VFM CHUN WARNS THAT ROK-U.S. CIVILIAN NUCLEAR

S E C R E T SEOUL 000273 SIPDIS E.O. 12958: DECL: 02/22/2030 TAGS: PREL PGOV PINR ENRG KNNP MNUC ECON KS KN JA CH SUBJECT: VFM CHUN WARNS THAT ROK-U.S. CIVILIAN NUCLEAR COOPERATION AGREEMENT RENEGOTIATION COULD BECOME "DEFINING" ISSUE IN BILATERAL RELATIONS Classified By: Ambassador D. Kathleen Stephens. Reasons 1.4 (b/d). Summary -------------- ¶1. (S) Vice Foreign Minister Chun Yung-woo told the Ambassador February 17th that revising the ROK-U.S. Civilian Nuclear Cooperation Agreement (CNCA) could soon become a "defining issue" in ROK-U.S. relations. The issue, he warned, was already drawing significant amounts of negative press attention and had to be handled skillfully. The ROK was now one of the world's top five nuclear power producers; other members of that "club," including Japan, all had the capability to reprocess spent fuel. Public opinion would not tolerate the perception that Korea was being discriminated against vis-a-vis Japan, Chun emphasized. The ROKG view of the way forward was for very quiet negotiations, with no publicity, resulting in a USG agreement that Korea had the right to reprocess. That, Chun claimed, would defuse critics and shift public debate to the issue of cost. The budget-busting cost of a reprocessing facility meant that the ROK would not actually reprocess spent fuel "during the next 20 years,8 although a reprocessing facility would eventually be built, likely near Kyongju. Negotiations had to begin in the second half of 2010, Chun argued, with the USG represented by an ambassadorial-level official. End Summary. Comment -------------- ¶2. (S) This was an unusually strong presentation from an able and experienced diplomat with a strong affinity for the United States. Koreans, and the Lee Myung-bak Administration in particular, are extremely proud of having won the recent nuclear reactor contract for the United Arab Emirates, and view the nuclear industry as both a source of national pride and a significant contributor to the economy. Chun's presentation over lunch was probably an opening gambit rather than the ROKG's bottom line, and we do not agree with the way that Chun characterized various aspects of this complicated issue, but he is right to flag the potential for damage to the overall bilateral relationship if the United States is perceived here as hamstringing the ROK effort to develop its nuclear industry. This will need careful handling. End Comment. VFM Chun: Watch Out... -------------- ¶3. (S) During a February 17 lunch hosted by Ambassador Stephens that covered other topics (septel),ROK Vice Foreign Minister Chun Yung-woo emphasized the urgent need to revise the ROK-U.S. Civilian Nuclear Cooperation Agreement (CNCA), which is set to expire in 2014. The issue, he warned, was already drawing significant amounts of negative press attention and attracting "grandstanding politicians" like Liberty Forward leader Lee Hoi-chang, who earlier in the day had publicly lectured a MOFAT Director-General about the need to "regain our nuclear sovereignty." The ROK was now one of world's top five nuclear power producers/users; other members of that "club," including Japan, all had the capability to reprocess spent fuel. Public opinion would not tolerate Korea being discriminated against vis-a-vis Japan, Chun emphasized. ...Because This Could Become a "Defining Issue" -------------- -- ¶4. (S) Chun asserted that revising the CNCA could, in time, become a "defining issue" in ROK-U.S. relations. It had to be handled with tact, skill, and "very little publicity," Chun stressed. Summarizing the ROKG view of the issue, the VFM said political conservatives strongly believe the ROK unfairly forfeited its right to reprocess spent fuel by signing the 1992 "Joint Declaration of South and North Korea on Denuclearization of the Korean Peninsula." With the rapid growth and sophistication of the ROK civilian nuclear energy industry, Chun said, it now made economic sense for the ROK to consider reprocessing. ROKG Vision of the Way Forward -------------- ¶5. (S) The CNCA needed to be revised to permit reprocessing and completed by the end of 2013 at the latest but preferably by the end of 2012, according to the vice foreign minister. Simply renewing the agreement would be unacceptable, Chun said, explaining that renewal would be viewed "as a fiasco" by politicians across the political spectrum. Chun asserted that the ROK should quickly be given the right to reprocess. That, he explained, would defuse critics and shift public debate to the issue of cost. The estimated USD 10 billion, budget-busting price tag of a reprocessing facility meant that the ROK would not actually reprocess any spent fuel "during the next 20 years," according to Chun, who added that building a storage facility was a lot cheaper. ¶6. (S) At some future point, though, Korea would have to build a reprocessing facility, Chun continued. Even if the United States, China, or Russia agreed to store ROK spent fuel, transporting it was costly and potentially dangerous, as environmental protesters would be out in force at key Korean ports. The Korean Hydro and Nuclear Power Corporation (KHNPC),Chun said, would probably build a reprocessing facility near Kyongju and the massive Wolsong nuclear power site. The KHNPC has already publicly pledged to move its headquarters to Kyongju, Chun explained, adding that the KHNPC would likely "sell" the reprocessing facility to the public as a potential hub of high-tech, high-paying jobs that would be a huge boost to the local economy. ROK View of Negotiation Process -------------- ¶7. (S) In terms of the negotiation process, Chun said the joint feasibility study on pyroprocessing was a good start. (Note: Post delivered a non-paper January 22 outlining the conditions under which the U.S. would be able to undertake with the ROK a joint study of the technical, economic, and non-proliferation aspects of pyroprocessing. We are still awaiting a formal response from the ROKG. End note.) The study, though, would take at least two years. Chun stressed that the two sides "can't just wait and leave it to the experts." Formal talks had to begin in the second half of 2010, Chun argued. The lead ROK negotiator was Deputy Foreign Minister Cho Hyun, an ambassadorial-level official; the State Department, Chun said, needed to appoint an ambassador as Cho's counterpart. It would be unacceptable to the ROK to have the United States represented by a State Department office director-level official, Chun stressed. STEPHENS