The Export reorganization act, 1975 : hearings before the Committee on Government Operations, United States Senate, Ninety-fourth Congress, first session, April 24, 30, and May 1, 1975 online

rights and obligations of the Agency and the country
to be safeguarded, and (b) the subsidiary arrangements,
which describe in greater detail the normal pro-
cedures of implementation in relation to specific
facilities. These subsidiary arrangements do not
abridge the Agency's rights which are set forth in
the basic agreement. Since the degree of detail with
respect to the country's nuclear program included in
subsidiary arrangements normally reveals proprietary
information, these arrangements are not made avail-
able to the Member States or their representatives.
Nevertheless, there are means by which the United
States can and does assure itself of the adequacy
of the Agency's safeguards, both in terms of the
arrangements concluded and their practical application.
Most importantly, the U.S. is a member of the Agency's
Board of Governors, which is fully responsible for
the effective functioning of the Agency's safeguards
system. In meeting this responsibility, the Board is
entitled to and receives information of the Agency's
safeguard system and activities, including the
number and type of installations and the kind and
quantity of materials subject to safeguards, the
number of inspections conducted, the composition
of the Agency's safeguard staff, the inspection
methods employed in the system, and the results of
such inspections in the case of suspected non-
compliance.



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2.



Another important factor in assuring the adequacy
of the Agency system is the active participation of
well-qualified U.S. citizens, as Agency staff personnel,
in every phase of the development and application of
the system. These U.S. citizens are, of course, inter-
national civil servants during the course of their
IAEA assignments, and neither seek nor receive U.S.
government guidance, but are exceptionally well-
qualified to provide background and expertise on
U.S. safeguards policies to the IAEA. The U.S.
Mission to the IAEA, in the regular course of its
liaison responsibilities with the Agency holds
frequent discussions with Agency safeguards personnel
of both U.S. and other nationalities to review the
operation of the Agency system.

Question #1. (a) ;



Is it true that we do not have access to the
IAEA's safeguards reports on these exported materials
and facilities? If so, how do we know that these
materials and facilities are being safeguarded to
our satisfaction?

Response :

It is correct that, for the same reason that
subsidiary arrangements are not disclosed, inspection
reports are not available to Member States. How-
ever, the Director General and staff of the Agency
are required to refer promptly to the Board of
Governors any non-compliance with safeguards. In
addition, as previously indicated, there are several
mechanisms through which the U.S. and other Member
States monitor the effectiveness of application of
safeguards by the Agency.

Question #1. (b) :

How can we control our nuclear exports ef-
fectively without direct access to this information?

Response :

In view of the consideration described above,
we do not believe that direct access to Agency



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3.

safeguard reports is necessary for effective control
of U.S. exports. The information available to the
United States is adequate to provide us with know-
ledge of the effectiveness of Agency safeguards and
to inform us of any non-compliance on the part of
recipient countries. Provision by the IAEA to other
nations of information on its safeguards findings
would undermine the concept of international in-
spection and make the system, and the Non-Proliferation
Treaty which it supports, less acceptable to other
countries .

Question #2:



How can we distinguish between a country that
seeks to develop its own nuclear fuel facilities
as a means of ensuring its energy independence,
and a country that wants its own nuclear fuel
facilities for developing nuclear weapons?

Response :

There are similarities in designs and, in some
cases, an overlap or duality in functions between
fuel facilities built to serve a legitimate civil
nuclear power purpose, and those built to serve
a nuclear weapons or nuclear explosive device
program, which often make it difficult to dis-
tinguish the overall characteristics of the
country's nuclear program. Nevertheless, the
specific nature of the fuel cycle facilities
which it constructs can provide an important and
meaningful indication of the intended purpose of
the facilities and of the country's overall nuclear
program. This is particularly true in the case of
relatively small and unindustrialized countries
whose ability to undertake a nuclear power program
could be expected to depend largely on technology
or equipment procured abroad, rather than on
indigenous development effort.

