SPECIAL ENVOY WOLCOTT'S NUCLEAR ENERGY SUPPLY

C O N F I D E N T I A L SECTION 01 OF 05 PARIS 001447 SIPDIS E.O. 12958: DECL: 07/29/2018 TAGS: ENRG TRGY KNNP PREL ETTC IAEA FR SUBJECT: SPECIAL ENVOY WOLCOTT'S NUCLEAR ENERGY SUPPLY CONSULTATION IN PARIS ¶1. (U) Summary. On July 20-21, Ambassador Jackie Wolcott, Special Envoy for Nuclear Nonproliferation, and Special Assistant Marc Humphrey traveled to Paris for consultations on civil nuclear supply criteria in light of the anticipated expansion in nuclear energy. Meetings were held with officials from the Ministry of Foreign Affairs, the French Atomic Energy Commission (CEA),the French International Nuclear Agency (AFNI),AREVA, and the Nuclear Energy Agency (NEA) of the OECD. In all meetings, Ambassador Wolcott discussed the Joint Declaration on Nuclear Energy and Nonproliferation, a presidential initiative designed to increase access worldwide to nuclear power, while minimizing associated safety, security, and nonproliferation risks. ¶2. (C) The principle purpose of this visit was to discuss the development of a nuclear supply "code of conduct" undertaken by the French in the wake of the May 16 P-3 meeting in London. MFA DAS-equivalent Martin Briens explained that the main elements of the French paper would be promotion of nuclear power and a willingness to help countries build infrastructure, balanced with a need for strict standards of supply. He suggested that the paper should bring in consensus views of nuclear suppliers and recipients, and should be developed within the context of the Nuclear Nonproliferation Treaty (NPT) review process. Wolcott expressed concerns with this approach since broad consensus would necessarily lower supply standards and connection to the NPT would lead to politicization of the issue. Wolcott delivered U.S. views on what elements such a code of conduct should include, including supplier commitments, recipient obligations, and possible "sanctions" provisions. Except for the latter point, Briens seemed to agree, and said that France would try and provide a draft paper to Washington and London in August, to allow discussion prior to a broader P-3 meeting in September. -------------- Martin Briens (MFA) -------------- ¶3. (C) Wolcott and Humphrey, accompanied by poloff, met with French MFA DAS-equivalent for nuclear disarmament and nonproliferation Martin Briens on July 21 to discuss a potential "code of conduct" for nuclear technology and equipment supply (French MFA NPT desk officer Myriam Pavageau also attended). Wolcott explained that she had come to Paris to discuss French progress to date on this effort. The USG not having yet seen a draft, Wolcott wanted to share some preliminary views on what elements such a code should include. She stressed that the USG was not looking to replace the guidelines of the Nuclear Suppliers Group (NSG) and emphasized the importance of supplier countries adopting uniform supply criteria, since one state with inferior standards will undercut any attempt to control the spread of sensitive nuclear technologies. ¶4. (C) Briens was receptive to Wolcott's points, noting that numerous countries have now expressed interest in new nuclear power programs, and that one accident would have unpleasant implications for the global nuclear industry. Briens observed that there exist numerous "tools" to safeguard the expansion of nuclear power (e.g., IAEA, Euratom, numerous technical conventions),and agreed on the need to avoid duplicating existing efforts and international agreements. In this regard, Briens proposed working within the context of the Nuclear Nonproliferation Treaty (NPT) review process. ¶5. (C) Briens recounted the May 16 P-3 meeting in London, where the importance of a "code of conduct" for nuclear suppliers was discussed. In his view, it would probably be less problematic to develop a set of principles supported by both suppliers and recipients ) a "charter for the responsible development of nuclear energy" ) since a supplier-only framework would be regarded by many as limiting. He said that France believed the "code" or "charter" should incorporate three elements: a willingness to (1) promote nuclear energy and (2) help states develop the requisite infrastructure for its pursuit, balanced by (3) restrictiveness in terms of high safety, security, and nonproliferation standards. He explained that France had some ideas on paper, but the draft was currently too long to be effective. In terms of procedure, Briens recommended that the P-3 first agree on the main outlines of a paper, which could then be promoted with other suppliers and with several potentially receptive recipients, such as the UAE, Jordan, and Brazil. Briens suggested a draft could be ready for the next NPT Review Conference (RevCon),hopefully with support of 100 countries. ¶6. (C) Noting that the next RevCon was two years away, Wolcott pressed for more rapid action. Briens stressed the PARIS 00001447 002 OF 005 political importance, in his view, of broad supplier and recipient buy-in. Though this would be difficult to reach, the product would be easier to sell. Acknowledging Wolcott's point, though, he suggested producing something by the next NPT Preparatory Committee (PrepCom) to