ARGENTINA AND BRAZIL TO COOPERATE ON URANIUM

C O N F I D E N T I A L BUENOS AIRES 000236

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/BSC AND ISN/NESS
DOE FOR HE-1 AND HE-23
NRC FOR OIP

E.O. 12958: DECL: 02/24/2018
TAGS: KNNP ENRG IAEA OTRA PREL ECON AR
SUBJECT: ARGENTINA AND BRAZIL TO COOPERATE ON URANIUM
ENRICHMENT, REACTOR DEVELOPMENT, AND IN DEFENSE

REF: BUENOS AIRES 0230

Classified By: AMBASSADOR E. ANTHONY WAYNE, FOR REASONS 1.4 (B) AND (D)

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Summary
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1. (C) Presidents Fernandez de Kirchner and Lula announced
February 22 that Argentina and Brazil will create binational
commissions to investigate how the two countries can best
cooperate in the enrichment of uranium and in the development
of nuclear power plants. The announcement appeared to take
members of the Argentine nuclear establishment by surprise.
The Argentine press also reported that Argentina and Brazil
decided to jointly develop a nuclear-powered submarine, but
those reports were met by denials from the Brazilian Defense
Ministry and the Argentine MFA. The two countries also
announced closer defense cooperation, to include joint
production of a lightly armored vehicle. End Summary.

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Nuclear Cooperation Bolstered
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2. (SBU) A joint declaration signed February 22 by presidents
Fernandez de Kirchner of Argentina and Lula of Brazil
contained language mandating closer bilateral cooperation on
nuclear energy, according to Counselor Sebastian Sayus from
the MFA's Directorate of International Security, Nuclear, and
Space Affairs. (Note: the declaration itself had not yet been
made public as of this writing.) Specifically, Argentina and
Brazil are to form a bi-national commission to facilitate
joint uranium enrichment for the production of nuclear fuel.
The presidents also agreed to establish a separate but
similar commission to cooperate on the design and development
of a next-generation power reactor. Both commissions have a
due date of August 2008 for their first reports.

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Joint Enrichment Makes Sense
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3. (SBU) Argentina and Brazil have taken different approaches
to uranium enrichment, with Argentina developing a variation
of the gaseous diffusion method, while Brazil utilizes gas
centrifuges. Rather than presenting an obstacle to
cooperation, however, the use of the two different techniques
could lead to efficiencies in enrichment. According to
Marcelo Salvatore, Strategic Operations Manager for Argentine
high-tech firm INVAP's nuclear division, the gaseous
diffusion enrichment technique used by Argentina is more
efficient in enriching uranium up to around one percent
U-235, while gas centrifuges operate more efficiently with a
concentration of one percent and above of U-235. There
exists, therefore, a natural synergy between the two
techniques, and Salvatore speculated that it is to take
advantage of that synergy that the two countries have
committed to joint enrichment.


4. (C) To enjoy the efficiencies achievable by employing the
enrichment techniques mentioned above, however, Argentina
would need to re-open its Pilcaniyeu enrichment plant, which
has been mothballed for the last decade. Argentine Atomic
Energy Commission (CNEA) Director of Institutional Relations
Jose Boado told Emboff February 25 that he was unaware of any
plans to resume operations at the Pilcaniyeu facility. He
expressed doubt that the Pilcaniyeu facility would be able to
contribute significantly to any enrichment effort in the
short term.

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Joint Reactor Development, Too
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5. (SBU) Then-President Nestor Kirchner publicly announced in
August 2006 that Argentine nuclear engineers had arrived at a
proprietary design for a 25MW nuclear power plant (the
CAREM). At the time, members of the Argentine nuclear
establishment explained that the CAREM would eventually be

re-designed to generate between 100MW and 300MW of power, so
that it could fill the underserved niche market of isolated
areas (e.g. islands, isolated cities) that are not part of a
larger power grid. Argentina has yet to advance further than
the design of a 25MW CAREM prototype, however.


6. (SBU) The joint declaration's establishment of an August
deadline for the first report on how Argentina and Brazil
will proceed in jointly designing and constructing a nuclear
power reactor might therefore be a political impetus to a
project that appears stuck. Joint development of this
project would also hedge the significant financial risks
inherent in the production and marketing of a new reactor.
The Government of Argentina might also believe that, by
embracing Brazil, it is eliminating a potential source of
competition for the CAREM.

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But A Nuclear Submarine?
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7. (U) A number of media outlets, most significantly
top-circulation daily Clarin, also ran stories on a supposed
Argentina-Brazil agreement to co-develop a nuclear submarine.
According to those stories, Brazil is to produce the
submarine, based on a French design, and the nuclear fuel,
while Argentina is to design the propulsion reactor, based on
the CAREM design.


8. (C) Those reports prompted denials by both the Argentine
and Brazilian sides. Reports published February 26 quote
Brazilian Defense Ministry Spokesman Jose Ramos as saying: "A
joint Brazil-Argentina project for the building of a nuclear
submarine is something that is not being discussed."
Similarly, the MFA's Sayus told Emboff that the joint
declaration contained nothing about nuclear submarine
cooperation. The Embassy's Naval Attache spoke to an officer
in the Argentine Navy's Office of Strategies, Plans, and
Policy, who reported that the first and only time he had
heard of the submarine plans was in the newspaper.
Similarly, CNEA's Boado said that he had been "completely
surprised" by the news reports regarding the submarine,
adding that "the Commission has no information on any of
this." (Comment: This project seems unlikely. It is
difficult to understand what would motivate Argentina to
participate in such an expensive and potentially
destabilizing project. End Comment.)

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Enhanced Defense Cooperation
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9. (SBU) The presidents also announced closer defense
cooperation, to specifically include co-production of the
Gaucho Light Strike Vehicle, a lightly armored
four-wheel-drive all-purpose vehicle. The Gaucho is designed
to complete reconnaissance, assault, transport, and
evacuation missions, and is air-transportable. Argentine
media also reported that Brazilian aerospace firm Embraer is
to enter into a partnership with the Government of Argentina.
That agreement would include the sale of an aircraft to
replace the Boeing 757 (Tango 01) currently dedicated to the
president's use. Some of the reports indicated that Embraer
would eventually replace Lockheed Martin at the aircraft
production and overhaul facility in the Province of Cordoba
where Pampa training aircraft are produced and older aircraft
(e.g. C-130s) are refurbished. The Embassy's DAO has been
unable to confirm those reports.

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Comment: Deliverables Gone Wild
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10. (C) What stands out with regard to the nuclear-related
aspects of the Fernandez de Kirchner-Lula joint declaration
is how little in-depth planning seems to have gone into the
announcements. Officials in the CNEA, MFA, Navy, and at
INVAP were all taken by surprise. That suggests that these
nuclear initiatives were hastily initiated and agreed at the
political level, under pressure from the two presidents to
produce deliverables, rather than evolving organically in
response to a real need. There is nothing unusual about
that, but it does suggest that the closer nuclear cooperation
agreed by both presidents might take a little longer than
mandated by the declaration's timeline.
KELLY