U.S.-RUSSIA TALKS ON JOINT INITIATIVE TO

C O N F I D E N T I A L MOSCOW 001129

SIPDIS

SIPDIS

DEPT FOR EUR/RUS, ISN/FO, AND T

E.O. 12958: DECL: 03/12/2017
TAGS: ENRG KNNP PARM RS
SUBJECT: U.S.-RUSSIA TALKS ON JOINT INITIATIVE TO
STRENGTHEN NUCLEAR DISTRIBUTION

REF: A. STATE 3772

B. MOSCOW 1001

C. MOSCOW 1002

Classified By: POL M/C Alice G. Wells for reasons 1.4 (b/d).


1. (C) SUMMARY. On January 26, a team led by A/S John Rood
met with a team led by Oleg Rozhkov, MFA Deputy Director of
the Department of Security and Disarmament Affairs (DVBR),to
discuss the joint initiative to strengthen nuclear
nonproliferation outlined in a January 10 letter from U/S
Joseph to DFM Kislyak. The meeting concentrated on the
proposal to provide nuclear technology to nations that make
long-term commitments not to pursue the full nuclear fuel
cycle, particularly enrichment or reprocessing. The
discussion focused on consideration of potential supplier
nations and target beneficiaries. The latter were subdivided
further into those nations currently operating nuclear
reactors and those that have expressed an interest in doing
so. The meeting concluded with a discussion of U/S Joseph's
proposal to make a targeted effort to gain universal
adherence to the Additional Protocol.


2. (C) The U.S. and Russian teams met again on January 29 on
the margins of the U.S.-Russia Strategic Security Dialogue
(Refs. B-C). In this meeting the two sides agreed to discuss
a draft "attractive offer" on the margins of the next meeting
on the Global Initiative to Combat Nuclear Terrorism (GICNT)
in Ankara beginning on February 12. The U.S. agreed to
provide a first draft via e-mail by February 7. END SUMMARY


3. (C) On January 26, a U.S. delegation led by A/S John Rood
met with a Russian delegation led by Mr. Oleg Rozhkov, MFA
Deputy Director in DVBR, to discuss the nuclear energy
component of a new joint initiative to strengthen nuclear
nonproliferation. This initiative was discussed in Vienna
December 15 and elaborated in a January 10 letter from U/S
Robert Joseph to DFM Sergey Kislyak (Ref A).


4. (C) Rozhkov opened the session by acknowledging receipt of
the January 10 letter and stating that Russia agreed with the
basic framework proposed in the letter and could work within
these guidelines. He then began by setting out the goal of
the day's session to define a circle of possible target
countries that would benefit from a program under which
nuclear supplier nations would work together with a common
vision to promote nuclear power to countries that would give
long-term commitments not to exercise their rights to the
full nuclear fuel cycle, in particular enrichment and
reprocessing. In addition to identifying target countries,
Rozhkov said it would be necessary to identify those supplier
nations that would participate, and he asked for a definition
of supplier nation - i.e., whether a supplier nation is one
that exports nuclear reactors or also could be one that
exports not reactors but materials and technology.

--------------
Supplier Nations
--------------


5. (C) Rood responded that the U.S. sees seventeen countries,
a subset of the nuclear suppliers group, as supplying
uranium, facilities, and reactors. Stratford elaborated that
this includes the P5, Japan, Netherlands, Germany, Argentina,
and Brazil. These ten nations are supplemented by Canada and
South Korea and, possibly, by the Czech Republic, South
Africa, and India. To this the U.S. adds Australia and
Kazakhstan, major uranium suppliers, for a total of seventeen.


6. (C) Rozhkov said he would like to "suspend" India from the
supplier list, saying it was Russia's understanding that
India does not intend to export any nuclear technology. Also,
including India would raise questions about what to do about
Pakistan. At the same time, Rozhkov noted that he would like
to add Ukraine, a major producer of turbines. Rood replied
that India wants to leave open the option to be a supplier
state in the future but that he could accept the suggestion
to "suspend." He said he also thought the addition of
Ukraine was acceptable.