In the case of such a country undertaking a
legitimate nuclear power program, for example, it
would be expected that the reactors installed in
the country would be clearly designed for the
purpose of power production, and that no large,
low burn-up, low-temperature reactors (whether
fueled by natural or slightly enriched uranium) ,
would be present. One or more research reactors
could serve legitimate and, indeed, essential



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purposes in connection with an overall peaceful nuclear
program, including training of nuclear engineers and
scientists essential to the safe conduct of a nuclear
power program, radioisotope production, and the like.
Either natural uranium or enriched uranium fueled research
reactors can be effective research and training facilities,
but natural uranium reactors produce plutonium as a
by-product, while research reactors fueled with highly
enriched uranium ordinarily cannot do so. Distinctions
in specific fuel cycle facilities which might exist if
intended for peaceful or for non-peaceful purposes are dis-
cussed in the response to Question 2 (a) .

Another factor which may be relevant is whether
the country, if it is not a party to the Non-Prolifer-
ation Treaty, has acquired and continues to acquire its
nuclear facilities from other suppliers, thus bringing
these facilities under peaceful use guarantees and
safeguards, or whether, in contrast, it seeks to
develop and build some or all these facilities indigenously,
thus avoiding any commitment to peaceful uses and safe-
guards.

In addition to any evidence which might be adduced
from the nature of a country's nuclear program and
facilities, there may be a number of other indications
of whether a country seeks fuel cycle facilities exclu-
sively for peaceful purposes or in order to preserve
an option for the production of weapons material.
These include the country's stated policy with respect
to nuclear weapons and nuclear proliferation, its
general political and defense posture, its readiness to
accept safeguards, and, of particular importance,
whether the country is a party to the Non-Proliferation
Treaty, and to any other treaties, such- as nuclear free
zone conventions, through which it has undertaken not
to acquire nuclear weapons or explosive devices.

While nuclear power reactors and associated fuel
cycle facilities have the capability of producing plutonium
for use in nuclear weapons programs, there is no evidence
to date that a nuclear weapon or nuclear explosive device
program has been based upon or involved the use of
facilities constructed primarily for such purposes, or
that facilities or materials subject to safeguards have
been diverted to these uses. The Indian explosive
device, it should be stressed, used unsaf eguarded material
produced in an unsaf eguarded research reactor.



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For many, if not for all countries, who might
intend to develop a nuclear weapons capability, or to
retain the option to do so, the establishment of
indigenous facilities outside of safeguards and not
involved in the nuclear power cycle, may represent
the most attractive course of action to pursue that
objective, as it clearly has in the past. Thus, U.S.
policies should minimize the incentives and eliminate
insofar as possible the opportunities and the rationale
which other countries may assert for following this
approach.

Question #2. (a) :



Is there any way to make that distinction by
evaluating the design of the fuel facilities?

Response:

Since light water nuclear power reactors utilize
substantially different types of nuclear fuel and employ
much different operating conditions than do reactors
which can produce plutonium without the production of
useful power, the fuel cycle facilities associated with
these different types of reactors may differ substantially.
In particular, a fuel reprocessing facility which is
designed for the reprocessing of fuel from low temper-
ature, low burn-up fuels such as are employed in plutonium
production reactors or in research reactors will be
unable to reprocess power reactor fuel elements, which
are clad with much less easily processed materials and have
very much higher fission product levels. The experience
of the U.S. and other nuclearly advanced countries
demonstrates clearly that while the reprocessing of low
burn-up, low temperature fuels involves technology which is
relatively unsophisticated and widely available, the
reprocessing of power reactor fuel elements, especially
on an economic scale, is a technically difficult task.
The unavailability of facilities for reprocessing of
power reactor fuel elements could stimulate a country
to develop independent small scale facilities for
reprocessing on a developmental basis.

Question #2. (b) :

Should we oppose the development of nuclear fuel
facilities by non-nuclear weapons states generally?



