RUSSIAN URANIUM OXIDE AS POTENTIAL COLLATERAL FOR

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 000115 SIPDIS E.O. 12958: DECL: 01/19/2020 TAGS: IAEA IR KNNP PREL RS SUBJECT: RUSSIAN URANIUM OXIDE AS POTENTIAL COLLATERAL FOR IRANIAN LEU Classified By: Deputy Chief of Mission Eric S. Rubin. Reasons 1.4 (b), (d),(e),(h). ¶1. (C) Summary: Deputy Director of Rosatom Nikolay Spasskiy told U/S Bill Burns in a meeting on January 13 that Russia has no uranium silicide to supply as collateral for Iranian LEU (low enriched uranium),but is technically capable of supplying at least a small quantity of uranium oxide fuel assemblies in a short time span, and larger quantities in six to nine months. Spasskiy noted a positive MFA reaction to the collateral idea, pressed for greater specificity on the nature of the collateral, its legal status, and the timing of a swap-out with Iranian LEU, while stressing that any political decisions on the matter rest with the MFA. End summary. ¶2. (C) On January 13, 2010, Under Secretary Bill Burns, accompanied by Deputy Assistant Secretary for Europe Dan Russell, NSC Senior Director for Russia and Eurasian Affairs Mike McFaul, Special Assistant Tamir Waser, CDA and Emboffs, met with Deputy Director of Rosatom, Nikolay Spasskiy at Rosatom. Spasskiy told U/S Burns that the GOR remains committed to its official position on the TRR proposal as put forward in October in Geneva. He said the idea of using collateral for an exchange in a third country "in no way detracts" from that basic position and that his MFA contacts, including Foreign Minister Lavrov, indicate a positive reaction. -------------- No Uranium Silicide -------------- ¶3. (C) Referring to a letter from Under Secretary Ellen Tauscher to Spasskiy on Russian technical possibilities for providing collateral for Iranian LEU, Spasskiy told Burns that Russia has no uranium silicide and that it does not produce any since Russian reactors do not use this fuel. He estimated it would take 3-5 years for Russia to produce uranium silicide for the Tehran Research Reactor because it would require technical information from Iran, new design development, production and testing according to Russian licensing requirements. The Iranian nuclear regulatory body would also have a role to play and Spasskiy noted that introducing a new fuel design "enlarges the field for possible maneuvering". -------------- Uranium Oxide Possibilities -------------- ¶4. (C) By contrast, Spasskiy noted that uranium oxide fuel offered a very different scenario as the design would be a very familiar one used in Russia's own reactors. His preliminary analysis was that in nine months, Russia could produce as many fuel assemblies as needed. If Argentina provided design information, the process could be reduced to seven months. He believes that the Argentinian fuel currently in use might last longer than 18 months, but that it is definitely close to expiring. Given this backdrop, he considered a seven to nine month timeframe for providing uranium oxide fuel assemblies to the TRR as realistic. -------------- How Much, How Fast? -------------- ¶5. (C) U/S Burns pressed as to what quantity could be made available as collateral quickly, for example, in the next month. Spasskiy responded that he would not consider "scraping through our stockpiles" for 19.75 percent enriched uranium oxide. If Russia needed to produce 115 kilograms to supply the TRR, the process could be abbreviated to six months. However, a tiny amount could be produced "very quickly" if not in metallic form. Burns commented that the collateral could be upgraded over time as Russia worked with France to finish the fuel assemblies. -------------- How Serious Are the Iranians? -------------- ¶6. (C) Burns noted it was not yet clear if it made sense to put forward an upgraded proposal unless the Iranians show MOSCOW 00000115 002 OF 003 some decisiveness. He emphasized that no USG decisions have been made, beyond our continuing support for the October IAEA proposal. Spasskiy agreed that the Iranian January 5 reply to the IAEA proposal (ref A),while more streamlined, was nothing new, amounting to the same counter-proposal floated by Iran in the October 19-21 Vienna talks. He stated his personal belief is that Iran wants to find a solution, given that it clearly needs the fuel, but cannot produce it on its own (in the remaining 18 plus months of its supply) without seriously downgrading safety