[Page 926]

364. Memorandum From Secretary of State Vance to President Carter 1

SUBJECT

  • Non-Proliferation Policy Progress Report

The following non-proliferation progress report covers the period since your speech last October before the organizing conference of the International Nuclear Fuel Cycle Evaluation (INFCE).2

Where Are We After the First Year?

Your non-proliferation policy has challenged the conventional wisdom surrounding the nuclear fuel cycle and progress has been made towards key objectives. International attention to the proliferation risk of sensitive nuclear technologies has increased. A more cooperative assessment of the problems is underway. Opposition remains and tensions with some nations persist, but our intentions and actions are better understood, received with less suspicion and have greater credibility.

The London Nuclear Suppliers Group Guidelines were published in early January, publicly establishing minimum conditions for nuclear technology exports to which all Suppliers have agreed.3 By submitting them to the IAEA and publishing them we reduced institutional tensions between the Suppliers Group and the IAEA.

Following your opening of the INFCE, its constituent working groups have begun substantive work. The polemics we feared could hamper the Evaluation’s progress have been minor and a number of nations see real value in such a comprehensive examination of the nuclear fuel cycle. It will take time but our purpose is to develop a consensus, not to solve immediate problems.

[Page 927]

The French decision to seek to amend the reprocessing plant contract with Pakistan moves France somewhat closer to your policy, but we are still uncertain about the firmness of the decision and the type of modifications the French are proposing. The FRG agreement to export to Brazil a complete fuel cycle remains essentially intact, but the size of the enrichment facility reportedly will be reduced, and there appears to be some dissension in the Brazilian nuclear community concerning the technological and economic value of the deal.

Your visit to India,4 while it did not lead to Indian acceptance of full-scope safeguards, reinforced the dialogue and underscored for Prime Minister Desai the importance you attach to non-proliferation measures. In Iran, your talks with the Shah5 resulted in agreement in principle on the terms for a new Agreement for Cooperation, but differences of interpretation of the agreement in principle still exist.

The new Non-Proliferation legislation6 tightens criteria for nuclear cooperation but does not call for moratoria on exports. Likewise, the Administration’s conditions for new highly enriched uranium (HEU) exports7 are stringent, but exports under existing agreements are not embargoed.

It is increasingly evident abroad that the United States has a long-term commitment to a stronger international nuclear community based upon a viable non-proliferation regime. We must recognize, however, that while we have sensitized the international community to the dangers of proliferation, we remain essentially isolated (with Canada and Australia) among the major industrialized states in questioning the inevitability of moving toward reprocessing and early commercialization of breeder technology. The prevailing attitude remains that non-proliferation goals can be pursued without conflict with perceived nuclear energy needs if reliance is placed on political and safeguards arrangements rather than limits on technology. The success of our policy will depend to a great extent on our ability to reconcile these differences. Cooperation towards this end is increasing. Our objectives will not be reached quickly but the strategy is sound.

Specific progress in key areas of the policy is outlined in the attachment.

[Page 928]

Attachment

Paper Prepared in the Department of State 8

Non-Proliferation Progress

1. Safeguards

The Nuclear Suppliers Group Guidelines set important minimum standards requiring safeguards on all transferred and by-product nuclear exports. The new legislation retains the provision you called for last April9 which would require full-scope safeguards in all new and existing agreements, allowing an 18-month negotiation period for existing agreements.

Only six non-nuclear weapons states are known to have unsafeguarded nuclear facilities—Spain, Egypt, Israel, Argentina, South Africa and India. We expect to begin renegotiation shortly of our agreement for cooperation with Spain. Egypt has indicated its willingness to accept full-scope safeguards if Israel is held to the same standard. We are exploring ways of providing such assurances. Argentina has indicated some willingness to accept full-scope safeguards in return for fuller nuclear cooperation. A technical team is traveling to Pretoria this month to begin talks on how the Valindaba enrichment plant could be brought under safeguards. The political sensitivity of our overall nuclear relationship with South Africa is aggravated by continuing uncertainties [1 line not declassified] We will also have problems convincing South Africa that safeguards on Valindaba will not expose proprietary commercial information.

