VZCZCXRO3093
PP RUEHBI
DE RUEHUNV #0535/01 3341659
ZNR UUUUU ZZH
P 301659Z NOV 09
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC PRIORITY 0332
INFO RUEHII/VIENNA IAEA POSTS COLLECTIVE PRIORITY
RHMCSUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEANFA/NRC WASHDC PRIORITY
RUEHAD/AMEMBASSY ABU DHABI 0044
RUEHTA/AMEMBASSY ASTANA 0210
RUEHKU/AMEMBASSY KUWAIT 0051
RUEHNY/AMEMBASSY OSLO 0205
RUEHSM/AMEMBASSY STOCKHOLM 0362
RUEHGV/USMISSION GENEVA 0928
RUEHBI/AMCONSUL MUMBAI 0076

UNCLAS SECTION 01 OF 04 UNVIE VIENNA 000535 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR T, S/SANAC, IO/GS, ISN/NESS, ISN/MNSA 
POL OR ECON/EST FOR IAEA ACTION OFFICER 
GENEVA FOR CD 
DOE FOR NA-243-GOOREVICH 
NRC FOR JSCHWARTZMAN, MDOANE 
 
E.O. 12958: N/A 
TAGS: ENRG KNNP AORC TRGY IAEA
SUBJECT: IAEA/BOG - RUSSIAN NUCLEAR FUEL RESERVE APPROVED 
 
REFS:  (A) UNVIE 531  (B) UNVIE 301  BOTH NOTAL 
 
---------------------------------- 
Paving the Way or Pyrrhic Victory? 
---------------------------------- 
 
¶1. (U) Summary:  The years-long IAEA debate over the creation of an 
international nuclear fuel reserve finally came to a head at the 
Board of Governors' Thanksgiving session.  Rather than have the 
Board act on a Secretariat recommendation, Russia chose the tactic 
of seeking approval of its plan by a resolution with sufficient 
cosponsors to indicate the inevitability of its adoption and 
consequently avoid a direct challenge in the Board.  The resolution, 
drafted by Russia and the Secretariat and edited in the process of 
enlisting support, came before the Board with fourteen sponsors 
(Azerbaijan, Canada, Denmark, France, Japan, the Republic of Korea, 
Mongolia, the Netherlands, Romania, Russia, Spain, Ukraine, the UK 
and the United States) and enough additional promises of support to 
ensure in advance the adoption of the resolution.  However, Russia 
was never able to discourage opposition sufficiently to avoid a 
vote. 
 
¶2. (SBU) Summary contd.: Following a debate that tracked closely 
along the lines of the IAEA's June meeting, the IAEA Board of 
Governors adopted the resolution approving the first of the 
approximately one dozen proposals for nuclear fuel supply assurances 
developed by Member States and the Secretariat.  The text is 
contained in paragraph 11.  The calls in the debate for "more time 
to consider the question" led the Chair to note the absence of 
consensus on the resolution and dashed the hope to have it adopted 
by silent acquiescence.  The vote, 23 for (U.S. included), 8 
against, 3 abstain, 1 absent, reflects the continued division over 
this issue between western states seeking to devise mechanisms to 
discourage the spread of sensitive technologies and the more vocal 
developing countries concerned about being disadvantaged 
commercially and denied their "right" to nuclear development as they 
see fit.  This continued division and the sense that the resolution 
was forced on the NAM/G-77 does not bode well for the prospects of 
other fuel assurance proposals, such as the IAEA Fuel Bank. 
However, several developing countries stood out as particularly 
effective allies in this effort, including Peru, Kazakhstan, and 
Mongolia, all of whom spoke out publicly in support.  Significantly, 
India departed from the other NAM to abstain, calling itself a 
potential supplier to a fuel bank.  End Summary. 
 
---------------------- 
The Sponsors' Strategy 
---------------------- 
 
¶3. (SBU) Russian IAEA Governor Berdennikov convened potential 
resolution co-sponsors to meetings on November 24 and 25 before the 
Board convened, as well as twice on November 26, before the opening 
of the Board meeting and at midday, to recruit co-sponsors and 
engineer group decisions on tactics.  Generally attending these 
meetings were the Ambassadors or msnoffs of all the ultimate 
sponsoring states plus Australia, Germany, Peru, and Switzerland. 
Berdennikov noted to all at the outset on November 24 that FM Lavrov 
had contacted their ministers with the request for co-sponsorship. 
 
