372. Paper Prepared in the Department of State1

STATUS REPORT FOR THE PRESIDENT ON NON-PROLIFERATION POLICY/NUCLEAR FUEL CYCLE INITIATIVES

Events of the past several months—particularly the INFCE plenary last November and the bilateral talks with our major nuclear cooperation partners in November and January, as well as our talks with India and Pakistan on nuclear issues—allow us to take a broad look at the progress and prospects of our non-proliferation policy, especially our initiatives on managing the nuclear fuel cycle.

In the two years since your April 1977 non-proliferation policy announcements,2 we have clearly achieved a heightened sensitivity [Page 945]abroad to the dangers that nuclear proliferation would pose and to the importance of deterring proliferation. We have also made progress in renegotiating some of our nuclear cooperation agreements, gained new adherents to the Nuclear Non-Proliferation Treaty, and won limited support from other nuclear suppliers for restraints on sensitive nuclear exports, particularly in the case of exports to Pakistan.

At the same time, and especially because of the insecurity of global energy supply that was accentuated by events in Iran,3 our efforts to restrain the use and transfer of sensitive nuclear technologies and materials are still viewed by many governments as an unacceptable infringement on their nuclear energy development plans. These governments defend their nuclear energy plans primarily on political grounds, specifically on their right to increase their energy independence and to undertake related technological development.

As a result, although our INFCE consultations show a growing consensus between ourselves and several of our industrialized partners on most issues concerning the nuclear fuel cycle and sensitive technology transfers, we have not been able to win many other governments’ support for our fundamental position: that non-proliferation concerns, as well as technical and economic factors, indicate that the transfer and use of sensitive technologies should be significantly restrained and delayed.

In talks with us even the Canadians, whom we view as close allies in our non-proliferation effort, have voiced doubts about the effectiveness of an attempt to deny sensitive technologies to the developing states even if they accept safeguards and give other non-proliferation assurances. Canadians argue that such a discriminatory approach could weaken the NPT. They also stress their interest in maintaining an option for Canadian enrichment and reprocessing facilities.

If the problems of access to peaceful nuclear technology and nuclear arms control cause a serious confrontation at the June 1980 NPT Review Conference, the NPT regime, which has served us so well over the last decade, could be significantly undercut. The situation would be even more acrimonious if the outcome of INFCE appears discriminatory or if SALT II and a Comprehensive Test Ban Treaty are not concluded before the conference. We are currently consulting with the other NPT depositary states (UK and USSR) and other key countries to promote a more productive atmosphere at the conference.

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As an outcome of INFCE, we look forward to a reasonably balanced technical analysis of fuel cycle issues in the final INFCE report in February 1980. But we do not expect to achieve a formal new international regime under which governments are committed to a set of norms and rules corresponding to our policy preferences. Rather, alongside the INFCE process, we hope to achieve a growing informal consensus among the major industrial countries on a set of general principles for nuclear commerce and fuel cycle management that can serve as a guide for national policies. To reach even an informal understanding, we will have to make some compromises. We also believe that such a consensus among suppliers may evoke a strong negative reaction on the part of many developing countries, although we are trying to bring them into the consensus as well.

We have begun to develop certain illustrative elements of the consensus we hope to achieve. These include strictly limiting and multinationalizing new enrichment and reprocessing plants; using plutonium only for research, development, and deployment in breeders and advanced thermal reactors; no recycling of plutonium in current generation thermal reactors; and pacing construction of any new reprocessing plants to meet only breeder and advanced reactor requirements and to avoid stockpiling of plutonium. We have also encouraged multinational safeguarded interim spent fuel repositories.

We hope that restraints of these kinds can be made acceptable on the basis of an evolutionary principle: that is, that various nuclear technologies and facilities may be transferred to developing countries but only when their energy needs and electric grids would support such transfers. However, we expect that a number of developing countries will resist this approach because they want complete access now to all nuclear technologies and will resent in principle a formula that discriminates between states on the basis of level of development.

In the near term, we will have to compromise on some of our illustrative elements in relation to the advanced countries. In particular, West Germany, Japan and Canada want to pursue, or to retain the option for, national enrichment and reprocessing programs. Winning their agreement to place such sensitive facilities under multinational auspices will require efforts that continue beyond the conclusion of INFCE. Also, West Germany and Belgium (and possibly Japan) are not likely to be dissuaded from their programs for research and development for thermal recycle of plutonium, although they may agree not to enlarge such programs for at least a decade.