133



Response:

The United States does not favor the widespread
establishment, in non-nuclear weapons states, of fuel-
cycle facilities which have the capability of contributing
to a nuclear weapons program. This policy, however,
is not necessarily promoted or effectively served by
opposition to the installation of such facilities in
every case, since a policy of total opposition could
well lead to the establishment of facilities under
no control whatsoever, or under less effective control.

In line with its policy of not favoring the wide-
spread establishment of nationally-controlled sensitive
fuel cycle facilities, the U.S. has instituted specific
controls and taken specific international initiatives.
Sensitive aspects of U.S. uranium enrichment technology
remain classified, and, as a result of U.S. initiative,
international understandings were reached in the early
1960 's to classify centrifuge uranium enrichment tech-
nology on the part of the countries principally engaged
in its development. The U.S. strictly controls the
export of uranium enrichment, reprocessing, and heavy
water production technology, and is not transferring
sensitive technology in these areas.

At the same time, since the U.S. is not the only
source of supply of technology or equipment in any of
these areas, specific instances of possible installation
of fuel cycle facilities in non-nuclear weapon states
must be reviewed on their merits in relation to U.S.
non-proliferation objectives. We believe these objectives
are best served by maintaining U.S. influence in the
nuclear programs of other countries in an effort
to ensure insofar as possible that these are directed
exclusively toward peaceful purposes under effective
international safeguards.

An important factor bearing on U.S. policy in this
area is the undertaking of Article IV of the Non- Prolifer-
ation Treaty, which states the following:

"All the Parties to the Treaty undertake to facil-
itate, and have the right to participate in, the
fullest possible exchange of equipment, materials
and scientific and technological information for
the peaceful uses of nuclear energy. Parties to
the Treaty in a position to do so shall also co-
operate in contributing alone or together with
other States or international organizations to



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the further development of the applications of
nuclear energy for peaceful purposes, especially
in the territories of non-nuclear-weapon States
Party to the Treaty, with due consideration for
the needs of the developing areas of the world."

The Non-Proliferation Treaty, like any other important
agreement, involves a bargain between the Parties. As
this provision reflects, an important part of the con-
sideration for which non-nuclear weapons States which
are Parties to the Treaty agreed to relinquish their
right to acquire nuclear weapons or nuclear explosive
devices is the understanding not only that they have
the right to participate in the peaceful uses of
nuclear energy, but shall receive the cooperation
of the nuclearly advanced States in doing so. To
the extent that the United States appears to be
drawing back from this undertaking the attractiveness
of the NPT will be diminished, as will U.S. ability
to influence affirmatively the improvement and
strengthening of the Agency safeguards system.

Question #3:



With the U.S. holding such a commanding role over
uranium enrichment services for non-Communist countries
well into the 1980' s, what alternatives would importing
nations have to accepting tougher safeguards, if we choose
to impose them?

Response:

While the United States had enjoyed a dominant
role in the supply of uranium enrichment services and is
the principal distributor at present, it no longer has a
"commanding role." On the contrary, existing U.S.
enrichment capacity is now fully committed, and pending
firm commitments to the installation of new capacity,
the U.S. is legally unable to make further commitments
for the supply of enriched uranium. This fact, coupled
with the fact that other nations are now active in
contracting for the supply of uranium enrichment services
places evident limitations on the U.S. ability to
insist on specific supply conditions.

The availability of natural uranium reactors is
another factor which must be considered in realistically
assessing the U.S. bargaining power as a supplier of
enriched uranium. It is frequently overlooked that the
first two reactors sold in international commerce —
to Italy and Japan — were natural uranium reactors of
the magnox type. These reactors continue in regular



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and reliable operation. Since that time, natural
uranium power reactors have been purchased by Argentina,
India, Spain, Pakistan, and Korea, and additional
countries are considering their purchase.

