DECLASSIFIED Authority HJ JD € 17 DEPARTMENT OF STATE W as in to11 0 C O W SECRET March 17 1978 TO See Distribution FROM PM - Leslie H Gelbjf1f SUBJECT The Dirty·Dozen -- Broadening Our Approach to Non-Proliferation US non-prolif eration policy since 1974 has focussed heavily on containing the spread of nuclear technologies which provide dire ct access to weapons-grade material This continues to be an urgent and essential first priority which has bee n pursued with impressive if not total success We have concentrated on the supply side of the ledger the International Fuel Cycle Evaluation is in part an effort to extend the same approach to consumers This approach does have shortcomings however It concentrates somewhat narrowly on nuclear transfers activities and policies and tends consciously to avoid linkage with other aspects of bilateral relationships It also tends to concentrate on capabilities rather than motivations relevant to proliferation The attached paper is an initial effort to explore more comprehensively the capabilities and motivations which seeT'l most relevant to proliferation in eleven sensitiv countries and to relate them to a broad range of US bilateral programs and activities The eleven countries of particular proliferation concern fall into one of two categories some have no apparent interest in obtaining nuclear weapons but have or may soon have the technical capability to do so others lacking the technical capability to produce a nuclear explosive at this time are nonetheless strongly motivated to achieve this capability The countries included are 1 2 3 4 5 6 Argentina Brazil Republic of China Egypt India Iran SECRET 7 8 9 10 11 Israf l Pakistan South Africa south Korea Spain '2 DECLASSIFIED Authority H D er7 - - - - - - - - - - P A Fn-tvr eNy o - sr- w SECRET J h -2Our objective is to identify factors across the whole range of our bilateral relationships which may be relevant to proliferation Our hope is that by looking at the entire spectrum of us activities programs and policies we can devises ecific non-proliferation strategies for each country whic exp 01 a o t e potential leverage available to us to influence proliferation motivations and capabilities The first step in this process is to set down all of the significant elements of our relationship with- each count·c y- -recognizing ·rrom the outset that not·-- ilT·· · · of these elements will necessarily be er direct or obvious relevance to proliferation A subsequent stage will attempt to boil down those lists of elements to those whose interactions with proliferation can be established a nd which migfit therefo1e beeeme-- components of a broader non-proliferation strategy A final stage will be to recommend specif ic act ions o n the basis of these analyses The paper does not attempt to draw conclusions or make recommendations except in the most general terms We believe that these should be reserved for a second or third stage I would appreciate your comments and contributions by March 31 PM NPP GOplinger 3 17 78 X 21835 SECRET If DECLASSIFIED Authority D ef7 Distribution S AS - Ambassador Smith T D - Mr Nye S P - Mr Lake L - Mr Hansell HA - Ms Derian AF - Mr Moose EA - Mr Holbroke EUR - Mr Vest NEA - Mr Atherton EB - Mr Katz INR - Mr Saunders IO - Mr Maynes OES - Ms Mink ARA - Mr Todman ACDA - Mr Keeny DECLASSll'IKU Authority H 'D'' e 7 SECRET 1 r Argentina A Non-Proliferation Status Argentina has the most advanced nuclear program in Latin America The Argentine objective is to establish complete national independence in the natural uranium fuel cycle within the next decade This is to include mining and milling uranium from Argentina's own resources fabricating fuel producing the heavy water that must be used in reactors fueled with natural uranium reprocessing spent fuel and purifying the produced plutonium and even constructing its own nuclear power reactors These capabilities are equally applicable to producing fissionable material for a nuclear weapons program While a nuclear explosives capability does not appear to be a near-term Argentine goal they have avoided foreclosing that option and are pressing forward in certain weapons-applicable areas such as reprocessing The Argentines are nearing completion of a pilot scale reprocessing facility which is expected to be co• could produce approximate year more than a bomb's w sometime in 1980 and which k'lograms of plutonium per plutonium • Sinc e this plant will be of indigenous origin it could be operated free of safeguards and international accounting for the plutonium produced SECRET SECRET i 2 The undertaking by the West Germans to sell Argentina 1 s regional rival Brazil facilities for e_n riching uranium and for reprocessing spent reactor fuel has given the Argentines greater incentive to acquire sensitive nuclear technologies These would help assure Argentina's lead in a regional competition in nuclear technology but would also put it closer to the ability to make nuclear weapons Argentina has already demonstrated an interest in obtaining missiles capable of carrying nuclear warheads Thus in the absence of comprehensive safeguards and given Argentina's nearness to a significant reprocessing capability Argentina must be considered a real proliferation threat US strategy with regard to Argentina rests heavily on Ar9entina 1 s desire to obtain heavy water production technology from the US and Canada We have told Argentina this would be possible if it deferred its reprocessing program and i l ' -that more limited forms of expanded nuclear cooperation includ- ing support for a nascent Argentine reactor export program could be undertaken if it adopted full-scope safeguards J c 1 Argentina is seriously