IAEA: U/S ROOD TOUR D,HORIZON WITH DG ELBARADEI

S E C R E T UNVIE VIENNA 000284

SIPDIS

DEPT FOR ISN/RA AND IO/T

E.O. 12958: DECL: 05/18/2018
TAGS: AORC PARM ENRG TRGY KNPP KN
SUBJECT: IAEA: U/S ROOD TOUR D,HORIZON WITH DG ELBARADEI
AND SECRETARIAT OFFICIALS


Classified By: Ambassador Gregory L. Schulte for reasons 1.4 b, d, h

Summary
--------------


1. (C) In a series of meetings with IAEA Director General
ElBaradei and Secretariat officials May 6, Acting U/S for
Arms Control and International Security John Rood discussed
priority issues on the U.S. agenda: nuclear safeguards in the
DPRK and India; reliable access to nuclear fuel (RANF) and
the U.S.-Russia agreement on nuclear energy and
non-proliferation; the 20/20 process, and, finally, the
IAEA's role in nuclear security. Rood advised the DG that
the U.S. sought to promote a greater IAEA role in DPRK
verification. Despite DPRK claims to the contrary, ElBaradei
was aware of the U.S. position and also noted the need for
clarification of the DPRK's NPT status. The DG assessed the
probability of bringing the India safeguards agreement to the
Board in June as low, due to domestic Indian considerations,
but was confident that it could secure swift passage, if
necessary by a Special Board.


2. (C) In an extensive discussion of RANF, the DG stressed
intense sensitivity and skepticism on the part of the G-77
and others. He agreed that sterile debates on NPT rights
lead nowhere and hoped to bring concrete proposals to the
Board by September. The IAEA fuel bank had the most promise
as a symbolic measure, and he had told the Russians to come
when they are ready with their proposal. Separately,
Secretariat officials focused on the perception of "foregoing
rights" and the Russian proposal's provision of guaranteed
export controls. Acting U/S Rood welcomed the multiplicity
of efforts on RANF but stressed that the U.S. proposal
setting aside 17.4 million metric tons of HEU be given due
consideration.


3. (SBU) Rood expressed strong U.S. support for the IAEA and
recognized the value of the 20/20 process but cautioned that
resource constraints be factored in, lest this vision go
unfulfilled. The 20/20 report is expected soon but the DG
did not anticipate substantive debate before the September
Board and during the Scientific Forum on the margins of the
General Conference. Rood also discussed possible synergies
between the IAEA and the Global Initiative to Combat Nuclear
Terrorism (GICNT) with Nuclear Security Director Nilssen.
The IAEA planned to participate in a GICNT table top exercise
in May but had not yet been invited to the Madrid Ministerial
in June. End Summary.

DPRK
--------------

4. (S) In his May 6 meeting with the DG, U/S Rood advised
ElBaradei of some progress on the DPRK issue; the declaration
was expected shortly and the team was told thousands of pages
of production records would be provided. The plan was for
China to receive the declaration as the Six Party Chairman
and circulate it to the six. He assured the DG that the U.S.
preferred that the IAEA play a larger role, especially in
verification, and, to the extent possible, would pressure the
DPRK to agree. The U.S. also remained committed to the
DPRK's return to the NPT and Safeguards. Rood advised
Safeguards DDG Heinoen separately that the U.S. would urge
China to give the declaration to the IAEA, though the DPRK
was reluctant to do so.


