I DECLASSIFIED Authority MND 48790 EXECUTIVE OFFICE OF THE PRESIDENT COUNCIL ON ENVIRONMENTAL QUALITY 722 JACKSON PLACE WASHINGTON D 20006 PERSONAL AND PRIVATE June 4 1980 MEMORANDUM FOR EDMUND S MUSKIE SECRETARY OF STATE FROM Gus Speth Chairman IL SUBJECT Attached Non-Proliferation Policy Memorandum The preferred course in my judgment is to postpone the review of U S non-proliferation policy until after the November election There are no compelling reasons to have such a review at this time Should the PRC review process continue however I believe it is essential that the option discussed in the attached memorandum be considered in that process It sets out our views as to the preferable course for the U S to take If a second PRC meeting is scheduled on this subject my plan then would be to recast the enclosed memorandum as a memorandum to the PRC participants and to request that it be reflected in any memorandum prepared for the President cc Leon Billings DEC LASSIF IED Authority MM 4am I EXECUTIVE OFFICE OF THE PRESIDENT I COUNCIL ON ENVIRONMENTAL QUALITY 722 JACKSON PLACE w wasams'rou o 20000 SECRET June 4 1980 MEMORANDUM FOR EDMUND S MUSKIE SECRETARY OF STATE FROM Gus Speth Chairman MM Irv-1 SUBJECT Implementation of the President's Non-Proliferation olicy U My May 16 1980 memorandum addressed certain recent proposals to change our nuclear non proliferation policy I argued for a different course a full implementation of the President's non-proliferation policy as set forth in 1977 and as strengthened by substantive developments since that time This memorandum sets forth for your consideration more Specific suggestions on implementing the President's policy U The President's 1977 policy which confirmed and extended President Ford's policy change of October 1976 rested on three tenets l the international security risks posed by civilian nuclear technologies involving direct access to large quantities of weapons usable nuclear explosive material 2 the lack of a compelling economic or energy security basis not only for the U S but also for our major allies and developing cOuntries to commit to these technologies for many years 3 our ability to influence significantly the technological choices of other nations through the still potent force of U S example and the central U S role in technology markets U Three years of additional experience have lent weight to the correctness of the first two tenets of our fundamental policy I maintain that despite appearances to the contrary the third remains true as well and that there is little reason either to changes our basic policy or to seek marginal changes in relations with our major allies at the price of our non-proliferation principles Instead I would propose the following actions to implement our basic policy more fully and more consistently U SECRET classification derived from State Dept memo May 12 1980 DECLASS Authority mg 48 205 In 4 2 SECRET - With respect to the danger of weapons usable material clear U S opposition to separation or use of_plutonium and weapons usable materials and to cooperation with foreign programs of this kind This would include 1 an eventual refusal to grant for reprocessing or for plutonium use commitments made after our 1977 policy announcement based on the frank and explicit recognition that safeguards as presently constituted do not work for plutonium and highly enriched uranium 2 a U S policy designed to discourage the expansion of foreign reprocessing capacity 3 active U S opposition to International Plutonium Storage unless the objective were substantially redefined 4 phase-down of domestic Rap on fuel cycles involving the separation and recycle of plutonium including a continuation of the pattern set in the Administration's FY Bl budget for breeder funded at lower levels With respect to the deferrability of commitments to dangerous technologies a large and comprehensive domestic and international commitment to major improvements in once-through LEU technologies This would include 1 offers of joint development with countries that abjure the use of plutonium fuels 2 fuel assurance initiatives for natural uranium or LEU that will make that fuel substantially more energy secure than plutonium fuels 3 government participation in a multi-reactor series of improved light water reactors that will demonstrate a safer and more uranium efficient technology to be marketed in the 1990's and 4 a refocusing of the breeder program to a long term effort based on less dangerous once-through LEU fuels such as the fast mixed spectrum reactor FHSR concept C Our policy must also provide for expanded near-term cooperative efforts to provide technical and other assistance for storage and subsequent disposal of spent fuel including renewed efforts aimed at providing the means to return from abroad and store in the U S spent fuel of U S origin when it is in our non-proliferation interests U - With respect to the force of U S example and technological influence a willingness to pursue an independant path from some of our major allies while we work to secure acceptance of our security and energy policies This includes an understanding that an unproliferated world is in the interests of all countries that nuclear power is important to our allies but not plutonium fuel that our allies are not truly committed to the use of plutonium and that allied efforts to match our once through initiatives may divert resources away from