considering these possibilities but has indicated that a reproc sing deferral would only be possible if Brazil took parallel action B Motivation i Security Argentina's principal security concerns stern from regional rivalries with Chile and Brazil SECRET Chile has rival claims to I DECLASSIFIED l ___ fJWD e17 L -----------Authority o L SECRET 3 islands near Cape Horn with potential claims to adjacent territorial shelf and parts of Antarctica Brazil is the major rival for military and political preeminence in the continent and in the South Atlantic and there are frictions over certain border areas and the orientation of Uruguay Other concerns exist in relations with UK over final disposition of Falklands and the major powers on jurisdiction over Antarctica and surrounding waters of contact with US military Isolation from US and loss the abse ce of an imminent global threat to the region and a general disinterest in extra-regional role leads the military government to be most concerned with internal security and political evolution Therefore it appears II SECRET • I J lJ M LA 1 lUJ Authority H- D € 7 I SECRET 4 that Argentina 1 s major incentive for moving to an actual weapons program would be to assert the appearance and fact - of strategic predominance in Latin America Looked at from that perspective there is a direct relationship between Argentina's nuclear intentions and its ability to achieve its objective through a strong force posture ii Political Perhaps the strongest motivating force for Argentine pursuit of sensitive nuclear technology is political and intimately connected with traditional rivalry between Brazil and Argentina Argentina places a high premium on its preeminent position in nuclear technology in Latin America far ahead of its nearest competitor Brazil in both nuclear capabilities and in independence While comparative military capabilities are a part of this motivation it is more a matter of overall prestige and image-building than security The most important Argentine objectives for maintaining and extending its lead are a to avoid falling behind Brazil in any specific nuclear technology e g if Brazil reprocesses so must Argentina b to obtain heavy water production technology on a commercial scale greatly reducing dependence upon outside help and c to press ahead as a nuclear exporter SECRET DECLASSIFHW Authority N 'D'' G 17 SECRET 5 iii Economic Argentina has strong economic motivations for expanding its nuclear power program and reducing its dependence upon imported fossil fuels This is a particularly important factor in its current effort to obtain additional reactor technology and above all heavy water production technology from the US and Canada It is not however a factor in the Argentine l reprocessing program which has no economic rationale in a system I based upon heavy water reactors C u s Programs and Activities i Arms Transfer Policy Because of the human rights situation in Argentina the Congress has prohibited any security assistance or the issuance of munitions control export licenses for commercial arms purchases after September 30 1978 For the same reason we refused FMS credits to Argentina in FY 77 and 78 Argentina still has about$30 3 million in unused prior year FMS credits and is continuing to try to purchase defense articles and services commercially or for FMS_ cash However for the last six months almost all requests for FMS cash or credit purchases or for munitions control licenses have been turned down or held up on human rights grounds Recent approval in principle of certain transactions including KC-130 tankers helicopters and naval periscopes as exceptions to the Department's wait-and-see t policy possibly averted a breakdown of the nuclear talks r SECRET f SECRET 6 But the outlook is not good for a resumption of business as usual Our ability to carry through a protracted negotiating process to meet non-proliferation objectives will continue to be affected by decisions on arms transfers - Resentment among Argentinian military leaders at us arms -- transfers policies could particularly harm our nuclear objectives since the Argentinian armed services also run the nuclear energy program ii Force Posture Our current US force posture provides little non-proliferation leverage We have no military installations in Argentina and virtually no military cooperation ---- SECRET DECLASSJl''U IJ Authority if ' 6 17 SECRET 7- 2 Brazil A Non-Proliferation Status The Brazilians and the FRG are embarked on the largest proposed transfer of nuclear technology to date If all the elements of the deal are completed Brazil will have up to eight light water power reactors a uranium reprocessing facility a pilot enrichment facility and a fuel fabrication plant Unlike Argentina all of Brazil's presently planned nuclear facilities will be under IAEA safeguards However like Argentina Brazil is not a party to the NPT nor has it waived into force the regional Treaty of Tlatelolco and thus has not committed itself to accepting safeguards on all future nuclear facilities and forswearing development of peaceful nuclear explosives --- Despite the foregoing we do not look upon Brazil as a ·-- - - serious prospective proliferator in the near term primarily because its sensitive facilities will be developed on an experimental basis and entirely under international safeguards Nonetheless Brazil's acquisition of reprocessing and enrichment technology would in time provide the technical basis necessary to support a nuclear weapons program It would as well set a precedent for other aspirants to acquire complete nuclear fuel cycle technology We have engaged in efforts over the past year to obtain deferral or cancellation