IAEA/RANF: RUSSIA SEES PROGRESS; BEIJING

C O N F I D E N T I A L UNVIE VIENNA 000198

C O R R E C T E D C O P Y (CHANGED REF AND TEXT IN PARA 3;6;9)

SIPDIS

FOR T, IO, ISN
DOE FOR NA-243 GOOREVICH, SYLVESTER
NSC STAFF FOR CONNERY

E.O. 12958: DECL: 04/30/2014
TAGS: AORC ENRG PREL KNNP IAEA
SUBJECT: IAEA/RANF: RUSSIA SEES PROGRESS; BEIJING
INTERLOCUTORS PRAGMATIC

REF: A: UNVIE 154
B: UNVIE 155
C: BEIJING 1120

Classified By: Ambassador Gregory L. Schulte, 1.4 (b) and (d)


1. (SBU) Sumamry: Ambassador's recent bilateral exchanges
in Vienna and Beijing on multilateral nuclear fuel
arrangements included encouraging signs for pragmatic
discussion in the June IAEA Board of Governors meeting,
paving the way to positive Board action in September.
Advancing the dialogue requires Moscow's expected release of
its dual agreement texts and the publication of an IAEA
Secretariat concept paper for an Agency-administered fuel
bank. Advocacy by the Director General and the Russian
Government in parallel with ourselves and other like-minded,
aimed at leading voices among developing countries, remains
crucial. End Summary.

Russians' Path Forward, with Stumbling Blocks
--------------


2. (C) U.S. and Russian Ambassadors Schulte and Zmeyevskiy
met April 16 with DCMs and mission officers in a
Russian-hosted luncheon discussion devoted mostly to the
nuclear fuel assurances issue. With regard to the Russian
fuel reserve arrangement, structured on a Russia-IAEA
"Agreement 1" and an IAEA model "Agreement 2" for supplying
recipient states, Zmeyevskiy said his government was
finalizing the two agreement texts with the IAEA and
progressing toward inter-agency approval to sign Agreement 1.
He did not know if the texts would be circulated to Board
member states in time for consideration in the June 15-19
Board meeting, but Russia would like to keep momentum up with
a constructive Board discussion in June. (Note: IAEA now
understands GOR decided to release the texts. End note.)
Zmeyevskiy said Russia would not circulate an alternative
concept paper beyond that which the Board received in
February. Our Russian interlocutors saw little more to
present beyond the February paper, short of releasing the
agreement texts. "The devil is in the details," per Russian
DCM Vladimir Sergeev, and the Board needed to see those
details in the agreement texts to be able to evaluate them.
Zmeyevskiy anticipated that member states would have to refer
the agreements to their own inter-agency stakeholders, going
beyond foreign ministries and atomic energy commissions to
include, he expected, justice and interior/homeland security
ministries.


3. (C) Ambassador Schulte conveyed that IAEA DG ElBaradei
intended (per ref A) to have fuel assurances as an agenda
item for the June Board meeting, which sub-ticks to discuss
the Russian arrangement, an IAEA-administered fuel bank, and,
potentially, the UK Nuclear Fuel Assurance concept involving
guaranteed export licensing. Zmeyevskiy observed that Board
member states were not and would not be ready to digest and
decide on all these concepts in June. Ambassador Schulte
noted in reply that he had sought his meeting with ElBaradei
in order to convey the first written communication from the
Obama Administration to the DG, namely the letter from
Secretaries Clinton and Chu commending and encouraging
ElBaradei's continued leadership on fuel assurances. The USG
hoped, the Ambassador said, that ElBaradei would help us get
some decisions from the Board before he departed office, and,
although ElBaradei remained reluctant to lobby individual
countries, the good news was that the DG was generally
"leaning forward." Zmeyevskiy agreed and expressed the view
that ElBaradei wants an achievement in this area to be part
of his legacy.


4. (C) Less encouraging was Zmeyevskiy's survey of the
opponents. Recalling recent Russian bilateral discussions
with Argentina and Brazil (which we inferred took place in
Vienna with resident PermReps),Zmeyevskiy said with a shake
of the head "I could not understand the logic of their
position." Both Latin countries had "spoken in generalities"
about NPT rights and technological discrimination.
Separately, at a dinner with several developing country
ambassadors and their UK colleague, Zmeyevskiy said it had
become clear to him how little his Vienna colleagues
understood the details of the Russian proposal. Only late
into a long night of dialogue, he said, did his counterparts
begin recognizing that the Russian proposal was not
"dangerous" but rather "in their interest" and not to be
ignored. Russia was neither creating competition for the
private sector nuclear industry nor creating complications

for the IAEA's mission. Rather, as people came to see the
Agency's legal and political role in the Russian arrangement,
Zmeyevskiy concluded, they found it reassuring. He added
that Russia was trying to persuade Cuba, a country that,
having no nuclear plant, could be agnostic about a fuel bank,
to see the interest that other developing states may have in
such arrangements and not stand in their way. "I see some
positive signs," he said regarding Cuba.