5. (S) According to ElBaradei, the DPRK had disingenuously
claimed to the IAEA that the U.S. did not want to work with
the Agency, which he knew to be false. The DG further
observed that the DPRK's NPT status was in legal limbo, a
point also raised by EXPO Director Vilmos Cserveny. Both
ElBaradei and Cserveny cited a UK statement to the NPT
Prepcom that stipulated the DPRK remained in the NPT. The
IAEA needed a clear answer as to whether DPRK was inside or
outside the NPT in order to apply appropriate safeguards and
the DG may raise the issue at the June Board meeting. The DG
said he believes "you are right" that the DPRK has left the
treaty, but given the differing views, he needs an
authoritative finding as to whether the international
community expects the IAEA to attempt to implement the DPRK's
NPT-related safeguards agreement. Regardless of NPT status,
however, upon the request of the Six Parties, the IAEA could
verify the DPRK declaration, thus allowing the DPRK's return
to the NPT, the DG presumed (assuming it has withdrawn.) The
IAEA stood ready to assist, though the DG noted it would be a
lot of work and require consultation with weapons state
experts, in the same way the IAEA drew from P5 states to
support verification work in South Africa after it dismantled
its weapons and joined the NPT. In a separate briefing with
EXPO, Heinoen saw no particular problems with monitoring or

verification in the DPRK. He noted that the IAEA would need
funding to play a larger role in verification of the
declaration. Cserveny was aware that A/S Hill was promoting
the IAEA's role.

India
--------------


6. (C) The DG was still hoping that an India Safeguards
agreement could be brought to the Board but saw the
likelihood as low. He agreed that India got a good agreement
with the U.S. and that this was more of an ideological issue
within the Indian government. He believed the Congress Party
did not want to risk an early election on this issue. Rood
noted that this was now a domestic India issue and the U.S.
was staying in the background. As for the IAEA Safeguards
agreement, the DG dismissed India specific "rhetoric" as just
that, and still hoped to bring it to the Board. His support
for the India agreement had drawn criticism, he noted,
including one full-page article from non-proliferation
experts. Once signed, the DG believed he could move a
Safeguards agreement quickly through a Special Board with a
couple of weeks notice. He did not expect controversy and
also did not see much of a problem in the NSG, despite
nay-sayers such as Austria.

Reliable Access
--------------


7. (C) Rood had detailed discussions with the DG and in the
EXPO briefing on Reliable Access to Nuclear Fuel (RANF). As
the world embarked on the so-called nuclear "renaissance,"
though it was much more than that, Rood noted, it was
essential to address the proliferation risks of nuclear fuel
cycle technology. The DG agreed in principle but noted that
the six countries had "shot themselves in the foot" when they
first put forward a proposal that required forgoing
enrichment. Though the proposal has since been adjusted, the
Agency was still trying to recuperate. He registered a "huge
sense of distrust" on this issue that extended beyond the
G-77 to countries like Italy, Canada and Australia. For
instance, in the Committee on Program and Budget, one NAM
member (Malaysia) opposed a passing mention of RANF in an
unrelated program audit document. Inherent distrust among
the G-77 was also fueled by Iran, the DG noted, as RANF is
seen as a means of putting extra pressure on Iran. In the
DG's view, the 10 percent of countries that are hard over on
enrichment rights, either see it as a prestige and security
issue, including through the prism of Iran; or have
commercial concerns, as is the case with Canada and
Australia.


8. (C) Nevertheless, the DG believed he could still move the
IAEA fuel bank proposal forward as a symbolic measure. For
the first time in the history of the Agency, it would be able
to fulfill its statutory mandate in this regard. He regarded
the EU as the best prospect for funding and was going to
Brussels to see Barosso later the same day. He had
approached Japan twice and was aware that Senator Nunn
planned to speak to Gulf states. Once he had the remaining
45 million dollars to match the NTI and U.S. monies, the DG
was prepared to bring the proposal to the Board. Rood
observed that the EU and France, in particular, were good
prospects. Gulf countries looked promising, but Japan was
unlikely to ante up. The DG saw Japan's position as
short-sighted. He agreed that a diversity of contributors,
especially recipient states, would be optimal and would seek
to solicit even symbolic contributions from countries like
India or Brazil.