of the reprocessing and enrichment - •7 • _ · - -i _ _ DECLASS1 l'l lm Authority r J D f 7 SECRET 8 portions of the FRG-Brazil deal We may want to examine further the relationship between our non-proliferation strategy - in Brazil and our politico-military relations with the FRG to see if there are ways to conduct our relations with the FRG which would allow us to influence more effectively the FRG 1 s actions in the non-proliferation area We have not made as much progress in furthering cur non proliferation strategy in Brazil as we have in Argentina During the Secretary's recent visit to Brasilia which followed our discussions with Argentina referred to above the concept of a mutual reprocessing deferral by Brazil and its rival Argentina wa@broached to Brazilian officials We are hopeful that once the Brazilians have absorbed the implications for their security of a regional nuclear reprocessing competition they will become more flexible If this should occur we would hope that the following could be accomplished -- deferral of any further reprocessing activities for a substantial period of time as with Argentina and -- acceptance of IAEA full-scope safeguards possibly through implementation of the Treaty of Tlatelolco B Motivations i Security Brazil's drive to become a regional and potential global power results in a desire for self-sufficiency in politics economics and technology •_ hey may perceive some security SECRET DECLASSIJ'l IJ Authority N 'D'' f3 17 _ SECRET 9 threat in regional conflicts Peru vs Chile and territorial frictions with neighbors potentially impacting on hinterland development Furthermore they are sensitive to Argentine military power and nuclear development particularly in view of their own isolation from the US in defense matters and their greatly reduced contact with US military Nonetheless the absence of an imminent global threat to the region and Brazil's disinterest in an extra-regional role except possibly in Africa leads the military government to be most concerned with internal security and political evolution As a result Brazil has no clear present interest in acquiring nuclear weapons although the military appears to want to preserve access to the nuclear option situation could change SECRET i This U l A LMMl'lt 1' Authority tJND ff 7 SECRET 10 radically if Argentina sought or was perceived by Brazil as seeking its own nuclear option Short of that Brazil's nuclear intentions are unlikely to be significantly influenced by the degree if its access to conventional arms sources or by the status of regional or bilateral security arrangements including super power guarantees ii Political Like Argentina Brazil's motivations for expanding its nuclear power program and sensitive nuclear technologies are strongly influenced by prestige and image-building considerations Brazil sees this aspect less in terms of immediate regional rivalry and its position within the Latin pecking order than as one aspect of Brazil's emergence as a major world power While still far behind Argentina in nuclear capabilities Brazil is the predominant Latin American power and regards technological advancement energy independence and potential military capabilities as important indicators of its overall position in the world iii Economic Brazil has large energy needs to support its future economic growth While alternative energy sources including hydroelectric power exist the present government has strongly emphasized nuclear power as the priority objective Brazil's nuclear power program is based upon the light-water enriched•· uranium fueled reactor type US action in 1974 in closing SECR T - __ - UEl-LA ll' 11 U Authority Hf JD e17 SECRET 11 its order books for future fuel contracts and the conversion of existing Brazilian contracts to 11 cond i tional 11 contracts £------ --------------'------ was traumatic for Brazil's nuclear planning and probably had much to do with its subsequent conclusion o - the agreement with the FRG which has become a major issue in our bilateral relationship Given Brazil's deep aversion to dependence upon external fuel sources the economic rational for acquiring however its own enrichment capability must appear persuasive knowledgeable Brazilians probably recognize that little economic justification for reprocessing will exist for at least a decade Many Brazilian scientists believe however that the FRG Brazil deal made Brazil more dependent than ever and on a single supplier C US Program and Activities i Arms Transfers Policy Over the past couple of years Brazil has gradually reduced its requests for US defense articles The reasons for the reduction include dissatisfaction with our policy of not providing sophisticated equipment a desire to alter the Brazil before US military relationship which dates back to World Warr · -- - -- - --- -· plans to develop_ Brazil's own arms industry and most important recently unhappiness with US human rights policies and practices Apart from the reduction of defense article transfers at Brazilian initiative we have recently held up SECRET r·· SECRET 12 approval of over a dozen Munitions List license applications for handguns and ammunition for the Brazilian Navy and various types of communications equipment for several government agencies because of _Congressional' objections Brazil ref used to accept FMS financing for FY 78 and has asked us not to submit a human rights report to Congress for FY 79 As a result it will be- come ineligible for any kind of security assistance including FMS cash or credit sales and grant training It will remain elibible however for commercial purchases with rnuuitions control export licenses In recent months however we have turned down most