VZCZCXYZ0020
PP RUEHWEB

DE RUEHC #5122 2262108
ZNR UUUUU ZZH
P 142050Z AUG 09
FM SECSTATE WASHDC
TO RUEHBR/AMEMBASSY BRASILIA PRIORITY 0000
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 0000
RUEHEG/AMEMBASSY CAIRO PRIORITY 0000
RUEHKL/AMEMBASSY KUALA LUMPUR PRIORITY 0000
RUEHSA/AMEMBASSY PRETORIA PRIORITY 0000
INFO RUEHMO/AMEMBASSY MOSCOW PRIORITY 0000
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 0000
RUEHUNV/USMISSION UNVIE VIENNA PRIORITY 0000

UNCLAS STATE 085122 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: AORC KNNP IAEA ENRG TRGY BR AR SF EG IN MY RS
SUBJECT: NUCLEAR FUEL BANKS - LAUNCHING A LISTENING 
CAMPAIGN 
 
REF: A. 09 UNVIE 301 
     ¶B. 09 STATE 76708 
 
¶1. (U) This is an ACTION REQUEST:  Please see para 10. 
 
------- 
SUMMARY 
------- 
 
¶2. (SBU) Since 2004, the International Atomic Energy Agency 
(IAEA) Secretariat has promoted the concept of multilateral 
nuclear fuel assurances.  This concept is intended to 
strengthen the international nuclear fuel market and thereby 
remove an incentive for states to develop indigenous uranium 
enrichment and spent fuel reprocessing capacity.  Since the 
IAEA produced a set of recommendations on this issue in 2005, 
a number of states associated with the Nonaligned Movement 
(NAM) and Group of 77 (G-77) have criticized this concept due 
to suspicions that it is an attempt to strip them of the 
right to the fullest possible access to peaceful nuclear 
technology.  The past few years have seen an impasse 
featuring entrenched rhetoric about fuel cycle rights. 
 
¶3. (SBU) A step forward was taken at the June 2009 meeting of 
the IAEA Board of Governors (BOG), at which the BOG 
considered two concrete nuclear fuel bank proposals.  For the 
first time, nonaligned states moved beyond rhetoric to raise 
specific concerns regarding the actual implementation of an 
international nuclear fuel bank.  To maintain this positive 
momentum, Washington recommends an engagement campaign 
focused on listening to specific implementation concerns from 
the most skeptical states. 
 
---------- 
BACKGROUND 
---------- 
 
¶4. (U) In 2004, IAEA Director General ElBaradei tasked an 
Expert Group to study the feasibility of "multilateral 
nuclear approaches" as a means of addressing the potential 
spread of uranium enrichment and spent fuel reprocessing 
technologies (ENR).  These technologies are considered 
sensitive since, in addition to producing fuel for civil 
nuclear reactors, they can also be misused to produce 
weapons-useable material.  Released in 2005 as IAEA document 
INFCIRC/640, the Expert Group's near-term recommendations 
called for (1) reinforcing the existing commercial market of 
fuel cycle services and (2) developing and implementing 
international supply guarantees of fuel cycle services, with 
the IAEA as a guarantor.  (COMMENT:  Among others, the Expert 
Group included participants from Argentina, Brazil, Egypt, 
India, Malaysia, South Africa, and the United States.  END 
COMMENT.)  Upon these recommendations, IAEA Member States 
have developed about a dozen complementary fuel assurance 
proposals designed to bolster the international fuel market 
and to remove one incentive for states to develop indigenous 
ENR technologies. 
 
¶5. (U) At the June 2009 meeting of the IAEA BOG, the Board 
considered detailed proposals for the two most advanced 
concepts:  (1) a low-enriched uranium (LEU) reserve to be 
located in and financed by Russia, and (2) an 
IAEA-administered LEU bank to be financed through 
contributions pledged by the United States (nearly $50 
million), the European Union (25 million EUR), the United 
Arab Emirates ($10 million), Kuwait ($10 million), and Norway 
($5 million), in addition to $50 million in challenge-grant 
funds from the U.S. nongovernmental organization Nuclear 
Threat Initiative (NTI).  Since access to both of these 
reserves would be controlled by the IAEA Director General 
using criteria approved by the Board of Governors, these are 
intended to provide impartial, "last resort" supply of LEU in 
the event that a consumer state is cut-off by its normal 
supplier for "non-technical, non-commercial reasons," and in 
the event that other international suppliers were unable or 
unwilling to provide back-up supply. 
 
