70. Telegram From the Department of State to Secretary of State Vance in London1

Tosec 40024/103235. Subject: Action Memorandum: Nuclear Cooperation With India (S/S/ No. 7711932). For the Secretary from Christopher.

1. Issue for decision. We need to decide on a strategy to deal with India, including an executive branch position on a long-pending license before the NRC2 for the export of slightly enriched uranium fuel for two reactors at Tarapur.

2. Background/Analysis. India is the sole third world country which has tested a device, using plutonium from the CIRUS reactor built with Canadian assistance and heavy water obtained in part from the U.S.3 As the possessor of additional unsafeguarded facilities as well as access to substantial unsafeguarded plutonium, India poses a significant nuclear problem.

[Page 178]3. Our immediate problems relate to Tarapur and what we should do about the heavy water at CIRUS.

4. Our overall goals are to induce India

—to forego further nuclear testing;

—to adopt export policies similar to ours;

—to eventually put all its activities under safeguards. Of all the above conditions, the last will clearly be the most difficult for India to accept.

5. Political/nonproliferation context. India is the symbol for many Americans of the misuse of civil nuclear cooperation for explosive purposes. The previous administration’s weak reaction to the Indian explosion led to severe criticism. A U.S. decision now to go ahead with continued supply to Tarapur could be seen as a quote business as usual unquote attitude. On the other hand, action to cut off supply to Tarapur could jeopardize controls we now have over U.S. fuel already in India. A U.S. cutoff could also have the effect of driving the new Desai government toward the Soviets and would be damaging to bilateral relations. Desai’s nuclear policies will probably take shape gradually. His March 24 public remark implied opposition to testing: quote if it is not necessary to have (peaceful nuclear explosions), we should not have them.4 Unquote. But elements in the new government aligned with the nationalist Jan Sangh Party have in the past favored a nuclear weapons policy.

6. A cutoff of Tarapur fuel could drive India to seek further nuclear independence and lead the non-aligned and LDC’s in a coalition of nuclear cooperation that could undermine the existing nonproliferation regime.

7. Tarapur fuel supply. In accordance with the 1963 agreement and the implementing contract, the U.S. is obligated to provide enriched uranium for the two Tarapur reactors until October 1993. In turn, the Indians are obligated to use only U.S. fuel and to accept safeguards on the facilities and fuel. The reactors, built under our aid program, provide 15 percent of the power in the west Indian states of Gujarat and Maharashtra, having a combined population of 77 million (1971).

8. The U.S. supplies various grades of enriched uranium in the form of uranium hexafluoride for the reactors. The fuel is fabricated into the fuel assemblies by India, a process that takes about a year. The last license for fuel was approved in July. In the absence of fresh fuel, the Indians have been running the fabrication facilities on scrap (and consequently at 20 percent capacity) since February 1977. Key [Page 179]questions are whether and when to supply additional fuel, and how best to handle the spent fuel from Tarapur.

9. New fuel needs to reach India this month to enable the Indians to resume full operation of their fuel fabrication facilities and to operate the Tarapur reactors efficiently beyond the middle of next year. The current shipment could arrive as late as August without causing a total shutdown of the fabrication plant. Since there is a substantial inventory of fabricated fuel assemblies for the reactors, we could withhold fuel until spring 1978 without actually affecting operation of the reactors; but this would close the fabrication facility and almost completely draw down the inventory of fuel. The Indian Atomic Energy Commission vehemently objects to this possibility. Prime Minister Desai told Parliament April 6 that quote if there is a delay beyond May 1977 (in the fuel arrival), the operation of Tarapur . . . could be affected by mid-1978. Unquote. Desai went on to say that India had informed the U.S. of the quote adverse effect unquote of a delay on the power situation in western India, and had quote emphatically unquote conveyed its view that such delays were not consistent with the Tarapur agreement.5

10. Options. We appear to have four options:

First: Cut-off the supply. A Cut-off of the fuel supply to Tarapur would satisfy those who do not want nuclear cooperation with India so long as it does not renounce further testing and is not a signatory to the NPT. If we cut off fuel supply, the reactor operation would have to be stretched out by reducing power levels and then shut down unless the Indians made arrangements with the Soviets to replace us as the source. We believe the Soviets are prepared to replace us if they can do so consistent with the London guidelines.6 The Indians could argue that our action is a material breach of the 1963 agreement, which specifically obligates us to fuel the reactors. They could claim that India was relieved of its obligation to maintain safeguards at Tarapur and to obtain our approval for reprocessing of the Tarapur spent fuel.

Second: Orderly disengagement/interim shipment. If disengagement is the strategy adopted, we believe it is important to try for an orderly withdrawal under which the Tarapur spent fuel is removed and its reprocessing in India avoided. Under this option we would inform the Indians we are prepared to recommend that the NRC [Page 180]approve a final fuel shipment, but we would require advance assurances on the continued safeguarding of all U.S. fuel, including spent fuel, and agreement in principle on its disposition.

Third: Withhold fuel unless and until Indians agree to all our new conditions and policies. This would be the best choice if it would work. The problem is that there is little chance of successful negotiations. The new Indian Government, relying on the conclusions of U.S. experts Last and Kiefer,7 has put itself on the record as to the quote adverse effect unquote of any delay in fuel supply. We would be putting the new government in a corner before it had time to shake down its position. If unsuccessful, we would find ourselves poorly positioned for orderly disengagement. It is doubtful if the resulting damage to bilateral relations could be confined only to the nuclear area. We would be forcing the Indians into closing down their Tarapur fuel fabrication operation in August if no agreement is reached by that date (with probable cutbacks in reactor power to stretch out existing fuel), and into seeking Soviet fuel.

