NPT ENVOY AMBASSADOR SANDERS CONSULTS ON NPT

C O N F I D E N T I A L SECTION 01 OF 08 CANBERRA 000341

SIPDIS

STATE FOR T, NP/MNA, EAP/ANP AND NP/RA

E.O. 12958: DECL: 02/22/2015
TAGS: PREL KNNP AORC PARM AS IR IAEA
SUBJECT: NPT ENVOY AMBASSADOR SANDERS CONSULTS ON NPT
REVIEW CONFERENCE IN CANBERRA

REF: A. STATE 18228

B. STATE 21700

C. CANBERRA 322

D. CANBERRA 323

Classified By: POLCOUNS WOO LEE FOR REASONS 1.4 (B AND D).


1. (C) SUMMARY: During February 10 consultations at the
Department of Foreign Affairs and Trade (DFAT) in Canberra
on preparations for the May 2005 Review Conference (RevCon)
on the Treaty on the Non-Proliferation of Nuclear Weapons
(NPT),Ambassador Jackie Sanders, Special Representative of
the President for the Nonproliferation of Nuclear Weapons,
discussed U.S. priorities with GOA officials, who concurred
with the U.S. goal to focus on non-compliance with the
Treaty's non-proliferation obligations. They speculated on
the motivations of various unhelpful Non-Aligned Movement
(NAM) states and strategized with her on tactics to work with
NAM, EU and other states, urging even wider consultations in
the run-up to the RevCon. Australian officials agreed on the
need to restrict access in some way to full nuclear fuel
cycle technologies, and hoped that consensus language could
be found at the RevCon on this commonly recognized need,
while the details would have to be decided later. They were
concerned that the USG's plan to restrict access to
enrichment technologies also included restricting Australian
access, even though it already had laser enrichment research
underway with U.S. corporations and nuclear labs. DFAT
officials announced they were considering making the
Additional Protocol (AP) a condition of supply for sales of
uranium, although this position had not yet been cleared
throughout the GOA or with Australian industry. They also
informed the Sanders delegation that they would soon begin
negotiations with China on a bilateral safeguards agreement
for uranium sales. End Summary.

PARTICIPANTS
--------------


2. (C) Ambassador Jackie Sanders, Special Representative of
the President for the Nonproliferation of Nuclear
Weapons, met on February 10 with DFAT Deputy Secretary Nick
Warner and Arms Control Office Director David Mason, before
attending a large roundtable gathering, hosted by DFAT First
Assistant Secretary for International Security David Stuart,
that included Australian Safeguards and Nonproliferation
Office (ASNO) Director General John Carlson, Mason, DFAT NPT
action officers John Page and Martin Walker, Analysts Doug
Keen and Miles Burgess from the Office of National
Assessments (ONA),ADOD Executive Officer for Proliferation
Security Sasha Kaminski, and Executive Officer for Security
Affairs Nicole Park from Prime Minister and Cabinet (PM&C).
Renick Smith, Special Advisor to Ambassador Sanders, Dr.
Elizabeth Murphy from the Office of Multilateral Nuclear
Affairs, John Mentz, Special Assistant for Nuclear
Nonproliferation Policy from the Office of the Secretary of
Defense, and Polmiloff (notetaker) also attended.

DEPSEC WARNER: GOA AND USG PRIORITIES ALIKE
--------------


3. (C) Ambassador Sanders laid out for DepSec Warner the
USG's priorities for the NPT RevCon, per Ref A guidance,
noting how closely she worked with Australian Ambassadors
Mike Smith in Geneva and Deborah Stokes in Vienna on
Conference on Disarmanent (CD) and International Atomic
Energy Agency (IAEA) issues. The USG wanted the RevCon focus
to be on non-compliance issues: the bad guys. The U.S. would
be prepared to discuss Article VI disarmament issues as well,
including the Moscow Treaty and Cooperative Threat Reduction
WMD dismantlement efforts in the Former Soviet Union.
Efforts to strengthen the NPT and the IAEA through
initiatives to restrict access to nuclear fuel cycle
technology would not be resolved before the RevCon, she
predicted, but they needed continued focus. She stressed the
need for high level involvement in capitals to prepare for
this year's RevCon, or risk losing the outcome to the "CD
mafia's 1995 mindset" on disarmament issues. She highlighted
Secretary Rice's committed attention to the NPT RevCon, as

