DAS KANG AND DELEGATION'S MEETINGS WITH GOJ ON THE FUTURE OF THE IAEA

C O N F I D E N T I A L TOKYO 002615

SIPDIS

DEPT FOR T, ISN KANG, ISN/MNSA, IO/GS
NSC FOR ADAM SCHEINMAN
VIENNA FOR DCM PYATT

E.O. 12958: DECL: 11/12/2019
TAGS: PREL, PUNE, PREL, ENRG, IAEA, JA
SUBJECT: DAS KANG AND DELEGATION'S MEETINGS WITH GOJ ON THE
FUTURE OF THE IAEA

Classified By: EMIN Marc M. Wall for reasons 1.4 (B) and (D).

1. (C) Summary: Japan understands and agrees with many of
the U.S.'s concerns about the future of the International
Atomic Energy Agency (IAEA),but fears that existing
politicization of the IAEA could complicate and challenge
some efforts at reform. Japan is also facing budgetary
challenges that may limit or reduce its voluntary
contributions to the IAEA. Ministry of Foreign Affairs
(MOFA) officials responsible for the IAEA and nuclear energy
spoke frankly about these and other issues during October 7
consultations with visiting USG officials. The U.S.
delegation was headed by ISN Deputy Assistant Secretary Eliot
Kang and included NSC Director Adam Scheinman, IO/GS Director
Julie Gianelloni Connor, UNVIE DCM Geoffrey Pyatt, and
ISN/MNSA Stephen Adams. MOFA was represented by Deputy
Director General for Disarmament, Nonproliferation and
Science Akahito Nakajima, Director for International Nuclear
Energy Cooperation Tsutomu Arai, Director for
Nonproliferation, Science, and Nuclear Energy Tsutomu
Koizumi, and several members of their staff. The delegation
also had a brief side-meeting with IAEA Director
General-Designate Ambassador Yukiya Amano, during which he
discussed his priorities for the IAEA. End Summary.

2. (C) MOFA Deputy Director General for Disarmament,
Nonproliferation and Science Akahito Nakajima opened the
meeting by expressing thanks for U.S. support for the
election of Ambassador Yukiya Amano as IAEA Director General,
and noted the time had come for establishing a global norm
for managing nuclear technology. After DAS Kang highlighted
President Obama's strong emphasis on nonproliferation,
Nakajima commented that Amano's task at the IAEA will be to
deal with those that still have the wrong idea about nuclear
energy, and to change their focus to peaceful, practical
applications. He also noted that Ambassador Amano now
represents an international organization, and as such the
Ministry is carefully distancing itself from him so as to
avoid any appearance of pressure or undue influence.

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Budget and Management <br />--------------

3. (C) The U.S. delegation (USDel) began discussions on the
IAEA budget and management by noting the agency's growing
resource requirements. DCM Pyatt stressed the need for
greater transparency and efficiency in the use of existing
resources, especially to justify any future budget increases.
Mr. Pyatt also suggested the consideration of a needs-based
budgetary process and performance driven metrics for
evaluating programs.

4. (C) Koizumi noted Japan shares the U.S.'s concerns about
the necessity of strengthening the IAEA's capacity, and he
agreed on the necessity of efficiency and transparency in
existing operations. Alluding to the idea that budgetary
reform could threaten technical cooperation projects popular
with developing countries, Koizumi said Japan believes
safeguards, technical cooperation, and security all should be
important at the IAEA. However, Koizumi said excessive
politicization of the IAEA has created a need for
reconciliation between developed and developing countries.
International Nuclear Energy Cooperation Division Director
Arai elaborated on these comments by explaining that while
Japan appreciates the need to grow the nuclear security
budget, it is concerned about avoiding confrontation with
developing countries. He suggested that we should make an
effort to broaden the understanding among developing states
that nuclear security is an enabler for the development of
nuclear energy. Arai noted that Japan feels safety is the
key element of nuclear energy, and in its bilateral
agreements with countries embarking on nuclear power, Japan
is including requirements related to the 3Ss of safety,
security, and safeguards.

5. (C) MOFA officials also highlighted a new potential
budgetary problem faced by the GOJ in relation to the IAEA.
The recently elected Japanese government has directed MOFA to
reduce Japan's voluntary contributions to international
organizations by 30%. Koizumi expressed hope the IAEA would
be exempt from this reduction, but indicated the decision
would ultimately lie in the hands of the politicians, and
MOFA would know more about the financial situation in a month
or so.