9. (C) Rood viewed the multiplicity of efforts on RANF as
positive and agreed that the IAEA fuel bank proposal would
have a psychological impact in showing progress. He bemoaned
the sterile debate in the NPT Prepcom between "haves" and
"have nots," who used the same talking points a decade ago.
ElBaradei concurred that NPT discussions were a waste of time
and more on the ground progress was needed. Having IAEA,
Russian and U.S. fuel banks on-line would also send a
psychological message, Rood noted, likening this to petroleum
reserves. Some counties may distrust the U.S. 17.4 million
tons, but they would have other sources. The DG observed
that we just have to take the first step but absent a
specific proposal any Board discussion would be circular. He
hoped the Russian proposal would be ready for the September
Board and the IAEA fuel bank, which was easily acceptable and
non-commercial, before then. The Russian proposal seemed to
be stuck between the Foreign Ministry and the technical
people at Rosatom, according to the DG. He had told the
Russians to come when they are ready. Rood offered to follow

up with Russian Deputy FM Kislyak.


10. (C) In a separate EXPO-arranged briefing, Nuclear Energy
Director for Fuel Cycle and Waste Technology Hans Forsstrom
reviewed the status of the various reliable access proposals
to date. It had already been a year since the Secretariat's
report, he noted, but the issue was not yet ripe for the
Board and was not expected to be added to the June agenda.
Forsstrom cited the same sensitivities among the G-77 on
philosophical issues and sought to work on practical
proposals. Three of the proposals seemed to be the most
promising: the IAEA fuel bank, though he did not expect the
EU would provide all of the remaining 45 million USD; the
Russian proposal and to a lesser extent the German
multinational enrichment center proposal. The Russian
proposal would be a good vehicle in his view to bring the
issue forward, and should be acceptable to the G-77 and NAM.
He noted that it includes a guaranteed export license, even
if Russia were to cut off supply to a particular country.
Rood inquired whether this meant the IAEA could override
export controls in the event of a supply disruption. The
Secretariat saw this as a key issue of the IAEA-Russia
agreement, putting the fuel under an international umbrella.
Forsstrom highlighted three criteria the DG had put forward
at a Berlin conference in April: multinational control;
recognition of states NPT rights and obligations; and
non-political criteria for the release of the fuel. He
explained that these three proposals (IAEA fuel bank, Russian
and German) met the "test" among the "have nots", that they
are not being asked to forgo any "rights."


11. (C) Rood expressed support for Angarsk and the Russian
proposal but asked why the U.S. proposal to set aside 17.4
million metric tons of HEU seemed to have been discounted in
Forsstrom's presentation. The key issues, Forsstrom
explained, were forgoing rights, on which he cited a 2005
letter from Ambassador Schulte relaying the U.S. offer, and
guaranteed export licenses. He suggested the U.S. could make
a proposal similar to the Russian proposal even with
additional conditions on export that might apply to some
countries. Rood observed that the U.S. and Six-country
proposals did not abridge NPT rights and "forgoing" was not
the same as "abridging." Business contracts commonly require
"forgoing" purchases from other suppliers, he noted
forcefully. EXPO Director Vilmos Cserveny acknowledged this
point in contract law but explained that in a politicized
environment, other countries interpreted it as such, though
he realized the U.S. had moved away from the term
"foregoing." Even though the DG came from the G-77, he had
to overcome distrust and suspicion on this issue.
"Foregoing" was a "killer" the DG's Special Assistant Graham
Andrew added, and prompted a knee-jerk reaction among the
G-77. He noted that the IAEA fuel bank would not have such a
requirement.


12. (C) Cserveny encouraged the U.S. to advertise its
proposal in Vienna like the others and said the Secretariat
was not endorsing one proposal over another but had presented
those that had been developed further. The IAEA had not
heard more on the Six Country, UK or Japan proposals. Rood
complained that the U.S. and Six Country proposals were
treated as "afterthoughts" in the Secretariat's presentation,
which seemed to short change a major commitment by the U.S.
to set aside 17.4 million tons of HEU. He cautioned them to
not give the appearance of espousing the G-77 view on
abridging rights. The Global Nuclear Energy Partnership
(GNEP),to which 21 countries had subscribed, also did not
"abridge rights" he noted but recognized the reality that
enrichment and reprocessing (ENR) was a major NPT loophole.
The U.S.-Russia agreement on nuclear energy and
non-proliferation was likewise an effort to promote nuclear
energy without ENR. Andrew recognized the twin goals of
providing an opportunity for access and non-proliferation but
noted that with some audiences it is best to advertise the
first goal. Forsstrom also saw GNEP as a positive initiative
on the back end of the fuel cycle, and suggested bringing it
to the Board to encourage G-77 and NAM buy-in.