SIPDIS
indicated during her Senate confirmation hearings. Warner
assured Sanders that the GOA likewise took the RevCon very
seriously and Mason informed her that Foreign Minister
Alexander Downer would attend the RevCon's opening and
deliver Australia's national statement, after which
Ambassador Smith would remain as Head of Delegation. Warner
described the GOA's priorities as the same as the USG's: Iran
and North Korea. He asked what kind of P-5 statement could
be presented, noting its absence would detract from common
goals to focus on other issues. Sanders outlined U.S.
efforts in the P-3 and P-5, citing Washington's goal to
achieve such a statement, but it had to be worth something
significant and not watered down. The U.S. was trying to
find commonly acceptable language on a Fissile Material
Cut-Off Treaty (FMCT) and the Comprehensive Test-Ban Treaty
(CTBT),while willing to be much more transparent on
disarmament than either Russia or China.

IRAN
--------------


4. (C) Switching briefly to Iran's non-compliance, Warner
took note of Secretary's Rice's somewhat tougher language
in the press that day on EU-3 efforts with Iran, saying there
needed to be a timeframe for Iran to be brought into
line. He said there was little to separate the GOA's view on
Iran from that of the USG or the Euros, but he was
skeptical that the EU-3 effort would lead to a desirable
outcome. Once the process with Iran failed, the GOA "would
be very supportive of referral to the UNSC," but he worried
whether Russia and China would effectively tackle the
issue. He said a carefully orchestrated process would be
needed to get Iran reported to the UN Security Council
(UNSC). Sanders agreed, saying there was little choice but
to let the EU-3 process play out while hoping it was not
facilitating secret Iranian nuclear operations. The United
States would make a strong statement on Iran at the upcoming
IAEA Board of Governors (BOG) meeting, but realized others
might not because the EU-3 process was ongoing. While many
countries wanted the issue to remain within the IAEA, if Iran
backed out of the EU-3 negotiations, most of them would find
it hard to keep Iran's non-compliance from being reported to
the UNSC. Warner stated that he had been Australia's
Ambassador to Iran 10 years ago, and its nuclear program was
an issue even then. He noted the Iranians' ability to "work
directly against their own best security interests." OSD's
Mentz commented that some NAM countries were growing more
frustrated with and skeptical of Iran, to include China.
Warner observed that the Chinese MFA had become significantly
more professional in the past few years. He stated that in
consulting with the GOA, the U.S. was "talking to the
converted," and he urged the U.S. to talk more about its
goals for the NPT and Iran with Brazil, South Africa and
Egypt, "the spoiler group." He also noted that their
economic relationships with Iran were likely to influence
states' positions on the Iranian nuclear issue. Sanders laid
out USG efforts to work with those countries, including an
upcoming trip through South America.

