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PP RUEHWEB

DE RUEHUNV #0095/01 0651539
ZNR UUUUU ZZH
P 061539Z MAR 09
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC PRIORITY 9100
INFO RUEHII/VIENNA IAEA POSTS COLLECTIVE PRIORITY
RHMCSUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEANFA/NRC WASHDC PRIORITY

UNCLAS UNVIE VIENNA 000095 
 
SENSITIVE 
SIPDIS 
 
STATE FOR T, ISN/NESS, IO/T, ISN/MNSA 
LONDON FOR KAREN BRONSON 
DOE FOR NA-243 (GOOREVICH) 
NRC FOR MDOANE, JSCHWARTZMAN 
 
E.O. 12958: N/A 
TAGS: AORC ENRG TRGY KNNP IAEA
SUBJECT: IAEA MARCH 2009 BOARD OF GOVERNORS: AOB DISCUSSION OF 
RELIABLE ACCESS TO NUCLEAR FUEL (RANF) 
 
¶1.  (SBU) Summary: Renewed leadership by the Director General, 
announcements of financial pledges, and calls for more dialogue from 
potential beneficiary states advanced us toward future IAEA Board 
action to implement reliable access to nuclear fuel (RANF) 
mechanisms under IAEA auspices.  The Board debate on March 5 was 
marked by new highs of support -- including announcements of 
donations sufficient to push funding for the IAEA fuel bank over the 
target of $150 million -- and new lows of criticism -- the G-77 
strongly rejected attempts to even discourage fuel cycle activities 
on the grounds of proliferation concerns.  Coached by the 
Secretariat, the Chair gaveled through a conclusion that should 
provide adequate support for the Board to consider the issue in June 
and for the Secretariat to do work on the related issues in the 
interim.  End Summary. 
 
----------- 
The Prelude 
----------- 
 
¶2.  (SBU) The reinvigorated debate on RANF started on February 23 
with the circulation of GOV/INF/2009/1, "Development of the Russian 
Federation Initiative to Establish a Reserve of Low Enriched Uranium 
(LEU) for the supply of LEU to the IAEA for its Member States." 
The proposal was for the Russian Federation to establish a 
guaranteed physical reserve of 120 tonnes of LEU in the form of UF6 
with an enrichment level ranging from 2.0% to 4.9% to be stored at 
the International Uranium Enrichment Center in Angarsk under IAEA 
safeguards (paid for by Russia) for the use of IAEA Member States 
experiencing a disruption of LEU supply.  The proposal went on to 
explain that the supply would occur through a combination of a 
Russian supply agreement with the IAEA and an IAEA agreement with 
the recipient state.  The proposal's features were characterized as 
follows: non-discriminatory and inclusive nature; non-restrictive; 
no cost to the IAEA; non-exclusive; non-disruptive; no delays; 
pro-cooperative; prolonged and promotional.  What was far less clear 
in the discussion was the meaning of one key sentence in the Russian 
proposal, "The LEU would be made available for any 
non-nuclear-weapon State member of the IAEA, which has an effective 
Agreement with the IAEA requiring the application of safeguards on 
all its peaceful nuclear activities."   This was a particular matter 
of interest in view of the fact that the proposal to the Board had 
been held in abeyance for nearly a year because of a dispute between 
Russia and the IAEA over supply conditions.  None of the IAEA 
officials Mission talked to could say whether this was meant to be a 
full-scope safeguards requirement or not.  The interpretation 
provided by one knowledgeable Rosatom official was that this 
language was an exact reflection of the Russian export control law 
of 1992 and that it was intended that India would be eligible and 
Pakistan and Israel would not be.  This distinction was less clear 
to Indian Atomic Energy Commission Chairman Anil Kakodkar, who told 
the Ambassador that he did not want to support a proposal that would 
not benefit India. 
 
------------------------------- 
The Director General Speaks Out 
------------------------------- 
 
¶3.  (SBU) The RANF discussion at the March Board started with the 
strongest statement of support issued by the Director General in at 
least a year.  Devoting nearly a fifth of his Opening Statement to 
the topic, the Director General referred to his advocacy "for a 
number of years" of the establishment of multinational mechanisms to 
assure access for all countries to nuclear fuel and reactor 
technology "as envisaged in the Statute."  Recalling the 
recommendations of the 2004/5 experts group and the report to the 
Board in June 2007, the Director General stated that "I am pleased 
to note important progress on two specific proposals that aim to 
establish a fuel assurance mechanism with the involvement of the 
Agency."  First he noted his circulation of the Russian proposal, 
remarking, "I trust that the Board will positively consider the 
detailed Russian proposal and give due consideration to other 
concrete proposals which may be coming."  He went on to state that 
with pledges made by Norway ($5 million) the USA ($50 million), the 
UAE ($10 million) and the EU (Euro 25 million) the international 
community was quite close to meeting the terms of the Nuclear Threat 
Initiative challenge grant and that, "Once the remaining funding is 
secured, I intend, with the Board's agreement, to develop a possible 
framework for this proposal for the Board's consideration." 
 
