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325. Study Prepared by the Ad Hoc Interagency Group on Nuclear Proliferation1

This report has been prepared in response to PRM–152 in which the President has requested recommendations on how the United States should proceed in its efforts to deter the spread of nuclear weapons. The material which follows includes an introductory section setting out the background, broad policy considerations, and principal issues that the current study is designed to address. This is followed by a series of sections outlining optional and recommended courses of action in the primary areas of current concern.3

[Omitted here is the table of contents.]

I. INTRODUCTION

A. BACKGROUND

For over twenty years the United States has been firmly committed to preventing the spread of nuclear weapons. The President has pledged that this Administration would, as a matter of priority, intensify US efforts. The proliferation of nuclear explosive capabilities to an increasing number of countries threatens to reduce our ability to control international events and manage crises, expose our nation to new risks, have a dissolvent effect on our alliances, and enhance the prospect of terrorist nuclear attacks. Our objective is to prevent this proliferation.

A successful non-proliferation policy requires attention both to the political and security motivations that lead states to acquire explosive devices and to the technical capabilities that make it possible for a state to develop nuclear explosives with little timely warning. Avoiding proliferation ultimately will depend to a large extent on how successful we are in reducing motivations to acquire nuclear weapons capability. These motivations are complex and are not amenable to short-term solutions. They reflect political evaluations of national security interests, [Page 801]of the strength and durability of alliances, the reliability of security guarantees, and perceptions that nuclear weapons status or near-status is prestigious and carries significant political rewards.

To successfully meet these concerns over the long-term, steps must be taken to enhance the credibility of existing security guarantees. We also need to make progress in achieving meaningful and verifiable arms control agreements that reduce nuclear weapon force levels and limit or prohibit nuclear testing; in establishing nuclear-free zones; in strengthening alliances; and in devaluing the prestige identified with nuclear weapon capability. This report, while sensitive to the importance over the long-term of reducing political and security motivations to acquire nuclear weapons, focuses on the more immediate problem of containing technical capabilities.

The problems addressed in this report arise from the nature of nuclear technology itself. The nuclear fuel cycle begins with mining of natural uranium. The amount of fissile material in natural uranium—the isotope U–235—must be increased to produce fuel for US-type nuclear power reactors (enrichment). Fuel assemblies are fabricated from the enriched uranium and burned in a reactor. The resultant spent fuel is stored temporarily at the reactor site.

After burning in a reactor, nuclear fuel contains a mixture of plutonium, slightly enriched uranium, and radioactive waste products. This spent fuel must be cooled for several months at the reactor site.

After cooling, spent fuel can be transported to more permanent storage. However, it has been assumed that spent fuel would be reprocessed to recover the plutonium and uranium, which would be recycled into new fuel (mixed-oxide or breeder fuel), thus reducing the amount of fresh enriched uranium required. The radioactive wastes separated during reprocessing would be prepared for permanent disposal.

The current problem is that many states are developing or have plans to develop full fuel cycle capabilities, that is, not only power reactors, but also reprocessing facilities and, in some cases, enrichment facilities that produce or are capable of producing weapons-usable material.

We are particularly concerned that the spread of enrichment and reprocessing facilities will bring these states close to the nuclear weapon threshold, making it easier to decide to acquire weapons in the future and reducing the time that diplomacy has available to counter moves toward proliferation. Motivations respond rapidly to changing political and security perceptions. If motivations coincide with a capability to produce nuclear explosive devices, further proliferation will almost certainly result. However, the technical capabilities which states have to acquire or produce weapons are amenable to more immediate controls than are motivations. Our efforts in the first instance must, [Page 802]therefore, focus on averting the further spread under national control of facilities and materials capable of use for weapons purposes and on strengthening safeguards and other controls over all peaceful nuclear activities.

Our non-proliferation policy must also take account of the legitimate role nuclear power can play in contributing to world energy needs and, specifically, in reducing reliance on costly and uncertain sources of oil. Non-proliferation and energy cooperation objectives need not conflict: even if national access to weapons-usable material is limited, supplies of non-sensitive fuels and reactors can continue; conversely failure to contain proliferation risks will not only seriously reduce world security but will also result ultimately in serious setbacks to, if not curtailment of, the continued application of peaceful nuclear power.

The US has had a long-term interest in assuring that nuclear power should be available, but only under the most rigorous safeguards, and that the growth and direction of the industry should not outpace progress in forging the necessary protective constraints and institutions. To this end, important protective arrangements were developed over the past two decades including bilateral constraints and controls, IAEA safeguards, and the Non-Proliferation Treaty (NPT).