NPT CHALLENGES: FUEL CYCLE
--------------


5. (C) Sanders stated the NAM's growing mantra about have's
and have-not's with respect to the nuclear fuel cycle,
without recognizing the concommitant compliance obligations,
had to be countered. France and the UK also had ambitious
consultation plans before the RevCon, and several
international NPT Conferences had already taken place or were
scheduled, so there was ample opportunity for consultations.
Mason agreed with Sanders' concerns about the NAM view that
the transfer of sensitive technologies was an "inalienable
right." Innovative ideas were needed, and he mentioned IAEA
DG ElBaradei's call for a five-year moratorium, as well as
the U.S./G-8 plan. He asked whether there was an effective
way to address the fuel cycle issue at the RevCon. Sanders
said she was not optimistic. Although she had not yet seen
the report from ElBaradei's experts group, it would have to
be considered and then "we will have to sort out what's the
best we can do at the RevCon." She recalled that some states
had called for a subsidiary body on the fuel cycle at the
RevCon, in addition to the already existing ones on
disarmament and the Middle East, neither of which were
useful. There had been some discussion with like-minded
countries in Geneva on whether there should be a
"proliferation" of subsidiary bodies, including on topics
which we considered important like compliance, or none at
all, she stated. (NOTE: In the later roundtable discussion
on this topic, Murphy noted that UN representatives had
pointed out that there was insufficient meeting space in the
UN building to host more than two subsidiary bodies. End
Note.) Mason was hopeful, since ElBaradei and others saw the
need to better control sensitive technologies, that at least
some common language could be found at the RevCon that
recognized the problem. Sanders agreed and said that since
the NAM states were ElBaradei's biggest supporters, the onus
should be on him to craft such language that would put
caveats on their "inalienable rights." To the degree that
the U.S. would be on the hotseat anyway for unwarranted
criticism on disarmament, she told Warner the USG would
appreciate whatever support the GOA could give. He replied,
"We will be there with you." He thanked her for traveling
all the way to Australia and asked her to stay in touch in
the lead-up to May. Mentz and Mason mentioned in passing
that Singapore had been particularly helpful within the NAM
on the NPT and Iran over the past few years, and Warner
concurred.

DFAT ROUNDTABLE: NAC AND NAM CHALLENGES
--------------


6. (C) FAS David Stuart welcomed Ambassador Sanders and the
delegation to his roundtable session, noting the U.S.
had an important leadership role to play in the NPT in
getting its message out to friends and others. He thought
the U.S. was having some effect, as noted in a press account
of a more helpful statement on the APthat RevCon
President-designate Duarte had made the day before. Stuart
confessed that the GOA was worried about the upcoming RevCon,
stating that this was a key motivation for the nuclear
terrorism conference that FM Downer had sponsored in Sydney
in November 2004, in order to get Asia Pacific countries onto
common ground on that issue. Sanders said the USG intended
to address all three pillars of the treaty: nonproliferation,
disarmament and peaceful uses of nuclear energy, but the
focus had to be on nonproliferation and the crisis of
non-compliance. The U.S. would be working with Australia and
others about strengthening the IAEA (Ref B and septel) as
well. While the U.S. was proud of its disarmament
accomplishments, she acknowledged that peaceful uses would be
contentious.


7. (C) Stuart pointed out that New Zealand, and not South
Africa, would be chairing the New Agenda Coalition (NAC) this
year and a few GONZ officials had a particular zeal for the
NPT. Sanders referred to the NAC's ability, by moderating
its stance, to get several NATO countries to support its
unhelpful disarmament resolution at the 2004 UN First
Committee (UNFC); she inferred that South Africa did not like
such moderation. Stuart posited that the reason South Africa
was backing away of the NAM and NAC was part of its strategy
to claim one of the African seats in the potentially expanded
UNSC, adding that he had just been talking with FM Downer
about how to take advantage of this opportunity for more
moderation. Stuart said he had found South African behavior
"quite appalling" up to now, even though it wanted to be
considered equal to Japan, Brazil and India for a UNSC seat.
ASNO DG Carlson thought South Africa was worried about being
locked out of the opportunity for fuel cycle technology and,
although he thought Pretoria had no plans to get back into
uranium
enrichment, it did not want to foreclose the option, and had
"reluctantly (gotten) in bed with Iran." Some of Carlson's
South African contacts were embarrassed by this, but said
their broader interests were being challenged. Their
concerns needed to be addressed: there was a difference
between noncompliant states and those that simply had an
interest in nuclear energy. Stuart said that in bilateral
pol-mil talks with Brazil later in the day, he would be
urging the GOB to increase its focus on NPT compliance issues
and language, especially given Brazilian Amb. Duarte's
presidency of the RevCon. Stuart was considering doing some
Australia Group (AG) outreach to Africa.


