IAEA/BOG - RUSSIAN NUCLEAR FUEL RESERVE APPROVED

UNCLAS SECTION 01 OF 04 UNVIE VIENNA 000535 SENSITIVE SIPDIS STATE FOR T, S/SANAC, IO/GS, ISN/NESS, ISN/MNSA POL OR ECON/EST FOR IAEA ACTION OFFICER GENEVA FOR CD DOE FOR NA-243-GOOREVICH NRC FOR JSCHWARTZMAN, MDOANE E.O. 12958: N/A TAGS: ENRG KNNP AORC TRGY IAEA SUBJECT: IAEA/BOG - RUSSIAN NUCLEAR FUEL RESERVE APPROVED REFS: (A) UNVIE 531 (B) UNVIE 301 BOTH NOTAL -------------- Paving the Way or Pyrrhic Victory? -------------- ¶1. (U) Summary: The years-long IAEA debate over the creation of an international nuclear fuel reserve finally came to a head at the Board of Governors' Thanksgiving session. Rather than have the Board act on a Secretariat recommendation, Russia chose the tactic of seeking approval of its plan by a resolution with sufficient cosponsors to indicate the inevitability of its adoption and consequently avoid a direct challenge in the Board. The resolution, drafted by Russia and the Secretariat and edited in the process of enlisting support, came before the Board with fourteen sponsors (Azerbaijan, Canada, Denmark, France, Japan, the Republic of Korea, Mongolia, the Netherlands, Romania, Russia, Spain, Ukraine, the UK and the United States) and enough additional promises of support to ensure in advance the adoption of the resolution. However, Russia was never able to discourage opposition sufficiently to avoid a vote. ¶2. (SBU) Summary contd.: Following a debate that tracked closely along the lines of the IAEA's June meeting, the IAEA Board of Governors adopted the resolution approving the first of the approximately one dozen proposals for nuclear fuel supply assurances developed by Member States and the Secretariat. The text is contained in paragraph 11. The calls in the debate for "more time to consider the question" led the Chair to note the absence of consensus on the resolution and dashed the hope to have it adopted by silent acquiescence. The vote, 23 for (U.S. included),8 against, 3 abstain, 1 absent, reflects the continued division over this issue between western states seeking to devise mechanisms to discourage the spread of sensitive technologies and the more vocal developing countries concerned about being disadvantaged commercially and denied their "right" to nuclear development as they see fit. This continued division and the sense that the resolution was forced on the NAM/G-77 does not bode well for the prospects of other fuel assurance proposals, such as the IAEA Fuel Bank. However, several developing countries stood out as particularly effective allies in this effort, including Peru, Kazakhstan, and Mongolia, all of whom spoke out publicly in support. Significantly, India departed from the other NAM to abstain, calling itself a potential supplier to a fuel bank. End Summary. -------------- The Sponsors' Strategy -------------- ¶3. (SBU) Russian IAEA Governor Berdennikov convened potential resolution co-sponsors to meetings on November 24 and 25 before the Board convened, as well as twice on November 26, before the opening of the Board meeting and at midday, to recruit co-sponsors and engineer group decisions on tactics. Generally attending these meetings were the Ambassadors or msnoffs of all the ultimate sponsoring states plus Australia, Germany, Peru, and Switzerland. Berdennikov noted to all at the outset on November 24 that FM Lavrov had contacted their ministers with the request for co-sponsorship. ¶4. (SBU) Berdennikov used the initial meetings to discuss revisions of the resolution text as a means of securing sponsorships. UK, French, and German additions to the original Russian/Secretariat text added preambular and operative paragraphs referring constructively to other fuel assurance proposals still under development as well as a preambular paragraph emphasizing states' rights under NPT Article IV. Berdennikov on several occasions posed the alternatives of advancing the proposal in this Board or deferring. When his question resulted in musing about the good will to be gained by allowing for more consultation, however, he replied with his own analysis that the opponents were implacably opposed and the supporters would gain no ground. The UK and U.S. ambassadors supported him in this analysis and others accepted it with quiet unease. On Wednesday, November 25, he secured the agreement of the group to table the resolution that evening on behalf of the sponsors that had formally signed up by the appointed hour; Berdennikov and UNVIE VIEN 00000535 002 OF 004 Ambassador Davies called on the Board Chair at 8:00 p.m. to submit the resolution with fourteen governors' signatures. -------------- Board Debate -------------- ¶5. (U) Board debate on the Russian LEU Reserve proposal was largely a rerun of the debate in June (ref B) involving three fuel assurance proposals, the Russian LEU Reserve, the IAEA Fuel Bank, and the German Multilateral Enrichment Sanctuary Project. Russia introduced its proposal, which had been presented to the Board by the Secretariat without a recommended action, noting that this was an issue that had been under debate for over 50 years and reminding the Board of some of the more recent history and initiatives. It also introduced the resolution approving the agreement between Russia and the IAEA establishing the reserve, approving a Model Agreement between the IAEA and