VZCZCXYZ0005
PP RUEHWEB

DE RUEHC #6708 2032150
ZNR UUUUU ZZH
P 222134Z JUL 09
FM SECSTATE WASHDC
TO RUEHUNV/USMISSION UNVIE VIENNA PRIORITY 0000
INFO RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0000
RUEHBR/AMEMBASSY BRASILIA PRIORITY 0000
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 0000
RUEHEG/AMEMBASSY CAIRO PRIORITY 0000
RUEHHE/AMEMBASSY HELSINKI PRIORITY 0000
RUEHKU/AMEMBASSY KUWAIT PRIORITY 0000
RUEHMO/AMEMBASSY MOSCOW PRIORITY 0000
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 0000
RUEHNY/AMEMBASSY OSLO PRIORITY 0000
RUEHBS/USEU BRUSSELS PRIORITY

UNCLAS STATE 076708 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: AORC KNNP IAEA ENRG TRGY RS
SUBJECT: NUCLEAR FUEL BANKS - CAPITALIZING ON THE JUNE 
2009 BOG 
 
¶1. (U) This is an ACTION REQUEST:  Please see para 13. 
 
------- 
SUMMARY 
------- 
 
¶2. (SBU) A step forward on fuel assurances was taken at the 
June 2009 meeting of the International Atomic Energy Agency 
(IAEA) Board of Governors (BOG), at which the Board 
considered two concrete nuclear fuel bank proposals.  For the 
first time, non-aligned states moved beyond rhetoric to raise 
specific concerns regarding the actual implementation of an 
international nuclear fuel bank.  Department, with 
interagency input, has crafted a strategy designed to 
capitalize on this momentum and to move this initiative 
forward in a manner that addresses the concerns of all 
parties.  In particular, we will hold consultations with both 
donor and recipient states over the coming months to identify 
specific reservations about current proposals. 
 
¶3. (SBU) In addition, UNVIE is instructed to encourage the 
IAEA Secretariat to develop a discussion paper based on views 
expressed at the June Board to serve as a basis for continued 
dialog at the September Board.  UNVIE is further instructed 
to urge the IAEA to bring forward detailed proposals for the 
Angarsk fuel reserve as soon as possible and to encourage the 
IAEA to revise its proposal for an IAEA fuel bank, to reflect 
Member State concerns, by the November Board.  This will be 
significant as the final Board meeting under the tenure of 
Director General ElBaradei.  The upcoming change of 
leadership at the IAEA has led the Nuclear Threat Initiative 
(NTI), whose challenge grant initiated the IAEA fuel bank 
proposal, to request intensified U.S. diplomacy in a letter 
from former Senator Sam Nunn. 
 
---------- 
BACKGROUND 
---------- 
 
¶4. (SBU) On July 6, 2009 Senator Sam Nunn, Co-Chairman and 
Chief Executive Officer of the Nuclear Threat Initiative 
(NTI), sent a letter to Secretary Clinton, Secretary Chu, and 
National Security Advisor Jones expressing concern with the 
slow progress on the International Atomic Energy Agency 
(IAEA) fuel bank.  The effort to establish this fuel bank was 
initiated by a $50 million challenge grant from NTI, in 
response to which matching funds have been pledged by the 
United States, the EU, the United Arab Emirates, Kuwait, and 
Norway.  To help move this initiative forward, Nunn requested 
that the U.S. lead a high-level diplomatic effort in capitals 
of key skeptics to try and encourage realization of the 
initiative before the conclusion of Mohamed ElBaradei's 
tenure as IAEA Director General (DG). 
 
¶5. (SBU) In addition, the letter implicitly endorsed the 
release criteria of the draft IAEA fuel bank proposal, as 
opposed to the stronger criteria of a separate nuclear fuel 
reserve proposed by Russia to be located at Angarsk. 
Notably, the release criteria of the IAEA fuel bank are 
weaker than Nuclear Suppliers Group (NSG) guidelines, and 
therefore inconsistent with domestic export requirements of 
most donor states, whereas the Russian proposal calls for 
fuel to be released in a manner consistent with its national 
laws and policies. 
 
---------------- 
MEETING WITH NTI 
---------------- 
 
¶6. (SBU) To coordinate a common USG response to the Nunn 
letter, the Department of State held an interagency meeting 
on July 15 with a representative from NTI.  Participants 
included Laura Holgate from NTI; Jim Timbie, Alex Burkart, 
Buzz Carnahan, Meha Shah, and Marc Humphrey from State; Mark 
Scheland from UNVIE; Rich Goorevich and Sean Oehlbert from 
the National Nuclear Security Administration; Bill Szymanski 
from the Department of Energy; and Joyce Connery from the 
National Security Council. 
 
¶7. (SBU) Timbie told Holgate that the United States backs 
fuel banks in principle but is not in a position to support 
the IAEA proposal as drafted, because it would allow release 
of nuclear material under conditions weaker than the NSG 
guidelines and, thus, undercut U.S. law.  Holgate responded 
that NTI supports the proposal as-is, since it views an IAEA 
fuel bank to be a mechanism of absolute last resort (which 
may never actually be used).  The "non-stringent" release 
criteria would be important, she added, to achieve broad 
acceptance of the mechanism, which was intended to be just 
one of many different options.  Goorevich, in turn, explained 
that USG funds (nearly $50 million from the DOE) must be used 
in accordance with U.S. law.  Others speculated that the same 
standard would apply to most other donor states, and 
particularly the EU. 
 