8. (C) Stuart and Sanders compared notes on how difficult
Egypt had been to work with over the past year in arms
control fora. Sanders stated that the Egyptian delegate at
the Wilton Park NPT Conference had gone so far as to
excuse the Iranian nuclear program while claiming that Israel
was the main threat, as well as to indicate that if Egypt did
not get what it wanted at the RevCon - progress on a nuclear
weapons free zone in the Middle East -- the
U.S. would not get what it wanted either. She expected that
the RevCon could be messy; there were hints from some
NAM states that they wanted the RevCon to fail, and to ensure
that the Nuclear Weapons States (NWS) took the blame.
Sanders remarked that the U.S. wanted a consensus document at
the RevCon, but it was not mandatory. Three of the last six
had not had one, and this would be as tough a Review
Conference as any of them. She added that the USG had
encouraged Duarte not to equate the success of the NPT or the
RevCon with the achievement of a consensus document. At the
January NPT Conference in Bali, he had said some unhelpful
things about the necessary elements of a consensus document.
She had encouraged him in Tokyo the day before to back away
from those notions. Mason related that Duarte had attended
the November nuclear terrorism conference in Sydney and had
been in "full flight" on some pet issues; Mason had inferred
that Duarte saw Brazil as the equal of India and likewise
wanted the status of a nuclear-capable state.


9. (C) Stuart labeled much of NAM behavior since 2002 as
"pernicious," such as Malaysia reading out a NAM statement on
Iran at the IAEA that had been written by Iran. At the
Sydney conference, he related, the Malaysian delegation had
tried to assert that the AP should not be seen as the
standard requirement to enable technology transfers; peaceful
nuclear energy was an unfettered right and Malaysia would not
be bound by an international protocol. Malaysia found itself
isolated when the Philippines had declared it was preparing
to adopt the AP. Mentz said he believed Malaysia had grown
disenchanted with Iran, and he suspected it would no longer
be willing to be its mouthpiece.


10. (C) Stuart observed that when senior officials of most
NAM states met with U.S. or Australian counterparts, they
invariably said the right things about nonproliferation, but
this did not extend to their arms control diplomats.
The "Egypts of the world" with narrow agendas should not be
allowed to drive the RevCon agenda, he declared; there
ought to be an institutional interest in a positive outcome.
One way to get Egypt on board, he believed, might be to work
through ElBaradei, who, along with his staff, at least shared
Western concerns. There should be a strategy
to break through the sterile bloc mentality, he added, and
our Foreign Ministers needed to reach out to FM Wirayuda in
Indonesia as well to do more on counterproliferation. He
believed Indonesia shared GOA and USG concerns about
proliferation. One thing the GOA would start saying to
counterparts more often, Stuart offered, would be to ask,
"how do you expect the NWS to disarm without assurances of
nonproliferation?" Sanders said the U.S. had also been
asking that question, but she agreed it was more helpful when
other states said it for us; "no one disarms in a vacuum."
She observed that Malaysia and South Africa had fallen out
with one another within the NAM during the 2004 NPT Prepcom,
and she assumed it was partly over leadership issues. Stuart
pointed out that Malaysia would be the head of both the NAM
and the Organization of Islamic Conference (OIC) until early
2006, which meant that unhelpful nationalistic holdovers from
the Mahatir era were still around. When Sanders commented
that at least the U.S. and Indonesia were working to improve
their relationship as an offshoot of tsunami relief
cooperation, Stuart replied, "we'd love you to be friends
again with them." He noted that Australia, Indonesia and
Norway were working on a paper together on integrated
safeguards.

NAM AND EU CHALLENGES
--------------


11. (C) Ambassador Sanders pointed with dismay to the
problem of EU and NAM caucuses. At the IAEA Board of
Governors (BOG) meeting in September and November, meetings
were suspended from the podium so that these groups could
meet. Stuart concurred, observing that both groups would
meet and then tell the rest of the world what they had
decided. The EU caucus now served to undercut the ability to
act as "the West" because they would have exhausted
themselves in their own negotiations and there was no room
for compromise with others afterwards. The EU problem would
only get worse at 25 states, he remarked. Sanders said the
rest of us -- the U.S., Australia, Japan, Canada, New Zealand
and others -- needed to organize too. The Western European
and Others Group had met almost daily during the 2000 RevCon.
Stuart pointed out that G-8 meetings helped to steer EU
meetings, so more of those might be needed. Sanders
commented that Australia had become an honorary G-8 member in
Vienna. Stuart strongly agreed with Sanders' point that high
levels of governments had to be involved in nonproliferation
and NPT policy, stating that was the way to leverage the
senior level concurrence on APEC and ASEAN Regional Forum
statements on nonproliferation and to "get them to reign in
their mafias." Sanders observed that that was the U.S.
message in every capital: this was everyone's security
treaty and everyone's concern.