¶4.  (SBU) The Director General went on to articulate three 
principles that he believed should be the basis for a nuclear fuel 
bank under IAEA auspices.  First, any such mechanism should be 
non-political, non-discriminatory and available to all States in 
compliance with their safeguards obligations.  Second, any release 
 
of material should be determined by non-political criteria 
established in advance and applied objectively and consistently. 
Third, no State should be required to give up its rights under the 
Non-Proliferation Treaty regarding any parts of the nuclear fuel 
cycle.  The Director General went on to extend his vision by stating 
that, "The next step would be to agree that all new enrichment and 
reprocessing activities should be placed exclusively under 
multilateral control, to be followed by agreement to convert all 
existing facilities from national to multilateral control." 
 
¶5.  (SBU) The opimism engendered by the Director General's 
stateent was reinforced by a strong statement of suppor by 
Kazakhstan during the nuclear safety debate or "multinational 
uranium enrichment centres" andthe "proposed creation of an 
IAEA-administered Iternational Nuclear Fuel Bank." 
 
---------------------------- 
The G-77 and NAM: Not So Fast 
----------------------------- 
 
¶6.  (SBU) The spirit of optimism was dealt a quick blow by the G-77 
at the start of the agenda item on Any Other Business, which was 
almost entirely devoted to RANF.  Argentina, speaking for the G-77 
and China (with a statement co-drafted by Egypt, we were told), 
added to the now tired line that there needed to be a cautious 
approach to address all the technical, legal, economic/financial, 
and political aspects of the proposal.  It continued to say that it 
was "premature" to consider these proposals before all aspects were 
adequately examined.  It used the existing economic crisis to urge 
caution before "imposing" further burdens on Member States. 
Building on its earlier criticisms of attempts to violate States' 
NPT rights to develop nuclear energy for peaceful purposes, the G-77 
stated that nonproliferation concerns should not restrict technology 
transfer and strongly rejected attempts to even discourage fuel 
cycle activities on the grounds of roliferation concerns.  The G-77 
has thus gone from "Don't restrict our rights because of 
proliferation concerns" to "Don't even try to discourage us from 
doing something because of proliferation concerns".  Cuba, speaking 
for the NAM, used its intervention immediately after the G-77 to 
fully endorse the G-77 Statement. 
 
¶7.  (SBU) Egypt took the G-77 argument a step further by stating 
that arguing that some technologies are more sensitive than others 
diminishes the safeguards regime.  It also stated that the fuel 
supply assurance proposals were trying to employ the Agency in 
efforts to limit exports (of sensitive technology) and that this was 
a cause of concern.  In a prelude to the forthcoming supply 
condition debate, Egypt also noted that none of the initiatives 
mention NPT adherence or the need to apply comprehensive safeguards 
as a supply condition.  While saying that this degrades 
comprehensive safeguards agreements, the clear meaning was that this 
could allow Israel to take advantage of the mechanism, which is not 
acceptable to Cairo.  Expressing support for the Director General's 
"idealistic" vision for the internationalization of the fuel cycle, 
Egypt felt that this should take place in the context of parallel 
steps by the Nuclear Weapons States engaging in verifiable 
disarmament.  Brazil questioned the need for fuel assurances and, 
recalling a statement by Russia earlier in the Board on another 
topic, observed, "If it's not broke, don't fix it."  Iran reiterated 
its earlier statements that it was premature to make any decisions 
and that any decisions on fuel assurance mechanisms had to be made 
by the General Conference.  Iran also criticized outside donors as 
expecting leverage and stated its view that the General Conference 
must decide on accepting donations. 
 