build momentum. (Note: Later in the meeting, the April 2009 International Ministerial Conference on Nuclear Energy in Beijing was suggested as another opportunity for this. End Note.) Wolcott also expressed concern about raising the issue within the NPT process, where it would likely be politicized and reduced to the lowest common denominator. ¶7. (C) As the USG was still exploring ideas for this "code" (and was therefore not ready to provide fully cleared interagency views in writing) Wolcott described elements that the United States would suggest for inclusion. First, it should contain "chapeau" language recognizing the need to balance growing interest in nuclear power with safety, security, and nonproliferation obligations. In particular, it should include language affirming suppliers' intent to provide a "viable alternative" to indigenous enrichment and reprocessing (ENR) technologies. Such language is already reflected in nuclear cooperation MOUs the U.S. has signed with the UAE, Saudi Arabia, Bahrain, and Jordan, she noted. Second, the code of conduct could include the following elements: -- recognition of the NSG guidelines as a minimum standard to build upon; -- recipient compliance with the NPT, a comprehensive safeguards agreement, and an Additional Protocol (the latter of which was referred to as "key" by Briens, adding that "we should not be shy"); -- promotion of international safety and security conventions; -- promotion of liability conventions such as the Convention on Supplementary Compensation; -- supplier determination that the capacity and readiness of recipient states is sufficient to deal with the technology (which Briens noted was important, though he questioned who could "certify" readiness); -- importance of long-term contractual arrangements to build-in fuel service assurances (which Briens noted would be a strong incentive against ENR acquisition); and -- restrictions on technology re-transfer. Finally, Wolcott suggested that the code of conduct could also include consideration of sanctions in the event of detonation of a nuclear device, violation of safeguards agreements, or breach of cooperation agreements (or withdrawal from the NPT, Briens interjected). ¶8. (C) Briens generally concurred with these elements, with the possible exception of sanctions. He also reiterated his view that a balanced package, including elements promoting nuclear cooperation, would be needed (noting that a mix of incentives and restrictions dated back to the original bargain of the NPT). If we want support from non-suppliers, he repeated, the effort should not be disconnected from the NPT review process. The implications of this initiative on Article IV will be closely watched, and we must find the "correct formula" when seeking to limit the spread of ENR. Wolcott opined that the trick will be to develop a "common understanding" among suppliers without the perception of forming a cartel, a point readily agreed to by Briens. In terms of next steps, Briens noted that France will work to complete an initial draft to send to Washington and London by mid-August. He then suggested a special P-3 meeting in September to discuss this draft, prior to a probable broader P-3 meeting later that month. ¶9. (C) Finally, Wolcott asked Briens for any comments on two U.S. papers exploring policy options for nuclear power plant financing and spent nuclear fuel (SNF) management. Briens commented that the financing paper was a good idea and had identified the right issues, in particular its mention of the World Bank. In response, Wolcott informed Briens that the Germans had recently managed to get suspended a planned World Bank research project to analyze the economical viability of nuclear power projects, which was to be jointly funded by the U.S., France and Japan. She encouraged France to actively push in the World Bank to get the study unfrozen. In regards to the SNF paper, Briens stated that France had not responded yet due to its own strict laws and constraints. For example, due to the requirement that France repatriate high-level waste to the host state following reprocessing, it could not participate in a fuel-leasing scheme. Humphrey asked if this policy could ever be changed, to which Briens responded that this would be "politically impossible." -------------- -- Olivier Caron (CEA) and Philippe Pallier (AFNI) PARIS 00001447 003 OF 005 -------------- -- ¶10. (U) Wolcott and Humphrey, accompanied by ESTH officer and Scientific Affairs officer, met with Olivier Caron (Director of International Relations of the French Atomic Energy Commission, CEA) and Philippe Pallier (Director of the French International Nuclear Agency, AFNI) on July 21 to discuss policy towards aspiring nuclear energy states. CEA Deputy Director Philippe Delaune and CEA Americas Specialist Thierry Ethvignot were also in attendance. ¶11. (SBU) Caron opened the meeting by stating that President Sarkozy was "keen on nuclear energy worldwide," but that the expansion of nuclear energy "has to be done in the right way" with strict nonproliferation and safety standards. Pallier explained that AFNI is a new public agency within the CEA, established on May 7, 2008. It was formed to consolidate expertise from