Since the Indian test of 1974,4 which demonstrated that a developing country could produce nuclear explosives by misusing peaceful nuclear cooperation, the United States has taken a number of initiatives seeking broad supplier state acceptance of common export policies. These include not only safeguards and control over nuclear exports and strengthening of the international safeguards system, but also efforts to forestall the acquisition of sensitive facilities by countries not already possessing them and minimizing access to and improving control over weapons-usable materials.

These and other related actions were stated in President Ford’s October 28 nuclear policy message.5 The key decision was that reprocessing would no longer be regarded as inevitable and should not proceed unless there is sound reason to conclude that the world community can effectively overcome the associated risks of proliferation. Avoidance of proliferation must take precedence over economic interests. In addition, the Ford statement called for a three-year moratorium on transfers of sensitive technology while alternative ways of meeting fuel cycle needs were explored, coupled with a domestic pause on commercial reprocessing pending evaluation of its proliferation risks. This latter decision was taken in the context of reprocessing for [Page 803]recycle in present reactors and did not address the US breeder reactor development program.

B. OVERALL STRATEGY

The October 28 statement—and the Carter San Diego speech6—offer a similar political and technical basic framework for the conduct of non-proliferation policy.

A common element in these policy statements is reinforcement of controls to ensure that civil nuclear supply is only used for peaceful purposes. They call for action to strengthen technical controls through more universal application of IAEA safeguards and improvement of safeguards and physical protection measures to deter unauthorized use of nuclear materials and facilities.

A second key element is denial of access to sensitive technologies (e.g., enrichment and reprocessing) so as to delay the spread of stockpiles of weapons-usable material and the facilities that produce them, while the international community develops ways to shape the future of nuclear energy so as to reduce proliferation risks.

Both policy statements also recognize that an effective non-proliferation policy cannot rely solely on denials and controls. A policy based solely on denial of sensitive technology transfers would lack legitimacy in the eyes of other nations, and over the long term would not present indigenous development of sensitive technologies and facilities. Similarly, a policy which permits the spread of sensitive national facilities, albeit under strengthened political commitments, in-ternational safeguards and physical security measures, would not in itself meet the problem of states acquiring capabilities which could quickly be turned to weapons purposes after abrogation of safeguards agreements.

We believe that a meaningful long-term non-proliferation policy requires the addition of a third approach based on the principle of bilateral and multilateral incentives. Such incentives must be responsive to other countries’ energy requirements. In particular, in encouraging acceptance of our non-proliferation policy and objectives we must be able to provide assured supplies of non-sensitive nuclear fuels (e.g., low-enriched uranium) on a timely, adequate, reliable and economically acceptable basis and be responsive to concerns over the management of spent fuel and nuclear waste.

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We also believe that a key element in developing international support for our non-proliferation policy is establishment of an International Fuel Cycle Evaluation Program that objectively and thoroughly examines the economic, environmental and non-proliferation advantages and risks of the current fuel cycle and major alternatives. The domestic component must relate our future energy needs with our non-proliferation and environmental objectives. The international component must seek to involve countries with major nuclear energy programs (both existing and projected) and address their legitimate concerns, to ensure that the evaluation will be internationally accepted.

This international component is particularly important because many other countries, including most key suppliers, strongly disagree with the US assessment that reprocessing is not necessary in the near term. Rather they consider this technology essential for resource conservation, for meeting waste handling and environmental requirements and for breeder development and fuel purposes.

C. MAJOR ISSUES

While the approaches identified above—controls, denials, incentives, together with an International Fuel Cycle Evaluation Program—are key policy elements in our proposed overall non-proliferation strategy, a number of major policy implementation choices need to be made.

1. How should the US deal with reprocessing and the export and disposition of weapons-usable materials?

There is interagency consensus7 on the need for an international moratorium on the export of enrichment and reprocessing plants and technology, the most difficult cases being the existing French and German agreements to export such facilities to Pakistan and Brazil, and our efforts to ensure the absence of reprocessing in Taiwan.

There is an interagency consensus on the need for assessment of reprocessing and examination of alternatives for recovering energy value from irradiated fuel and that this evaluation should be international and broad based.

There is also an interagency consensus that domestic, regional, and international spent-fuel storage arrangements are needed in supporting our approach to reprocessing.

