289. Memorandum From the Director of the Policy Planning Staff (Lord) to Secretary of State Kissinger 1

IMPLICATIONS OF FRG-BRAZIL NUCLEAR SALE

For President Scheel’s visit, you have already received memoranda from George Vest, Art Hartman, and myself providing background on the FRG-Brazil nuclear sale and the broader multinational suppliers’ efforts. In recent days, particularly over the weekend, there has clearly been intensified press and Congressional concerns over the German nuclear sale. Questions have arisen as to whether US views have been made known to the Federal Republic at sufficiently high political levels, specifically by you or the President. German officials are apparently claiming in private that the absence of such direct interventions demonstrates that the US is not overly concerned. (Consistent with this belief, today’s Washington Post editorial urges President Ford to raise the Brazilian sale with President Scheel.)

I therefore thought it would be helpful to you—and important—to pull together exactly what is involved in this issue and why it has stirred so much controversy, as background for your discussions with Scheel and Genscher.

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The FRG-Brazilian sale represents a serious and unprecedented step in international nuclear transfers and, as you know, comes at a particularly unfortunate time—in the midst of complex diplomatic and technical effort to reach agreement among major suppliers on strengthened and standardized nuclear export controls. This is why we have, in recent months, sought to induce the FRG to reconsider transfers of sensitive enrichment and reprocessing technology to Brazil, or, if such transfers could not be stopped, to impose the strictest safeguards possible.

In my judgment, the following four implications of the FRG-Brazil sale are of special significance:

1. While the reactors involved pose a normal and containable risk, the sale of uranium enrichment and plutonium reprocessing technology presents particular proliferation problems. These facilities either produce or process weapons-usable material and are therefore difficult to safeguard. However strict the controls may be, small diversions within the margins of inspection error can be dangerous and potential abrogations of agreements would leave sensitive material in the hand of the recipient.

2. As the particular recipient in question, Brazil’s situation is less than desirable. The GOB has not only refused to join the NPT and the Latin American Nuclear Free Zone, but has been openly hostile to both treaties. Further, Brazil continues to express interest in following India’s lead by developing a “peaceful” nuclear device. Even if the FRG assistance is well safeguarded, there are always problems of technology “leakage” and abrogation to consider.

3. Under the German sale, Brazil would become the first non-nuclear weapons state to have received external assistance in acquiring a complete nuclear fuel cycle, including enrichment and reprocessing plants. This event, occurring at this juncture, will make it more difficult for us in our multilateral meetings to persuade other suppliers, notably the French, to follow our national policy and refrain from assisting countries in establishing national enrichment and reprocessing capabilities, when not economically justified and when proliferation concerns are greater than normal. Depending upon the actual safeguards concluded by the FRG and Brazil, the sale may or may not damage our minimum goal of ensuring the tightest possible agreed controls over sensitive transfers.

4. Reactions in Congress to the sale can take two opposite courses, neither of which would be desirable from the perspective of sound national policy. On the one hand, “liberals” could accuse the Executive Branch of being too relaxed about the sale and of defending both the FRG and Brazil. This could lead to tougher Congressional legislation to cripple US nuclear export policies as a means of attempting to coerce [Page 891]other suppliers and punish recipients. On the other hand, “conservatives” could argue that the US lost billions of dollars of reactor sales to Brazil, since the FRG took commercial advantage of our restraint by offering sensitive technology as a “sweetner” to negotiate lucrative reactor sales. This could lead to pressure for this nation to aggressively enter the international market for enrichment and reprocessing technology—in contrast to our present policy of providing fuel services and encouraging commercial-scale regional fuel cycle facilities.

Our frequent approaches to the FRG on the Brazilian sale, consistent with your guidance, have been made in Washington, London, and Bonn by the Deputy Secretary, George Vest, and the Embassy (most recently in instructions to Ambassador Hillenbrand). It is difficult to believe that top officials in the German Government have not received a clear signal from the US or that they doubt your personal concern over this issue. A cabinet decision was nevertheless made in Bonn last month to go forward with the sale, including enrichment and reprocessing technology, and the final government agreement will be signed in a few weeks when a Brazilian official visits Germany.

As a practical matter, it may be too late to halt the FRG commitment to transfer sensitive technology, although there may be flexibility both in the government agreement and the subsequent detailed contract arrangements. Your talking points for President Scheel deal with the nuclear issue, should it arise. In view of recent events, it now seems particularly important to remove any possible misunderstanding Scheel and Genscher may have regarding (1) our regret over the FRG decision to sell enrichment and reprocessing technology to Brazil; and (2) the significance we attach at this stage to

—slowing the pace of providing this technology and limiting its scope to the pilot level, while working toward multilateral plants to serve regional commercial needs; and

—placing tight safeguards over such transfers, including the active involvement of the FRG in the management and operation of resultant facilities.

I am aware of the undesirability of putting excessive pressure on Bonn, particularly in light of recent publicity over the Brazil sale. But it should be stressed that, while expressing regret at the decision to export sensitive technology, we have not sought to publicly embarrass the FRG. Indeed, we tried to accurately portray the German safeguards arrangements, and, if we succeed in persuading the FRG to incorporate all our suggested controls, we may increasingly be placed in the position of defending the sale—against expected intensified Congressional and press criticism in the US. Moreover, despite some German concerns that the US has sought “commercial advantage”, it was the FRG agreement to provide sensitive technology (which we would not [Page 892]supply) that resulted in Westinghouse and GE losing American reactor sales to German firms in Brazil. Finally, as I indicated in a recent memorandum, the FRG needs our support in COCOM for a reactor sale to the Soviet Union without safeguards. It is therefore both responsible and reasonable for us to make our objections to the Brazilian sale clearly known to top FRG officials, and, at the very least, to induce them to impose all possible safeguards.

  1. Summary: Lord discussed the implications of a proposed FRG nuclear reactor sale to Brazil.

    Source: National Archives, RG 59, Records of Secretary of State Henry Kissinger, Entry 5403, Box 14, Briefing Memos, 1975, Folder 4. Secret; Nodis. Two of the memoranda to which Lord refers, a June 14 memorandum from Lord to Kissinger and a June 12 memorandum from Hartman to Kissinger, are ibid., Policy Planning Council, Policy Planning Staff, Director’s Files (Winston Lord), 1969–1977, Entry 5027, Box 356, Jun. 1–15, 1975; both provide guidance on the reactor sale issue for Scheel’s June 16 to 18 state visit to Washington. Kissinger and Genscher discussed the issue briefly on June 16, but reached no conclusions. (Memorandum of conversation, June 16, ibid.; Central Foreign Policy Files, P820123–1320)