U.S.-Russia Agreement
--------------


13. (C) Rood also informed the DG about the Bush-Putin
agreement to promote nuclear energy and non-proliferation.
He advised that Ambassador Wolcott was working with Russian
Governor Berdinakov on this effort to "polish-up" the NPT
bargain and realize the NPT's vision on usage of nuclear
energy. The U.S.-Russia effort sought to remove economic
incentives for the pursuit of enrichment technology and
included outreach to the World Bank to remove restrictions on

financing for nuclear power infrastructure. ElBaradei
observed that countries such as the UAE and Jordan were
starting from "zero" infrastructure and saw greater prospects
for nuclear power in large countries. He encouraged the
sharing of R&D, such as on Generation IV reactors, with
countries, noting that some tend to equate enrichment with
science and technology. ElBaradei was disparaging of French
President Sarkoszy's willingness to sell nuclear power to
"everyone and their brother", but noted that AREVA was not
keen on entering countries with no infrastructure and
preferred to sell to the likes of South Africa, India, China
and Brazil where it could achieve economies of scale.

20/20
--------------


14. (SBU) Acting U/S Rood discussed the upcoming 20/20 report
of the Commission of Eminent Persons with the DG and
Secretariat officials, expressing strong USG support for the
IAEA and our desire to see the Agency resourced properly, but
also cautioning on the need for realistic budget targets.


15. (SBU) The DG stressed that the Commission was independent
and that he had not seen a draft of the report. The
Commissioners represented a broad spectrum of views on
nuclear power, disarmament and other issues and their report
would be sent to the Board without comment. He hoped to get
the report next week but did not expect substantive
discussion in the Board until September. Since this was a
long-term view of the Agency, no immediate Board action was
expected though there were some short-term issues, including
the laboratories, that had resource implications. The DG
explained that the genesis of the 20/20 initiative had been
the "pathetic" budget discussions on the Board. He cited the
example of the AIPS where the Japanese were arguing
unrealistically that the 14 million USD shortfall could be
made up through internal savings and the debate was conducted
in terms of mantras. 20/20 was an effort to go beyond the
Board to Member States and to honestly assess what the Agency
can or cannot deliver in several areas. The DG noted a gap
between the policy level and budget deliberations, and was
tired of the repeated clichs on "zero nominal growth" and
the like. Rood expressed support for this important project
and agreed that people often had trouble focusing on the big
picture as we look to the IAEA to do more. ElBaradei also
mentioned that he had suggested a non-proliferation Summit to
President Bush at one juncture, which could possibly be
pursued after 20/20.


16. (SBU) DG Special Assistant Andrew also provided an
overview of the 20/20 process during the EXPO-arranged
briefing. He explained the intense 3-4 months of internal
prep-work involving the whole Agency, that the Secretariat
had done. The Commission represented a balanced team charged
with focusing on big picture issues such as the over-reliance
on extra-budgetary funding in areas like nuclear safety and
security. The Secretariat had provided some guidance on the
first draft of the Commission report but the DG was steering
clear of this independent process, he noted. The report was
expected in 7-10 days and would be presented by former
Commission Chair and Mexican President Zedillio to the Board
in June with substantive discussion expected in the September
Board and the Scientific Forum on the margins of the October
General Conference. The Commission report was "only the end
of the beginning" of the process, he stressed. It would be
up to the Board to frame the issues presented in the report
for future consideration.


