IAEA/IRAN: DG REPORTS TEHRAN,S CONTINUED LACK OF

C O N F I D E N T I A L SECTION 01 OF 03 UNVIE VIENNA 000073

SIPDIS

E.O. 12958: DECL: 02/20/2024
TAGS: KNNP AORC IAEA IR
SUBJECT: IAEA/IRAN: DG REPORTS TEHRAN,S CONTINUED LACK OF
COOPERATION

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


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Summary
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1. (SBU) The IAEA Director General's (DG) February 19
report on Iran describes the dichotomy between Iran's lack of
cooperation with the IAEA -- the stalled investigation on
possible military dimensions (PMD) issues and the refusal to
allow IAEA access to some declared nuclear facilities -- and
the pace of Iran's centrifuge advances. This is the 24th
DG's report written since 2003, and conveys a "matter of
fact" tone rather than the frustration one would expect an
agency to express after being completely snubbed by Iran on
its investigation into nuclear weaponization-related
activities since August 2008. The report provides updated
figures for centrifuge activities at Natanz, including the
considerable uptick in the amount of low enriched uranium
(LEU) produced, it documents Iran's continued violation of
UNSC and Board Resolutions by refusing to suspend enrichment-
and heavy water-related activities, and it notes Iran's
continued refusal to implement the Additional Protocol (AP).
Particular emphasis is given to Iran's failure to provide
early information on new nuclear facilities (required by Code
3.1 of the Subsidiary Arrangement) and access to the
heavy-water reactor at Arak .


2. (C) Although the report's conclusions highlight Iran's
lack of cooperation, there is plenty of fodder for NAM
defenders of Iran to cherry-pick, including the usual
references to the non-diversion of declared nuclear material.
It is written in such a way as to set up the usual exchange
of Board statements between the NAM and the West, preventing
consensus and thereby aiding Iran's argument that it has
broad international support for its position. Almost as an
afterthought, the Director General injected further
"balance" at the end of the report with an unhelpful
reference to the need to provide copies of documentation to
Iran, an indirect jab at the U.S. that he has made previously
in oral remarks to the Board but never before in a written
report. Iran and its allies will undoubtedly pounse on this,
even though the report notes that Iran has had access to and
opportunity to study this documentation.


3. (C) The Director General has also taken an unhelpful
press line emphasizing the limited operation of new
centrifuges at Natanz since his last report and attributing
this, without evidence, to a political decision on the part
of the Iranian leadership, thus implying that this move was a
concession or sign to the international community. This
emphasis deflects attention from the report's most troubling
and arguably more cogent finding - the sizeable increase in
the amount of LEU produced at Natanz which approaches the
necessary amount Iran could enrich further for a nuclear
weapon. We fully expect that the Director General will
continue to attempt to downplay the urgency of the Iran file,
including in his oral remarks to the March Board.


4. (C) Nevertheless, the report provides a template of
Iran's noncooperation, which we should use to help change the
dynamic in the Board room. A P5 1 statement at the beginning
of the Iran agenda item expressing our unity of purpose could
further deflate NAM efforts to downplay Iran's
noncooperation. Another way of changing the dynamic is to
follow the French Mission's suggestion of an orchestrated Q&A
in the Boardroom on key issues of concern, including Code 3.1
and uranium enrichment figures, thus putting the
Secretariat's responses on record. We do not anticipate that
the Chair's Summary of the agenda item will be anything more
than a recitation of the "he said," "she said" exchange in
the Board.

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Iran's Continued Defiance of
UNSC Obligations
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5. (SBU) The DG's report states that Iran continues to
build and expand its enrichment- and heavy water-related
activities, despite numerous calls by the IAEA Board of
Governors, the UNSC, and the P5 1 to suspend such activities.
Since the November 19, 2008 DG's report, Iran has completed
installation of ten additional centrifuge cascades, but only
one additional cascade is actually operating with uranium
hexafluoride (UF6) gas. The report notes that Iran, as of
February 1, has produced approximately 1010 kilograms of low
enriched uranium (LEU) in the form of UF6 gas. (Comment:
The intelligence community notes that approximately 1,300
kilograms of low enriched UF6 - if further enriched to

UNVIE VIEN 00000073 002 OF 003


weapons-useable levels - would be sufficient for Iran's first
nuclear weapon. This suggests that Iran is nearing the
necessary fissile material for a latent nuclear weapons
capability should it choose to take the step of
weaponization. However, this material remains under IAEA
safeguards-seals and cameras-and diversi
on would be detected raising alarm in the IAEA and the
international community. End Comment.)


6. (C) Although the late November 2008 physical inventory
verification (PIV) at the Natanz Fuel Enrichment Plant (FEP)
determined that Iran had produced 209 kg of LEU more than it
previously had reported to the IAEA, the DG's report
marginally notes this error by stating "the physical
inventory as declared by Iran was consistent with the results
of the PIV, within the measurement uncertainties normally
associated with enrichment plants of similar throughput."
The LEU estimates in the previous DG reports were based on
Iranian theoretical calculations of LEU product, which turned
out to be incorrect. Discovery of this discrepancy during
the PIV is a clear reminder that the IAEA can only verify the
true status of low enriched UF6 production once a year.
(Comment: Most of the press reporting , following the DG's
line, seems to be stressing the "apparent slow down" in
centrifuge operations rather than the noteworthy increase in
low enriched UF6 product. End Comment.)


