AMANO'S METHODICAL, "SOFT" WAY FORWARD ON FUEL BANK

UNCLAS UNVIE VIENNA 000583 SENSITIVE SIPDIS FOR T TIMBIE/DESAULTES, ISN/NESS BURKART/CARNAHAN/HUMPHREY ALSO FOR S/SANAC, IO/GS DOE FOR NA-243 GOOREVICH/OEHLBERT NSC FOR SCHEINMAN/HOLGATE/CONNERY NRC FOR OIP DOANE/SCHWARTZMAN E.O. 12958: N/A TAGS: TRGY PREL ENRG KNNP AORC IAEA SUBJECT: AMANO'S METHODICAL, "SOFT" WAY FORWARD ON FUEL BANK REFS: (A) UNVIE 535 (B) UNVIE 364 (C) SCHELAND-TIMBIE ETAL EMAIL 12/03/09 (NOTAL) ¶1. (SBU) Summary: DG Amano told EU Ambassadors the process for further considering an IAEA-administered international nuclear fuel bank (INFB) should be transparent; decisions on how to move forward rested with the Board Chair and Member States. A Secretariat paper addressing implementation issues was under review in light of the adoption of the Russian LEU reserve. Amano agreed with EU interlocutors that the approval of the Russian proposal was a first step in a larger process, but he found regrettable that the approval had not enjoyed consensus. Secretariat staff sees an INFB as a more complex undertaking for the Agency than is the Russian reserve. Separately, the German Ambassador declined a request from the Board Chair to lead a working group (because, no doubt, he saw that a formal group would mean the death of the issue). End Summary. ¶2. (SBU) Vienna's newly empanelled EU Troika, Ambassadors Lundborg (Sweden),Serra (Spain),and Lundin (Commission PermRep) and a Swedish Mission notetaker called on IAEA Director General (DG) Amano December 17 to advocate continued progress on multilateral nuclear arrangements (MNA),specifically on developing an international nuclear fuel bank (INFB) administered by the Agency. The EU's principal message was that informal discussions should continue actively, with Secretariat help. The EU Ambassadors posited that the Board of Governors' approval in November of the Russian LEU reserve (ref A) provided momentum toward further developments on MNA. According to Swedish Counselor Stig Isaksson, Amano agreed the Russian reserve was a first step, but he found it regrettable that the Board had not approved the mechanism by consensus. ¶3. (SBU) Amano, according to Isaksson, said the process going forward should be transparent. Asked by the EU about the Secretariat paper in development since shortly after the June Board meeting addressing technical issues raised at that time (ref B), Amano confirmed that the paper was largely complete prior to his assumption of office. He said it was under review in light of the approval of the Russian reserve; he gave his EU interlocutors to understand he would release the paper when he was comfortable with it. Overall, Isaksson characterized Amano as cautious on the way forward; indeed, Amano reportedly said the decision on how to move ahead resided with the Board Chair and Member States. ¶4. (SBU) Wrapping up his account of the EU meeting with Amano, Isaksson said EXPO Head Vilmos Cserveny had noted the greater complexity for the Secretariat of designing and administering an INFB in comparison with the Agency's role vis-a-vis the Russian LEU reserve. IAEA division head for fuel cycle issues Hans Forsstroem shared with Isaksson subsequently that, following the departure of the EU Ambassadors, Amano and the Secretariat staff present (Cserveny, Forsstroem, Legal Adviser Johan Rautenbach, EXPO's Tariq Rauf, and Special Assistant for Management Suzuki) had engaged in a good further discussion of the issue. ¶5. (SBU) Parallel to the EU encounter, also on December 17 DepCouns heard from the DG's Special Assistant for Science and Technology, Graham Andrew, that Amano favored "soft consultation" to move the fuel bank forward. Amano did not want the Secretariat to hurry the issue or Member States to bring it before the Board again before the issue was ripe. Tasked by Amano to draft a strategy for moving ahead, Andrew told us he thought one-on-one contacts in which the Secretariat hears out concerned Member States were necessary. Having Turkey, for example, say that it had never really been consulted on the fuel bank gave the DG pause, Andrew explained. ¶6. (SBU) Finally from Isaksson, Mission learned that EXPO's Rauf reported Board Chairman Ambassador Arshad (Malaysia) had surprised one of the two Vice Chairmen, German Ambassador Luedeking, with the request to lead a formal working group of interested Member States on the issue of assurance of nuclear fuel supply. German Counselor Trautwein confirmed this to us, along with the fact that his Ambassador had declined Arshad's request the same day. Trautwein shared that Luedeking recognized the convening of a working group in this case as a sure recipe for paralysis. ¶7. (SBU) In addition to wordsmithing its long-withheld paper on implementation issues, EXPO intends to intensify outreach to expert consultants in nuclear fuel services ranging from transport to pricing, as it elaborates its fuel bank proposal. Tariq Rauf informed IAEACouns and STATE/ISN visitors earlier in December that he aimed to have the proposal ready for approval at the June or, at the latest, September 2010 Board meeting. Rauf acknowledged the prospect that pledged funds could be withdrawn in the absence of a successful outcome in 2010 was a factor in setting this target. The Secretariat also apparently awaits information from the Government of Kazakhstan as a potential host for fuel storage and management. Counselor Sergey Savelyev told us his government had received a set of technical questions from the Secretariat in summer 2009; his mission was still awaiting responses from capital, but Savelyev was confident Kazakhstan would provide the Secretariat documentation of all relevant Kazakh law treating nuclear export control and regulation of nuclear operations. ¶8. (SBU) Comment: Our tactics for advancing the INFB should be informed by Amano's own agenda for rebuilding a climate of greater consensus in the Board, and the related imperative to ensure that U.S. initiatives do not get crosswise with the new DG's developing thinking. DG Amano likely aims to use the process on the IAEA fuel bank also for healing the rifts he saw deepened by the confrontational outcome on the Russian reserve. We will encourage Secretariat outreach on the model suggested by Graham Andrew, as the team from EXPO, Nuclear Energy and Legal who have worked the issue internally have not done enough locally with Member States (and were prohibited from doing so by the previous DG). Anticipating release of the Secretariat paper in January, Mission will re-engage with EU and other INFB donors (Norway, Kuwait, UAE) after the end-of-year holidays to re-convene an informal "friends" group, including Kazakhstan and selected other G-77/NAM members, to take the discussion forward. DAVIES