Differences among Agencies exist, however, on the following issues:

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how an international fuel cycle evaluation program should allocate resources and effort domestically and internationally between reprocessing and alternative technologies.

Some argue that virtually all domestic technical evaluation efforts should be addressed to non-reprocessing technologies, in order to provide a clear signal to others that the US is not going forward with reprocessing. Existing reprocessing plants abroad could be used for evaluation of reprocessing, both technically and organizationally.

Others favor an approach in which the US technical evaluation includes not only alternative technologies but also reprocessing itself in order to establish more effective safeguards and controls in the event that decisions (in the US or elsewhere) are made to proceed with reprocessing.

Options and recommendations on this issue are on pages 15 & 16.

how the US should deal with reprocessing activities abroad.

We are being pressed by Japan, Spain, Switzerland and Sweden to permit them to ship US-supplied fuel to the UK or France for reprocessing, on the grounds that lack of available spent fuel storage capacity could force them to shut down their reactors. This raises a number of issues requiring immediate decision: Should we permit reprocessing in existing facilities in these nuclear weapon states (NWS), subject to US approval over disposition of separated plutonium? Should we seek a moratorium on all new reprocessing plants? How should we handle existing reprocessing plants in non-nuclear weapon states (NNWS)8 such as the plants in Japan, in Germany and Belgium? Do we integrate some, all or none of these into an International Fuel Cycle Evaluation Program?

A major issue in our on-going negotiations is the US right of approval over reprocessing. This has also raised problems in our attempts to obtain such rights in negotiating with Iran, Spain, Yugoslavia and others. While there is a consensus on the need to tighten and extend our veto rights over reprocessing, we need to spell out the conditions under which we allow reprocessing and/or alternative disposition of spent fuel.

Finally, there are the related questions of how to meet near-term domestic and foreign spent fuel storage concerns and how best to assure that adequate fuel supplies will be available during the evaluation period. In addition, we must determine whether or under what conditions to continue exporting weapons-usable material or reactors requiring their use. Proposed licenses to export highly-enriched uranium to the FRG and South Africa under existing contracts are pending and are being challenged in licensing proceedings.

2. How can the US help to create a reliable nuclear fuel assurance system?

There is interagency consensus:

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that the US must move rapidly and decisively to reestablish its reliability as a nuclear fuel supplier, and that to achieve this end we must not only take steps to provide new enrichment capacity but also to restore certainty that contractual commitments will be honored on a timely basis for all cooperating states adhering to their non-proliferation obligations;

—that a policy of constraint on reprocessing must be accompanied by strong incentives, focusing on assured supply of low-enriched uranium and of natural uranium fuel;

—that the establishment of parallel policies among the nuclear supplier states which would at least entail cooperative planning of new enrichment facilities and close consultations on the relation between fuel assurances and “back-end” constraints is essential;

—that multilateral as well as international arrangements to assure access to fuel supplies are needed in order to avoid placing reactor exporting nations at a competitive disadvantage or recipients at an economic disadvantage provided they abide by generally accepted non-proliferation guidelines.

Differences exist over what specific steps need to be taken now with respect to multilateral collaboration in the area of enrichment.

Discussion of this issue and recommendations on fuel assurances are on pages 22–28.

3. How should we tighten our agreements for civil nuclear cooperation and our nuclear export policy?

Nuclear exports take place under agreements for cooperation between the US and individual recipient countries.

There is interagency consensus that stricter terms should be required in new agreements including, if all suppliers concur, full-scope safeguards (i.e., safeguards on all nuclear activities in NNWS); and that we should seek to upgrade existing agreement to include at least some additional conditions.

This study examines:

—what new requirements we will impose for future agreements for cooperation. Of primary concern are:

Whether we make full-scope safeguards (i.e., safeguards on all nuclear activities in a NNWS) a condition of US nuclear cooperation or instead insist on alternative measures aimed at widening safeguards application.

Whether and to what extent the US should impose new requirements in the absence of agreement by other key suppliers to impose them.

(A decision to impose increased safeguards and other conditions for new agreements would affect, among others, the proposed agreements with Israel, Egypt, and Brazil.)

—how we should upgrade cooperation under existing agreements, in particular:

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What interim export standards should we apply pending renegotiation of existing agreements and consultations with other suppliers.

Should we favor, as part of our comprehensive legislative proposal, the application of new stricter export standards either automatically or subject to a Presidential determination, after a specified period of time.

