VZCZCXRO6189
RR RUEHSK
DE RUEHUNV #0029/01 0271618
ZNR UUUUU ZZH
R 271618Z JAN 09
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC 8932
INFO RUCNNSG/NUCLEAR SUPPLIERS GROUP COLLECTIVE
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEANFA/NRC WASHDC

UNCLAS SECTION 01 OF 03 UNVIE VIENNA 000029 
 
SENSITIVE 
SIPDIS 
 
STATE FOR IO/T, ISN/MNSA, ISN/NESS, ISN/RA 
NA-243-GOOREVICH/BRUNNS; NA-241 O'CONNOR, LAMONTAGNE 
NRC FOR OIP - HENDERSON, SCHWARTZMAN 
 
E.O. 12958: N/A 
TAGS: ENRG ETTC KNNP MNUC PARM PREL ENR
SUBJECT: IAEA: NUCLEAR SUPPLIERS GROUP DISCUSSES TEXT BUT NO 
AGREEMENT REACHED 
 
REF:  STATE 3082 
 
¶1.  (SBU)  SUMMARY AND COMMENT: On January 15, interested NSG 
Participating Governments (PGs) discussed the current "clean text" 
to revise paragraphs 6 and 7 of the Part 1 NSG Guidelines regarding 
conditions for approval of transfers of enrichment and reprocessing 
(ENR) equipment and technology.  During the day-long meeting, a 
number of countries requested clarification on the meaning or 
interpretation behind the proposed "clean text," often focusing on 
how supply within and outside the group would be affected.  Brazil 
and Argentina spoke out against any references to the Additional 
Protocol (AP) because of their unique regional arrangement and 
Brazil's unwillingness to sign an AP at this point.  A number of 
European PGs spoke in favor of requiring an AP.  While many PGs 
reiterated previously known positions, Switzerland opposed the 
language in 6a(ii) and 7 (b) and (c), proposing new language which 
did not meet with the approval of those present.  The Swiss said 
they would consider whether to formally table the language or not at 
the next CG, proposed for mid-March.  Ambassador Schulte as U.S. 
head of delegation along with like-minded PGs noted the strong 
support for approving the language "as is" in recognition that it is 
a compromise text which has taken five years to negotiate.  South 
Africa and Luxembourg did not attend the informal meeting.  The 
Indian delegation in Vienna has taken active interest in this 
exercise, complaining that the NPT supply condition is inconsistent 
with the US-India nuclear deal. 
 
¶2.  (SBU) COMMENT:  It is possible we may be able to make progress 
and obtain PG agreement on the Additional Protocol as a criterion 
for transfer of sensitive technologies if we can be flexible and 
creative in the CG Chair's report to the Plenary.  PGs are hesitant 
to make any changes to the Nov 2008 "clean text".  Both China and 
Russia have already signaled in writing that they can accept the 
text as it is.  It is also clear suppliers do not intend to 
establish criteria to immediately cut off supply to two PGs.  This 
needs to be balanced with PG positions that only through the 
combination of a CSA and an AP does the IAEA have the means to draw 
conclusions about the absence of undeclared activities.  The CG 
Chair is working with a group of Friends of the Chair on a text that 
would note consultations with the IAEA on a possible future regional 
arrangement approved by the Board that combines the tools of both 
instruments.  If the Chair is successful, we will still need to 
lobby reticent PGs to support the text in advance of the Plenary. 
One important key to the success of this approach is for PGs to 
understand that such a hybrid safeguarding arrangement does not 
exist today.  END SUMMARY AND COMMENT 
 
---------------- 
PARAGRAPH 6a(ii) 
---------------- 
 
¶3. (SBU) After a brief opening statement by the Chair urging 
interested members to come to a conclusion on the text. Ambassador 
Schulte noted the emphasis of the incoming US Administration on 
nonproliferation and its desire to achieve effective multilateral 
results.  Now was an opportunity to show that the NSG could reach a 
conclusion, after nearly five years of work, on an issue of utmost 
importance to the World's nonproliferation regime.  Subsequent 
discussion focused on 6a(ii) and how to make the AP a criterion for 
transfers of sensitive technologies.  Brazil noted the text is 
ambiguous, and observed that Brazil has made a concession to agree 
to the AP as a condition of supply in certain circumstances.  Brazil 
said it wishes to avoid ambiguity but it could only live with the 
text if it is clear that the Quadrapartite safeguards agreement 
between Brazil, Argentina, ABACC and the IAEA can meet the criteria 
set forth in 6(a)ii, and acknowledged that not all PGs agreed that 
does so.  Brazil suggested the group think about making an exception 
for Argentina and Brazil, noting this would not be the first 
exception.  Argentina supported. 
 