¶4. (SBU) Berdennikov used the initial meetings to discuss revisions 
of the resolution text as a means of securing sponsorships.  UK, 
French, and German additions to the original Russian/Secretariat 
text added preambular and operative paragraphs referring 
constructively to other fuel assurance proposals still under 
development as well as a preambular paragraph emphasizing states' 
rights under NPT Article IV.  Berdennikov on several occasions posed 
the alternatives of advancing the proposal in this Board or 
deferring.  When his question resulted in musing about the good will 
to be gained by allowing for more consultation, however, he replied 
with his own analysis that the opponents were implacably opposed and 
the supporters would gain no ground.  The UK and U.S. ambassadors 
supported him in this analysis and others accepted it with quiet 
unease.  On Wednesday, November 25, he secured the agreement of the 
group to table the resolution that evening on behalf of the sponsors 
that had formally signed up by the appointed hour; Berdennikov and 
 
UNVIE VIEN 00000535  002 OF 004 
 
 
Ambassador Davies called on the Board Chair at 8:00 p.m. to submit 
the resolution with fourteen governors' signatures. 
 
------------ 
Board Debate 
------------ 
 
¶5.  (U) Board debate on the Russian LEU Reserve proposal was largely 
a rerun of the debate in June (ref B) involving three fuel assurance 
proposals, the Russian LEU Reserve, the IAEA Fuel Bank, and the 
German Multilateral Enrichment Sanctuary Project.  Russia introduced 
its proposal, which had been presented to the Board by the 
Secretariat without a recommended action, noting that this was an 
issue that had been under debate for over 50 years and reminding the 
Board of some of the more recent history and initiatives.  It also 
introduced the resolution approving the agreement between Russia and 
the IAEA establishing the reserve, approving a Model Agreement 
between the IAEA and a recipient Member State wishing to take 
advantage of the reserve, and granting the Director General the 
authority to conclude an agreement according to the model without 
obtaining further permission of the Board of Governors.  Russia 
asked for the resolution to be adopted without a vote. 
 
¶6.  (U) Argentina, speaking for the G-77 (and mistakenly adding 
"plus China" in its introduction), reiterated the June 2009 view 
that there was a need for caution on the technical, legal and 
economic aspects as well as on the underlying political aspects of 
fuel assurances.  Argentina stated that the Agency must first agree 
on a coherent conceptual framework including principles and 
objectives, asserted that any proposal should be adopted by 
consensus of the General Conference, noted that there had been no 
developments addressing the concerns identified in June, concluded 
that no decision could be taken at this time, and indicated that 
that it looked forward to future dialogue.  These themes were echoed 
by Egypt, speaking for the NAM and in its national capacity, 
Argentina speaking in its national capacity, Brazil, Pakistan, and 
Venezuela, all of which subsequently voted no on the resolution. 
Pakistan also stated that fuel assurance proposals should also 
address the supply of natural uranium.  India, Turkey, Peru and 
Afghanistan all supported the need for consensus, although the first 
two abstained on the resolution and the latter two voted for it. 
Argentina, Egypt and Venezuela all rejected the notion that any 
particular technology was a proliferation risk while Venezuela went 
further to say that the real proliferation risk was the absence of 
disarmament under NPT Article VI.  Brazil reprised its question from 
June about just who would benefit from this proposal, except perhaps 
that a nation being penalized for very poor behavior might be able 
to avoid the penalty.  Argentina repeated a long list of conditions 
that it felt a fuel assurance proposal must meet, apparently without 
realizing that the Russian proposal addressed them. 
 