numerous French agencies (including the Ministry of Economy, Finance and Industry; the Ministry of Foreign and International Affairs; the Ministry of Ecology, Energy, and Sustainable Development; the Ministry of Universities and Research; the Institute for Radioprotection and Nuclear Safety; and the Nuclear Waste Management Agency) to provide assistance to aspiring nuclear energy states over a broad range of competencies (including regulatory and legal frameworks, feasibility and site studies, and education and training). In addition, expertise would be drawn from the Nuclear Safety Authority (ASN) and French industrial companies (EDF, Suez, Alstom, AREVA, and Total) when necessary. Once an intergovernmental agreement with an interested state is in place, AFNI would provide expertise to the host country on a contractual basis. AFNI, with a small permanent staff of five, would select French experts and a project manager to work with a local task force, drawn from the host country's government or industry. ¶12. (SBU) Wolcott asked how nonproliferation considerations would be addressed within this new framework, noting that recent U.S. nuclear cooperation Memoranda of Understanding included language affirming the recipient states' intent to favor the international fuel market over indigenous enrichment and reprocessing technologies. In response, Caron explained that the AFNI Steering Committee would provide oversight and would only authorize cooperation with countries with sound nonproliferation credentials. Pallier added that nonproliferation would be addressed "within the scope of the cooperation." For example, France would assist countries to develop capacity to enforce export controls or to adopt international conventions. If cooperation led to reactor provision, arrangements would be made for reliable fuel services. ¶13. (SBU) When asked, the French side reported that international agreements had so far been signed with Jordan, Algeria, Libya, Tunisia, and the UAE. Future agreements were being considered with Vietnam, Thailand, and the Philippines (but not Indonesia). France has an old agreement with Egypt that would need to be renegotiated for assistance under AFNI. Caron explained that AFNI projects would be focused on the pre-industrial phase and would play a "non-commercial role." Wolcott explained that, through the Joint Declaration on Nuclear Energy and Nonproliferation, the United States was also focusing on providing early assistance to states beginning to consider new nuclear energy programs. ¶14. (SBU) Humphrey asked why ASN, the French nuclear regulatory body, was not fully integrated into AFNI. In response, Caron explained that ASN was independent from the French government. ASN expertise would be available, however, when necessary and if the host country wants. It was expected that once a regulatory body is established in the host country, it could work directly with ASN, independent of the AFNI framework. Humphrey noted that the competencies offered under AFNI did not include nuclear plant operation, and asked if France had discussed operator training possibilities with French utilities. In response, Caron explained that plant operation must be part of a bigger "industrial strategy," adding that Suez could potentially be hired to operate the UAE's first plant. ¶15. (SBU) When asked by Wolcott who pays for French expertise under the AFNI framework, Pallier explained that the recipient pays on a contractual basis, noting that nuclear energy is a "long-term investment" for which the host country must take ownership. Caron commented that it would be unusual for a poor country with scarce resources to pursue such an expensive technology. In such cases, France could put in place slower, "traditional" assistance measures. Wolcott noted the importance of project finance for nuclear energy programs, and reported that a forthcoming World Bank study on nuclear energy options had been suspended by Germany. Finally, Pallier emphasized the importance of human PARIS 00001447 004 OF 005 resource development, noting that French universities and engineering schools would be an important resource for recipient countries. Engineers could study in France and then return to build their own national or regional programs, he explained. -------------- Arthur de Montalembert (AREVA) -------------- ¶16. (U) Wolcott and Humphrey, accompanied by EMIN, met with Arthur de Montalembert (Vice President of International Affairs),Ana Palacio (Senior Vice President for International Affairs and Marketing) and Francois Scheer (Advisor to the CEO) at AREVA's headquarters on July 21. Wolcott opened the meeting by explaining the Joint Declaration on Nuclear Energy and Nonproliferation and what the U.S. is doing to bring about its implementation. ¶17. (SBU) Montalembert followed with an overview briefing on AREVA, where he noted that AREVA works in all areas of the nuclear fuel cycle, including the construction of a "black box" enrichment plant in Idaho, and a used fuel recycling plant and mixed-oxide (MOX) fuel fabrication plant in France. When asked what France does with spent MOX fuel, Montalembert explained that the utilities, owners of the nuclear material, have chosen to store