¶8. (SBU) Timbie stated that the USG believes the Russian 
proposal would be a useful precedent that would allow for 
donors to provide LEU through the IAEA to recipients in a 
manner consistent with their national laws and policies.  The 
United States would therefore encourage Russia and the IAEA 
to bring the Angarsk reserve proposal forward for approval as 
soon as possible, and encourage others to support the Russian 
proposal as well. 
 
¶9. (SBU) Holgate explained that the purpose of the Nunn 
letter was not to endorse the release criteria of the IAEA 
proposal, but to encourage the United States to make 
high-level demarches to capitals of key skeptics (namely 
Argentina, Brazil, India, and Egypt).  Burkart noted that the 
recent June meeting of the IAEA Board of Governors (BOG) was 
constructive and marked a replacement of empty rhetoric by 
substantive debate about implementation details.  Since 
specific issues (e.g., access criteria, liability, and 
finance) were now being discussed, general demarches would be 
of less utility than expert exchanges on particular concerns. 
 Above all, Burkart added, the United States and other 
supplier states should enter into a listening mode in an 
effort to understand the chief concerns of skeptical members 
and demonstrate that their concerns are being taken 
seriously.  This approach was employed with some success 
during a June 30 bilateral meeting with Argentine officials 
at the Department of State. 
 
¶10. (SBU) Burkart and Scheland strongly suggested steps be 
taken to capitalize on the forward momentum from the June 
BOG.  Scheland suggested that discussions should be held to 
distill "nuts and bolts concerns" from BOG states, including 
red-lines, which could be used to inform the Secretariat. 
Burkart suggested that the Secretariat could compile a list 
of issues, along with suggested steps to address them, into a 
discussion document to put before the BOG in September. 
Outputs from the September BOG could then be used to further 
refine the IAEA fuel bank and Angarsk fuel reserve proposals. 
 
----------------------------------------- 
USG STRATEGY FOR SEPTEMBER BOG AND BEYOND 
----------------------------------------- 
 
¶11. (SBU) Washington recommends a three-point strategy to 
capitalize on the momentum generated at the June 2009 Board. 
First, the United States should consult with donors to come 
up with a common view that those who provide LEU to the fuel 
bank would, consistent with the NSG guidelines, apply the 
restrictions called for by their national laws and policies. 
An initial demarche will be delivered by State Department 
experts on July 20 to a visiting joint delegation from the 
European Council and European Commission (headed by Annalisa 
Giannella, Personal Representative of High Representative 
Solana for Non-Proliferation of WMD, and Richard Wright, DG 
RELEX Director of Crisis Platform and Policy Coordination). 
Further demarches to EU and other supplier states will be 
sent septel.  Second, the United States will engage key 
skeptical states.  Follow-up demarches will be sent to our 
missions in Argentina, Brazil, Egypt, and India.  The 
objective of these two sets of consultations would be to 
gather input on the full spectrum of concerns, which could 
then form a basis of feedback for the IAEA. 
 
¶12. (SBU) Third, the United States should consult with the 
IAEA Secretariat to develop a common understanding of 
realistic outcomes for the September BOG and beyond.  For 
example, this could include a continuation of the June Board 
discussions in September, with an effort to put an IAEA fuel 
bank proposal on the formal agenda for the November Board. 
Simultaneously, we should urge the IAEA and Russia to put 
details of the Angarsk proposal (specifically the two 
agreements that will govern its operation) before the BOG as 
soon as possible. 
 
-------------- 
ACTION REQUEST 
-------------- 
 
¶13. (SBU) UNVIE is requested to convey the following points 
to appropriate officials in the IAEA Secretariat as soon as 
possible. 
 
BEGIN TALKING POINTS: 
 
-- The United States was encouraged by the thoughtful 
discussion on fuel assurances at the June Board of Governors 
meeting. 
 
-- For the first time, Member State interventions moved 
beyond rhetoric and began to address explicit concerns about 
fuel bank implementation. 
 
-- We believe this was facilitated by the fact that concrete 
proposals were put before the Board, which enabled states to 
provide constructive comments. 
 
-- We hope this positive momentum will be sustained at the 
September Board. 
 
-- We encourage the IAEA to compile a list of issues raised 
at the June Board, along with suggested points on how to 
address them, into a "discussion document" to put before the 
Board in September. 
 
-- Outputs from the September Board could then be used to 
further develop the IAEA fuel bank and Angarsk fuel reserve 
proposals. 
 
-- We encourage the IAEA to refine its fuel bank proposal in 
a manner that reflects the concerns of all Member States, 
including those of both potential recipients and suppliers. 
 
-- The United States believes that the Angarsk proposal is 
nearing a state that will be acceptable to the Board of 
Governors. 
 
-- We urge the IAEA to work with Russia to bring the final 
operating agreements for this mechanism before the Board for 
approval as soon as possible. 
 
END TALKING POINTS. 
 
¶14. (SBU) (U) Department thanks Post for its assistance in 
this matter.  Department points of contact for working-level 
fuel assurance issues are Marc Humphrey and Burrus Carnahan 
(ISN/NESS). 
CLINTON