17. (SBU) Rood said that the U.S. regarded the IAEA as
crucial and recognized the growing demands on the Agency,
including in connection with the so-called nuclear
"renaissance," climate change and energy demands. Resources
could never fully keep pace with this growth and he advised
the Secretariat to take account of resource constraints early
in the process and consider what might be dropped. Without
due account of resources, the vision of 20/20 would go
unfulfilled, he feared. Andrew observed that there was a
compelling case for more resources but that the Secretariat
had made every effort to prioritize and identify activities
they could do less of, improve efficiency and seek outside
funding. Rood agreed that such a compelling case could be
made but suggested changes in business operations.

Nuclear Terrorism
--------------


18. (U) Rood discussed the Global Initiative to Combat
Nuclear Terrorism (GI) with Anita Nilsson, Director of the
Office of Nuclear Security. Nilsson outlined IAEA efforts to

expand the scope of its security programs after September 11,
to move from ad hoc to sustainable solutions. She urged that
now was the time to make sure the international community had
a solid base for activities against a threat which would be
with us into the foreseeable future. Rood welcomed IAEA
action and encouraged Nilsson to "keep it up." He was
concerned that the security situation changed constantly and
was not sure that the international community was staying
abreast.


19. (U) Nilsson expressed the view that the strength of the
GI was its statement of principles, noting that some of the
language was identical with the language in the IAEA's own
Nuclear Security Plan. How, she asked, could we make sure
that adherence to the shared principles led to a solid
structure which could keep international attention fixed at a
high level on nuclear terrorism? And what did U/S Rood think
the role of the IAEA should be, in practical terms, in
implementing the principles? Rood replied that he hoped to
hear form the IAEA what an appropriate role for the IAEA
might be. The Office of Nuclear Security should certainly
take part in some, although not all, of the activities in the
current Program of Work. Perhaps, Rood suggested, the IAEA
might want to sponsor a GI exercise of its own.

20.(U) After explaining that it would be difficult for the
IAEA to sponsor an event which did not include all its
Members States, Nilsson countered by suggesting a more
inclusive approach. Why not welcome everything which
supported the GI principles as part of the GI? Activities
ranging from the IAEA's own programs, Member States'
bilateral activities, as well as the specific GI Program of
Work activities, could all be counted as part of the Global
Initiative. After all, she argued, everything that supported
the principles supported the Global Initiative; we are all
working toward the same goals. Rood thought this was an
interesting notion which he would have to consider further.
In any case, he added, there would have to be a specific GI
program of work to challenge subscribing states to act on the
principles.

21.(U) As an example of an IAEA activity which clearly
supported the principles of the Global Initiative, Nilsson
mentioned the IAEA's Integrated Nuclear Security Support
Plans (INSSP's). There are currently plans in various stages
of implementation with 44 countries. The Office of Nuclear
Security considers all aspects of nuclear security in
developing the plans. The INSSP's cover legal commitments as
well as nuclear activities. Does the country subscribe to
the relevant international treaties and conventions? Does
the country have proper legislation in place? What nuclear
materials or radioactive sources does the country possess?
Is the security for such items at the level prescribed by
international agreements? On the basis of this overall
assessment, the Office of Nuclear Security provides countries
with steps they should take to ensure adequate security.
Perhaps, Nilsson suggested, the Global Initiative could note
the importance of the full implementation of INSSPs as a goal
for Member States.
Rood replied that the INSSPs sounded quite interesting and
worth further investigation.


22. (U) Finally, Rood and Nilsson briefly discussed possible
IAEA attendance at the Madrid Ministerial meeting in June.
Nilsson had apparently not yet received an invitation to the
meeting, only to the table top exercise in May, which the
IAEA plans to participate in. Nilsson promised to consider
attendance once she had all relevant information. Rood urged
her to attend and added that he hoped Director General
ElBaradei would be able to attend as well.


23. (U) Acting U/S Rood did not have an opportunity to clear
this message.
SCHULTE