it in spent fuel ponds at the reprocessing plant in La Hague for reprocessing at a later date. ¶18. (SBU) Palacio asked how much money the United States was ready to put behind its international nuclear power initiatives. In response, Wolcott noted that the Senate has recently approved a bill to continue funding for GNEP, and that the U.S. makes regular significant contributions to the IAEA and had pledged $50 million for the NTI fuel bank. Furthermore, under the Joint Declaration, the U.S. was promoting existing programs to help recipients develop nuclear infrastructure in the near-term. Montalembert noted that the new French agency AFNI was "on the same wavelength." ¶19. (SBU) Montalembert raised the issue of the back-end of the nuclear fuel cycle, noting that since current technology is being implemented satisfactorily, he didn't see the need to wait for a new generation based on spent fuel recycling in fast neutron reactors. Noting that France is required to repatriate high-level wastes when reprocessing foreign-origin spent fuel, Humphrey asked about the likelihood this could be changed to offer take-back services as an incentive against sensitive technologies. Montalembert responded that this would be difficult since there was "strong political weight" behind the current policy. In France, he continued, popular opinion is much less concerned about nuclear nonproliferation than in the United States, even on the issue of Iran. He therefore strongly cautioned against "forcing" the issue of nonproliferation on a population that is more concerned about nuclear waste. ¶20. (SBU) Referring to the Joint Declaration, Palacio cautioned against any mechanism that interferes with the international fuel market, and was assured by Wolcott that this was not USG intent. To increase confidence in the fuel market, Humphrey asked if AREVA was in a position to offer fuel contracts for the lifetime of a reactor. Montalembert responded that AREVA could not, since it was dependent on the duration of government-issued export licenses which had shorter terms. When Wolcott asked what France would do if a recipient country violated its nonproliferation obligations, Montalembert responded that it could terminate or revoke its export license, adding that the IAEA should serve as "guarantor" to confirm if there was such a breach. ¶21. (SBU) Turning to finance, Palacio commented that in her view, previous U.S. representatives to the World Bank (where she had just finished serving as Senior Vice President and General Counsel) had not been supportive of nuclear power. Wolcott responded that the U.S. was actively supporting a proposed research proposal on nuclear energy at the Bank, but that this has been suspended for the moment through German intervention. ¶22. (SBU) Wolcott commented that, in contrast to France, which was contracting out its services, the United States was ready to provide bilateral assistance on more generous terms (in addition to continued assistance through the IAEA). However, we would expect transparency and high standards in return, as had been reflected in recently signed nuclear cooperation MOUs with several potential recipient states. Montalembert commented that since most states were not interested in enrichment technologies in the first place, restrictive policies would never succeed. Given the number of special cases, such as South Africa, that must be PARIS 00001447 005 OF 005 addressed, it would likely prove difficult to design a generic policy to limit the spread of sensitive technologies. Instead, he recommended proceeding on an ad-hoc, case-by-case basis. ¶23. (SBU) Montalembert concluded the meeting by stating that AREVA has designed an approach specifically tailored for "newcomer" countries. To help understand what is needed to develop a nuclear program from scratch, AREVA has prepared a paper, entitled "Proposed Master Plan in Preparation for Deployment of a Nuclear Power Program." -------------- Luis Echavarri and Janice Dunn Lee (NEA) -------------- ¶24. (SBU) Wolcott and Humphrey, accompanied by DOE Science Advisor for Energy Affairs, met with Luis Echavarri and Janice Dunn Lee, Director General and Deputy Director General of the OECD Nuclear Energy Agency (NEA) on July 22. Echavarri explained the function of the NEA, including its role as technical secretariat for the Generation IV International Form and the Multinational Design Evaluation Program. He also explained that the NEA has expressed interest in becoming a GNEP observer, though this has been blocked by China due to onjections about Taiwan's participation in the OECD. Wolcott explained the Joint Declaration and recent U.S. activities to advance this initiative. Echavarri commented that, as an organization for developed countries, it would be difficult for the NEA to contribute to this initiative directly. However, it was prepared to work with its constituents to shape relevant policies (such as reliable access to nuclear fuel) and through technical aspects (such as proliferation-resistant reactor designs of spent fuel management solutions). ¶25. (U) Ambassador Wolcott cleared this cable. Please visit Paris' Classified Website at: http://www.intelink.sgov.gov/wiki/Portal:Fran ce STAPLETON