requests for FMS sales or munitions control licenses Taken altogether arms trasnfer business with Brazil is not a US growth industry and is not likely to again be one if present human rights and arms transfer policies continue transfers remain a sensitive issue within the context of Brazilian relations Arms us- Any abrupt cancellation of these commercial arms sales however could impinge on the extremely difficult negotiations we are attempting to sustain in the nuclear area ii Force Posture US force posture at present provides no non-proliferation leverages We have no milit ry installations there and virtually no military coopera·tion However there exist a potential common interest in the South Atlantic African littoral and petroleum Sea Lines of Communication Also Brazil's naval strength although modest could evolve to make them a significant partner in South Atlantic security in the 1980s JJ 1 A LA Jr 11 IJ Authority fJND t 17 - SECRET 13 The US human rights campaign and the subsequent decline in security assistance have greatly reduced our non-proliferation influence But Brazil remains capital and technology hungry creating an atmosphere the US could capitalize on through positive initiatives such as constructively pursuring Brazil's global ambitions SECRET DECLASSIFIED Authority e f IJD 17 SECRET 14 J -Republic of China A Non-Proliferation Status Taiwan has been engaged in a suspected nuclear weapons program since the PRC first exploded a nuclear device in 1964 Taiwan has an impressive group of scientists and engineers most of whom are apparently of the Ministry of Defense rather than the Atomic Energy CoµnciJ _o r_ the nuclear research institute The Taiwanese have a Canadian supplied research reactor capable of producing bomb quantities of plutonium and the independent fuel cycle capability to run the reactor without outside support They also have the technical know-how to separate and purify plutonium for use in explosives and ay have completed sufficient experimental high explosive work to be reasonably confident of producing an effective first-generation nuclear explosive i We believe that we have a fairly good handle on Taiwan's nuclear activities Following US intervention the ROC has agreed to reorient its nuclear research away from activities relevant to weapons production We are also making arrange- ments to remove spent fuel of the major research reactor from Taiwan thus depriving the ROC of a ready source of plutonium Without such direct intervention the a nuclear weapon within a year or two ROC could have assembled The hoc probably anticipate the date when they may wish to resume a greater nuclear weapons effort In addition further isolation of SECRET t Authority tJ 'D'' e 7 SECRET 15 of the Taiwanese may well bring to an end IAEA sa J lil ---- and inspections which even now are tenuous B Motivations i Security Given the POC's overwhelming conventional superiority and its rrodest nuclea· _arsenal - the BCC probably sees a nuclear weapons capability as a potential __ deterrent against absortion by the PRC in circumstances where US protection has diminished or disappeared ii Political Our desire to prevent ROC development of nuclear weapons conflicts with our overall China policy of moving toward full diplomatic relations with the PRC As long as we still have - diplomatic relations and the Mutual Defense Treaty with Taipei it is unlikely the ROC would pursue a nuclear weapons program that - ould ri a break in US re_lations When arrl if we break relations with Taipei however we will lose this leverage Taiwan will however continue to have extremely important economic ties with the US and we may continue to supply it with arms depending on what kind of settlement is possible with Peking iii Economic The ROC has no clear economic motivation for the development of a reprocessing capability except for the desire to keep its nuclear research program and personnel at a high level of competence • I I There are substantial economic consi- derations in the possible loss of US support for fueling the SECRET I • DECLASSIFIED Authority _tJIJf ' ef7 SECRET 16 ROC's power reactor program and such a loss would be acceptable only if the ROC's national security were clearly and immediately threatened We have already used the threat of cutting off cooperation in nuclear power on at least two occasions to force the ROC away from nuclear weapons research We may need to do so gain c US i Programs and Activities Arms Transfer Policy The continued sale of defensive military arms will sustain the ROC's confidence in its conventional deterrent capabilities - -·-and- -wiil thereby · reduce the prospects that the ROC would in a mood of desperation seek to proquce nuclear weapons Thus other policy reasons for continuing to supply Taiwan with the defensive military arms it requires to maintain a credible deterrent reinforces our proliferation interests In reviewing export licenses for military related technology and equipment we have been careful to deny the ROC access to items which would contribute to a nuclear weapons development program ii Force Posutre US has already made clear it will remove all forces from Taiwan and ROC is concerned over continued us -mtpabilie¥ and willingness to help defend Taiwan after these remaining symobolic forces are gone SECRET •- - --_ U l L LA 11' 11 U SECRET 17 · iii Defense Treatx_ The ROC already assumes that our Defense Treaty will be nullified once normalization occurs with Peking iv Intelligence Sharing Arrangements Our intelligence sharing arrangements are a two way street and provides us an important source of leverage SECRET I - DEl LASSIJ' It JI Authority H JD 17 ' SECRET 1 4 Egypt A Non-Prolferation