7. (C) Rozhkov and Rood discussed South Africa, with Rood
saying he did not wish to bring South Africa in on the
"ground floor" given the obstructionism of key South African
officials and Rozhkov countering that, while he agreed we
would likely face obstructionism from the start, it would be
best to bring South Africa in from the beginning so that it
could not criticize the initiative from the outside. Rood
suggested that question of what to do with South Africa be
left to be determined for now. Rozhkov and Rood agreed that
a number of states would be treated as both suppliers and

potential beneficiaries, including Brazil and Argentina.


8. (C) Rozhkov asked whether Argentina and Brazil can be
considered suppliers. Rood responded that they see
themselves as such and that they are influential with
non-aligned countries. Rozhkov said that in his view, both
countries are just marginal suppliers that could, in fact,
become users if presented with a sufficiently attractive
offer. He said he thought the same is true of Canada and
Australia and proposed that they, too, should be thought of
as marginal suppliers. Rood responded that he saw both as
supplier nations.


9. (C) Rozhkov and Rood briefly touched on DPRK and Iran,
agreeing that these are special cases that should not be
considered under the nuclear energy initiative.


10. (C) Summing up, Rood and Rozhkov agreed on the list of 17
nations listed by Stratford as modified to "suspend" India,
include Ukraine, leave South Africa as to be determined, and
to leave Argentina and Brazil in the category of possible
future suppliers and beneficiaries for whom immediate
inclusion might be important for political reasons.

--------------
Target Beneficiaries
--------------


11. (C) Turning to potential beneficiaries of the nuclear
energy initiative, Rozhkov said he saw these as falling into
two broad categories: 1) those nations with no nuclear
capabilities at all and 2) those that already operate at
least one reactor. Rood agreed.


12. (C) Rozhkov further stated that by reactor he meant a
nuclear power plant (NPP). This led to a roundtable
discussion of whether nations with research reactors but no
NPPs should be considered under the second category.
Stratford noted that many countries that ultimately want NPPs
are likely to want to start with research reactors. He
proposed, therefore, that these should be included in the
mix. Rozhkov agreed with this logic so long as the research
reactors, if offered, be of the LEU, not HEU, variety and
would not include heavy water research reactors.

--------------
Beneficiaries with Existing Reactors
--------------


13. (C) Addressing first those countries that already operate
at least one reactor, Rozhkov said there were some countries
that are not currently planning to increase the number of
NPPs but that nevertheless need an assured supply of fuel for
existing units. Such countries include Ukraine, the Czech
Republic, Canada, and South Korea. Rozhkov suggested that an
"attractive offer" be customized for countries such as Brazil
and Argentina that already do some of their own enrichment on
the condition that these countries freeze their enrichment at
current levels. Timbie said this would demonstrate to these
countries the cost of "going it alone," and Rood agreed this
was a good idea.


14. (C) Rozhkov asked about those countries in Central and
Eastern Europe that already have NPPs and want to increase
their number but that are dependent on EU regulations.
Examples are Bulgaria, Hungary, and Lithuania. The latter is
a special case in that this country, which currently gets
over 80% of its electrical power from nuclear energy, is
planning to close its one NPP. The EU is supposed to provide
alternate energy sources by 2009, although it is not clear if
it can do so. Other Eastern European countries wishing to
increase the number of NPPs include Slovakia (wishes to
unfreeze construction of two NPPs),Slovenia (wants to add
one NPP),and Romania (wants to start construction of NPPs
around 2008). Rozhkov and Rood agreed that some of these
countries, particularly Hungary and Bulgaria, might readily
agree to forgo enrichment and reprocessing, and could be good
candidates for early success.


15. (C) Rozhkov said Finland is interested in both GNEP and
President Putin's International Fuel Center initiative and
should, therefore, be counted as a possible beneficiary
country. According to Rozhkov, Finland plans to build one or
two NPPs along with SNF storage facilities.


16. (C) Rozhkov said Belgium also has approached the RF about
President Putin's initiative, and Rood agreed Belgium is a
fine beneficiary country candidate.


