O 022214Z JUL 08
FM AMEMBASSY CANBERRA
TO SECSTATE WASHDC IMMEDIATE 9794
INFO ASEAN REGIONAL FORUM COLLECTIVE IMMEDIATE
DISARMAMENT CONFERENCE COLLECTIVE IMMEDIATE
EXPORT CONTROL AND RELATED BORDER SECURITY IMMEDIATE
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AMCONSUL SYDNEY PRIORITY

S E C R E T CANBERRA 000671 
 
 
STATE FOR ISN, T, VCI AND EAP 
 
E.O. 12958: DECL: 06/30/2018 
TAGS: KNNP MNUC PARM PREL AS
 
SUBJECT: ISN ACTING A/S MCNERNEY'S NONPROLIFERATION 
CONSULTATIONS IN CANBERRA 
 
Classified By: Deputy Chief of Mission Daniel A. Clune. Reasons: 1.4 (b 
),(d) 
 
SUMMARY 
------- 
¶1. (S/NF) During ISN Acting Assistant Secretary Patricia 
McNerney's June 30 consultations on nonproliferation in 
Canberra, senior Australian officials said Prime Minister 
Rudd wanted his proposed International Commission on Nuclear 
Nonproliferation and Disarmament to have a strong disarmament 
focus.  They confirmed the initiative remains in a nascent 
stage, with such details as consultations with Japan on 
co-chairing the initiative, development of terms of 
reference, and identification of representatives to sit on 
the Commission remaining to be worked out.  On Iran, 
Australian officials confirmed the GOA was considering what 
additional steps it could take to increase pressure on Iran, 
including regarding Bank Melli.  In response to the DPRK's 
recent nuclear declaration, the GOA had renewed its offer to 
provide bilateral development aid if the DPRK made progress 
in abandoning its nuclear weapons but took on board AA/S 
McNerney's concerns that Australia not provide 
non-humanitarian aid prematurely.  Discussions also covered 
the Proliferation Security Initiative; the Global Initiative 
to Combat Nuclear Terrorism; Civil Nuclear Outreach; 
Trilateral Cooperation; Chemical, Biological, Radiological, 
and Nuclear (CBRN) threat reduction, and Australian plans to 
host the Missile Technology Control Regime (MTCR) Plenary in 
November 2008.  The Australian officials said strong 
anti-nuclear sentiment in Australia ruled out consideration 
in the short term of the use of nuclear energy to address 
reduction of greenhouse gases.  The new Rudd government is 
not expected to make a decision for some months on whether to 
continue the previous government's participation in the 
Global Nuclear Energy Program (GNEP). 
 
¶2. (S/NF) Acting Assistant Secretary McNerney discouraged an 
International Commission predominantly focused on 
disarmament, noting it would divert the spotlight away from 
such proliferators and NPT violators as Iran, Syria and North 
Korea, and ignored the positive progress that was being made 
in disarmament.  She discussed U.S. plans to announce 
additional sanctions against Iran, noted EU's recent issuance 
of further sanctions and urged Australia to consider more 
expansive sanctions.  On Australia's offer of bilateral 
development assistance to North Korea, McNerney cautioned 
against resuming aid before the DPRK had taken further steps 
toward verifiably dismantling its nuclear program.  She urged 
Australia to remain engaged in GNEP, stressing GNEP's 
importance in preventing nuclear proliferation and 
facilitating the benefits promised by the NPT, and the 
importance of Australian leadership on this international 
issue. End Summary. 
 
¶3. (SBU) The Department of Foreign Affairs and Trade (DFAT) 
hosted an interagency roundtable for Acting Assistant 
Secretary McNerney in Canberra June 30, including 
representatives from the Australian Department of Defence, 
Australian Safeguards and Nonproliferation Office, Department 
of the Prime Minister and Cabinet, and the Office of National 
Qof the Prime Minister and Cabinet, and the Office of National 
Assessments.  (A full list of participants is provided at 
para 28.) A summary of the discussions follows. 
 