7. (SBU) The report also notes Iran's continued work on its
"new generation" centrifuges-the IR-2 and IR-3-at the pilot
FEP at Natanz. Iran's progress in this area remains
difficult to determine based on the limited information
available from the DG's report. Operations at the uranium
conversion facility (UCF) at Esfahan-the facility that
produces the UF6 feed that is later enriched at Natanz-remain
ongoing. (Comment: Iran has less than 100 tons of
yellowcake-the feed material that is converted into UF6
gas-remaining. It is assessed that Iran will exhaust its
yellowcake stockpile this year if the UCF continues operate
at normal capacity. However, Iran has operated the UCF over
the last year at less than design capacity and at a slower
pace than in the previous two years, possibly in an attempt
to utilize its yellowcake stockpile as long as possible
without having to shutdown the UCF. End Comment.)


8. (SBU) The report, highlighting Tehran's failure to abide
by Code 3.1 of its Subsidary Arrangement, states that since
August 2008 Iran has continued to refuse the IAEA access to
the IR-40 Heavy Water Research Reactor at Arak to conduct a
mandatory Design Information Verification (DIV) inspection.
The DG explains in the February 2009 report that Iran's
refusal to allow access to the IR-40 could "adversely impact
the IAEA's ability to carry out effective safeguards" at the
reactor, and that it is now impossible for the IAEA to use
satellite imagery to monitor the reactor's construction since
the domed containment structure has been completed. The
report indicates that the process lines for the production of
natural uranium pellets for the IR-40 reactor fuel have been
completed and that fuel rods are being produced at the Fuel
Manufacturing Plant at Esfahan. (Comment: This is the first
indication that Iran now is producing its own nuclear power
reactor fuel. End Comment.) Iran also has not provided the
IAEA the preliminary design information, as requested by the
IAEA in December 2007, on the planned nuclear power reactor
in Darkhovin.

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Absolutely No Progress on Possible
Military Dimensions
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9. (SBU) The report underscores the number of outstanding
issues that need to be clarified regarding possible military
dimensions (PMD) to Iran's nuclear program. The IAEA simply
notes in a matter-of-fact tone that it has "still not
received a positive reply from Iran" regarding its request
for access to relevant "information, documentation, locations
or individuals." Consequently, "the Agency has not made any
substantive progress on these issues." While the DG urges
Iran to cooperate and provide clarifications on the PMD
issues, he also calls at the end of the report and almost as
an afterthought, on the "Member States which have provided
such documentation to the IAEA to agree to the IAEA's
providing copies thereof to Iran." The previous para notes,
however, that Iran was shown and given the opportunity to
study the documentation. Although the DG has made such a
request from the "Member State" in his opening statements to
the September and November 2008 Boards, this is the first
time that it has appeared in the text of the DG's report.
It is unfortunate that the report, although it acknowledged
past access to these documents, did not also include, on
balance, the fact that Iran continues to have access short of

UNVIE VIEN 00000073 003 OF 003


the permanent provision of copies, but has refused to even
look at the material.

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How the Report Will Be Used in the Board
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10. (SBU) Despite the matter-of-fact tone, the report is
tough in terms of documenting Iran's continued failure to
cooperate with the IAEA, to abide by numerous Board and UNSC
requirements, to make substantive progress on PMD, and to
implement Code 3.1. However, on the latter point, the report
stops short of calling this a breach of Iran's safeguards
agreement. All of this said, there is the usual fodder for
the NAM and other "Iran-friendlies" throughout the
report-the ability to verify the non-diversion of declared
nuclear material and the DG's calls for Member States to
provide copies of PMD documentation to Iran-to rally support
for and defend Iran.

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Comment and Recommendation
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11. (C) In order to build support for the IAEA
Secretariat's continued investigation into Iran, the U.S.
should in its intervention share in the DG's "regret" on the
lack of Iranian cooperation, especially highlighting the
conclusions on Iran's defiance of UNSC and Board resolutions,
the IAEA's inability to be in a position to provide credible
assurances about the peaceful nature of Iran's nuclear
program, and hone in on Iran's unilateral suspension of Code
3.1. Another objective should be to try to change the
dynamic in the Boardroom. Unfortunately, the way the report
is written with the DG's injection of "balance" sets us up
for another "he-said, she-said" exchange with NAM defenders
of Iran. A P5 1 statement would certainly help change the
dynamic . Another way of doing so is the French suggestion
of an orchestrated Q&A in the Boardroom with the Seceratariat
so that the exchange becomes part of the official record, as
opposed to the informal technical briefing. Such an
exchange would also focus the Board discussion on the key
technical issues raised by the report rather the political
stances of Board members and grandstanding by Iran.
SCHULTE