17. (C) Rozhkov said Armenia had not yet made a decision to

increase its nuclear energy but that plans exist to continue
operating the Armenian NPP through 2015. In the future,
Armenia may want both fuel and new NPPs as it is heavily
reliant on nuclear energy.


18. (C) Rozhkov noted that Mexico is talking of up to ten
future NPPs and said that Tenex is already providing fuel to
Mexican NPPs.

--------------
Beneficiaries without Existing Reactors
--------------


19. (C) Rood proposed the discussion now turn to those
countries that do not currently operate a reactor but that
have expressed an interest in developing nuclear energy. He
handed Rozhkov an analysis of nineteen countries (Algeria,
Belarus, Chile, Egypt, Georgia, Ghana, Indonesia, Jordan,
Kazakhstan, Libya, Malaysia, Morocco, Nigeria, Philippines,
Syria, Tunisia, Turkey, Venezuela, Vietnam, and Yemen) and
the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar,
Saudi Arabia, and the United Arab Emirates) that have said
they are interested in nuclear power.


20. (C) Algeria. Rozhkov agreed that Algeria has expressed
interest in nuclear power and asked whether this country has
the necessary infrastructure and specialists. Rood said it
has a very good infrastructure but that there are other
problems. For this reason, Rood said Algeria is not in the
"top five" U.S. candidate beneficiaries.


21. (C) Chile. Rozhkov said that Chile is a good candidate
but is still in the process of deciding the fate of nuclear
power due in part to the influence of its Green party.



22. (C) Egypt. Rozhkov noted announcements that President
Mubarak hopes to build three NPPs. Rood said he had seen
those announcements. As to statements by Mubarak that Egypt
hoped to develop the full fuel cycle, Rood said these seemed
designed mainly for political purposes as a way of asserting
Egypt's rights and giving it a greater leadership role. Rood
said he sees Egypt at the top of the U.S. list as a
beneficiary of the joint nuclear initiative.


23. (C) Georgia. Rozhkov said Russia has not considered
Georgia, and Rood replied that Georgia is not in the U.S. top
eight or nine. Rozhkov said he expected Georgia would
continue to rely on hydropower.


24. (C) Ghana. Stratford noted Ghana is at the bottom of the
U.S. list. Rood said Ghana has conducted some studies but
lacks the necessary infrastructure. Rozhkov questioned
whether Ghana has any interest in nuclear energy.


25. (C) Indonesia. Rozhkov said Indonesia plans 8-12 new
NPPs by 2025 and has a long-established nuclear regulatory
body. Rood said Indonesia is very high on the U.S. list.


26. (C) Jordan. Rozhkov noted ironically that Pakistan had
offered Jordan the full nuclear fuel cycle just 2-3 days ago.
Rood said Jordan is interested in nuclear energy but lacks
the necessary infrastructure. Timbie added that an NPP could
be built in Egypt that could supply Jordan. He noted that we
should explore the possible benefits of a regional grid for
the Middle East, so the region could share the benefits of
nuclear energy without a reactor in every country.


27. (C) Kazakhstan. Rood said Kazakhstan is near the top of
the U.S. list, and Rozhkov concurred that Kazakhstan has
qualified specialists as well as the necessary grid. Tobey
added that Kazakhstan is interested mainly in small to medium
size reactors of about 300-600 MW.


28. (C) Libya. Rood said one reason to include Libya was to
reward it for its cooperation on nonproliferation. Rozhkov
asked whether Libya could share its grid with Egypt.


29. (C) Malaysia. Rozhkov said Malaysia is at the bottom of
his list, and Rood responded that it is not high on the U.S.
list either.


30. (C) Morocco. Rozhkov said Morocco is interested in
constructing a 1000MW reactor between 2010 and 2016 and is a
good candidate. Rood said Morocco's help on the GICNT has
given it good credentials. He added, however, that Morocco
has a poor grid and few specialists. Rozhkov agreed.