NUCLEAR NONPROLIFERATION AND DISARMAMENT COMMISSION 
--------------------------------------------- ------ 
¶4. (C) Jennifer Rawson, First Assistant Secretary for 
International Security, DFAT, traced the genesis of Prime 
Minister Rudd's International Nuclear Nonproliferation and 
Disarmament Commission (NNDC) initiative from the Australian 
Labor Party's (ALP) longstanding commitment to nuclear 
disarmament and its experience with the 1995 Canberra 
Commission on the Elimination of Nuclear Weapons, initiated 
under the previous Labor government.  The new Commission, 
chaired by former foreign minister Gareth Evans, would build 
on this history but take into account the current strategic 
realities in seeking to make a practical contribution to 
nuclear nonproliferation and disarmament.  She stressed that 
Prime Minister Rudd wanted the Commission to give a strong 
focus to disarmament, a view shared by Evans.  In 
establishing the commission, the GOA re-emphasized the 
importance of the U.S. alliance and its role in the region, 
and planned to consult closely with the United States. 
Rawson acknowledged the progress the U.S. had made on 
 
 
disarmament, voicing the hope the U.S. could make additional 
steps towards that goal.  Development of the commission was 
at an early stage.  The GOA needed to continue discussions 
with the Japanese government about the possibility of 
co-chairing the Commission, which would be composed of 
independent experts rather than government officials.  Rawson 
expressed optimism that the question of Japanese 
co-chairmanship wold be resolved in a week or so.  Another 
remaining task is development of the commission's terms of 
reference (TOR).  Gareth Evans, who is not able to turn his 
attention to the commission until mid-July, would have a hand 
in drafting the TOR.  Rawson said she hoped the United States 
and other countries could contribute to it, too. 
 
¶5. (C) Acting A/S McNerney cautioned that the commission 
should not veer too far towards disarmament either in terms 
of focus or members' backgrounds.  While the United States 
agreed the NPT was under serious pressure, it would not be 
helpful to focus on disarmament at the expense of continuing 
to spotlight proliferators and NPT violators such as Iran, 
Syria and North Korea.  Moreover, the U.S. record on 
disarmament was a good one, she argued, adding the United 
States reduced the role of nuclear weapons in its strategic 
posture and that the total number of U.S. nuclear weapons had 
been reduced significantly and was at one of the lowest 
points in history.  McNerney, observing that Australia had 
set an ambitious agenda for itself before the 2010 NPT Review 
Conference (RevCon), asked what timetable the GOA had in 
mind, and whether it contemplated asking the United States to 
join the Commission.  She also cautioned against allowing the 
Commission to be used as a platform to attack the United 
States.  On timing, Rawson responded the commission would 
have an as-yet-undetermined number of meetings before 
producing at least an interim report in advance of an 
international conference that Australia planned to host at 
the end of 2009, approximately six months before the RevCon. 
She said the question of representation on the Commission 
remained to be discussed with Gareth Evans, but offered her 
personal view that it would be unrealistic not to include the 
United States and other P-5 states.  Rawson took on board the 
caution about allowing unhelpful elements to highjack the 
agenda, reassuring McNerney that Australia would not let that 
happen.  Rawson also noted the important work by Chris Ford 
over the last year in NPT meetings publicizing USG success on 
disarmament. 
 
IRAN 
---- 
¶6. (S/NF) Acting A/S McNerney briefed her Australian 
interlocutors on the status of Iran's enrichment activities 
and the latest P5 plus 1 offer, noting the international 
community needed to be ready to respond with increased 
pressure if Iran rejected the offer.  She cautioned that, 
rather than rejecting the offer outright, Iran would 
prevaricate and attempt to play countries off against each 
other to buy time.  She observed that Iran was low on yellow 
cake, and that the United States had approached Rio Tinto to 
ensure Iran did not have access to new supplies from that 
Qensure Iran did not have access to new supplies from that 
source.  She urged further outreach to other companies to 
close off other possible markets.  McNerney advised the 
United States was continuing to push for a new UN Security 
Council resolution.  The U.S. planned to announce additional 
sanctions against Iran possibly during the second week of 
July.  McNerney asked the GOA to consider more expansive 
sanctions as well, including designating Bank Melli.  In 
addition to sending a signal that Iran faced consequences for 
its action, she asserted, further GOA steps would indirectly 
help our strategy of encouraging the Gulf nations to pressure 
Iran.  She disputed commentary that claimed sanctions were 
failing, describing the practical effects banking, shipping 
and travel sanctions were having in isolating Iran, but that 
the total effect of sanctions requires additional time and 
increased effort.  McNerney highlighted cooperative efforts 
in denying IRISL vessels unfettered access to international 
shipping as one example of further steps to implement UNSCR 
¶1803. 
 