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Safeguards
--------------

6. (C) The U.S. and Japanese delegations also discussed the
future of safeguards at the agency. The sides agreed that
working with the new Chairman of the Board--Malaysian
Ambassador Arshad Hussein, who has not demonstrated a
commitment to strong safeguards--could be difficult for
Amano. MOFA officials admitted they do not have a lot of
experience with the new chair, but do have good relations
with nuclear officials in Kuala Lumpur. Koizumi said when
MOFA talks to Malaysia on nuclear matters, it speaks not to
the Foreign Ministry, but instead to the head of the Atomic
Energy Commission, who Koizumi noted "controls Malaysia's
safeguards system." Koizumi suggested it may be useful to
engage with Malaysia via this route, rather than the Foreign
Ministry. Koizumi commented that sometimes the positions
taken by delegations in Vienna and Geneva do not seem to
match what the ministries at home are saying. The USDel
agreed, and noted that high-level U.S. officials have begun
an effort to visit selected capitals such as Cairo and
Pretoria to speak directly to the relevant ministries about
cooperation at multilateral forums. IO/GS Connor suggested
that MOFA officials could perhaps do the same, visiting Kuala
Lumpur, Jakarta, and other capitals where they have influence.

7. (C) Also on the issue of safeguards, MOFA officials
highlighted Japan's contributions to the Safeguards
Analytical Laboratory (SAL),and expressed interest in
securing contributions from other countries, including the
United States. The U.S. delegation raised the idea of going
outside the IAEA for funds, to another venue such as the G-8.

--------------
Ambassador Amano
--------------

8. (C) In a side meeting with IAEA Director
General-designate Amano, the delegation reviewed major themes
from the day's consultation and asked about Amano's
priorities for his forthcoming tenure. Amano noted that he
has been using his time in Japan to lecture and conduct
senior-level meetings (including the day before with Prime
Minister Hatoyama) aimed at building up the IAEA's
constituency. Amano outlined four immediate priorities for
the IAEA. First, he said, is to strengthen the IAEA
institutionally. In this, he took encouragement from the
widespread support for the agency among G-8 governments.
Second is nuclear security--and here he noted the particular
importance that President Obama has placed on the challenge
of nuclear security and his intention to prioritize IAEA work
in this area. Amano also flagged safeguards as a priority,
noting that Japan needs to see itself as not just a major
target of the safeguards operation, but also as a
technologically advanced country that has lessons that need
to be shared with other countries. Continuing on the
safeguards theme, Amano cited Iran and North Korea as
compliance cases that "won't go away." In this regard, he
continued, the agency must make clear that these countries
need to implement their safeguards obligations. Referring to
the recently disclosed Iranian facility at Qom, Amano offered
a gentle criticism of the IAEA Secretariat suggestion that
the Iranian response thus far was ok. Iran is not like other
countries, he underlined, since the Security Council
resolutions make clear that any Iranian enrichment activities
must cease, so the Qom facility is by definition illegal.

9. (C) Finally, Amano shared his decision to bring with him
Japanese MOFA official Satoshi Suzuki, who will work directly
for the Director General with responsibility for personnel
and management issues (presumably encumbering the Office of
Oversight Services Director position that under El Baradei
was filled by Versask Liengsririwat). In discussing his
personnel plans, Amano indicated that he intended to follow a
"Change with Continuity" plan, which he explained as a plan
to keep certain key Deputy Directors General (DDGs),
including Olli Heinonen, in place so as to ensure continuity
in critical IAEA areas, while replacing some DDGs. He also
noted that he was aware of the need to appoint a woman to a
senior position, and indicated his intention to retain Amcit
DDG David Waller, which USDel welcomed.

--------------
Technical Cooperation
--------------


10. (C) On the issue of Technical Cooperation (TC),the U.S.
delegation said not enough attention has been paid to the
overall performance of the programs and noted the division is
more focused on overall expenditures than final results.
MOFA officials expressed frustration with TC, but also
concern that the pursuit of TC efficiency could anger
developing countries and threaten the success of
non-proliferation efforts. International Nuclear Energy
Cooperation Division Deputy Director Zentaro Naganuma
suggested donors should send a message regarding TC in a
positive manner: that evaluation of existing projects will
allow us to duplicate and promote successful projects.

--------------
Nuclear Security
--------------

11. (C) Japan began the discussion on nuclear security by
giving an overview of its efforts in this area. Arai
informed the delegation that Japan intends to host a regional
seminar on nuclear security in January. He also described
Japan's ongoing negotiation of bilateral nuclear agreements
with several countries, in which Japan is asking partner
countries to accept provisions related to nuclear security.
He noted Japan would like to emphasize the development of
human resources and is thinking of contributing to training
in this area. Arai requested U.S. thoughts on what security
issues are most urgent.

12. (C) DAS Kang responded that the United States wants the
IAEA to take ownership of the nuclear security issue, and the
USG wants to see dedicated human resources at the IAEA and
regular budget funding. Director Scheinman said we will need
to find and leverage those areas where the IAEA has access
and capability, and to set aside the idea that the IAEA has
no role in nuclear security.