31. (C) Nigeria. Rozhkov said he was aware of some Nigerian
plans but that these were still at the level of political

declarations. He said Nigeria is not well prepared and is
politically unstable. He added that if he were a banker, he
would consider Nigeria a poor credit risk. Rood said Nigeria
is low on the U.S. list.


32. (C) Philippines. According to Rozhkov, the Philippines
have not declared any nuclear intentions. Rood agreed but
said the Philippines had been included in the analysis
because others like IAEA DG ElBaradei have mentioned the
possibility. Rozhkov said he did not think this was
sufficient to warrant inclusion in the list of target
beneficiaries. Rood agreed.


33. (C) Tunisia. Tobey said that Tunisia is not on the U.S.
list but that we might consider them. Rozhkov added that
Russia is concerned about Tunisia's large external debt.


34. (C) Turkey. Rood said he saw Turkey as falling in the
top five target beneficiaries. Rozhkov agreed Turkey is a
serious candidate and added that Turkey has sufficient
uranium to operate 3-5 NPPs. Rozhkov said he thought Turkey
might want to use Russian enrichment services.


35. (C) Vietnam. Rozhkov said it is definite Vietnam would
like to build something -- most likely two NPPs of 1000MW
each -- and will make a final decision by the end of the
year. Rozhkov said Vietnam is high on Russia's list, and
Rood said it is in the U.S. top five. Rozhkov added that he
thought Vietnam would be interested in buying NPPs and fuel,
and returning spent nuclear fuel.


36. (C) Yemen. Rozhkov said Yemen is interested in nuclear
energy and has consulted with Russia. He added, however,
that Yemen is not interested in nuclear energy for power
generation but, rather, for desalination. Rood said he had
not heard this before and that it indicated to him that Yemen
might have more serious intentions than he had thought.
Rozhkov suggested a "customized offer" might be needed
because of Yemen's special circumstances.


37. (C) GCC. Rood said he was not certain of the GCC's
intentions. Rozhkov said the UAE had expressed some interest
and might be considering a reactor from South Korea.


38. (C) Belarus. Rozhkov said a moratorium on NPPs was being
reconsidered and that Belarus may build two new NPPs,
starting construction after 2008. He said Belarus has had
consultations with both Russia and Areva. He characterized
Belarus as "having a stable regime that is, however,
unpredictable."


39. (C) Venezuela. Rozhkov said Hugo Chavez has made some
statements, but Rood said they are not backed up by action.
He added the U.S. would be very concerned if they were.


40. (C) With discussion of the U.S.-provided list now
complete, Rood asked Rozhkov if he could think of any other
countries for the target beneficiary list. Rozhkov suggested
a number of other countries for consideration, noting that
many of them have no infrastructure but do have deposits of
uranium. He noted that we should think about how they fit
into our plans.

--Bangladesh: Rozhkov said Bangladesh was interested in
medium sized reactors up to 600 MW and was planning
discussions with China. Rood agreed that we should consider
Bangladesh as a possible beneficiary.
--Poland: a new NPP might be constructed there, according to
Rozhkov, and could share electricity with Lithuania.
--Australia: it should be included in the target list.
--Myanmar: it has an interest in research reactors and has
approached Russia. Rood reiterated U.S. concerns about
nuclear cooperation with Myanmar and urged Russia to avoid
any such cooperation. In response to a question from Rood as
to whether any Russian nuclear cooperation was being
contemplated or pursued, Rozhkov said the "nothing" was
underway.
--Kyrgyzstan: Rozhkov noted that they have considerable
deposits of uranium.
--Tajikistan: It has some uranium but no plans for NPPS.
--Uzbekistan: It should be considered in the same category as
Kyrgyzstan and Tajikistan.
--Mongolia: It has deposits of uranium but they are of a poor
quality.


41. (C) Rozhkov said that we should consider the following
countries for possible regional cooperation, including
regional grids: Egypt, the Gulf States, Jordan, Libya,
Morocco and Tunisia.


42. (C) Concluding, Rood suggested that once the concept for
the nuclear initiative is complete, it would be best to focus
on one or two countries to test and demonstrate the
initiative's effectiveness.