¶7. (S/NF) Rawson confirmed the Australian government was 
looking at additional measures it could take, especially in 
light of the EU announcement of additional sanctions.  The 
GOA had scope to do more and understood the importance of 
having the international community united in forcing Iran to 
halt its activities.  She was pessimistic that Iran would 
 
 
pull back from its course.  Iran wanted, at a minimum, to 
move to a breakout capacity in its nuclear development, she 
asserted.  The global community needed to maintain pressure 
to force Iran to consider the consequences of its actions. 
Iran's neighbors, such as Saudi Arabia, were worried. 
 
¶8. (S/NF) John Carlson, Director-General of the Australian 
Safeguards and Non-Proliferation Office, commented that the 
Iranians had a sufficient stockpile of LEU at Natanz to 
produce HEU by the middle of 2009, if its centrifuges 
continued operating at their current rates of efficiency, 
which he put at two-thirds of 80 percent.  The fact that Iran 
was able to keep its older centrifuges operating continuously 
at that level, and was bringing more advanced centrifuges on 
line, was not good news, he observed.  Carlson handed 
McNerney three ASNO documents: "Further Nuclear Facilities in 
Iran: Obligation for Early Provision of Design Information to 
the IAEA"; "Iran Nuclear Issue -- Brief Critique of Options 
for a Negotiated Outcome"; and "Safeguards in a Changing 
Environment."  (Papers have been forwarded to ISN separately.) 
 
NORTH KOREA 
----------- 
¶9. (S/NF) Acting A/S McNerney described U.S. actions taken in 
response to the DPRK's nuclear declaration, along with next 
steps in the Six-Party process, but stressed that while these 
actions are positive, the United States remained 
appropriately skeptical of North Korea's direction and would 
test it through verification activities.  She noted a 
verification implementation plan had not yet been finalized, 
and none of the disabling actions the DPRK had taken to date 
would be difficult to reverse.  Moreover, the DPRK had not 
yet taken the significant actions, such as removal of fissile 
material and disposal of fuel rods, that would show its 
serious intent in dismantling its nuclear program.  Taking 
note of Foreign Minister Smith's announcement following the 
DPRK declaration that Australia had renewed its offer of 
development assistance, McNerney cautioned Australia against 
prematurely resuming development aid and urged Australia to 
wait until North Korea had taken more concrete actions to 
dismantle its nuclear program, adding she had delivered the 
same message to the Europeans.  She warned that the DPRK was 
skilled in extracting maximum assistance by doing as little 
as possible. 
 
¶10. (S/NF) First Assistant Secretary Rawson reaffirmed 
Australia's support for the Six-Party Talks and its intention 
to consult closely with the 6PT states.  Australia shared 
U.S. concerns about North Korea's proliferant behavior, 
particularly with Syria and Burma, and procurement networks. 
It was unclear to Australia whether the DPRK had made the 
decision to give up its nuclear weapons, but it was important 
to involve them in a process that promised to bring them 
closer to giving up their weapons and fissile material, 
estimated to be in the range of 30 to 55 kg.  On resumption 
of aid, Rawson assured McNerney that if the GOA begins 
providing assistance to North Korea, it would be on a very 
small scale, for example in agriculture, and would be linked 
Qsmall scale, for example in agriculture, and would be linked 
to further progress in dismantling its nuclear program. 
Roger Hodgkins, Senior Analyst with the Office of National 
Assessments, observed the DPRK declaration dealt only with 
plutonium.  It had been crafted in such a way to make access 
to an HEU program a challenge.  McNerney noted that the U.S. 
verification plan was being drafted to cover all aspects of 
the North's nuclear and weapons programs. 
 