¶4.  (SBU) Spain and Switzerland both suggested references to INFCIRC 
540 as a compromise, to which Brazil was unwilling to agree.  Brazil 
continued to argue that a regional arrangement between Brazil and 
Argentina might be on the same level as an AP, but admitted they are 
not there yet.  U.S. Del noted its aspiration for the 
universalization of the AP, however in recognition of the compromise 
text, strongly supports the text as written.  Switzerland again 
noted regional agreements are counter to the intent of PGs adding 
the AP to their safeguards obligations.  U.S., Canada, France, 
Japan, Spain, Italy, the UK, Ireland, South Korea, Australia and 
Belarus all agreed that approval of text as circulated would be 
best.  The CG Chair observed that the NSG has past precedents for 
phasing in new supply arrangements, citing the adoption of the dual 
use regime and full scope safeguards as a condition of supply, and 
urged PGs to keep an open mind on text that might be used for the 
 
UNVIE VIEN 00000029  002 OF 003 
 
 
Chairman's report to the Plenary for this case. 
 
¶5.  (SBU) An uncomfortable but necessary discussion ensued about the 
AP criteria.  The Chair observed that the group is considering an 
arrangement that clearly limits transfers to PGs that are in good 
standing, and suggested PGs consider why Argentina and Brazil would 
agree to something that would change their eligibility status. 
Japan stressed the importance of universality of the AP, but offered 
the consideration of special treatment for Brazil and Argentina, 
possibly in the form of a grandfather arrangement.  Canada and New 
Zealand called attention to the NSG being seen as a "cartel" and 
cautioned that the group not be perceived as having a double 
standard for those in the NSG.  Reaching no informal agreement, the 
Chair proposed to use the CG Chair's report to the Plenary as a 
vehicle to clarify the meaning of para 6 as a way of addressing 
concerns.  France suggested Brazil and Argentina offer language for 
that purpose.  Several PGs welcomed the suggestion that the CG 
Chair's report should note that there is an on going dialogue 
between the IAEA and the parties to the Argentina/Brazil 
Quadripartite Safeguards Agreement, which would indicate that 
eventually the Agreement could be appropriately structured to 
achieve the same objective as an AP.  The Chair was left the task, 
with the assistance of a group of friends, of capturing an 
understanding for the Chair's report to the Plenary, with thoughts 
on how to phase in this new criterion for transfers. 
 
¶6. (SBU) Without reaching informal agreement on 6a(ii), discussion 
moved on to para 7.  Switzerland, Turkey and Spain voiced concerns 
about the concept of para 7, which they view as imposing 
restrictions on technology development, and Turkey in particular 
noted we should ensure we are not prohibiting access to PGs and NPT 
parties in good standing - as provided for in NPT Article IV.  US 
Del noted that PGs can purchase technology on the commercial market, 
receive turnkey facilities, or by joint development followed by 
transfer controls, and pursue indigenous efforts, but the point 
remains that the language in paras 6 and 7 strikes a balance in the 
interest of all PGs and remains the best compromise text after five 
years of effort. 
 
------------------------ 
INFORMAL SWISS PROPOSALS 
------------------------ 
 
¶7. (SBU) Toward the close of the meeting, the Swiss Delegation 
informally proposed the following language for para 7: 
 
(b)  For a transfer of an enrichment facility or equipment based on 
enrichment technologies which have been demonstrated to produce 
enriched uranium on a significant scale.  Participating Governments 
should: (Bullets not changed) 
 
(c)  Before exporting new enrichment technologies Participating 
Governments should inform the NSG of arrangements governing 
transfers of such technologies.  Such arrangements should be, at a 
minimum, equivalent to those in 7(b). (Balance not changed) 
 
¶8.  (SBU) After comments, including from US Del, that these proposed 
changeswould not help PGs reach agreement the Swiss said tey would 
consider whether to table the language ormally or not prior to or 
at the next CG.  Late in the meeting, a clarification on supply 
chain was worked out among the U.S., Japan, and URENCO parties which 
will go in the Chair's report 
 
---- 
6(b) 
---- 
 
¶9.  (SBU) Turkey expressed support for the criteria-based approach, 
but it does not share the need for, nor the understanding of, the 
subjective criteria.  Turkey assured PGs it is ready to consider how 
to strengthen and expand 6(a), but 6(b) causes concern.  Turkey 
noted all PGs have the right to apply subjective criteria and 
suggested that be left to PGs to do so.  Others noted the subjective 
criteria are simply factors for consideration and that Turkey's 
concerns were already addressed in the version of the text that was 
produced at the Nov 2008 CG meeting.  The CG chair suggested PGs 
keep Turkey's comments in mind and hoped differences could be 
resolved through diplomatic consultations. 
 
¶10.  (SBU) COMMENT: The Indian delegation in Vienna has taken active 
interest in this exercise, complaining that the NPT supply condition 
is inconsistent with the US- India nuclear deal.  Mission has 
countered by noting that the US goal of NSG restrictions on ENR 
transfers pre-dates the US-India deal and has been well known to 
officials in Delhi.  END COMMENT 
 
UNVIE VIEN 00000029  003 OF 003 
 
 
 
---------- 
NEXT STEPS 
---------- 
 
¶11.  (SBU) The Chair proposed the next CG be in March, possibly 
right after the Board of Governors (March 2-6).  In an effort to 
reach informal agreement prior to the CG, the Chair said he would 
continue consultations with interested PGs, brief PGs not in 
attendance, and seek support for bringing this to an end in March. 
 
SCHULTE