plutonium In fact we need not fear international isolation once we set firm and consistent directions for our policy C Low enriched uranium or LEU unlike plutonium or highly enriched uranium cannot be used directly to make nuclear explosives Reactors fueled with LEU which would subsequently be disposed of directly as radioactive waste are referred to as once through reactors U SECRET DECLASSIFIED Authority 487905 3 SECRET Details of these suggestions follow The potential impact of these plutonium and once-through initiatives could be complemented by associated measures with respect to the hard case proliferators some tentative ideas along this line appear in the attachment C It is now time to capitalize on the substantive of our non- proliferation policy and on the public impatience with approaches that would undercut that policy by a byzantine series of proposed compromises The stage has been set for U S leadership once again to determine the course of nuclear energy development U I Phase down of U S involvement with plutonium fuels A single breeder reactor reload would contain enough plutonium for hundreds of nuclear weapons after three years of intense research we have found no way to render this plutonium safe No evolutionary agreement with our allies to allow ever increasing plutonium use could assure us of reciprocal actions on their part that would be decisive enough to justify the awesome proliferation risk involved in a worldwide move toward plutonium as a fuel On the contrary we would be drawn into a world of ever wider demands for access to weapons usable material and of diminished attention to more proliferation resistant technologies We therefore need a clear public declaration that the U S for one will phase down its involvement with or acquiesence in civilian commerce in weapons usable nuclear ex losive material and will take action along the following lines A International 1 Restriction of_plutonium breeder reactor RED and other cooperation to_pre-1977 commitments We should clearly delineate our opposition to new ventures involving plutonium fuels At most we should grandfather specific breeder reactor RED facilities to which commitments were made in Europe and Japan prior to our 1977 policy and which are either operating or under construction today 5 These are the following reactors currently in operation or under construction In the U K the Dounreay breeder reactor in France the Phenix and one Super Phenix breeder reactor in Germany the breeder reactor and in Japan the Fugen thermal reactor and the Joyo breeder reactor The Japanese Monju breeder reactor has been planned for several years and is budgeted for a construction start in this fiscal year however we understand that a site for Monju has not been selected Grandfathering the Monju breeder will be a matter for negotiation and decision on tactical grounds SECRET DECLASSIFIED Authority MND 4-9790 4 SECRET U S policy would then support the provision of adequate plutonium to run these RBD facilities including the use of U S origin material when it cannot otherwise be obtained 5 2 U S MB-lo policy Pursuant to existing policy we should continue to approve MB lo's for pre-1977 contracts for reprocessing but not plutonium use in cases where there is spent fuel storage congestion These approvals should cut off by 1935 which will provide adequate time to enlarge storage capacity 5 The same policy would apply to reprocessing contracts that antedate our 1977 policy change However we should not approve any requests for reprocessing in new or expanded reprocessing plants unless and until it is clear that plutonium for the grandfathered projects cannot otherwise be obtained from existing stocks or facilities In no case would the U S approve reprocessing significantly in advance of the time of actual need 5 Beyond this limited plutonium cooperation which would phase itself down over the coming decades we should neither approve new MB-lo's nor engage in technical cooperation or exchanges of any kind concerning Pu recycle or highly enriched uranium Traffic in plutonium and highly enriched uranium is a form of commerce we should decisively reject S 3 Firm opposition to new or expanded reprocessing facilities We should continue to seek to convince foreign policy military and economic constituencies among our major allies of the dangers of increased commitment to plutonium production If necessary we should employ incentives and leverage to head off the new reprocessing facilities in the U K and Japan and with less expectation of success in France Full use of our leverage on Japan Spain Sweden and Switzerland would reduce potential revenues for the proposed French and British reprocessing facilities by about 40 percent not by the lower figure cited in the State Department PRC paper with respect to Japan alone This may not dissuade France from its breeder oriented expansion but it would act as a disincentive to the U K which is in the business for foreign revenues It would also stongly discourage the proposed Japanese facility which would be dependent on U S approvals for years to come 5 Because in the U K and France the same organizations BNFL and COGEMA perform both enrichment and reprocessing services the U S might offer additional incentives for them to defer their currently planned reprocessing expansions a U S offer to enlarge and share future enrichment business through joint planning adjustment of tails assays and