NUCLEAR ENERGY ISSUES AND COMPLIANCE
--------------


12. (C) FAS Stuart said Australia had an important stake in
the nuclear fuel supply as the world's major uranium
producer. Sanders related that the U.S. provided more
peaceful nuclear energy technical assistance than any other
country. At the moment, technical safety concerns about the
nuclear power industry were very low compared to
the post-Chornobyl era, Stuart averred, but governments
needed answers on proliferation safeguards to have full
confidence in the nuclear industry. He outlined the
Australian priority on compliance as recognition of the AP
as a condition of supply for technology. In addition,
although this idea had not been cleared through the GOA
interagency yet, DFAT was considering making the AP a
condition of supply for uranium as well. This idea would not
be cleared with Australian industry in time for the RevCon,
he noted. It would also likely have to be coordinated with
Canada and South Africa. As one of the G-10 "critical
supply" countries of sensitive technologies, Australia would
be watching the results of a UK-led G-8 meeting the following
week on this issue. He did not think there was scope to do
more than continue working on the G-8 plan before the RevCon;
but serious RevCon support for the one-year moratorium would
be useful. In Stuart's view, there was "not much hope for"
ElBaradei's ideas; the IAEA could not be the physical
guarantor of fuel supply. The GOA did support a moratorium
for some period of time to reach an agreeable framework on
nuclear fuel cycle technology. The GOA has not yet decided
on ElBaradei's five-year moratorium idea, but Stuart believed
that five years was too long and would allow states to avoid
dealing with the problem. Stuart also urged that guaranteed
supply had to be part of any restrictions. Australia also
had to consider its own status as a supplier and its possible
future interest in enrichment and reprocessing technology.
The USG agreed on the need to make the AP a condition of
supply, Sanders said, but likely would not have its own AP in
force before the RevCon because the implementing legislation
was not complete.


13. (C) Stuart expressed GOA reservations with parts of the
U.S./G-8 plan to guarantee supply of enrichment technology
only to those countries which already had an enrichment
capability. Carlson stated that the Australian
company Silex was already working with U.S. nuclear labs and
energy companies on a laser enrichment project. (NOTE:
At lunch the previous day (Ref C),Carlson had expanded on
this issue. Although he and Stuart agreed with the
general need to limit enrichment research in some way, the
U.S. had not listed Australia under its plan as a country
that would be allowed to continue its research. The irony
was that the ongoing Australian laser research would lead
to program development in the U.S., to the benefit of the
U.S. firms. End Note.) Sanders stated that the U.S.
continued to prefer the President's proposal to limit the
fuel cycle. She offered to follow up on the Australian laser
enrichment issue. She saw problems with ElBaradei's effort
to multilateralize the handling of the fuel cycle. For
starters, it would be too taxing for the IAEA. Stuart
agreed, adding that national export control laws and other
rules also applied. The main goal was to garner the
political will to agree that the problem had to be addressed.
This was an area where G-8 leadership was good, he assessed.