Status Egypt's nuclear plans and capability are modest and are projected to remain so Egypt has one nuclear research reactor supplied by the Soviets a number of years ago but has none of the ancillary fuel cycle facilities that would provide experience in preparation of fissionable materials for nuclear explosives Egypt desires to acquire a nuclear power plant from the US but this too would not be of direct relevance to a nuclear weapons program The significance of Egypt for proliferation resides largely in the possibility of a nuclear reaction in Israel to actions Egypt may take - in the areas of nuclear power programs safeguards and in non-nuclear areas B Motivations i Security Egypt's main security concern has been Israel but Israeli withdrawal from Sinai could leave Egypt relatively secure from external attack Concern has grown about Soviet influence in the region especially in the Horn of Africa and North Africa and • the affect on the Suez sea 'Lines of Communication Soviet i influence has further enhanced the ability of Libya and other rivals to destablize Egyptian politics but unless Israel or Libya go nuclear or unless there is a radical upheaval in Egyptian politics a sense of compulsion to develop the nuclear option is considered minor SECRET DECLASSJFIEU Authority l f'l1'JD ff 17 SECRET 19 C US Programs and Activities Egypt has shown increasing interest in expanding its modest arms supply relationship with the us However it now attaches higher priority to maintaining momentum in the peace negotiations sale of 50 F-s· The Administration has recently proposed the aircraft to Egypt A decision to increase arms transfers to Egypt would be linked almost exclusively to enhancing Mid ast ·peace negotiations minimizing any residual leverage available for other purposes To the extent that increased arms transfers increase our overall leverage in Egypt however an expanded military supply relationship could allow us some say in non-proliferation matters in the future Egyptian action on the NPT however is probably linked to some degree to Israel action on full-scope safeguards us military relations with Egypt are in the process of gradual restoration US economic assistance to Egypt has also become very substantial and is a positive source of non-proliferation influence SECRET t J I Dl LAS Jl Jt V Authority H AID 6 7 SECRET 20 5 India A Non-Proliferation Status India's ability to fabricate a workable nuclear explosive is proven In addition India's efforts to develop a satellite launch capability have direct application to nuclear weapons delivery systems India has developed a large measure of independence in its nuclear program although the loss of foreign technological assistance would be extremely costly in time and money In fact India will soon be in a position to export a-t -least technological expertise and eventually nuclear hardware In terms of basic nuclear capabilities India can be regarded as a sixth nuclear power The Desai government is rethinking the direction of India's nuclear program and has publicly rejected peaceful nuclear explosives devic PNE Although the Indians are capable of exploding a secooo nuclear they have not for at least two reasons the us could cea·s e supply of enriched uranium and India's scientists have been unable to find a convincing application for a PNE we are continuing to use our influence to persuade the Indians to accept full-scope safeguards We hope to avoid a resumption of any nuclear tests or initiation of a nuclear weapons program B Motivations i Security India's recourse to nuclear weapons will in large measure ' be a function of its relationship with neighboring states and t I i I r its ability to counter hostile moves by conventional means SECRET i Ul l LA Jr 11 lJ 'JJJD f ff 17 Authority SECRET 21 - Whatever threats China or the USSR might pose to stability in the sub-continent India is unlikely to dev9lop nuclear weapons as a response to those established nuclear powers For the near term India has enhanced its political and military standing by having demonstrated a nuclear capability and barring unforseen developments is unlikely to develop a nuclear military force India 1·s u d e l insecurity is not always forth- rightly admitted but relates tp the continued divisions withinindia along regional or sub-national lines and i the revolutionary and secessionist potentials of radi- calization of ·the Indians 75 miliion · uslims Fear of major Soviet or Chinese attacks is discounted but the political influence of these states working through the domestic vulnerabilities just mentioned is take seriously Over the long-term a capability to deter Chinese nuclear threats is viewed as prudent The threat from Pakistan has always been taken seriously because of the domestic Muslim minority ii Political As long as Desai is Prime Minister there is some hope of using his moralistic pronouncements on NPT and CTB to box India into full-scope safeguards commitments iii Economic US economic ties with India have been significant but Indian economic diversification has reduced our potential non-proliferation leverage J SECRET 22 - C U S Programs and Activities i Arms Transfer Policy Our arms transfers to India have been minimal In 1976 our sales agreements amounted to approximately $3 million Our security assistance program in India is limited to a small grant military training program IMET Most transfers have been spare parts for weapons the US supplied India in 1963 We currently supply India no sophisticated technologies or lethal weapons and our leverage on nuclear policy through arms transfers is small India could be affected by major arms transfers to Pakistan Thus restraint in arms transfers to Pakistan