a recipient Member State wishing to take advantage of the reserve, and granting the Director General the authority to conclude an agreement according to the model without obtaining further permission of the Board of Governors. Russia asked for the resolution to be adopted without a vote. ¶6. (U) Argentina, speaking for the G-77 (and mistakenly adding "plus China" in its introduction),reiterated the June 2009 view that there was a need for caution on the technical, legal and economic aspects as well as on the underlying political aspects of fuel assurances. Argentina stated that the Agency must first agree on a coherent conceptual framework including principles and objectives, asserted that any proposal should be adopted by consensus of the General Conference, noted that there had been no developments addressing the concerns identified in June, concluded that no decision could be taken at this time, and indicated that that it looked forward to future dialogue. These themes were echoed by Egypt, speaking for the NAM and in its national capacity, Argentina speaking in its national capacity, Brazil, Pakistan, and Venezuela, all of which subsequently voted no on the resolution. Pakistan also stated that fuel assurance proposals should also address the supply of natural uranium. India, Turkey, Peru and Afghanistan all supported the need for consensus, although the first two abstained on the resolution and the latter two voted for it. Argentina, Egypt and Venezuela all rejected the notion that any particular technology was a proliferation risk while Venezuela went further to say that the real proliferation risk was the absence of disarmament under NPT Article VI. Brazil reprised its question from June about just who would benefit from this proposal, except perhaps that a nation being penalized for very poor behavior might be able to avoid the penalty. Argentina repeated a long list of conditions that it felt a fuel assurance proposal must meet, apparently without realizing that the Russian proposal addressed them. ¶7. (U) Sweden, speaking on behalf of the European Union, expressed support for the proposal, noting also that the EU had pledged 25 million Euros to the Fuel Bank and that the UK and Germany had also made proposals. The EU statement also cited the support that the proposal gave to the provisions of UNSCR 1887. The EU statement was followed by statements of support from Ukraine, the U.S. (text in paragraph 9),Canada, China, the ROK, Mongolia, Japan, the UK, France, Switzerland, and, under Rule 50, Kazakhstan and Austria. All made supportive statements but largely cited the generalities of the benefits of fuel assurances and not the specifics of the proposal. Mongolia, Japan, the ROK and the United States all noted the lack of impact on Agency resources and Japan and the United States noted the safeguards criteria for eligibility, while the ROK cited the reasonableness of the eligibility criteria generally. The ROK noted that additional elaboration was needed on the nature of the disruption that could trigger use of the reserve. The United States noted that the proposal dealt satisfactorily with safety, security and liability issues, while also citing the work of the GNEP Nuclear Fuel Assurances Working Group on the availability of fuel fabrication services. -------------- Got Them Right Where They Want Us? -------------- UNVIE VIEN 00000535 003 OF 004 ¶8. (SBU) Following the Board's November 26 discussion, the Russians again convened the sponsors to request support for the option of requesting a vote. Berdennikov analyzed that the opponents to the proposal knew "they have the Chair" with them, that the Chairman would note correctly that there was no consensus and could then turn to the sponsors with the alternatives to defer a decision or assign the issue to a working group. Berdennikov took the position that either alternative would reduce the likelihood of approval in the future. At this juncture, in the Russian analysis, opponents were "taken by surprise" and there was no unity of position among G-77 or NAM states. Allowing more time for consultations, Berdennikov asserted, would result in no more "yes" votes but would allow the opponents to turn abstentions into "no" votes. In this analysis, again, Berdennikov got strong endorsement from the UK ambassador. Others (Canada, France) actively endorsed the position of asking for a vote if necessary; no one present objected. -------------- Little Drama in Voting -------------- ¶9. (U) The resolution approving the Russian LEU Fuel Reserve and the necessary agreements to implement it came to a vote on the morning of November 27 after the Board has passed the more closely watched resolution on safeguards verification on Iran and heard a lengthy round of explanations of vote on that topic (septel). The Board Chair took up the Russian proposal with the resigned observation, "Since we are in a voting mood," let us turn to the resolution on an LEU reserve. The resolution passed 23-8-3 with one Board Member absent. -- Voting YES were: Afghanistan, Australia, Burkina Faso, Cameroon, Canada, China, Denmark, France, Germany, Japan, the ROK, Mongolia, the Netherlands, New Zealand, Peru, Romania, Russia, Spain, Switzerland, Ukraine, the UK, the United States, and Uruguay. -- Voting NO were: Argentina, Brazil, Cuba, Egypt, Malaysia, Pakistan, South