If these new stricter standards (e.g., full-scope safeguards requirements) are applied to exports under existing agreements, this would require modification of all agreements. Depending on the nature of the increased safeguards conditions, these could be particularly difficult in the case of some key non-NPT parties such as India, South Africa and Spain. US reprocessing controls are also likely to raise bilateral tensions with both NPT and non-parties. While US leverage alone may suffice in many cases, whether other suppliers adopt similar policies will have an important bearing on the success of such a US policy.

It should be noted that current bills in Congress which have strong bipartisan support, go much further in tightening the criteria for both agreements and licensing, particularly in seeking to foreclose foreign reprocessing.

Options and recommendations on nuclear export policy are on pages 31–41.

4. How far-reaching a policy should we pursue alone and with others to strengthen sanctions against violations on non-proliferation obligations?

There is a consensus supporting the October 28 statement to at least cut off nuclear cooperation with states who may in the future violate a US safeguards agreement. The issues now are:

—whether to extend this policy to include a clearly stated intention to cut off supplies in the event any international safeguards agreement is violated or if a US customer hereafter explodes a nuclear device (useful, perhaps, in the case of India);

—whether and how to strengthen the operation of the sanctions provision of the IAEA Statute;

—whether to expand sanctions into non-nuclear areas, such as automatic suspension of eligibility to receive discretionary US economic, military, or financial assistance;

—how much emphasis to place on obtaining agreement on common sanctions policies from other suppliers before determining a US position on the above measures?

Discussions and recommendations on these issues are addressed on pages 29–30.

D. CONSIDERATIONS AFFECTING POLICY FORMULATION

In addressing and deciding on specific issues associated with the above areas, four policy considerations must be factored in:

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urgency associated with the decision in question. For example, a number of bills have been introduced in Congress, that, if enacted, could adversely affect our ability to further non-proliferation objectives. The Executive Branch needs to put forward a comprehensive legislative package urgently to focus Congressional efforts in a supportive direction.

the relative emphasis given to denials, controls, sanctions and incentives in implementing our non-proliferation policy. A decision on how to handle reprocessing of US-origin fuels, for example, must be evaluated in terms of whether our objectives are best achieved by strict controls over reprocessing, and recovered plutonium, denying outright authorization to reprocess, offering alternative guaranteed fuel sources in lieu of reprocessing, assistance in spent fuel storage or a combination of these approaches;

the degree to which the United States should stress a unilateral or multilateral approach in defining and implementing our non-proliferation policy. For example, we must recognize that fundamental differences may exist between the US and other supplier and recipient states on the best way to control proliferation; and that unilateral US policies may lead to unproductive or possibly counterproductive non-proliferation results.

the need to assess the longer-term costs as well as benefits of short-term non-proliferation policy measures. Total denial of safeguarded nuclear assistance to a given country could, for example, lead that country to undertake development of indigenous and uncontrolled nuclear weap-ons capability.

Against this background of policy considerations and major is-sues, the following section presents the detailed options and recommendations to allow policy decisions consistent with the overall strategy outlined above.

[Omitted here is Part II: Policy Options and Recommendations.]

  1. Source: National Archives, RG 383, Records of the Arms Control and Disarmament Agency, Office of the Director, Subject Files Pertaining to Presidential Review Memoranda and Directives, MEMCONS with Foreign Officials, and National Security Decision and Study Memoranda, May 1963–October 1980, Accession #383–98–0053, Box 1, Presidential Review Memorandum/NSC–15—Nuclear Non-Proliferation Policy, January–March 1977. Confidential.
  2. See Document 317.
  3. Detailed analyses of these issues and options were prepared as a basis for this report and are available. [Footnote is in the original.]
  4. See Foreign Relations, 1969–1976, vol. E–8, Documents on South Asia, 1973–1976, Documents 161, 162, 163, 164, 167, 168, 169, and 161.
  5. See footnote 2, Document 317.
  6. On September 25, 1976, in San Diego, Carter pledged that “if elected President, he would halt further arms sales of nuclear power technology and nuclear reactor fuel to any nation that refused to forgo nuclear weapons development or insisted on building its own national plant for reprocessing reactor fuel.” (Charles Mohr, “Carter Vows a Curb on Nuclear Exports to Bar Arms Spread,” New York Times, September 26, 1976, p. 1)
  7. Consensus, as used here and subsequently in the report refers to the working level only, and not necessarily to official Agency views. [Footnote is in the original.]
  8. In this report and in the NPT, only the US, UK, France, USSR and China are considered NWS. All others, including India, are NNWS. [Footnote is in the original.]