precautions. He noted that if Iran succeeds in making the qualitative jump from producing 3.5 percent enriched uranium to 19.75 percent and if Iran does not agree to a solution, it could provoke an "enormous crisis". He described Iranian government current strategy as erratic, due to domestic political concerns. -------------- How Flexible are the Americans? -------------- ¶7. (C) Given the looming crisis described, Spasskiy asked if the U.S. might consider demonstrating flexibility in allowing the IAEA to take custody of the Iranian LEU on Iranian territory. He praised the U.S. for its flexibility demonstrated thus far, while adding that from the technical point of view, there is not much difference if custody of the LEU is taken in or outside of Iran. He also emphasized that 1200 kilograms (the amount of required removal of Iranian LEU) is a symbolic number, based upon the 600 kg provided by Argentina plus an estimated 600 kg produced by Iran ("In reality, Iran now has over 1500 kg"). Spasskiy added that the credibility of the IAEA was also at stake, warning that in pursuing one goal, we should be careful not to undermine another. ¶8. (C) Upon U/S Burns reiterating that 1200 kg LEU out of Iran is the core ingredient of a confidence building measure, Spasskiy quickly acknowledged that "in that case" collateral becomes the key issue. He added that Iranians "also have their disbelief", particularly due to past experience with the French. Stressing the need for some kind of guarantee, he said Iranians may not view what is offered as collateral, if they believe we can take it back at any time. Spasskiy noted that for a solution using collateral to work, three aspects must be defined carefully: 1) the nature of the collateral (what is it?),2) its legal status, and 3) the timing involved. Noting that while there were very few things to like about the Iranian counter-proposal, he did like the notion of the simultaneous LEU for collateral swap. -------------- Future Russian Plans for TRR -------------- ¶9. (C) Switching tones, Spasskiy noted that the TRR proposal opens up "great opportunities" and represents the one area where there is potential for progress with Iran. If we successfully carry off this deal, he said, the next step would be to upgrade the reactor and eventually to install a new reactor. An international effort centered on the TRR, he concluded, will be "a great hook on which to pull (the Iranians). -------------- -------------- Nuclear Summit, Plutonium Protocol, Global Partnership -------------- -------------- ¶10. (C) In closing, Spasskiy turned to other issues. On the upcoming Nuclear Security Summit in April, he said that the GOR is now "perfectly in line". Originally, he feared that the time span for organization was too short, but now he is happy with the agenda and believes it will be an important event. He added that what remains to be done on the Plutonium Protocol agreement is only a technical checking of the text. It would then be up to the MFA and State Department to decide on the theatrics of a possible signing at the Washington Nuclear Summit. ¶11. (C) U/S Burns agreed that we want to pin down concrete achievements for the Summit, adding that during the 2010 Canadian chairmanship of the G8 Global Partnership (GP),we want to move towards turning the institution into a true partnership with Russia. Spasskiy responded that the GOR was very positive about an expanded GP, but that it should not MOSCOW 00000115 003 OF 003 detract from current cooperation. He added that the U.S. and Russia should bilaterally have a better understanding of where they would like the GP to go before we are confronted with "cut and ready drafts" presented by the Canadian chair. -------------- Comment -------------- ¶12. (C) Spasskiy clearly sought to feel out any USG wiggle room on the location (in Iran) and proposed quantity of an LEU swap. Finding none, he quickly embraced the possible use of collateral in a third country as the key issue and carefully laid out his view of what remains to be addressed (nature of the collateral, legal terms, and timing). Spasskiy was careful to couch his analysis as a "technical perspective", leaving the political decision-making to his colleagues at the MFA. He does understand clearly that the USG has not made any decision to "upgrade" the IAEA proposal, and that we continue to stand firmly behind the October IAEA offer. ¶13. (U) U/S Burns has cleared this cable. Beyrle