possible creation of LEU stockpiles for energy security purposes see below 5 SECRET DECLASSIFIED Authority MNQ 4-919 05 5 4 Possible a ive oppos on 1P5 By its participation in the International Plutonium Storage discussions the U S --in spite of its avowed agnostic position--is creating the impression that it might well participate in an international regime to distribute plutonium fuels This activity is not only ill advised but goes beyond the NNPA which only calls for international storage of spent fuel and which directs that formost consideration will be given to the timely warning criterion which plutonium fuels cannot meet C The U S should immediately correct any misapprehensions by insisting that its future positive participation in IPS discussions is contingent on a restructuring of the objectives of an IPS system Plutonium would only be stored in nuclear weapon states and to the extent that an IPS engaged in distribution of nuclear fuel to non-weapon states that fuel would only be low enriched uranium If the U S cannot secure substantial support for this position it should begin active opposition to IPS in the plenary meeting in December 1980 S 5 1990 deadline for HEU phase-out The excellent and successful U S efforts to secure acceptance of conversion of HEU reactors to LEU shOuld now be supplemented by a deadline The U S should announce that it will not export significant quantities of HEU for use in reactors or research facilities after 1990 S B Domestic In order to mDVe U S nuclear development off of the plutonium standard the President should 1 stress continued Administration Opposition to commercialization of plutonium technologies 2 stress that U S nuclear development efforts will henceforth focus primarily on thermal and fast reactors employing the once-through use of LEU fuels as the reactors of the future 3 continue the pattern set in the FY 81 budget toward contained breeder RED funding and 4 call for a refocusing of the breeder technology program onto less dangerous once through LEU fuels and as the fast mixed spectrum reactor concept see below U SECRET I DECLASSIFIED Authority wag 49005 8 EC ET II Commitment to once through technologies Recent analyses by U S agencies and their contractors indicate that low enriched uranium can serve as our exclusive nuclear fuel until at least several decades into the next century that stockpiled low enriched uranium would provide energy security sooner and at a lower cost than would plutonium fuel and that even if the assumptions underlying these analyses turn out inaccurate there will still be decades of time to take action and no more than small economic penalties We can increase worldwide confidence in these conclusions and meet Congressional demands for nuclear hardware development by the following initiatives for once-through technologies U A International 1 Joint reactor development The United States shOuld under take a major program to develop a light water reactor with substantially improved safety features and uranium efficiency approximately twice that of present systems We could offer such reactors on the world markets in the 1990's Because of their price advantages over breeder reactors and because of their embodiment of the best of American nuclear technology they can be expected to undercut the market for breeders much as U S wide bodied jet aircraft destroyed the market for supersonic transports Joint develOpment of and access to this technology would be attractive to the more realistic nuclear officials in other countries Such joint development should be offered to countries that phase down as the U S would do the civilian use of weapons usable material C We are talking about four major classes of technology 1 More uranium efficient LWR's and possibly other thermal reactors 2 once through fast reactors including the preliminarily developed concept of the fast mixed spectrum reactor 3 large uranium resources available at prices up to 10 times current levels which would still compete economically with breeder reactors and 4 improved enrichment tech- nologies that could extract up to 20 percent more nuclear fuel from a given quantity of raw uranium The first three technologies could be widely disseminated the last even though it and present enrichment technologies are more amenable to timely warning than are plutonium facilities should continue to be confined to a few sites in the world that produce nuclear fuel U Nuclear engineers say that this is a reasonable uranium efficiency objective for the year 2000 Light water reactors and advanced enrichment technologies have already been defined that can together achieve this objective U SECRET DECLASSIFIED Authority 4- '1 -7- SECRET Like the U S breeder program foreign breeder technology programs can be kept alive by reorienting them toward the once-through use of LEU fuels Similarily current economic circumstances and updated techno- logy--such as the application of new U S ion exchange technology to the extraction of uranium from seawater -are beginning to promise a multi plication of economical uranium resources by factors or even by orders of magnitude The U S should offer international cooperation on these technologies the ultimate commercial importance of which is more uncertain than is that of the improved LWR to countries that abjure the use of plutonium fuels C 2 Secure uranium or LEU supplies There are several proposals to clearly demonstrate that