Your visit to India extended the rapport with the Indians, and PM Desai declared India’s willingness to accept full-scope safeguards if a Comprehensive Test Ban (CTB) were concluded and if the nuclear weapons states were to dedicate themselves to stopping “vertical” proliferation by halting the production of nuclear weapons and reducing their nuclear stockpiles. We are exploring ways to ensure that the Indians do not define these conditions in ways that would be impossible for us to meet.

We have begun a program to renegotiate old agreements and negotiate new ones that incorporate the newly legislated criteria. In renegotiating the EURATOM agreement we face serious political and legal problems on issues other than safeguards, and these could affect our [Page 929]other negotiations. Sensitive political problems remain to be solved in South Africa and Argentina, but we will continue a dialogue aimed at getting safeguards on all of their facilities.

2. Restraints on Sensitive Transfers

The informal assurances we received from the Germans and the French of a de facto moratorium on new agreements to transfer reprocessing facilities bolster the Guidelines, which call for restraint in export of sensitive technology. Efforts to extend restraints retroactively to the FRG/Brazil deal have failed so far but the Brazilian projects themselves are shaky. [2 lines not declassified] Elements of the Brazilian scientific community are pushing for modifications of the agreement. We have repeatedly spelled out our views against reprocessing. Now that the French are seeking to modify their contract to transfer a reprocessing facility to Pakistan, and are pressing the Germans to follow suit, the Germans are more isolated. Until after the French elections10 we are reluctant to press the French on what “modifications” they will actually agree to with Pakistan. Should simple coprocessing be involved we see little non-proliferation benefit.

We will urge the French to continue their efforts to convince the Germans of the regional security implications of Brazil’s having a reprocessing capability. Mutual deferral of reprocessing in Argentina and Brazil will be sought: in Brazil, we plan to focus our efforts on President Geisel’s successor, who will not be as personally committed to the deal; Argentina has indicated privately that it would consider deferring its own reprocessing plant only if Brazil were to do so. We have said that we would consider providing heavy water production technology that Argentina wants only if it deferred reprocessing, as well as adopted full-scope safeguards.

Planning on how to control the diffusion of sensitive centrifuge and other enrichment technology is now underway, and we will consider various institutional frameworks to ensure control of the front end of the fuel cycle.

3. Incentives

We are working to implement foreign aspects of the spent fuel storage policy Secretary Schlesinger announced last October.11 Several [Page 930]countries (Sweden, India, Austria, Switzerland, Denmark) have indicated interest.

The $5 million non-nuclear energy alternatives program12 is starting with initial data collection and resource assessment in four less developed countries. We have designed the use of this limited budget so as to affect directly countries that are on the threshold of moving towards nuclear power programs.

Planning for a three-level system of fuel assurances is proceeding. Very recently the DOE published its proposed new terms and conditions for enrichment service contracting with the United States Government. In addition, the potential for cross-investment among supplier countries in enrichment facilities and other possible multilateral fuel assurance measures involving suppliers and consumers are also being examined. Finally, we are exploring the possibility of an International Nuclear Fuel Bank and will use INFCE to obtain the views of others.

4. Building Consensus on the Structure of the Fuel Cycle

On October 19, you opened the organizing conference of the INFCE by calling on nations to cooperate in the search for solutions to the proliferation problem. Nearly fifty countries and four international organizations are now participating actively in the various INFCE working groups, all of which have begun substantive work. Despite the sometimes stiff bilateral opposition to our non-proliferation policy, the INFCE participants have focused their attention within a multilateral context on the technical aspects of the nuclear fuel cycle and its proliferation risks. Maintaining a constructive atmosphere in the INFCE and directing its work towards a consensus on the particularly sensitive parts of the fuel cycle (reprocessing and enrichment) remain key tasks. We will need to develop plans on how to utilize the INFCE results in defining and implementing future elements of our policy.

5. Domestic Policy and Legislation

Legislation consistent with your proposals of last April has passed both houses of Congress by overwhelming majorities. Our program to renegotiate existing agreements for cooperation and negotiate new ones will proceed according to the newly legislated criteria.