¶6. (SBU) Since the IAEA Secretariat launched the current fuel 
assurances effort, many states associated with the Nonaligned 
Movement and Group of 77 have expressed reservations.  The 
primary suspicion is that this is an effort, by major 
suppliers, to deprive states that do not currently possess 
ENR technology of the opportunity to do so.  Many states 
(including most action addresses) have individually, or 
through association with NAM or G-77 statements, voiced 
concerns about losing their "inalienable right" under the 
Nuclear Nonproliferation Treaty to the fullest possible 
access to peaceful nuclear technology.  The detailed Russian 
and IAEA proposals presented to the BOG therefore included 
explicit language stating that access to the fuel banks would 
not require a state to give up its right to pursue any fuel 
cycle technologies.  Rather, the idea is that an assured 
supply of nuclear fuel would help persuade states that there 
is no need to exercise their right to invest in costly and 
complex ENR programs. 
 
¶7. (SBU) In partial response to this clarification, a step 
forward was taken at the June 2009 BOG meeting.  At this 
meeting nonaligned states moved beyond rhetorical statements 
about "rights" to raise specific concerns regarding the 
actual implementation of a fuel bank (ref A).  Washington 
believes this advance in the content of the debate was also 
facilitated by the fact that detailed proposals were put 
before the BOG, which enabled states to provide constructive 
comments on actual implementation details.  For example, 
statements by NAM countries raised specific concerns that 
needed to be addressed, such as reliability of the triggering 
mechanism, eligibility criteria, financing, liability, and 
fuel fabrication issues. 
 
¶8. (SBU) In order to capitalize on the forward momentum 
generated at the June 2009 BOG, Washington recommends 
engaging key skeptics to listen to their views about specific 
issues in need of resolution as well as ideas on how to do so 
(ref B).  A listening campaign would demonstrate to skeptics 
that their concerns have been seriously considered and would 
enable us to gather input on the full spectrum of concerns. 
All feedback, from potential suppliers and recipients, would 
form a useful basis upon which Russia and the IAEA could 
revise their proposals to gain greater acceptance. 
 
¶9. (SBU) NOTE FOR NEW DELHI:  India will be addressed 
separately.  Department is aware of the unique and 
fundamental concerns India has with the fuel bank proposals, 
and we will be developing a tailored demarche for New Delhi. 
 
-------------- 
ACTION REQUEST 
-------------- 
 
¶10. (SBU) Action addressees are requested to convey the 
following points to appropriate officials in the Ministry of 
Foreign Affairs, as well as appropriate technical ministries, 
as soon as possible.  Interlocutors should be encouraged to 
provide substantive comments on implementation details and to 
instruct representatives in Vienna to engage in constructive 
discussion.  Technical ministries, which we expect to be 
generally pragmatic, should be especially encouraged to 
provide feedback. 
 
BEGIN TALKING POINTS: 
 
-- For five years, the IAEA Secretariat has sought to 
establish a mechanism to provide reliable access to nuclear 
fuel.  The United States has supported this effort. 
 
-- In Prague, President Obama called for a "new framework for 
civil nuclear cooperation, including an international fuel 
bank, so that countries can access peaceful power without 
increasing the risks of proliferation." 
 
-- After a long effort, two concrete fuel bank concepts are 
now taking shape ) a fuel reserve in Angarsk, Russia and an 
IAEA-administered fuel bank. 
 
-- In June, detailed proposals for these mechanisms were 
considered by the Board of Governors, and for the first time 
Member States were able to comment on explicit issues 
associated with their implementation. 
 
-- The United States was encouraged by the thoughtful 
discussion that ensued and by the constructive comments made 
by many Member States. 
 
-- We hope this pragmatic dialog will be sustained at the 
September Board. 
 
-- Since your country has a particularly influential voice in 
this discussion, we believe it would be very helpful to have 
a clear understanding of your views of these proposals. 
 
-- For example, what particular implementation issues do you 
view as most problematic?  How would you recommend these be 
addressed? 
 
-- We encourage you to share your detailed views with us, 
with others on the Board, and with the IAEA Secretariat. 
 
-- It is our hope that the Russian and IAEA proposals will be 
elaborated (upon) to reflect the concerns of all BOG States, 
so that these can be improved in such a way that is 
acceptable to all. 
 
If asked/As needed: 
 
-- We believe that a fuel assurance mechanism would help 
increase access to civil nuclear power in a manner that 
simultaneously addresses proliferation concerns. 
 
-- Both of the proposals under consideration by the Board of 
Governors make clear that access to these mechanisms would 
not require giving up any right to peaceful nuclear 
technologies. 
 
-- President Obama echoed this sentiment in Prague, when he 
stated that "no approach will succeed if it is based on the 
denial of rights to nations that play by the rules." 
 
END TALKING POINTS. 
 
¶11. (U) Department thanks Posts for their assistance in this 
matter.  Department points of contact for working-level fuel 
assurance issues are Marc Humphrey and Burrus Carnahan 
(ISN/NESS); please include USMISSION UNVIE VIENNA as an info 
addressee on all responses. 
CLINTON