Foreign Relations of the United States, 1977–1980, Volume XXVI, Arms Control and Nonproliferation

358. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter¹

Washington, October 7, 1977

SUBJECT

• Nuclear Fuel Assurances

Your April 7 statement on nuclear proliferation policy² identified

assured access to nuclear fuel supplies

assistance with spent fuel storage

as the key areas in which the US would develop programs to encourage other nations to adhere to our new, rigorous, non-proliferation policies. Such incentives will be particularly important in the many cases where we will be asking other nations to renegotiate existing Agreements for Cooperation to meet our new standards.

You have already approved a program for spent fuel storage.³ This memorandum asks for your approval of several measures to provide assured access to fuel supplies. These measures have been developed during a lengthy interagency study (Tab B)⁴ by the NSC Ad Hoc Group on Proliferation (hereinafter, “the Group”). This paper substitutes for a longer decision memorandum (Tab A)⁵ submitted by the Group which you need not read. In general, the recommendations have the support of all members of the Group (State, ERDA, DOD, ACDA, NRC, CIA, CEQ, FEA, EPA, OSTP, Schlesinger, Eizenstat, OMB and NSC) except where important differences are noted.

Assured access to nuclear fuel has two distinct components:

—access to uranium ore

—access to enrichment services

To be fully satisfactory to recipients, a program must provide access to both of these on a timely basis, in adequate quantity, and in a fully reliable manner. Your decisions on the following measures will be provided as guidance to the agencies:

1. Parity pricing and non-discriminatory terms in US fuel supply contracts for nations meeting non-proliferation standards. The Group recommends that you approve a policy under which nations that meet our higher standards—as embodied in new or amended Agreements for Cooperation—would receive nuclear fuel at the same price and under the same conditions as domestic customers. Such parity pricing and non-discriminatory terms will assure foreign customers of the importance we attach both to non-proliferation and to ensuring that legitimate energy needs are met. The Group believes that a standard of pricing that differentiates between domestic and foreign customers would undermine our efforts to achieve parallel policies among all fuel supplier nations.⁶

2. Contribution to International Uranium Resource Exploration. Perhaps the most critical issue in the plutonium/breeder debate is whether there is enough uranium to supply the world’s needs through the fission age without the necessity of recourse to the breeder. The US has recently stepped up its own uranium resource evaluation program, and has encouraged the international community to do likewise. The International Energy Agency (IEA) is currently doing paper studies preparatory to actual field exploration of international uranium reserves. The Group recommends that you authorize it to prepare options to provide increased US technical and financial assistance in support of the IEA’s activities.⁷

3. Explore the Possibilities of Foreign Investment in US Enrichment Plants. Even under the most attractive terms, foreign countries hesitate to place their reliance in a fuel supply contract, since the supplier has full control over its implementation, and could, under unforeseen circumstances cut off their fuel supply. One way to alleviate these fears would be to offer foreign nations part ownership in new US enrichment plants under terms which would guarantee their access to some of the plant’s output. For our part, we would insist on terms that would assure our control of plant operations, and fully protect classified data and technology. Such an investment plan could reduce foreign incentives to construct their own enrichment facilities, and could establish a basis for truely multinational fuel cycle cooperation. The Group requests your authorization to undertake ad referendum discussions with other nations to explore the prospects for such investment arrangements. Any resultant proposals would be submitted for approval.⁸

4. Discussions of Possible Multilateral Programs with Other Uranium and Enrichment Suppliers. Eventually, multilateral programs of assured fuel supply, would be preferable to bilateral ones, since they would ensure that proliferation goals were not undercut by commercial competition among suppliers, and because the US cannot expect to meet all foreign needs on its own. Accordingly, the Group requests your authorization of discussions and preliminary negotiations with other uranium producers, and enrichment service suppliers to explore: (1) the establishment of a secure uranium supply base, through various measures including possible guarantees by uranium producers; (2) a variety of possible investment arrangements between the US and others, including unilateral, cross-investment and barter plans; and (3) the establishment of multilateral pooling or collective guarantee arrangements involving joint planning, fuel sharing and back-up arrangements among suppliers. All of these arrangements would only be offered to nations which are supportive of our non-proliferation goals. In all cases, these discussions will be exploratory⁹—no commitments will be made without your prior approval.¹⁰

5. Internationally Owned Fuel Supply—The Fuel Bank. Over the long term, the ultimate in fuel dependability would be provided by an arrangement in which nuclear fuel supply is owned and sold by an international entity—as opposed to nationally owned resources subject to multilateral guarantees or management. One possibility is an international fuel bank. Such a bank would own supplies of both uranium and enrichment capacity (as measured in SWUs, Separative Work Units) and any nation which adhered to certain non-proliferation standards would be eligible to participate. The purpose of such an arrangement would be that the bank acts as an insurance policy, protecting customers from arbitrary political actions by suppliers. There is a great deal of Congressional interest in this idea, and our preliminary investigation concludes that it has significant merit.

All agencies except OMB and the NRC recommend that you authorize consultations with other countries and international agencies on the desirability and feasibility of such a fuel bank, including an indication of our willingness to make a contribution of enriched fuel from the US stockpile (subject to a determination that DOD’s stockpile requirements will not be adversely affected). We would indicate that, if satisfactory arrangements were made, the US would be prepared to make an initial contribution sufficient for ten large reactors for five years (or 5 million SWU), and that we would work with other uranium producers to provide uranium supplies for the bank.¹¹ OMB and NRC on the other hand, believe that more analysis is needed before any specific indication is made of the size of the potential US contribution.¹²

There is virtue in both positions. Further analysis of the idea is clearly needed, but I believe that we would learn a great deal from consultations with others that would contribute to such an analysis. I see no harm in proceeding with consultations in which we would indicate that we are prepared to make a “substantial” contribution—without mentioning any number which could be taken as an implied commitment. I therefore recommend that you authorize talks along these lines, and a subsequent analysis to be submitted for your decision.¹³

Alternatively that 5 million SWUs be mentioned as the possible contribution.

Alternatively that no mention be made of the size of a possible US contribution.

1. Source: Carter Library, National Security Council, Institutional Files, Box 4, PD–08 [4]. Confidential. Sent for action. In the upper right-hand corner of the memorandum, Brzezinski wrote “RI [Rick Inderfurth] JT [Jessica Tuchman]. Implement. ZB.”
2. See footnote 3, Document 338.
3. Not found.
4. Attached but not printed.
5. Attached but not printed.
6. Carter checked the “Approve” option and in the right-hand margin wrote “Prices should equal costs. Do they? J”
7. Carter checked the “Approve” option and in the right-hand margin wrote “J.”
8. Carter checked the “Approve” option and in the right-hand margin wrote “explore idea only. J.”
9. Carter underlined the word “exploratory” in this paragraph.
10. Carter checked the “Approve” option and in the right-hand margin wrote “J.”
11. In the left-hand margin next to this paragraph, Carter wrote “100,000/reactor.”
12. OMB explanation of their position is at Tab C. [Footnote is in the original. Tab C is attached but not printed.]
13. Carter checked the “Approve” option and in the right-hand margin wrote “J.”