could be a factor in our ability to influence India's nuclear policies But the effects are double-edged our connection with Pakistan has always made our dealings with India problematic SECRET I SECRET 23 6· Iran A Non-Proliferation Status Iran has a significant plan for a nuclear program and is unlikely to jeopardize it by being caught in a nuclear - --------------- - weapons program In completing these plans however Iran will eventually acquire access to and expertise in most areas of the nuclear fuel cycle needed for the design and rnanu- facture of nuclear weapons Iran is a party to the NPT and advocates a regional -- nuclear free-zone For the foreseeable future Iran apparently does not intend to acquire fuel reprocessing technology B Motivation i Security Iran lives in the Soviet shadow has a second powerful and historically hostile neighbor in Iraq has a brittle political system and sits on a coveted resource that could critically affect the fate of the West Political radicalization and instability of neighboring states is worrisome as is the declining US and British influence east of Suez which leaves a vacuum that Iran feels compelled to fill Iran is further disturbed by perceived shifts in the USSoviet military balance Iran cannot hope to use nuclear weapons in effective defense against the USSR While there might be some deterrent SECRET 24 value Iran might also be more heavily targeted But nuclear options might be perceived as a useful complement to Iran's p litical and military efforts to build regional stability especially if one or more neighbors evidence intentions to go the nuclear way A Pakistani weapons program in particular could provoke an Iranian response ii Poli ti cal Iranian uncertainly about US domestic policies and long term attitudes toward Iran sp desire for security independence including divestation of external ties and possibly the nuclear option iii Economic Nuclear power is a key component in Iran's industrial advance to economic self-sufficiency a critical replace- ment for depleted oil and a symbol of modernization and prestige I I I t j DECLASSJFIKV Authority tJND e17 SECRET 25 c · US Programs and Activities i Arms Transfer Policy The Shah has consistently asked for the most sophisticated weapons that the US sells abroad In 1976 the United States agreed to transfer in excess of $5 billion in material to Iran This year the Iranians provided us with a long range projections of their planned arm c requests 'Ihis includes more F-14 and F-16 aircraft an l large numbers of selfpropelled artillery pieces Given the quantity and quality of our arms relationship some leverage arises in using arms supply to help deter a future Iranian nuclear weapons decision But there are inherent limits on our leverage given Iran's importance to the US due o key US intelligence and communications facilities within its boundaries its role as a supplier of oil to the US its purchases of approximately $3 5-4 0 billion of US civilian goods per yearf and its influence in the outcome of Middle East negotiations Negative leverage may be the most relevant factor The Shah has consistently linked his ability to acquire conventional arms from the US to his inclination not to attempt to obtain a nuclear weapons capability Should the US attempt to significantly reduce its supply of arms to Iran we would risk giving the Iranians incentive to acquire nuclear weapons although it is equally likely that the Shah would turn to Western European suppliers as he is now doing in the case of naval vessles which we declined to provide Dt C LA S Sll' lMJ Authority H- D'' e17 SECRET - 26 -7· Israel A Non-Proliferation Status There are clear indications of Israel's longstanding interest in possessing a nuclear capability but we lack a basis on which to conclude whether Israel now has nuclear weapons - A key facility in Israel's nuclear program is the Dimona research reactor supplied by France in the early 1960 1 s which can produce weapons-quantities of plutonium annually we believe Israel has reprocessed some spent fuel from that reactor to obtain plutonium i f a significant reprocessing capability does exist 9 the Israelis could produce weapons on demand Israel has maint a i ned a careful ambiguity in its public references on the question of whether it has or could produce nuclear weapons Moreover Israel refuses to accept IAEA safeguards on all its nuclear facilities which would mean placing the Dimona reactor and any reprocessing and plutonium handling facilities under safeguards B Motivations i Security We are unable to judge whether Israel sees actual demonstration of nuclear weapons to be in its self interest or whether its steadfast and careful ambiguity in public references on the question of whether it has nuclear weapons meets its requirements Given Israel's capabilities we judge it likely that it could and would resort to nuclear veapons if its Authority H 'D'' el 7 SECRET 27 existence as a state were threatened Thus far however Israel has met its challenges by means of its close security relationship with the US and with its almost unhindered access to conventional arms from abroad Should either of these elements fail Israel might well demonstrate a public capability ii Political Israeli insecurity is profound because of Isra i Lt s precarious location the number size and commonality of its opponents and the intractability of the regional conflict 1 US political and defense commitments remain indispens '- but have become more uncertain as the oil factor has grown in ------------- importance ·- --- -· ·--- - US and NATO force postures vis-a-vis the USSR and Warsaw Pact together with interests in secure access to Middle Eastern oil