STRENGTHENING THE NPT AND IAEA
--------------


14. (C) Sanders remarked that the topic of creating an IAEA
Special Committee on Safeguards and Verification (Ref B and
septel) would be addressed in the BOG meeting at the end of
February. Stuart said he thought the GOA would agree with
it, but he wondered whether it would be acceptable to NAM
states. He said the GOA would also like the RevCon to
consider what more the UNSC could do in the event a party
moved to withdraw from the NPT. In Australia's view, the
matter should be automatically referred to the UNSC;
withdrawal should not absolve the party from any unmet NPT
obligations; and withdrawal should not free any previously
supplied equipment or technology from restrictions imposed by
the supplier at the time of supply. The GOA would discuss
this with Russia, China and those states looking for
permanent UNSC status. Carlson pointed out that the Treaty
itself required that the withdrawing party notify the UNSC of
its intention. Sanders agreed and offered that no further or
automatic mechanisms related to UNSC referral of withdrawal
were needed. She agreed that withdrawal did not excuse
previous violations and noted that the USG was looking at the
issue of making it a part of fuel and technology supply
contracts that those materials would have to either be
destroyed or returned to the supplier if the receiving
country later withdrew from the NPT. Stuart stressed that
his point was to ensure that all states saw the issue of NPT
withdrawal as a core matter for the UNSC. He was not trying
to prescribe what the Council would have to do about it, but
he also did not want to let the matter get lost in obscure
technical arguments at the BOG.

DISARMAMENT, FMCT, CTBT
--------------


15. (C) Stuart commended the USG effort to get its empirical
message on disarmament out, mentioning specifically the
recent speech by Assistant Secretary Rademaker on Article VI
efforts. Stuart cautioned that it would also be good if
Congress did not approve more funding for nuclear weapons
research. Under the RevCon optics, the U.S. could be seen as
strengthening its arsenal. He also warned that Duarte had
pitched the "irrational and facile" sales line that the P-5
NWS had to "offer something" on disarmament at the Conference
in order to get what they wanted, but he did not think U.S.
explanations were enough. He asked for further bilateral
discussion on the FMCT, stating he thought there was a way to
address U.S. concerns about verification. Even some
indication that the USG might reconsider verification before
the RevCon would be helpful, he posited. Carlson thought
there could be an innovative approach, different from the
rigid IAEA safeguards model. He handed out copies of his
article in "Arms Control Today" on the idea. Stuart said he
sought greater detail on the U.S. perspective and would be in
Washington February 28 - March 3. Sanders welcomed his visit
and willingness to talk about FMCT verification, but she
cautioned that he should not expect to change minds after
Washington's very lengthy interagency review of FMCT
verification. Stuart said it bothered the GOA that China and
others were hiding behind the USG position on the FMCT.
Sanders said simply that the USG could not agree to a
negotiating mandate that included FMCT verification. Stuart
asked Sanders what sort of RevCon final document language the
United States could live with on the CTBT. Stuart said he
knew Australia would not change U.S. minds on the CTBT, but
Australia was doing work on the CTBT which it thought was
important. Sanders noted that the United States continued to
support the testing moratorium and the CTBT monitoring
system.


16. (C) NPT Action Officer John Page asked about the RevCon
agenda and where the U.S. stood with respect to the "13
Steps" from the 2000 RevCon Final Document. Sanders
explained that Duarte was working to get an agreed agenda, a
satisfactory way for him to spend his time from her
perspective. The U.S. was still sorting through what to say
about the 13 Steps, noting there had been five years of
momentous events since 2000. It was important to remember
that the goal was arms reductionnot a sterile debate on the
13 Steps, some of which no longer even existed. She said the
U.S. was working on a UNSC Presidential Statement on the 35th
Anniversary of the NPT. Hopefully, it would serve to remind
NPT parties not to lose the (security) forest for the
(disarmament) trees.

AUSTRALIA'S INTENT TO SELL URANIUM TO CHINA
--------------


17. (C)Stuart said Carlson would be visiting Beijing soon to
work on a bilateral safeguards agreement in order for
Australia to be able to sell uranium to China. Carlson wryly
commented that the Chinese starting position was
"trust us" without regard to accounting rules and other
safeguards requirements. He related that China wanted to
secure a longterm uranium supply. Up to now, it had been
self-sufficient. Mentz stated that a long-dormant USG
civilian cooperation agreement with China had been activated
the previous year. U.S. constraints included
catch-all controls and end-use checks. He hoped Australia
would include those measures as well.


18. (U) Ambassador Sanders and the delegation have cleared
this cable.

STANTON