--------------------- 
Support from the West 
--------------------- 
 
¶8.  (SBU) Far more positive statements came from the Western 
countries.  The Czeh Republic on behalf of the European Union 
repored the decision of the EU Council to contribute Eur 25 
million to the nuclear fuel bank.  The EU Sttement also noted other 
proposals, thanked the Jpanese Government for its January seminar 
on the nuclear fuel cycle, and noted the upcoming March 17-18 
conference in London on Multilateral Approaches to the Fuel Cycle. 
It requested the Secretariat to develop a concept for the 
establishment of the Nuclear Fuel Bank and to submit it to the Board 
as its June session.  The Russians outlined their proposal, noting 
its conditions were in agreement with the principles outlined by the 
Director General and stating the belief that they saw nothing in the 
G-77 and NAM statements that were at variance with their approach. 
The Russians promised to submit additional specific proposals.  The 
United States and Canada both noted the Russian proposal and 
 
expressed the view that it was now time to unertake a discussion at 
the Board on implementatio. 
 
¶9.  (SBU) The U.S. statement (para. 16) referred to President 
Obama's call for establishment of "a new international nuclear 
energy architecture - including an international nuclear fuel bank, 
international nuclear fuel cycle centers, and reliable fuel 
assurances - to meet growing demands for nuclear power without 
contributing to proliferation."  In addition to calling for action 
on the Russian proposals, the U.S. also noted that the international 
community had almost met the Nuclear Threat Initiative's challenge 
grant and stated that the we looked forward to the Director General 
bringing a concrete concept to the June Board for consideration. 
The U.S. statement also noted the progress in establishing a fuel 
reserve from 17.4 tonnes of highly enriched uranium (HEU) removed 
from the weapons program.  To date, over 3 tonnes of HEU had been 
down-blended yielding more than 50 tonnes of LEU. 
 
¶10.  (SBU) Japan used its statement to express appreciation to 
participants in the seminar of fuel assurances that it had sponsoredin January 
and to state its willingness to join a oard discussion 
of the issues.  Germany explaine its proposal for a multilateral 
enrichment plant operated by the IAEA (which had been discussed in 
detail at a well-attended side event on Monday), calling it 
complementary to other proposals and in compliance with the Director 
General's proposals.  The ROK made a mildly supportive statement 
stating that it was the right time for the Board to engage in 
intensive discussions of all aspects of the various proposals. 
 
¶11.  (SBU) Turkey issued a statement that fell in the middle some 
place.  While stating that it was prepared to consider all proposals 
favorably, it reiterated the G-77 line about needing extensive 
consultations on the technical, political, legal, and economic 
aspects of the proposal before considering any kind of decision. 
Turkey laid out what it called four "vital conditions" that it said 
must be satisfied by a mechanism for assurance of nuclear fuel 
supply: 1) participation should be voluntary and not require 
countries to relinquish legitimate rights under the NPT; 2) it 
should function as a backup to a well functioning market; 3) it 
should convince States that they would be able to obtain fuel in a 
predictable, stable and cost-effective manner over a long term 
period without undue interference; and 4) production and storage 
facilities should not be under the control or jurisdiction of any 
one state or "group of states." 
 
------------------------- 
Cracks in G-77 Solidarity 
------------------------- 
 
¶12.  (SBU) Several NAM and G-77 States, while associating themselves 
with the statements of those groups, also indicated readiness to 
discuss fuel assurances.  China expressed support in principle for 
all efforts that promote nuclear energy and nonproliferation and 
stated it was open minded about mechanisms.  It further stated that 
the international community should seek solutions acceptable to all 
to prevent proliferation but to promote the use of nuclear energy. 
The Philippines requested the Secretariat to update its previous 
work (i.e., the June 2007 report GOV/INF/2007/11) and to provide a 
comprehensive analysis of the proposed mechanisms and related 
issues.  Morocco endorsed the general principles presented by the 
Director General and stated that the doors were open for discussion. 
 The Jordanian delegation confirmed to us on the margins that it had 
a supportive statement prepared in coordination with its national 
atomic energy authority, but had held back for lack of formal 
instruction to speak from the MFA. 
 
------------ 
Over the Top 
------------ 
 
¶13.  (SBU) Following interventions by Board members, both the United 
Arab Emirates and Kuwait spoke at the Board for the first time on 
this issue (under Rule 50).  Both noted the importance of 
multinational fuel assurances.  Each pledged $10 million to the fuel 
bank, pushing the total pledged over $150 million.  Kuwait supported 
discussions in June and the UAE encouraged the Secretariat to 
consider proposals and schedule Board consideration.  The United 
States took the floor to welcome these contributions, to recall the 
Director General's statement in March 2008 that he would bring a 
concept for a fuel bank to the Board when the money was available, 
and stated it looked forward to discussion at the next Board 
meeting.  In closing, Ambassador said to the Board, "Let us see what 
we can agree, between all of us, that advances no hidden agenda but 
promotes our common interest in the peaceful use of nuclear 
 
technology." 
 