Africa, and Venezuela. -- ABSTAINING were: India, Kenya and Turkey. -- Azerbaijan, a sponsor, was ABSENT. ¶10. (U) Following the vote, a number of countries voting no or abstaining explained their votes, decrying the absence of consensus. India broke from other NAM states by abstaining and delivered an explanation of vote (EOV) lamenting the introduction of "discriminatory" criteria for fuel bank eligibility but also noting India's potential to be a supplier of thorium to an international fuel reserve. After the formal EOVs, the Chair opened the floor. Canada, in an "additional statement" suggested that perhaps it would be worthwhile to pursue developing a general framework before moving on to discuss other proposals. The U.S. stated that it viewed the resolution just adopted as part of the dialogue process and that it wanted to continue to explore the issues. - ¶11. (U) Begin Text of Resolution (available to the public on www.iaea.org): Request by the Russian Federation regarding its Initiative to Establish a Reserve of Low Enriched Uranium (LEU) for the Supply of LEU to the IAEA for its Member States. Resolution adopted by the Board of Governors on 27 November 2009 The Board of Governors, (a) Recalling the Report by the Director General GOV/INF/2007/11 "Possible New Framework for the Utilization of Nuclear Energy: Options for Assurance of Supply of Nuclear Fuel", (b) Recalling the document GOV/INF/2009/1 "Russian Federation Initiative to Establish a Reserve of Low Enriched Uranium (LEU) for the Supply of LEU to the IAEA for its Member States", (c) Recalling the Report by the Director General GOV/INF/31 UNVIE VIEN 00000535 004 OF 004 "Assurance of Supply - Russian Federation Initiative to Establish a Reserve of Low Enriched Uranium (LEU) for the Supply of LEU to the IAEA for its Member States", (d) Noting the provisions of Article IX of the IAEA Statute allowing Member States to make available to the Agency nuclear materials for supply to other Member States, (e) Noting that a number of concepts of assurance of supply of nuclear fuel have been proposed, which can complement each other to strengthen the assurances provided to interested Member States, and that discussion have already taken place in the Board, (f) Reaffirming that the establishment of the reserve of LEU and the subsequent implementation of future agreement with Member States will be carried out as a back-up solution only and in such a way that any disturbance or interference in the functioning of the existing fuel market is avoided, while noting the importance of developing a range of complementary options for additional assurances of supply, and the fact that the good operation of the market already provides assurances of supply, and (g) Emphasizing that the inalienable rights of all Parties to the NPT to develop research, production and use of nuclear energy for peaceful purposes without discrimination provided for in Article IV of the NPT will in no way be affected by the aforementioned Russian Initiative. Hereby, ¶1. Welcomes the offer of the Russian Federation to establish on its territory a reserve of LEU to the IAEA for its Member States; ¶2. Authorizes the Director General to conclude and subsequently implement the Agreement with the Russian Federation to establish a reserve of LEU for supply to the IAEA for its Member States, attached as Attachment 1 to GOV/2009/76. ¶3. Approves the Model Agreement, attached as Attachment 2 to GOV/2009/76 as the standards text for agreements that are to be concluded with Member States for the supply of LEU by the IAEA from the reserve; ¶4. Authorizes the Director General to conclude and subsequently implement future Agreements with Member States for the supply of LEU by the IAEA when the Director General considers that the request of the Member State fulfills the eligibility criteria included in the Agreement with the Russian Federation, without the requirement of a case-by-case authorization by t he Board but with a requirement for the Director General to keep the Board informed of the progress of individual Agreement; and ¶5. Decides to remain seized of the matter with a view to considering, and eventually adopting at an early date, other complementary proposal to strengthen the assurances of supply of nuclear fuel available to interested Member States. End Text of Resolution ¶12. (U) Begin Text of U.S. Statement as delivered. Mr. Chairman, The Director General assembled an Expert Group on Multilateral Approaches to the Nuclear Fuel Cycle in mid-2004. Many reports, proposals, and discussions both formal and informal over the ensuing five years brought us to the decision the Board made today. My delegation was among the sponsors of the resolution on the Request by the Russian Federation regarding its Initiative to Establish a Reserve of Low Enriched Uranium (LEU) for the Supply of LEU to the IAEA for its Member States. U.S. support for this specific proposal is intended to advance dialogue in this Board and this Agency on means for reinforcing the market in nuclear fuel services through various concepts involving fuel reserves, export licensing, multinational enrichment facilities, improved information sharing, and such other concepts as may be put forward. We hope and expect to continue this dialogue. Thank you. End Text of U.S. Statement. DAVIES