To reach a consensus on fuel cycle issues, we believe that we will have to move beyond our present case-by-case consideration of approvals of retransfers of US-supplied fuel for reprocessing because this confronts our nuclear partners with uncertainties they believe they [Page 947]cannot manage. We believe it may be possible to deal with such approvals on a generic basis within the framework of the restriction on reprocessing that we are now considering proposing.

Our approval right on reprocessing is the main issue in the renegotiation of our nuclear cooperation agreements. We have signed a new agreement with Australia and initialed one with Norway.4 Our negotiations are well under way with Finland and several other countries. Reaching agreed conditions on reprocessing would allow us to move forward with our renegotiation program in particular with EURATOM and Japan.

Beyond the fuel cycle consensus we are seeking, we also face certain critical cases posing a high risk of proliferation. Pakistan’s sensitive nuclear programs aim at achieving an explosives capability, directly challenging efforts to restrain proliferation. We are working with other suppliers to restrain sensitive exports to Pakistan, while exploring internally and with other governments various approaches to the problem.

At the same time, we do not believe that India will agree to place all its peaceful nuclear activities under IAEA safeguards by March 1980 as the law requires for continued US cooperation, and the collapse of the Desai Government raises new uncertainties about India’s future nuclear course.5 We have not been successful in gaining South Africa’s agreement to adhere to the NPT or to accept IAEA safeguards on its enrichment activities. Meanwhile, we believe South Africa is already producing weapons-grade enriched uranium. Finally, the FRG contract with Brazil for the transfer of sensitive nuclear technology, while encountering some delays and difficulties, remains intact with sensitive facilities planned to come online in Brazil in the mid-to-late 1980’s. This situation is complicated by Argentina’s plans for the indigenous development of a reprocessing facility.

All these critical cases pose difficult challenges for us this year and beyond. On other non-proliferation issues, we also foresee a difficult 1980 scenario that we believe we should signal to you. The following sequence is likely:

—A final INFCE conference in February whose formal results are extremely modest in comparison to the hopes we originally entertained, but which may still discomfit many of our nuclear partners, especially the developing countries.

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—A March 10 US embargo on nuclear supply to non-nuclear weapon states that have not placed all their peaceful nuclear facilities under IAEA safeguards (this is likely to affect India in particular).

—In the case of EURATOM, a need for you to extend for one year the March 10 deadline for obtaining their agreement to grant the US the right to veto reprocessing of spent US-supplied fuel.

—A June Non-Proliferation Treaty Review Conference marked by challenges on the part of countries which believe the nuclear-weapon states have not fulfilled their NPT obligations to transfer nuclear technology for peaceful uses and to reduce their own nuclear weapons forces.

—An industrialized-nation summit in which we, as well as our partners, may be called upon to make certain explicit concessions (for example with regard to the agreed conditions under which reprocessing of spent US-supplied fuel will normally be approved).

On these and other issues, our leverage is limited and declining. We are not the only supplier of essential nuclear materials, equipment, or services, and some countries will be willing to forego our nuclear supplies despite the value they place on good overall relations with us.

Also, it is not likely that the principles we hope to establish will receive early formal approval internationally or be reflected in new institutions in the near term. However, we believe that the potential problems can be moderated if we use a more informal and flexible approach to our non-proliferation goals, especially because other governments will accept significant restraints on their nuclear activities far more readily in practice than in principle.

We also believe that achieving an effective global consensus on non-proliferation policy, and especially on managing the nuclear fuel cycle, will require a continuing effort through the 1980s and beyond. Even if the process we foresee moves forward reasonably successfully, we must expect that some “problem states” will elect to remain outside the consensus that begins to develop and that we will, on occasion, be confronted with difficult dilemmas in restraining potential proliferators.

  1. Source: Carter Library, National Security Affairs, Staff Material, Global Issues, Oplinger/Bloomfield File, Box 31, Chron: 7/79. Confidential. Sent under cover of a July 20 memorandum from Vance to Carter.
  2. See footnote 3, Document 338.
  3. In the wake of the Shah’s decision to leave Iran, the nation’s new government suspended oil exports, which affected the world’s energy supply. See Foreign Relations, 1969–1976, vol. XXXVII, Energy Crisis, 1974–1980, Documents 181, 182, 187, 188, 189, 192, 193, 194, and 200.
  4. The United States signed an agreement concerning the peaceful use of nuclear energy with Australia on July 5 and initialed an agreement with Norway on nuclear cooperation on May 11.
  5. Indian Prime Minister Moraji Desai resigned, July 15, after Deputy Prime Minister Charan Singh and Minister of Health Raj Narain withdrew from his ruling Janata Party.