-------------------------------------- 
The Director General Speak Out - Again 
--------------------------------------- 
 
¶14.  (SBU) In another forceful (and unscriptd) intervention, 
Director General El Baradei conluded Board consideration of RANF by 
identifying three areas that needed work in the multilateralization 
of the fuel cycle.  First, he saw nuclear disarmament as needed to 
create the environment and he welcomed the new policies of the Obama 
Administration.  Second, he said that we needed to strengthen the 
safeguards system - it is not what it ought to be.  Third was 
assurance of supply.  It must be looked at as a win-win - security 
of supply without adding to proliferation.  While noting that 
everybody having a fuel cycle was not stable, the Director General 
noted that no one was now questioning the rights of states   The two 
proposals discussed - the Russian reserve and the NTI fuel bank - 
were "added plusses."  Whether countries will want to establish 
their own fuel cycle is their own decision.  Although the concept 
may have been present in some earlier proposals, no one, he noted, 
is now asking countries to forego "their rights".  The Director 
General concluded by stating that the best way to work together was 
dialogue to discuss the issues.  While we had failed for 50 years to 
find an acceptable mechanism, this did not mean we shouldn't try 
again.  Russia would be coming with proposals.  Germany was 
developing its proposal and the Secretariat would come with a 
framework for a fuel bank.  "We will succeed together or we will 
fail together."  There is no alternative to dialogue. 
 
---------- 
Summing Up 
---------- 
 
¶15.  (SBU) In a highly unusual move, the Board Chair produced a 
short conclusion for this "Any Other Business" item.  "With regard 
to the specific issue of nuclear fuel supply assurances, the sense 
that I get from listening to the various speakers is that the Board 
will continue with its discussions on these proposals and the 
Secretariat will assist in elaborating the framework."  The Director 
General, she noted, is the most effective advocate of the assured 
supply concept.  The Chair then gaveled, "It is so decided."  Tariq 
Rauf, the Secretariat point man on assured fuel supply, had 
previewed this tactic to us, saying that it would provide the 
Secretariat with the authority it needed to proceed with its work. 
 
-------------- 
U.S. Statement 
-------------- 
 
¶16.  (U) BEGIN TEXT AS DELIVERED: 
 
Madame Chairwoman, 
With each Board meeting, we learn of even greater global interest in 
nuclear power.  Though individual motivations vary, one common 
factor driving this interest is the quest for energy security. 
Realizing the full benefits of nuclear power requires that we all 
have reliable access to nuclear fuel.  For these reasons, President 
Obama has called for the establishment of "a new international 
nuclear energy architecture - including an international nuclear 
fuel bank, international nuclear fuel cycle centers, and reliable 
fuel supply assurances - to meet growing demands for nuclear power 
without contributing to proliferation."  On Monday our Director 
General also said, "remains convinced that a multilateral approach 
has great potential to facilitate the expanded safe and secure use 
of nuclear energy for peaceful purposes, while reducing the risk of 
proliferation." 
We are finally nearing closure on two concepts, and the associated 
funding, that would provide fuel assurances.  After so much effort, 
the time has come to bring these to reality. 
The nuclear power sector is blessed with a reliable, dynamic, and 
well functioning market.  Around the world today, more than 400 
reactors are supplied through sound, long-term contracts with a 
diverse set of vendors.  Still, as we have come to learn recently 
even with the most stable markets, the possibility remains for 
unforeseen interruptions.  Therefore, we believe that as responsible 
suppliers and recipients of nuclear power it would be wise to 
bolster the international fuel market against unexpected 
disruptions. 
Likewise, the Director General has recognized this fact, and called 
on us - the IAEA Member States - to devise new mechanisms to ensure 
reliable access to nuclear fuel.  In response, many in this room 
have developed one or more fuel assurance proposals.  Two of those 
proposals are now nearing realization. 
 