--------------
Nuclear Energy
--------------

13. (C) Arai began by commenting on the importance to Japan
of the "3S's" of safeguards, security and safety. Noting the
role the IAEA plays in promoting the development of
infrastructure in countries that have an interest in nuclear
power, Arai observed there is room to improve the Agency's
international coordination on nuclear energy issues. He also
said Japan would like to make more use of the Friends of
Nuclear Energy Group in Vienna. Arai expressed an interest in
the future of the Global Nuclear Energy Partnership, and
noted that Japan would need to see an understanding among the
parties involved before any changes are made to the
Partnership. Koizumi followed with some comments on fuel
supply assurances. He noted Japan's believes this is an
important issue, but given the divide between developed and
developing countries, too much pushing on the issue could
result in a breakdown in discussions.

14. (C) DCM Pyatt asked the GOJ attendees about Japan's
position on Kazakhstan's expressed interest in joining the
East Asia Group at the IAEA. Koizumi noted they had been
asked about this in Vienna, and Ambassador Nakane's first
reaction was positive. He said it may take Japan a while to
develop a final position because they have to consult with
other states, but they do not consider Kazakhstan's joining
to be impossible. He concluded by noting U.S. support for
Kazakhstan's joining would be taken into account in Japan's
deliberations.

--------------
Regional Matters
--------------

15. (C) The U.S. delegation opened a discussion on regional
issues by highlighting ongoing challenges related to Iran,
Syria, and the DPRK, and noting the issue of the Qom facility
in Iran will be an immediate challenge for Director General
Amano. DAS Kang also reiterated that the United States will
not accept North Korea as a nuclear state.

16. (C) Japan's basic position on Syria, Koizumi said, is
that full cooperation with the IAEA, as well as Syria's
signing and implementing of the Additional Protocol, are
necessary. He noted Japan has already delivered this message
to Syria. For Iran, he said Japan doesn't know the full

history of recent developments, but believes the latest P5 1
meeting was positive. He expressed uncertainty about the
outcome of the agreement made by Iran to the P5 1. Koizumi's
staffer Ishii then expressed pessimism on the issue of Iran,
and asked several detailed follow up questions, including
what the U.S. expects to happen with regard to inspections on
the October 25 and the nuclear fuel supply concept. He
expressed concern that fuel enriched under the program could
be turned back into UF6 by Iran and re-enriched. He also
wanted to know how this program would be managed given the
various UN resolutions that prohibit export of material to
Iran. In reply to Ishii's questions, USDel noted the amount
of material represented three core loads and was based on a
1988 supply agreement. The risk of re-conversion is
manageable, given the ability to enrich from natural to LEU
has already been demonstrated. Moreover, the fuel will be
under IAEA safeguards.

17. (C) Koizumi's staffer Onishii began Japan's comments on
North Korea by describing Japan's evaluation of North Korea's
recent claim that it had nearly completed reprocessing spent
fuel rods removed from the 5 MWe reactor in 2003. Taking
into account the likely timeline for removing the rods and
reprocessing operations, the GOJ thinks the DPRK claims may
be factual. However, he said Japan could only guess
regarding the North Korean assertions about enrichment. DAS
Kang responded that there is every reason to believe North
Korea's claims regarding spent fuel reprocessing.

18. (C) Koizumi said Japan feels North Korea should only be
rewarded for irreversible disarmament measures. DAS Kang
opined, given the history of North Korean misbehavior, we
cannot accept anything less than irreversible disablement.
He noted the United States is in synch with Japan and South
Korea on this issue, and China is coming on board.

19. (C) Referring to the recent IAEA General Conference,
Koizumi expressed concern certain Middle East countries had
introduced new text on the last day of the conference, and
suggested the United States and Japan should consider how to
deal with such tactics in the future. He referenced what he
described as the ability of Russia and China to prevent last
minute changes to the Middle East resolution, and suggested
we should in the future coordinate sooner with a "core group"
of countries.

--------------
Nuclear Suppliers Group
--------------

20. (C) Switching to the Nuclear Suppliers Group, Koizumi
said Japan had received a report on the last meeting,
appreciated U.S. momentum for the new guidelines, and is
waiting for the conclusion. He noted it is important for
Japan to see the Additional Protocol (AP) as a condition of
supply, especially after the newest UN Security Council
resolution. He described the last text produced by the chair
as ambiguous on this point, and asserted that any special
treatment for Argentina and Brazil should be temporary and
strictly limited, and apply only to them. He said Japan
would be happy to approach Argentina and Brazil on the issue.
DAS Kang noted the importance of the universalization of the
AP, and agreed it should be a condition of supply.

21. (U) This cable was cleared with the USDel subsequent to
its return to Washington.
ROOS