¶7.  (U) Sweden, speaking on behalf of the European Union, expressed 
support for the proposal, noting also that the EU had pledged 25 
million Euros to the Fuel Bank and that the UK and Germany had also 
made proposals.  The EU statement also cited the support that the 
proposal gave to the provisions of UNSCR 1887.  The EU statement was 
followed by statements of support from Ukraine, the U.S. (text in 
paragraph 9), Canada, China, the ROK, Mongolia, Japan, the UK, 
France, Switzerland, and, under Rule 50, Kazakhstan and Austria. 
All made supportive statements but largely cited the generalities of 
the benefits of fuel assurances and not the specifics of the 
proposal.  Mongolia, Japan, the ROK and the United States all noted 
the lack of impact on Agency resources and Japan and the United 
States noted the safeguards criteria for eligibility, while the ROK 
cited the reasonableness of the eligibility criteria generally. 
The ROK noted that additional elaboration was needed on the nature 
of the disruption that could trigger use of the reserve.  The United 
States noted that the proposal dealt satisfactorily with safety, 
security and liability issues, while also citing the work of the 
GNEP Nuclear Fuel Assurances Working Group on the availability of 
fuel fabrication services. 
 
---------------------------------- 
Got Them Right Where They Want Us? 
---------------------------------- 
 
UNVIE VIEN 00000535  003 OF 004 
 
 
 
¶8. (SBU) Following the Board's November 26 discussion, the Russians 
again convened the sponsors to request support for the option of 
requesting a vote.  Berdennikov analyzed that the opponents to the 
proposal knew "they have the Chair" with them, that the Chairman 
would note correctly that there was no consensus and could then turn 
to the sponsors with the alternatives to defer a decision or assign 
the issue to a working group.  Berdennikov took the position that 
either alternative would reduce the likelihood of approval in the 
future.  At this juncture, in the Russian analysis, opponents were 
"taken by surprise" and there was no unity of position among G-77 or 
NAM states.  Allowing more time for consultations, Berdennikov 
asserted, would result in no more "yes" votes but would allow the 
opponents to turn abstentions into "no" votes.  In this analysis, 
again, Berdennikov got strong endorsement from the UK ambassador. 
Others (Canada, France) actively endorsed the position of asking for 
a vote if necessary; no one present objected. 
 
---------------------- 
Little Drama in Voting 
---------------------- 
 
¶9.  (U) The resolution approving the Russian LEU Fuel Reserve and 
the necessary agreements to implement it came to a vote on the 
morning of November 27 after the Board has passed the more closely 
watched resolution on safeguards verification on Iran and heard a 
lengthy round of explanations of vote on that topic (septel).  The 
Board Chair took up the Russian proposal with the resigned 
observation, "Since we are in a voting mood," let us turn to the 
resolution on an LEU reserve.  The resolution passed 23-8-3 with one 
Board Member absent. 
 
-- Voting YES were: Afghanistan, Australia, Burkina Faso, Cameroon, 
Canada, China, Denmark, France, Germany, Japan, the ROK, Mongolia, 
the Netherlands, New Zealand, Peru, Romania, Russia, Spain, 
Switzerland, Ukraine, the UK, the United States, and Uruguay. 
 
-- Voting NO were: Argentina, Brazil, Cuba, Egypt, Malaysia, 
Pakistan, South Africa, and Venezuela. 
 
-- ABSTAINING were: India, Kenya and Turkey. 
 
-- Azerbaijan, a sponsor, was ABSENT. 
 
¶10.  (U) Following the vote, a number of countries voting no or 
abstaining explained their votes, decrying the absence of consensus. 
 India broke from other NAM states by abstaining and delivered an 
explanation of vote (EOV) lamenting the introduction of 
"discriminatory" criteria for fuel bank eligibility but also noting 
India's potential to be a supplier of thorium to an international 
fuel reserve.  After the formal EOVs, the Chair opened the floor. 
Canada, in an "additional statement" suggested that perhaps it would 
be worthwhile to pursue developing a general framework before moving 
on to discuss other proposals.  The U.S. stated that it viewed the 
resolution just adopted as part of the dialogue process and that it 
wanted to continue to explore the issues. 
- 
¶11.  (U) Begin Text of Resolution (available to the public on 
www.iaea.org): 
 
Request by the Russian Federation regarding its Initiative to 
Establish a Reserve of Low Enriched Uranium (LEU) for the Supply of 
LEU to the IAEA for its Member States. 
 
