private consultations, when discussing the role of such a storage regime for separated plutonium, we should be wary of appearing to condone national reprocessing.

6. Strengthened IAEA Safeguards. We support the proposed program to sponsor safeguards demonstrations for sensitive facilities, offer an ERDA laboratory to support development of new techniques, and explore possibilities for greater U.S. contributions to improving agency capabilities. The Department is prepared to seek cooperation from other suppliers and recipients in reinforcing our initiatives, and believes that a public statement surfacing these proposals would be useful in this connection.

7. Strengthened Physical Security. We support a policy of strengthening and standardizing physical security over nuclear materials. We have made significant progress in establishing physical security guidelines for suppliers to follow as result of the London Suppliers’ understandings. Before going beyond these agreed standards, the U.S. should first seek to bring its own national standards up to these levels. The concept of an international convention—which has been proposed internationally in 1974 and again in 1975 in the UNGA and explored diplomatically with other suppliers and in the IAEA context—could be mentioned as part of an overall nuclear policy statement. But it should be recognized that the prospects for strong mandatory provisions as well as early negotiation of such a convention are limited.

8. Waste Management. We support the review group’s recommendations on waste management, but further recommend that the U.S. publicly propose the pursuit of international R&D initiatives in this field. We also propose that specific attention be given to the question of whether the U.S. could accept foreign waste, if we ever entered into an international reprocessing service program.

9. Non-Nuclear Technologies. The Department supports these proposals and will work with ERDA in studying possibilities. However, we do not see substantial opportunities emerging which could provide an effective near-term deterrent to smaller countries desiring to obtain nuclear power plants. In the proper context, on the other hand, initiatives in non-nuclear energy cooperation may be helpful in dissuading certain countries from acquiring sensitive nuclear facilities, such as reprocessing plants. In formulating and implementing any such program, we should draw upon the efforts we are making in the IEA and in CIEC to cooperate with LDCs in the energy field. Of particular importance might be the U.S. proposal for an International Energy Institute which we are discussing within the IEA and CIEC, following up the various proposals we made at the UN Seventh Special Session.

10. U.S. Safeguards Effectiveness. We support the proposals for assuring the effectiveness of U.S. safeguards, with the understanding that upgraded intelligence efforts should be responsive to our broader non-proliferation policy needs and not injurious to the IAEA. We would also seek other supplier support for fallback bilateral safeguards and work with them to gain timelier access to IAEA safeguards information.

11. Public Statement. The Department does not believe that the UNGA would be an appropriate forum to discuss new non-proliferation policies emphasizing tougher constraints. While the drama and worldwide scope of a Presidential UNGA address are positive factors, such a message would likely be attacked as restrictive and discriminatory by the less developed countries, even if balanced by offers of inducements. On the other hand, a domestic message, perhaps to the Congress, would present an opportunity to underline both the safeguards and constraints inherent in our nuclear policies and the experimental character of any domestic reprocessing program. If the President nonetheless selects the UNGA as the forum for a statement on nuclear policy, the Department would recommend that he emphasize the cooperative aspects of our non-proliferation policy.

12. Nuclear Policy Organization. Rather than the proposed Nuclear Policy Council including State, ERDA and ACDA, we believe that consideration should be given to continuation of the existing NSC/VPWG mechanism or a specially constituted Under Secretaries Committee reporting to the President through the NSC and the Domestic Council. Instead of establishing another bureaucratic layer, the Department favors the option of an Under Secretaries Committee as the most flexible and coherent means of effectively representing the interests of the domestic and foreign policy agencies. Whatever the institutional arrangement, the Department of course welcomes the review group’s support of its lead responsibility (in coordination with other relevant agencies) in the diplomatic and foreign policy elements of U.S. nuclear policies.

1. Summary: The paper discussed the Department of State’s positions on the nuclear policy report prepared by the interagency Nuclear Policy Review Group.

   Source: Ford Library, National Security Adviser, NSC Middle East and South Asian Affairs Staff Files, Convenience Files, Box 37, Nuclear Policy Review and Non-Proliferation Initiatives. Confidential. Attached to Document 207. For a summary of the report, see Document 208.