Fourth: Early negotiations/recommend NRC approve interim shipment. U.S. leverage with the Indians would be maximized if we ship additional fuel under the pending license while we try to negotiate understanding on outstanding nonproliferation issues. The fuel shipment we would offer to supply would allow the Indians, after they complete processing the remaining scrap in August, to run their fabrication facility for another six months at full capacity. However, they will not be able to complete fabrication of any additional fuel rods until we provide them with a further shipment of a different enrichment, essential to fabrication of full assemblies. In this way, we would be responsive to Indian desire to keep their fabricating facility in operation while not in fact providing the complete mix needed for reactor fuel assemblies. This should meet Desai’s political needs while providing time to try to negotiate an overall nuclear understanding.

We would advise the Indians that, consistent with our nonproliferation legislation,8 detonation of an Indian nuclear explosive device would result in the termination of fuel supply. We would also follow up on an earlier Indian suggestion that unsafeguarded U.S. origin heavy water at CIRUS be combined with U.S. origin heavy water in the Rajasthan reactors under safeguards.

[Page 181]If we proceed cautiously and avoid putting Desai in a corner, we appear to have some prospect of influencing Indian nuclear policy in the direction of our long-term objectives although negotiations will be difficult. If we fail, there could be domestic U.S. criticism that supply should have been cut off earlier. But an effort toward orderly disengagement may still be possible at that point.

11. Conclusions: Under the circumstances, we favor option 4. Without undercutting our overall nonproliferation posture, an interim shipment provides time to see whether a satisfactory understanding on nuclear matters can be achieved with Desai. It will also avoid presenting the new government, which we have warmly welcomed, with a strongly negative political signal. In addition, this should act as a clarification of U.S. policy to foreign observers by signalling a U.S. willingness to negotiate rather than impose new conditions in existing agreements.

12. Recommendation: That you authorize us to inform the Indians that we are prepared in principle to recommend NRC approval of a further interim shipment if they agree to early negotiations on outstanding nuclear questions.9 (Option 4)

Clearances: State—NEA: ADubs, T: Mr. Nye, OES: Mr. Nosenzo, ACDA: CVanDoren, ERDA: GHelfrich, DOD: Col. Harlow, Energy Adviser: Mr. Ahearn. NSC views are being cabled by septel to Brzezinski.10

Christopher
  1. Source: National Archives, RG 59, Central Foreign Policy File, D770158–0782. Confidential; Immediate. Drafted by Ober and Nosenzo; cleared by Dubs, Nye, Energy Adviser Richard Ahearn (S), and Van Doren, and in ERDA, DOD, and S/S; approved by Christopher. Vance was in London with Carter May 5–11 to attend the G–7 Economic Summit and a NATO Ministerial meeting.
  2. The Nuclear Regulatory Commission controlled U.S. exports of nuclear fuel to foreign consumers. Although the NRC had the authority to deny licenses for shipments, the President could override a NRC decision (subject to a congressional veto).
  3. See Foreign Relations, 1969–1976, vol. E–8, Documents on South Asia, 1973–1976, Document 163. CIRUS was the Canadian-built research reactor at Bhabha Atomic Research Center near Mumbai, India.
  4. See footnote 7, Document 66.
  5. Desai’s April 6 responses to questions from the Lok Sabha were reported in telegram 5027 from New Delhi, April 7. (National Archives, RG 59, Central Foreign Policy File, D770121–0900)
  6. The London Guidelines, which were adopted between 1975 and 1978 by the Nuclear Suppliers Group, sought to regulate the spread of nuclear fuel by limiting exports of materials, equipment, and technology to non-nuclear states unless those states complied with IAEA safeguards.
  7. George Last and William Kiefer, contractors for the Department of State, were sent to India in September 1976 in order to assess the fuel supply levels at Tarapur. (Telegram 2334 from Bombay, September 7, 1976; National Archives, RG 59, Central Foreign Policy File, D760337–0694) They reported that fuel production would be affected if a shipment of enriched uranium arrived later than May 1977. (Telegram 689 from Bombay, March 23; National Archives, RG 59, Central Foreign Policy File, D770100–1055)
  8. See Document 6.
  9. Vance approved the recommendation. (Telegram Secto 4008 from London, May 8; National Archives, RG 59, Central Foreign Policy File, P840076–1260, N770003–0268)
  10. No telegram was found. In a May 5 memorandum to Brzezinski, upon which an unknown hand wrote: “Sent to ZB via DACOM 5/5pm,” Aaron outlined the NSC Staff’s view on the Department of State’s recommended proposal to the Indian Government. He noted that Tuchman had “serious doubts and reservations about the wisdom of this step,” while Thornton supported the initiative in order to have an impact on Indian nuclear policy and to send the Desai government a positive signal. Aaron considered it detrimental to the administration’s overall non-proliferation goals. (Carter Library, National Security Affairs, Donated Material, Papers of Walter F. Mondale, David Aaron, Box 214, Aaron, David: Chron File, 5/1977) Telegram Tosec 40243/107344 to New Delhi, May 13, informed the Embassy of Vance’s decision and directed it to convey the message to the Desai government that the Carter administration would recommend that the NRC issue an export license on the condition that India agreed to negotiations on other nuclear questions. (National Archives, RG 59, Central Foreign Policy File, D770168–0437) The instructions were rescinded, however, after Carter approved delaying action on the issue until he returned from London. (Memorandum from Brzezinski to Aaron and Tuchman, May 11; Carter Library, National Security Affairs, Staff Material, North/South, Thornton Country File, Box 93, India: Desai (Prime Minister) Visit to US: 6–9/78, Nuclear, 5/77–4/78) The Department communicated the instruction to delay informing the Indians to the Embassy in telegram 107972 to New Delhi, May 13; National Archives, RG 59, Central Foreign Policy File, D770169–0315)