C O N F I D E N T I A L SECTION 01 OF 02 UNVIE VIENNA 000417

SIPDIS

STATE FOR P, T, ISN, IO, SCA
DOE FOR NA-24 - SCHEINMAN; NA-243 GOORVICH

E.O. 12958: DECL: 07/24/2018
TAGS: ENRG IAEA KNNP MNUC PARM TRGY ETTC IN
SUBJECT: IAEA SHARES COST ESTIMATE FOR INDIA SAFEGUARDS
IMPLEMENTATION

Classified By: CLASSIFIED BY CHARGE D'AFFAIRES GEOFFREY R. PYATT,
FOR REASONS 1.4 (b) AND (d)


1. (C) Summary: The IAEA Secretariat has shared with us on a
confidential basis their estimates for the near term costs of
implementing safeguards in India as part of the US-India
nuclear deal, which could total Euro 19 million by 2016.
Speaking with DCM on July 23, Deputy Director General
Heinonen emphasized that he was committed to keeping this
figure out of the August 1 debate over the India agreement,
and was sharing the cost estimates with only a handful of
IAEA officials for now. Nonetheless, he said, Director
General El Baradei wanted to be sure the US was aware of the
IAEA's implementation estimate. Previewing the IAEA's July 25
technical briefing, Heinonen said the Secretariat would stick
to the point that India's agreement meets all the safeguards
standards. Aside from Pakistan, he does not expect
opposition within the board. End Summary.


2. (C) DDG Heinonen asked to see DCM July 23 in order to
talk through IAEA plans for implementing expanded safeguards
in India. Heinonen explained that the IAEA has prepared a
cost estimate based on India's previously published
separation plan, but pushing the date of full implementation
back to 2016 (vice 2014, which is the Indian government
continues to use). The safeguards department has estimated a
cost of Euro 6.5 million for additional equipment (mainly
core discharge monitors and surveillance) required at the 8
PHWR's that India will declare under its separation plan.
The balance of Euro 12.5 million would pay for inspections
and implementation related travel. Beyond 2016, the IAEA
estimates an additional cost of Euro 2.4 million per year (at
2007 prices) for ongoing safeguards monitoring in India.

3. (C) A major uncertainty that could affect the final cost,
Heinonen noted, is the disposition of India's existing spent
fuel inventories. Because the Department of Atomic Energy
has been unwilling to engage on the technical substance of
safeguards implementation, the IAEA does not know whether
India intends to declare its spent fuel inventories at the
civilian sites, or will move that material elsewhere. Also,
since the IAEA only has access for now to the old RAPS sites,
the inspectors are uncertain how design changes in India's
PHWRs might affect the cost of cabling and conduit (since
some of these cables reach into the reactors' core area,
access ducts must be constructed carefully, adding to the
cost).


4. (C) Heinonen underlined that he did not want these cost
issues to spill over into the August 1 board decision on the
India safeguards agreement, and as a result the information
was being tightly held within the IAEA Secretariat. For now,
the Secretariat will stick to the figure of Euro 1.2 million
cited as the first year cost for one new reactor. If the
separation plan that India eventually notifies to the IAEA
ends earlier, that will reduce the full implementation cost,
but only marginally.


5. (C) Heinonen was confident that the IAEA would be prepared
to take on a significantly expanded safeguards responsibility
in India even if implementation begins as early as 2009.
Since much of the IAEA's monitoring equipment is custom made
and comes from a small group of vendors, hardware will be an
issue. To move forward quickly Heinonen proposed to employ
monitoring equipment originally procured for the Busher
reactor in Iran, which is now running behind schedule. This
inventory would then be replaced as the expanded IAEA budget
for India comes on line. In response to a question about the
potential utility of the US safeguards support program,
Heinonen emphasized that Director General El Baradei was
committed to paying for India safeguards from the regular
IAEA budget, since this is a core IAEA activity that should
be funded the same way as other safeguards programs. He
noted in this context that the IAEA budget to be approved at
the September General Conference contains a specific line
item for India activities.


6. (C) Previewing the IAEA's July 25 technical briefing,
Heinonen said the Secretariat would stick to the point that
India's agreement meets all the safeguards standards. The
briefers will explain the status of the India preamble, walk
through a comparison of the operational provisions vis-a-vis
other agreements, and address any legal questions. Aside
from Pakistan, he does not expect opposition within the Board
of Governors.

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7. (C) Comment: With both US Presidential candidates calling
for substantial increases in the IAEA budget, Heinonen and
others around the Secretariat are thinking expansively about
their future operations. Since Heinonen provided this India
estimate at the request of DG El Baradei, we suspect it was
intended also to influence our approach to the simultaneous
debate in Vienna over future funding for the IAEA's Technical
Cooperation activities. End comment.
PYATT