Here in Vienna - more than two years ago - the Nuclear Threat 
Initiative announced a pledge of 50 million U.S. dollars for an 
international nuclear fuel bank.  As you know, this challenge grant 
was made upon two conditions, which must both be met by the upcoming 
General Conference in September.  Generous pledges by Norway, the 
United Arab Emirates, and the European Union as well as support from 
my own government have come in response to the NTI offer.  Total 
contributions from member states of 100 million dollars will meet 
the first condition. 
With support from member states, a total of 150 million dollars 
would be available to the IAEA, provided the second condition is met 
- the Board of Governors must approve an institutional framework for 
the fuel bank.  As we all know, the details surrounding this 
initiative are complex, and deserve our considered discussion.  Now 
that the funding goal is close to being met, we look forward to the 
Director General bringing forward a concrete concept for our 
consideration at the next Board meeting in June. 
As we also have just heard from the Russian Governor about  their 
proposal, for a reserve of low-enriched uranium to be held at 
Angarsk in Russia, is also nearing fruition.   We thank the Russian 
Federation for sharing this news with Member States today and we 
read with great interest the concept paper GOV/INF/2009/1.  We look 
forward to further in-depth consultations among all Member States 
and the IAEA Secretariat on future steps. We strongly support 
Russia's call to bring the "the proposal as outlined ... to the 
Board of Governors for its consideration as soon as possible." 
I am pleased to report that the United States continues to make 
progress on yet another component to support this endeavor.  Three 
years ago, we announced that 17.4 tons of highly enriched uranium 
would be turned into a low-enriched uranium fuel reserve.  To date, 
over 3 tons of HEU has been down-blended and more than 50 tons of 
LEU fuel has been produced.  Once an operational framework is in 
place, this material could also be drawn upon for last resort 
assurance. 
Madame Chairwoman, 
The concept of IAEA involvement in nuclear fuel assurances is not 
new. It is clearly authorized under Article IX of the IAEA Statute. 
In 2003, the Director General of this Agency brought this issue back 
to the fore in his essay "Towards a Safer World."  Since then, the 
IAEA has overseen an expert group study and issued a substantive 
framework report. Member States have put forward more than 12 
proposals, and a number of international conferences have been 
convened.  What's more, several multilateral bodies have established 
working groups to explore mutually acceptable solutions. 
Over the past four years, we have all put a great amount of time and 
effort into this venture.  The Director General reiterated earlier 
this week his view "that a multilateral approach has great potential 
to facilitate the expanded safe and secure use of nuclear energy for 
peaceful purposes, while reducing the risk of proliferation."  Along 
with many others, we hope to see a tangible product emerge before 
the current era of Agency leadership draws to a close. 
In conclusion, the appetite for a fuel assurance mechanism is clear, 
the need is growing, the resources are in place and the time is 
right to bring this concept to life. 
Therefore, we encourage opening a discussion amongst us on the 
technical, legal, and other issues involved.  Two concepts and the 
associated funding are nearing fruition.  Let us bring one or both 
of these concepts to the Board in June and see whether we can start 
to establish an international, mechanism that advances our common 
interest in the peaceful use of nuclear technology. 
Thank you. 
 
END TEXT. 
 
----------------- 
U.S. Intervention 
----------------- 
 
¶17.  (U)  BEGIN TEXT AS DELIEVRED: 
 
I apologize for taking the floor again, but wish to welcome, on 
behalf of my Government, the two important announcements just made, 
under Rule 50, by the distinguished representatives of Kuwait and 
the United Arab Emirates.  The two distinguished Ambassadors each 
announced a contribution of 10 million U.S. dollars to the 
international nuclear fuel bank under the auspices of the IAEA. 
 
Thanks to these and earlier contributions, counties have now met the 
funding challenge put forward by the Nuclear Threat Initiative over 
two years ago. Despite today's financial crisis, the IAEA now has 
150 million U.S. dollars to set up a fuel bank at little or no 
additional cost to the Agency or Member States. 
 
At our meeting a year ago, Dr. El Baradei told us that he would 
 
bring us a concept for consideration once the 150 million U.S. 
dollars in funding is available.  We look forward to discussing this 
concept together with the complementary concept from the Russian 
Federation, at our next meeting. 
 
Today we had a good, substantive discussion on fuel assurances, 
including on some issues we need to examine in greater depth.  Let 
us move our discussion from AOB to an agenda item on the basis of 
concrete proposals, prepared by or in cooperation with the 
Secretariat.  Let us see what we can agree, between all of us, that 
advances no hidden agenda but promotes our common interest in the 
peaceful use of nuclear technology. 
 
END TEXT. 
 
 
 
SCHULTE