The selection of natural uranium reactors by
these countries, despite their less favorable economic
characteristics, is a direct reflection of the reluct-
ance of many nations to depend on enriched uranium,
and clearly illustrates the limitations on U.S. ability,
through its dominant position as an enriched uranium
supplier, to impose excessively strict conditions
on its use.

The decision by other countries to devote signif-
icant resources and to assign substantial portions
of their electrical generating capacity to the use
of nuclear reactors which depend for their vital
fuel needs on a single outside source of supply
is an extremely difficult one. The fact that a
number of countries made this decision during the
years when the United States enjoyed a nearly
exclusive role in the supply of enriched uranium
reflects both the technical and economic superiority
of U.S. reactor technology and the adoption of
governmental fuel supply policies which were designed
to reassure the recipient country of long-term
availabiltiy of U.S. enriched uranium on stable and
attractive terms, and without undue restrictions as
to related fuel activities by the recipient. Without
such policies, the technological superiority of
U.S. reactors alone would not have led to the wide-
spread adoption of light water reactors. We believe
that their adoption has served U.S. interests well
by developing and maintaining a strong basis for the
U.S. to influence the nuclear power programs in the
direction of peaceful uses. Largely as a result of
this influence, the U.S. was able to secure and
implement safeguard and inspection rights of an
unprecedented nature, and was able to propose and
bring about the adoption of the Non-Proliferation
Treaty which similarly includes unprecedented provisions
for international verification.

To secure and preserve these advantages, the U.S.
adopted and followed throughout the period of U.S.
dominance as an enriched uranium supplier, policies
which were designed both to encourage the use of



136



9.



enriched uranium reactors and to minimize insofar as
possible and for as long as possible the development
of sources of supply. These policies were evolved-
during the course of intensive negotiations covering
many years, and represented the best judgement of the
Department of State and the Atomic Energy Commission,
working in close consultation with the Joint Committee
on Atomic Energy, as to what was achievable. The
best evidence that policies significantly more
rigerous than these would have been unacceptable and
counter-productive is the emergence of independent
sources of enriched uranium elsewhere in the world.
The development of these sources was, in part, a
result of the desire of other countries to avoid what
they regard as excessive reliance on the United States,
and was not fundamentally a result of concern over the
adequacy of U.S. supply capabilities, which emerged
at a later date. At the same time, changes in U.S.
fuel supply policy price and contracting criteria during
the past five years, and the recent uncertainty over
when new enriching capacity will be constructed in the
United States has further increased foreign concerns
over the reliability of the U.S. as a fuel supplier,
and further stimulated the development of alternative
sources of supply.

While the U.S. remains for the time being the
principal supplier as a consequence of arrangements
entered into earlier, our policies on safeguards must
continue to take into account both the need for good
faith implementation of these earlier commitments and
the realities of the present supply situation. We are
working closely with both other suppliers and recipient
countries on a continuing basis to strengthen inter-
national safeguards and physical security arrangements,
and we believe substantial progress is being made in
these efforts. Attempts to impose arrangements which
are not perceived by other countries to be in their
own interests would be unrealistic in the light of
the current supply situation and would accelerate
and strengthen the development of sources of supply
independent of the United States.

Question #3. (a) ;

For example, could they turn to the Soviet Union
for enrichment services? Are the Russians willing and
able to provide an alternative supply of highly enriched
as well as low-enriched uranium?



137

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Response:



At the present time, enrichment services on a
commercial scale are being offered by the Urenco Centrifuge
enrichment consortium, consisting of the United Kingdom,
the Federal Republic of Germany and the Netherlands;
by Eurodif, the French-Italian diffusion enrichment
enterprise (whose first plant is to be in operation
by 1980) , and by the Soviet Union. The United Kingdom
is also continuing to operate its own diffusion plant
to meet internal needs. Additional capacity is being
considered by the former two organizations, while several
other overseas enrichment undertakings are being actively
considered. South Africa is operating a small pilot
plant and has recently announced plans for the construction
of a commercial scale plant.