Resolution adopted by the Board of Governors on 27 November 2009 
 
The Board of Governors, 
 
(a) Recalling the Report by the Director General GOV/INF/2007/11 
"Possible New Framework for the Utilization of Nuclear Energy: 
Options for Assurance of Supply of Nuclear Fuel", 
(b) Recalling the document GOV/INF/2009/1 "Russian Federation 
Initiative to Establish a Reserve of Low Enriched Uranium (LEU) for 
the Supply of LEU to the IAEA for its Member States", 
(c) Recalling the Report by the Director General GOV/INF/31 
 
UNVIE VIEN 00000535  004 OF 004 
 
 
"Assurance of Supply - Russian Federation Initiative to Establish a 
Reserve of Low Enriched Uranium (LEU) for the Supply of LEU to the 
IAEA for its Member States", 
(d) Noting the provisions of Article IX of the IAEA Statute allowing 
Member States to make available to the Agency nuclear materials for 
supply to other Member States, 
(e) Noting that a number of concepts of assurance of supply of 
nuclear fuel have been proposed, which can complement each other to 
strengthen the assurances provided to interested Member States, and 
that discussion have already taken place in the Board, 
(f) Reaffirming that the establishment of the reserve of LEU and the 
subsequent implementation of future agreement with Member States 
will be carried out as a back-up solution only and in such a way 
that any disturbance or interference in the functioning of the 
existing fuel market is avoided, while noting the importance of 
developing a range of complementary options for additional 
assurances of supply, and the fact that the good operation of the 
market already provides assurances of supply, and 
(g) Emphasizing that the inalienable rights of all Parties to the 
NPT to develop research, production and use of nuclear energy for 
peaceful purposes without discrimination provided for in Article IV 
of the NPT will in no way be affected by the aforementioned Russian 
Initiative. 
Hereby, 
¶1. Welcomes the offer of the Russian Federation to establish on its 
territory a reserve of LEU to the IAEA for its Member States; 
¶2. Authorizes the Director General to conclude and subsequently 
implement the Agreement with the Russian Federation to establish a 
reserve of LEU for supply to the IAEA for its Member States, 
attached as Attachment 1 to GOV/2009/76. 
¶3.  Approves the Model Agreement, attached as Attachment 2 to 
GOV/2009/76 as the standards text for agreements that are to be 
concluded with Member States for the supply of LEU by the IAEA from 
the reserve; 
¶4. Authorizes the Director General to conclude and subsequently 
implement future Agreements with Member States for the supply of LEU 
by the IAEA when the Director General considers that the request of 
the Member State fulfills the eligibility criteria included in the 
Agreement with the Russian Federation, without the requirement of a 
case-by-case authorization by t he Board but with a requirement for 
the Director General to keep the Board informed of the progress of 
individual Agreement; and 
¶5. Decides to remain seized of the matter with a view to 
considering, and eventually adopting at an early date, other 
complementary proposal to strengthen the assurances of supply of 
nuclear fuel available to interested Member States. 
 
End Text of Resolution 
 
¶12. (U)  Begin Text of U.S. Statement as delivered. 
 
Mr. Chairman, 
The Director General assembled an Expert Group on Multilateral 
Approaches to the Nuclear Fuel Cycle in mid-2004.  Many reports, 
proposals, and discussions both formal and informal over the ensuing 
five years brought us to the decision the Board made today.  My 
delegation was among the sponsors of the resolution on the Request 
by the Russian Federation regarding its Initiative to Establish a 
Reserve of Low Enriched Uranium (LEU) for the Supply of LEU to the 
IAEA for its Member States.  U.S. support for this specific proposal 
is intended to advance dialogue in this Board and this Agency on 
means for reinforcing the market in nuclear fuel services through 
various concepts involving fuel reserves, export licensing, 
multinational enrichment facilities, improved information sharing, 
and such other concepts as may be put forward.  We hope and expect 
to continue this dialogue. 
Thank you. 
 
End Text of U.S. Statement. 
 
DAVIES