¶11. (S/NF) Turning to Syria's suspected nuclear site, 
McNerney said the Syrians had not been helpful in providing 
full access to IAEA inspectors.  Carlson opined that the 
inspectors could be expected to find graphite from the 
reactor, but the Syrians would likely concoct a cover story 
attributing the presence of graphite to missile engines.  The 
best way to verify the existence of a nuclear facility would 
be to get to the rubble underneath the new building 
constructed on the site, he said.  McNerney interjected it 
was also worrisome that Syria had denied IAEA access to the 
other suspected nuclear sites. 
 
PROLIFERATION SECURITY INITIATIVE (PSI) 
--------------------------------------- 
¶12. (C) DFAT Acting Assistant Secretary for Arms Control and 
Counter-Proliferation Gerry McGuire said Australia was 
pleased with the evolution and course of the PSI program, 
 
 
which now included 91 countries.  He described Australia's 
outreach activities in the Asia-Pacific region, including 
plans to host a regional PSI meeting in 2009.  He hoped to 
flesh out GOA plans at the PSI meeting in Paris in September. 
 
¶13. (C/NF) Acting A/S McNerney described U.S. outreach 
efforts with Thailand and Indonesia.  Apparently, Thailand 
was not yet ready to join PSI, despite positive signals from 
the Ministry of Foreign Affairs, because of opposition from 
the military.  Indonesia had shown itself to be increasingly 
open-minded towards PSI, but preferred more bilateral 
cooperation.  A possible strategy would be to continue to 
engage bilaterally with Indonesia, for example through 
activities in the Malacca Strait, until it was comfortable 
with cooperation and might find it easier to endorse the PSI. 
 
¶14. (C/NF) Rawson agreed, suggesting that PSI countries 
engage with Indonesia bilaterally in the same kinds of 
exercises and activities that are compatible with PSI, but 
without badging them as PSI activities. 
 
Global Initiative to Combat Nuclear Terrorism (GI) 
--------------------------------------------- ----- 
¶15. (SBU) Jennifer Rawson expressed satisfaction with the 
progress of the GI, but hoped to see more countries in the 
Asia-Pacific region engaged.  Australia was planning 
additional outreach, and was examining what can be done at 
the practical level to make the program more meaningful.  It 
was more important to engage in practical activities than to 
simply sign up more countries, she observed.  Australia was 
looking at possible activities for 2009 that focused on 
prevention as well as consequence management. 
 
¶16. (SBU)  McNerney agreed on the need to show concrete 
outcomes.  Membership had had the benefit of making countries 
reorganize themselves internally in a way that made them view 
nuclear terrorism differently.  Outreach remained important. 
McNerney encouraged Australia to enlist the participation of 
the private sector and local governments in the GOA's efforts 
to prevent and respond to nuclear terrorism.  McNerney also 
suggested that the GOA host an exercise in 2009.  Rawson 
noted the GOA was considering an exercise, and would more 
likely focus on prevention rather than consequence management. 
 
Civil Nuclear Outreach 
---------------------- 
¶17. (C/NF) Acting A/S McNerney described U.S. civil nuclear 
outreach programs, and the U.S. HEU downblending program to 
create an assured fuel supply.  She expressed U.S. 
appreciation for Australia's support for the United States' 
revised criteria-based proposal for controlling transfers of 
enrichment and reprocessing (ENR) facilities and technology 
in the Nuclear Suppliers Group.  Canada opposition to the 
turnkey - blackbox criteria appeared to be rooted in a 
fixation on rights.  She described fuel bank proposals, 
including the Nuclear Threat Initiative fuel bank fund 
challenge.  She also noted MOUs signed with Gulf states that 
set a precedent for responsible civil nuclear development. 
McNerney expressed hope that Australia would remain in the 
Global Nuclear Energy Partnership (GNEP), and that Australia 
QGlobal Nuclear Energy Partnership (GNEP), and that Australia 
would help advocate for nonproliferation as aspects of civil 
nuclear development, including under GNEP. 
 