however continue to guarantee a strong US stake in a Middle East settlement which also promises improved Israeli security Evidence that Israel is nuclear weapons capable has an ambiguous effect it may be domes jcally reassuring probably offers some deterrence against all-out Arab warfare and may be some incentive to Arab states to find a political settlement - it raises the stakes of major power interest in a settlement and may margipnally increase the risks of hostile major power intervention in the region SECRET SECRET - -·- J I UtA LA -'ll' U U Authority 'J IID 817 SECRET 28 - but1 it also provides incentives to Israel's opponents to follow suit and there is evidence that Libya and perhaps Iraq would like to • iii C Economic US Program and Activities i Arms Transfer Policy Our commitments to Israeli security and military assistance to Israel are longstanding extensive and highly political in nature Recent arms transfers are the 15 F-15s and 75 F-16s that are part of the Middle East aircraft package Israel has requested in addition an extensive 10 year list of equipment MATMON C totalling $15 billion in its entirety We do not expect to address this rquest Rather arms approvals for Israel will likely continue to be made on an annual basis after extensive review and analysis These decisions will be most affected by our commitment to Israel's security aJrl the Middle F ast peace process The existence of this · relationship in fact may be responsible for whatever restraint Israel has exercised regarding nuclear weapons i I r t I I l SECRET r DECLASSIFIED Authority tJ D £ 17 SECRET 1 29 Israel's recent arms requests were not fully satisfied Whether the us could find ways to be more forthcoming in our arms supply relationship as a means of moving Israel toward full-scope safeguards is uncertain and involves complex factors related to the entire question of a Middle East peace settlement Moreover any increase in entail additional US US arms supply to Israel would probably financing More certainly however if serious doubts arose in Israel concerning the US commitment-· either in arms supply or in the broader security commitment-they could have the effect of driving Israel away from considering full safeguards and toward either development of nuclear weapons or more explicit indications of willingness to employ nuclear weapons in the Middle East ii Political Support Dependence on the US for political support and military assistance gives the US extensive non-proliferation leverage over Israel but this is qualified by - strong domestic •US interests supporting Israel unequivocal and - the clandestine character of the Israeli nuclear program and its freedom from safeguards which make official deniability possible and shield the program from attempts to verify military use The high US priority in finding a peace settlement in the area is overriding and inhibits effective pursuit of non-proliferation I objectives in Israel DECLASSIFIED Authority t lAI Q 6' 8f7 SECRET 30 s Pakistan A Non-Proliferation Status The French have contracted to supply Pakistan a reprocessing facility It is our assessment that the Pakistanis are intent on obtaining the reprocessing plant to give them a nuclear weapons options as a counter to India even though at France's insistence the plant would be covered by international safeguards Negotiations for the French facility in process when India exploded a nuclear device in May 1974 were immediately thereon accelerated With the recent change in the Pakistani government the French Pakistan deal has become less certain and it is possible that the French will reconsider the deal At this juncture France is seeking to interest Pakistan in accepting a modification of the contract to shift the plant to a form of cx r-processiong Pakistan has refused to alter the contract but the French are a mtinuing to press alternative nodification proposals The us has made kna-m its preference for cancellation Pakistan must be considered a proliferation threat even if the French reprocessing plant does not go forward -✓ scientists and engineers are competent Its There are indications of interest in nuclear explosives-related research and development work Pakistani technical personnel have been trained in such sensitive fuel cycle areas as reprocessing They may even have access to a small reprocessing laboratory in Pakistan Canada severed its nuclear relationship with Pakistan last year if safeguards are not maintained on the Canadian supplied KANUPP SECRET I DECLASSIFIED Authority IW Ob f 8 f l 31 power reactor and its spent fuel Pakistan would have access to a source of plutonium Should the Pakistanis acquire a significant reprocessing capability we are concerned not only that the Paks may develop weapons but also that the Indians would feel constrained to resume their nuclear test and perhaps move toward a weapons program B Motivations i Security It is not clear that Pakistan perceives a security requirement for nuclear weapons although it may well see the long term viability of the present Pakistani state to be questionable and may also regard its current conventional capabilities as inadequte against potential neighboring adversaries Whatever Pakistan's sense of insecurity may be it was undoubtedly enhanced by India's demonstration of a nuclear capability in 1974 which reinforced an existing imbalance between the two countries on the conventional level In this context Pakistan's access to foreign arms supplies and its ability to rely on great power guarantees of the status quo in the sub-continent may be critical elements in the formulation of Pakistani long term nuclear intentions Indian Ocean and other arms control negotiations in the