5. (SBU) Ambassador Schulte continued the Russian dialogue
during his participation in the April 20-22 Beijing IAEA
conference on nuclear power. Joined by ISN/NESS acting
director Burkart, the Ambassador met Vladimir Kuchinov of the
ROSATOM State Atomic Energy Corporation. Schulte recounted
what he understood to be the common U.S.-Russian strategy to
push ElBaradei to the front, get specific concepts to the
Board for consideration, and to work member states
(reassuring skeptics, urging new entrants to nuclear power to
show support, and neutralizing troublemakers). The
Ambassador urged that Russia engage actively, including with
IAEA members like Cuba and Syria, wher Russia had more
influence than does the U.S. Kuchinov said the GOR's goals
were to secure at the June Board the IAEA Secretariat's
mandate to conclude an arrangement, and in September to have
the Board authorize ElBaradei to sign the agreements.
Kuchinov confirmed Russian interagency agreement on the model
agreements was still in train. Regarding process and
packaging in the Board, Burkart suggested and Kuchinov agreed
it would be advantageous to have Chairwoman Feroukhi and the
Board discuss ElBaradei's two intended sub-items (for the two
concepts) together.

Key Country Policy-Makers Mostly Constructive
--------------


6. (SBU) UNVIE defers to Embassy Beijing for comprehensive
reporting on the ministerial conference. In formal
presentations and bilateral conversations in Beijing,
Ambassador Schulte heard the following on fuel assurances
from key players:

-- DG ElBaradei made a pitch in his statement from the podium
and said he hopes to present two proposals to the Board in
June. Privately, ElBaradei told the Ambassador it was up to
the USG to deliver the skeptics. The Ambassador urged the DG
also to engage, including during his remaining time at the
conference.

-- China Atomic Energy Authority Chen and National Energy
Administration Vice Administrator Sun Qin said China would
"actively participate" in discussion of multilateral assurances in
"constructive" way but appeared not to be further briefed on the
subject.

-- Indian Atomic Energy Commission chief Anil Kakodkar
observed that while large countries will want fuel cycle,
small countries will want reactors with an assurance of
nuclear fuel.

-- Argentina's Secretary of Energy Daniel Cameron indicated
Buenos Aires would be supportive of fuel assurance
arrangements if they help countries get access to nuclear
energy and do not deny rights. Ambassador assured Cameron
that concepts on the table were not aimed at denying rights
to Argentina or any other country. Cameron wants to continue
consulting with us on the issue, including at upcoming
bilateral led on the USG side by ISN/NESS Burkart (likely in
June after the Board meeting).

-- Ambassador Schulte briefed Thailand's Minister of Energy
Channukul on fuel banks. The minister expressed concern
about cartels but added that Thailand would study the
concept. Thailand was relying on U.S. private sector
consultant Burns and Roe to advise on its national nuclear
program. Channukal's deputy Norkun Sittiphong told Embassy
Beijing's DoE attach afterwards that the consultant was
recommending reliance on the market backed by a fuel bank.

-- Egypt's Minister of Electricity and Energy Hassan Younes
said Egypt has no intention to acquire enrichment
capabilities and supports fuel banks. (Note: This stands in
remarkable contrast to the position staked out by Egyptian
Deputy Assistant Minister Khaled Shamma to Ambassador Schulte
at the March 17-18 London fuel supply conference). Minister

Younes said he was very appreciative of President Obama's
Prague speech and commitment to the goal of zero weapons.
Ambassador Schulte noted to Younes the Egyptian MFA was
worried about NPT rights in the context of a fuel assurance
mechanism and assured him none would be sacrificed.

-- The chairman of Pakistan's Atomic Energy Agency, Ansar
Parvez, told the Ambassador he considered a fuel bank a "good
idea" but wondered whether the interval between the June and
September Board meetings was adequate to consider proposals.
Parvez said a lot of confidence-building was required to
address latent concerns among developing countries about
rights and whether fuel suppliers were trying to advance
economic interests. He wanted to know how Pakistan would
benefit; AmbassadorSchulte replied each country could assess
its spcific interests as it reviews the IAEA Secretariats
concepts, but that Pakistan would benefit from imiting the
spread of enrichment technologies evn if it never drew fuel
from an IAEA bank.

--Khaled Toukan, Chairman of Jordan's Atomic Energy
Commission, in a bilateral meeting with delegatios said
Jordan was supportive of the fuel assurancs concept as long
as national rights were not copromised. He undertook to try
to have Jordan mae a supportive statement at the June Board.
Conersely, though, in an intervention from the floor uring
the conference, Toukan said NPT universaliztion and
disarmament were issues of higher priorty than fuel
assurances. (Note: This remark, drected at Israel's
non-NPT status, drew an affiring nod from Syrian Atomic
Energy Commission chif Ibrahim Othman and will be heard
frequently fro Arab states, even those with a national
interes in fuel assurances. End note.)

Follow-Up
--------------


7. (SBU) IAEA fuel assurances point manTariq Rauf told
Msnoff April 27 that the Agency' Russian interlocutor, MFA
Ambassador Berdennikov had confirmed GOR intent to release
the two agrement texts in time for Board discussion in June.
Rauf anticipated the documents would be out in te week
after the NPT PrepCom. He indiciated theSecretariat would
continue to advocate to Berdennkov that Russia do active
outreach to Board membrs in support of the proposed
arranegment.


8. (C) On April 30 we recounted to an Argentine Mission
Couselor in Vienna (please protect) the substance of
Ambassador Schulte's Beijing conversation with Energy
Secretary Cameron, reported above. Our counterpart
recommended confidentially that the U.S. present the case for
fuel assurances -- free of any mandatory foreswearing of
domestic enrichment -- to nucelar industry and energy policy
makers in Buenos Aires. Approaching the right small circle
of officials could move our bilateral dialogue to a more
pragmatic ground related to the economics and technical
realities of nuclear power, which could be reflected in
future instructions the Argentine mission here gets on the
issue.


9. (U) UNVIE coordinated this report with Embassy Beijing.

SCHULTE