LEU fuels are more energy secure than are plutonium fuels lO-year export licenses for enrichment services life-of-reactor licenses for such services or the export of life of- reactor stockpiles of uranium or LEU to countries with good non-proliferation credentials Each of these proposals involves a tradeoff between the loss of possible U S leverage the ability to embargo nuclear fuel exports and the loss of an opportunity to make LEU fuels more energy secure than plutonium fuels Clearly there are a number of countries with good non-proliferation credentials for which a U S embargo threat would not be a significant consideration in a hypothetical future decision to develop nuclear weapons These are the same countries Japan and the nations of Euratom most intrigued with plutonium fuels because of their distant promise of making a marginal contribution to energy security Without prejudging the tradeoffs we should sympathetically explore an LEU energy security initiative An offer of LEU stockpile sales not necessarily drawn from existing government stocks but rather from new uranium and enrichment supplies has potential political attractions a means of enlarging the world enrichment market so that the French and especially the British could develop an alternative source of foreign revenues to the sale of reprocessing services increased uranium sales to benefit a depressed U S uranium industry and increased enrichment sales to benefit U S localities in which construction of enrichment facilities has been slipped S B Domestic l Multi-reactor series of improved LWR's There is continuing Congressional and vendor pressure for a breeder demonstration project either CRBR or an updated version Our economic and non proliferation analyses tell us that this would be a waste of resources and would undercut the U S example of restraint with respect to plutonium fuels Once through fast reactor fuels would be somewhat more approPriate for such a demonstration but will probably not be ready before the It would make more sense from an economic and non-proliferation point of view to budget a portion of the funds required for one breeder demonstra- tion reactor to a new program that sharing the cost with industry SECRET mtnata_ SECRET 3 would build a series perhaps five of new LWR's incorporating the most advanced safety and uranium efficiency improvements Utility partici pants would be expected to underwrite most of the costs reflecting the nuclear energy value of these facilities These reactors would be the most visible embodiment of our policy change and the most visible commercial threat to allied countries that persist in allocating their nuclear Ran funds to breeder reactors C The political attractions of such a program could be complemented by a stockpile initiative described above that was coordinated with domestic uranium and enrichment interests C 2 Redirection of breeder to once-through LEU The President in 1977 promised to restructure the U S breeder reactor program to give greater priority to alternative designs of the breeder and to defer the date when breeder reactors would be put into commercial use The concept of a once-through fast reactor using LEU favorably reviewed in 1979 by a DOE technical committee is the only significantly proliferation resistant concept using breeder technology that has yet been developed The concept requires the design and proof testing of long-lived fast reactor fuels- a multi year undertaking for which the U S FFTF facility is uniquely appropriate The breeder program should be restructured with funds left over after the LWR initiative is budgeted The redirected breeder technology program should move forward at a much slower pace of development with central emphasis given to the qualification of LEU once-through fuels and associated physics design We cannot guarantee at this time that a proliferation resistant fast reactor can be developed But we should insist that proliferation resistance is one prerequisite for U S acceptance of fast reactors U 3 Clear directives for the FY82 DOE budget and the Conceptual Design Study DOE needs time to substantially redesign its programs in light of domestic initiatives 1 and 2 described above Major changes in FY82 programs will be difficult to design and cost out after this summer In addition DOE is moving into the final phases of the Conceptual Design Study on a larger breeder reactor a study that is due to Congress in March of 1981 Early policy guidance with respect to both of these processes is essential if we are to avoid a disconnect between non-proliferation initiatives and domestic activities U Other non-proliferation aspects of the budget should be defined early and negotiated with Congress as part of the package a termination of reprocessing programs especially Barnwell more emphasis on large but higher cost uranium resources etc Adequate congressional support does exit for on advanced isotope separation technologies but we need to assure that safeguards development and proliferation resistance reviews are coordinated with this U bECRti DECLASSIFIED Authority MNQ 49w t I U S willingness to act independently The success of our efforts to defer commitments to thermal recycle was largely due to our willingness to get out ahead of our allies and to change our domestic and international policies in line with our non- proliferation concerns Unfortunately certain changes in our non- proliferation policy now being