¶18. (C/NF) Rawson replied that there had not yet been a 
decision by the new Labor government on Australia's continued 
participation on GNEP.  A GOA decision was two or three 
months away at least, as the issue was not high on the 
government's list of priorities.  She recounted the 
Australian Labor Party's history of opposition to nuclear 
power plants, and noted that the party had had a bitter 
dispute in 2007 over whether to abandon its policy to limit 
uranium mines to three nationwide.  In the end, the policy 
was scrapped but the polarization it occasioned would make it 
even more difficult for a Labor prime minister to reverse the 
long-standing opposition to nuclear energy in Australia. 
There had been some discussion about revisiting the nuclear 
energy question, driven by concerns over climate change and 
the imperative of developing an emissions trading scheme, but 
it was a minority view.  Some in Australia saw GNEP as merely 
a scheme to promote nuclear energy rather than a 
nonproliferation program.  Rawson said she had had some 
success in educating the Minister for Foreign Affairs on 
GNEP's value on nonproliferation.  It would take several 
 
 
months for the issue to play out, she predicted, voicing hope 
that the nonproliferation assurances in a reliable fuel 
supply would prevail. In her view, Australia needed to be a 
player in the global nuclear energy picture, of which GNEP 
was a part.  There was a visceral anti-nuclear feeling in 
Australia, but it was up to the government to manage it. 
 
¶19. (C/NF) Carlson commented that while in opposition, the 
Australian Labor Party believed GNEP was a plot by nuclear 
countries to send spent fuel back to Australia for storage. 
It would be hard to overcome entrenched views on GNEP. 
Carlson noted an Executive Committee of Cabinet would meet at 
the beginning of October to take up the issue.  Carlson 
stated flatly that there was no way to get to a workable 
cap-and-trade system without nuclear energy, a point he had 
made directly to Prime Minister Rudd.  Carlson did not 
foresee a shift to embrace nuclear energy emanating from the 
federal level.  Decisions about energy were made at a state 
level, he explained.  He predicted there would be no movement 
towards nuclear energy in Australia unless a state or 
territory concluded that it needed to have nuclear power in 
its energy mix. 
 
¶20. (C) Carlson said Australia was interested in seeing 
adherence to the Additional Protocol as a condition of 
supply.  Acting A/S McNerney confirmed that this was 
consistent with U.S. policy, which supported the Additional 
Protocol as a condition of supply. In reponse to Rawson's 
question on the status of the "square brackets," McNerney 
said the U.S. hoped the issue would be addressed in the G8 
statement. 
 
U.S.-India Civil Nuclear Agreement 
---------------------------------- 
¶21. (C) In response to Rawson's question about the status of 
the U.S.-India civil nuclear agreement, McNerney acknowledged 
that prospects for passage before the end of the current 
Administration appeared slim, although there was a small 
window of opportunity.  Rawson reiterated the Rudd 
government's policy that it would not sell uranium to India 
as a non-NPT member.  The GOA would decide on an exception 
for India in the NSG for the U.S.-India deal "at the 
appropriate time," she added. 
 
Trilateral Strategic Dialogue (TSD) 
----------------------------------- 
¶22. (C/NF)  Acting A/S McNerney discussed the possibility of 
using the TSD to advance nonproliferation goals, perhaps 
through a new working group.  One area for trilateral work 
could be in export controls and border security; another 
would be bioterrorism.  Japan could focus on industry, with 
the U.S. contributing on the legal angle.  Each country could 
use its strengths, and target specific countries in capacity 
development.  Biosecurity engagement with Indonesia, for 
example, would be an area for collaboration.  She thanked 
Australia for contributing to the success of the trilateral 
May 2008 bioterrorism workshop in Kuala Lumpur. 
 
¶23. (C/NF) Rawson agreed that the TSD represented an 
important means of pursuing practical nonproliferation 
cooperation.  The Japanese needed to be cajoled, however, and 
were more "siloed" than Australia or the United States, but 
Qwere more "siloed" than Australia or the United States, but 
it was still worth the investment and effort to enlist 
Japan's participation.  Rawson noted it was important to both 
consolidate our current trilateral activities and expand into 
new areas. 
 