The Soviet Union has a large capability for the
supply of enrichment services, and has concluded complete
supply arrangements with Great Britain, France, Italy,
the Federal Republic of Germany, Belgium, Sweden, Finland,
Spain and Austria. It is also actively promoting the
sale of enrichment services to other nations, especially
Japan.

Data provided by the Federal Republic of Germany
indicate that in 1975, 35% of enriched uranium deliveries
to the FRG will be provided by the Soviet Union, and that
in 1977 this proportion will become 49%. By 1979, another
20% of West Germany's requirements will be derived from
Western Eurpoean sources, with their share increasing
to 30% by 1982. These data for the nuclear power program
of the Federal Republic of Germany, the largest in Europe,
are indicative of the extent to which the U.S. domination
of enriched uranium supply is being reduced by the
emergence of independent sources of supply.

We have no definite knowledge of whether the
requirements for highly enriched uranium in Western
Europe and elsewhere would be met by the Soviet Union,
since we are aware of no requests to the Soviet Union
for such material. At the present time, highly enriched
uranium is not being produced by the Urenco centrifuge
facilities, although they are capable of doing so. It
is our understanding that plans for Eurodif do not
include a capability for the production of highly
enriched uranium, although the French national plant
produces such material at present for the French



138

n.

military program. The United Kingdom plant formerly
produced highly enriched uranium, but its upper
stages are not operating at the present time.

Although the requirements for highly enriched
uranium in Western Europe and elsewhere are relatively
limited, consisting largely of fuel for research, test,
and experimental reactors, the investment in these
facilities which would be idled if highly enriched
uranium were not available is substantial. We have
no doubt, therefore, that alternative arrangements
for the supply of such material would be made if it
should cease to be available from the United States.
For example, this could involve operation of Urenco ' s
centrifuge facility to produce highly enriched material,
although other solutions are conceivable. Regardless
of what solution might be employed, we believe that
the development of alternate supply sources for highly
enriched uranium would be decidedly prejudicial to U.S.
interests and to our overall non-proliferation objectives.

Question #4:



How do your functions differ from those in ERDA
with respect to promoting United States nuclear tech-
nology abroad?

Response :

The Department of State is responsible for ensuring
that U.S. nuclear cooperation policies and programs are
consistent with U.S. foreign policy interests, of which
the U.S. policy of avoiding the proliferation of nuclear
weapons is a major facet. Among other matters, the
Department of State is responsible for U.S. participation
in and representation at the International Atomic Energy
Agency, which deals with a wide variety of activities
in the field of peaceful uses of nuclear energy.

The promotion of U.S. technology abroad is not
an objective in itself, but is undertaken only to the
extent that it serves overall United States interests.
Toward this end, the Department of State works closely
with ERDA and the Nuclear Regulatory Commission to
ensure that foreign policy and national security interests
are taken into account in such activities as the negotia-
tion of agreements for cooperation (which the Department
of State undertakes jointly with ERDA) and in the imple-
mentation of these agreements, including the issuance of
nuclear export licenses.



139

12.

The Department of State also undertakes direct
action, with other nations and international organiza-
tions, often jointly with ERDA, in a variety of areas
involving international nuclear cooperation, including
cooperation and consultation between nuclear suppliers
on non-proliferation matters, the development of
adequate safeguards and physical security arrangements,
and assuring the adequate supply of nuclear materials
for peaceful purposes.

While the relationship between the Department
of State and ERDA involves extremely close cooperation,
with many activities being undertaken jointly, in general
it can be said that ERDA has primary responsibility for
the implementation of Agreements for Cooperation through
the negotiation and administration of fuel supply contracts
and information exchange arrangements, as well as the
provision of technical advice and information to
various countries and international organizations with
which the U.S. cooperates in the peaceful uses of
nuclear energy. The Department of State, working with
the National Security Council as appropriate, is responsible
for foreign policy guidance. In carrying out its respon-
sibilities in the nuclear area, the Department coordinates