--------------
Additional Protocol
--------------


43. (C) The meeting ended with a consideration of U/S
Joseph's proposal to make a targeted effort to gain universal
adherence to the Additional Protocol. Rood began by saying
he had a list of 8-12 countries that he would like to bring
into adherence with the protocol. Rozhkov, however, said the
G8 had proposed 22 countries and added that Russia has
particular concern over Argentina and Brazil. Rood said he
was agreeable to that.


44. (C) Rood said it would be useful for the U.S. and Russia
to focus on India and Pakistan, but he added that Saudi
Arabia, Syria, and Venezuela are also of concern. As to
Argentina, he said Brazil is the key. Whatever Brazil does,
Argentina will follow, as the GOA has indicated it plans to
move forward in concert with Brazil.

--------------
Summing Up
--------------


45. (C) Rozhkov said he thought the U.S. and Russia have the
same "common vision" and that the next step is to conduct
talks to develop the details of the "attractive offer" that
would be offered to target beneficiary countries. This led
to discussion of the mechanism by which target nations would
make long-term commitments not to exercise their rights to
the full fuel cycle. Rood posited that this might best be
done through enforceable commercial contracts, as part of a
package with governmental understandings as well. The public
emphasis could be placed on the benefits received such as
fuel leading as opposed to forgoing capabilities like
reprocessing and enrichment, Rood argued.


46. (C) Timbie noted that the back end of the fuel cycle and
dealing with spent fuel would be key issues the initiative
would have to deal with.


47. (C) The meeting ended with both Rood and Rozhkov agreeing
that good progress had been made and noting that discussion
would continue on January 29 during Strategic Dialog talks
between U/S Joseph and DFM Kislyak.

-------------- --------------
Meeting on Margins of Strategic Security Dialogue
-------------- --------------


48. (C) At the request of U/S Joseph and DFM Kislyak, A/S
Rood and DVBR Deputy Director Rozhkov met again on January 29
on the margins of the U.S.-Russia Strategic Security Dialogue
(Ref B) to chart specific next steps to advance the nuclear
nonproliferation initiative.


49. (C) Rood and Rozhkov agreed that the U.S. and Russia
would discuss on the margins of the next GICNT meeting in
Ankara on February 12 a draft declaration and a draft
"attractive offer." Rood and Rozhkov agreed the U.S. would
prepare drafts that would be provided by e-mail by February 7.


50. (C) Rood and Rozhkov further agreed that a set of
explanatory notes would be needed to elaborate details of the
joint initiative.


51. (C) During a wide ranging discussion, the U.S. and
Russian delegation members identified both financing and
spent nuclear fuel (SNF) as issues that need to be addressed
to make the "attractive offer" truly attractive to target
beneficiaries. The two sides agreed that joint action to
effect a change in World Bank and IMF policies that currently
prohibit funding for nuclear energy projects may be
warranted. Noting that a final solution to SNF handling lies
in the future, the two sides agreed that a mechanism to
remove responsibility for SNF handling from the beneficiaries
would make the joint initiative much more attractive to those
nations.

U.S. Participants
--------------
A/S John Rood* - State/ISN
William Tobey* - DOE
Jim Timbie* - State/T
Richard Stratford - State, Director ISN

Alden Greene - State, Embassy Moscow
Michele Dash* - DOE, Embassy Moscow
Robert McCutcheon* - State, Embassy Moscow

Russian Participants
--------------
Oleg Rozhkov* - MFA, Deputy Director
Konstantin Popov - Rosatom, Section Head
Andrey Belyakov* - MFA, Senior Counselor
Valeriy Artemiev - MFA, Senior Consultant
Mikhail Kondratenkov - MFA, First Secretary
Alexander Trofimov - MFA, Second Secretary
Vyacheslav Gutkov - Rosatom, Leading Specialist
Alexander Bulychev - MFA, Attache
Marina Belyaeva** - Rosatom

* Also participated in January 29 splinter meeting.
** Participated only in the January 29 splinter meeting.


52. (U) A/S Rood has cleared this message.
BURNS