CBRN Threat Reduction 
--------------------- 
¶24. (SBU) Ms. McNerney described ISN's threat reduction 
activities in Southeast Asia, particularly Indonesia and 
Thailand, flagging U.S. success in developing good relations 
with scientists.  The proliferation risk from misuse of 
scientists' knowledge was a very thorny issue.  ISN also 
worked closely with the Philippines aimed at reducing 
bioterrorism.  McNerney said the U.S. had also focused on the 
threat posed by Pakistani nuclear weapon scientist A.Q. Khan, 
demarching Pakistan to keep him under house arrest when the 
Pakistani government was considering allowing him more 
freedoms.  Turning to the G8 Global Partnership, McNerney 
acknowledged the need to expand the program's scope beyond 
Russia and the former Soviet Union, despite opposition by 
Russia.  She expressed hope that Australia would continue to 
 
 
be supportive, noting its contribution for submarine 
dismantlement, and promised to revisit the issue with 
Australia, once the G8 had issued its statement.  The U.S. 
was concerned about nuclear smuggling, and how the G8 could 
organize itself to address the issue.  More secure shipping 
was one answer. 
 
¶25. (C/NF) First Assistant Secretary Rawson outlined 
Australia's parallel activities, which had a counterterrorism 
focus.  The Rudd government wanted to focus strongly on 
Southeast Asia, as well as India and Pakistan. 
 
MTCR Plenary 
------------ 
¶26. (C) Acting A/S McGuire reviewed Australian preparations 
for hosting the MTCR Plenary in Canberra during November 3-7, 
¶2008.  The GOA had not yet named the Chair, as the nominee, 
who would be DFAT's Assistant Secretary for Strategic 
Affairs, was not yet in place.  McGuire said the Plenary 
would have a strong Southeast Asia focus.  He welcomed the 
U.S. outreach proposal for discussion at the Small Group. 
McGuire inquired whether the U.S. planned to continue to seek 
support for its UAV proposal at the Plenary. 
 
¶27. (C/NF) Acting A/S McNerney responded that the U.S. needed 
to get past opposition from Russia, Brazil, and South Africa. 
 Russia, especially, was unwilling to agree to an UAV 
proposal that would reduce its own flexibility.  The United 
States was still considering how to carry the proposal 
forward. 
 
PARTICIPANTS 
------------ 
¶28. (SBU) Participants in the June 30 DFAT-hosted roundtable 
in Canberra included: 
 
United States: 
 
-- Acting Assistant Secretary Patricia McNerney, Bureau of 
International Security and Nonproliferation (ISN), Department 
of State 
-- Bridget McGovern, Special Advisor, ISN 
-- Randall Beisecker, Action Officer for Southeast Asia, 
Office of Regional Affairs, ISN 
-- Daniel A. Clune, Deputy Chief of Mission, U.S. Embassy 
-- John W. Crowley, Deputy Political Counselor, U.S. Embassy 
(notetaker) 
-- Carol M. Hanlon, Political-Military Officer, U.S. Embassy 
 
Australia: 
 
-- Jennifer Rawson, First Assistant Secretary, International 
Security Division, Department of Foreign Affairs and Trade 
(DFAT) (Chair) 
-- Gerry McGuire, Acting Assistant Secretary, Arms Control 
and Counter-Proliferation Branch, DFAT 
-- Chris de Cure, First Assistant Secretary, Americas 
Division, DFAT 
-- Craig Chittick, Assistant Secretary, United States Branch, 
DFAT 
-- Rebecca Skinner, First Assistant Secretary, Strategic 
Policy Division, Australian Department of Defence (ADOD) 
-- Kathryn Hitchings, Acting Assistant Secretary, Security, 
Policy and Programs Branch, Department of Defence (ADOD) 
-- John Carlson, Director-General, Australian Safeguards and 
Non-Proliferation Office (ASNO) 
-- Rob Floyd, Acting Head, Office of National Security, 
Department of the Prime Minister and Cabinet (PM&C) 
-- Roger Hodgkins, Senior Analyst, Office of National 
Assessments (ONA) 
 
 
¶29. (U) AA/S McNereny reviewed and cleared this reporting 
cable prior to her departure from Australia. 
 
MCCALLUM 
 
 
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