proposed would seek harmonious relations with our allies by enshrining into policy the lowest common denominator thinking of their nuclear bureaucracies We should understand that our strongest lever on our allies and the strongest incentive for those in their governments sympathetic to our views is our ultimate willingness to move independently in technological directions that make economic and non-proliferation sense The force of U S example and our influence on world technology is still such that if we are ever alone it will not be for long C We should discontinue the U S declaratory policy that emphasizes the interim nature of our non-proliferation actions the special justifi- cation for plutonium fuels in nations without indigenous uranium resources and the waning U S leverage Instead we should adopt a new declaratory stance emphasizing the following C l The interest of all countries in non-proliferation The U S should no longer suggest that it might trade access to dangerous tech- nologies for nominal allied support for non-proliferation policies We should widen our communications beyond our allies' nuclear bureaucracies and steadfastly insist that allies pay attention to their long run security interest in an unproliferated world C 2 The lack of justification for weapons usable material in civilian_p ograms anywhere Our analyses make clear that assuming free international trade in nuclear material LEU on a once through basis is the preferred fuel throughout the world until at least well into the next century Similarly our fuel assurance initiatives should undercut the energy security arguments that we have treated as giving Europe and Japan a special dispensation to proceed with a plutonium economy 5 3 The lack of allied commitments to plutonium Partly as a result of the INFCE process the U S has backed into an occasionally declared acceptance of a world divided between breeder nations and non-breeder nations In fact only a limited element of the international nuclear community -- unfortunately that element with which we communicate most often considers the world committed to breeders or plutonium fuels France the nation with the most advanced breeder program will not make a commitment to follow-on breeder projects for several years Chancellor Schmidt in a Time interview of June 11 1979 said think the fast breeder question linked as it is with a question of reprocessing should not be decided right now We need some more years to decide that one In the meantime we have to keep that option open The most salient nuclear issue for our allies is not plutonium fuel but rather the continued acceptance of major nuclear programs at all Our improved LWR initiative can address this all-important concern C SECRET I DECLASSIFIED Authority um 42w - 10 - a SECRET 4 Alternatives to plutonium technologies on the international reactor market The second greatest nuclear concern of our allies is continued reactor sales in the limited and competitive international market for nuclear energy hardware We should make it clear that our improved LWR initiative is a commercial challenge to those countries that persist in focusing their reactor development resources on plutonium breeders We should structure our offers of couperation in LWR improvements to sharpen up a choice that our allies will need to make in any case investing in an economically dubious te' ology for the 2020's versus investing in a technology with many decades of growth potential that will begin to dominate the market in the 1990's 9 SECRET DECLASSIFIED Authority 49 905 11 SECRET mm TENTATIVE COMPLEMENTARX APPROACHES WITH RESPECT TO NUCLEAR PROLIFERATORS There is little evidence that U S Capitulation on plutonium issues will decisively improve allied cooperation with respect to hard case proliferators Indeed some allied nations have violated at least the spirit of the Non-Proliferation Treaty the Nuclear Suppliers Agreement and the agreement to defer major moves during the INFCE period by offering sensitive exports to such countries as Argentina and Iraq We should stiffen our opposition to such reckless behavior and dramatize our stronger non-proliferation policy by such actions as the following 3 1 Heavier_pressures for allied export control In line with the Kansai modifications of our policy we should not only limit our approvals for retransfers or reprocessing as described in section I above but should also insist that the countries in question be supportive in non-proliferation efforts For example Swiss and Italian participation in the French breeder program relies on approval of U S we should deny such until those countries make the best possible non-proliferation fixes to their Argentina and Iraq deals If necessary we should be willing to publicly reveal the specifics of involvement between suppliers and would-be proliferators S 2 More visib1e_preparation to deal with destablizing cases We should begin to discuss publicly preparations for sanctions against countries that acquire nuclear weapons In addition the Administration should publicly direct the Department of Defense to prepare to prevent proliferation or to deal with its consequences in the cases of such nations as Libya Iraq Pakistan and India 5 SECRET                     National Security Archive    Suite 701  Gelman Library  The George Washington University    2130 H Street  NW  Washington  D C  20037    Phone  202 994‐7000  Fax  202 994‐7005  nsarchiv@gwu edu