In addition to your decision to veto the ERDA authorization bill containing funds for the Clinch River Breeder Reactor, we have restructured the FY–1978 work program at Barnwell reprocessing plant so as to remove the possibility of any reprocessing there. However, we fore-see continuing Congressional pressures to use the Barnwell plant in [Page 931] FY–1979 in a way that would be perceived by other nations as inconsistent with policies we are urging on them.

We are working closely with DOE in examining and assessing various alternative nuclear technologies and their proliferation resistance. The results of DOE’s Non-Proliferation Alternative System Assessment Program13 will be prepared for foreign dissemination in INFCE and elsewhere. As these efforts develop, they will support our calls for other nations to study more proliferation-resistant fuel cycles.

6. Measures to Affect Motivations to Develop Explosives

Portugal recently ratified the NPT, bringing to 103 the number of parties. Indonesia appears prepared to ratify. We will continue to press for South Africa’s accession. India, Brazil, France, and China still oppose the Treaty as discriminatory.

During Secretary Vance’s trip to Latin America,14 Argentina declared its intent to ratify the Treaty of Tlatelolco. Recent reporting, however, suggests that Argentina’s intentions regarding ratification are still uncertain. Assuming Argentina does ratify the Treaty, only Cuban, French, Russian and US (on Protocol I)15 actions would then remain to bring the Treaty into effect for Brazil and Argentina. We have urged all of them to act and our ratification of Protocol I is ready for submission to the Senate.

A Comprehensive Test Ban Treaty may be concluded this year. A CTB will be a concrete expression of our intent to curb the nuclear arms race. If the CTB contains no exceptions for weapons states and excludes all nuclear explosions, it will be an important tool in our efforts to formalize PM Desai’s pledge to forswear any further peaceful nuclear explosions (PNEs) and to move India towards full-scope safeguards.

Your decision to strengthen NATO by the addition of more troops will serve to reinforce our security guarantees in this area. On the other hand, we must work carefully to minimize the regional political-military implications of our withdrawal from East Asia. We are particularly concerned about the intentions of Taiwan and South Korea.

We are also studying the relation between our arms transfer policies and non-proliferation.

  1. Source: Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 123, Vance, Miscellaneous Communications With: 3–5/78. Secret. In the upper right-hand corner of the memorandum, Carter wrote “Good report. J.”
  2. On October 19, 1977, Carter told the INFCE Conference that the United States was “eager to cooperate as a nation which is a consumer and also as a supplier. We want to ensure that where there is a legitimate need and where there’s mutually agreed upon nonproliferation restraint, that there be an adequate supply of nuclear fuel.” (Public Papers: Carter, 1977, pp. 1812–1814)
  3. The updated Guidelines applied to nuclear transfers for peaceful purposes to help ensure that such transfers would not be diverted to unsafeguarded nuclear fuel cycle or nuclear explosive activities. (Documents on Disarmament, 1978, pp. 7–25)
  4. Carter visited India January 1–3.
  5. Carter visited Iran December 31, 1977–January 1, 1978.
  6. The Carter administration submitted the Nuclear Non-Proliferation Act to Congress in January. Carter signed it into law on March 10, 1978.
  7. The Carter administration established the Reduced Enrichment for Research and Test Reactors (RERTR) Program in 1977 to develop the technical means to use Low-Enriched Uranium (LEU) instead of HEU in research reactors, while ensuring no significant loss of performance.
  8. Secret.
  9. See footnote 3, Document 338.
  10. The French legislative elections were scheduled for March 12 and March 19.
  11. The proposal, which was actually first announced by Schlesinger’s aide John Ahearne during an October 18, 1977 press conference, would allow the U.S. Government to “acquire and store the spent nuclear fuel that’s piling up at the nation’s utilities.” (“President Proposes U.S. Acquire and Store Spent Nuclear Fuel,” Wall Street Journal, October 18, 1977, p. 19)
  12. Not found.
  13. Not found.
  14. Vance visited Latin America from November 20–23, 1977. See Foreign Relations, 1977–1980, vol. XXIV, South America; Latin America Regional.
  15. Protocol I of the Treaty of Tlatelolco bound overseas nations with territories in Latin America—the United States, the United Kingdom, France, and the Netherlands—to the terms of the treaty, which prohibited the manufacture, testing, storage, and use of nuclear weapons in Latin America.