region may be a source of non-proliferation influence over Pakistan to the extent they encumber or restrain India militarily which is not their perceived present direction Conventional arms transfers to Pakistan are the most decisive potential source DECLASSIFIED Authority NA t £ 68 f 1 SECRET 32 of US non-proliferation leverage ii iii Political Economic Potential economic assistance may be a significant source of a non-proliferation influence our potential influence will be severely curtailed if the French reprocessing deal goes through and the Glenn Amendment is invoked SECRET DECLASSIFIED Authority 9 6 f B I 1 SECRET 33 c U S Programs and Activities i Arms Transfer Policy our grant security assistance to Pakistan has been limited since 1965 to a modest grant military training program IMET • W also provide defense art i -cles an·d ·services on a commercial and FMS cash basis i nce L975 these have amounted to about $50 million per year largely for spare parts ammunition and communications equipment In addition to a request for MK 46 ASROC torpedoes now being processed Pakistan has expressed serious interest in ac qui ring selr-proposed hc Mitzers and less explicit interest in 110 F-5E F aircraft The Glenn earl r the Svmington Amendment prohibits military assistance under the Foreign Assistance Act to any country which acquires reprocessing technology under other than narrowly-defined conditions We· believe that no transfers of technology from France to Pakistan have yet occurred which would bring the Glenn Amendment into effect For all practical purposes therefore we have already clearly signalled our ability to use security assistance as leverage Should the French cancel the reprocessing deal altogether with resultant strong and adverse reaction in Pakistan we might consider using a resumption of FMS saies to ameliorate this reaction and to provide a visible non-nuclear alternative to Pakistan's security concerns As Pakistan is a poor nation however they could not purchase large amounts SECRET DECLASSIFIED AuthorityiJJ 6 08 l a r-------·- ------ SECRET 34 of defense articles without outside assistance Pakistan is of course part of the action-reaction cycle in arms competition in South Asia Significant arms transfers to India such as the Jaguar sale could give Pakistan additional motivation to exercise the nuclear option • SECRET I l J DECLASSIFIED AuthoritvUN D 6 fJB 1 1 SECRET 35 g South Africa A Non-Proliferation Status This past August we learned of the existence of a facility in the Kalahari Desert which could be associ ted with nu clear explosives testing South Africa has clearly demonstrated competence in nuclear science and technology South Africa's pilot enrichment plant at Valindaba now in operation was indigenously designed and built This enrichment facility may be capable of producing highly enriched uranium -- the probable material for any South African device We believe that South Africa could produce a nuclear explosive fairly quickly In the aftermath of international publicity regarding the suspected nuclear weapons test site in the Kalahari Desert the SAG gave public assurances of its peaceful nuclear intentions but has not clarified the purpose of the test site We have urged the SAG to reinforce its assurances by adhering to the NPT and accepting interim safeguards at its Valindaba enrichment ✓ plant We indicated that we could not otherwise continue any form of nuclear cooperation withn South Africa ¥ 1 J If the south Africans meet our conditions we would w · und ake to supply low enriched uraniwn LEU for the nuclear rI -- power reactors now under construction in South Africa by the i I French Since the South Africans will not for several years SECRET DECLASSIFIED Authority4¼J C b 68 I 1 I SECRET 36 have sufficient capacity to produce their own power reactor fuel they must either depend on the US or possibly France for this supply or dE ifer completion of the power reactor project They also desire that the us continue fueling the Safari research reactor a US supplied facility that - - operates on highly enriched uranium HEU • Safari is South African's major nuclear research tool the question of its future operation is of major concern to South Africa and could lead it to produce HEU from its own enrichment plant f ailing reswnption of fuel supply by the US B Motivations i Security Until recently South Africa was asswned to have no perceived military requirements for nuclear weapons Its worsening geo-political situation may be changing the calculus South Africa feels itself increasingly hemmed in as developments in neighboring former buffer states •'lanibia Angola Rhodesia Mozambique place these states in a potential adversary relationship with South Africa Moreover because of US and broader western opposition to South Africa's domestic policy South Africa feels increasingly isolated from the West and unable to rely on outside allies in case of need These developments appear to be creating in South Africa something like a seige mentality We no longer exclude the likelihood that South Africa will develop and possibly test nuclear weapons SECRET t -- DECLASSIFIED AuthorityflLN D 6 wBJ l -- -- - -- SECRET 37 both to demonstrate its staying power in a future regional conflict and to make clear to its domestic and foreign audiences that south Africa can go it alone if need be c ii Political iii Economic U S Programs and Activities i Arms Transfer Policy The us has not supplied arms to South Africa for a decade and the embargo was recently reinforced and made total when the US extended it to include spare parts and maintenance items · IT Hence between the US and South Africa there are not SECRET DECLASSIFIED AuthorityN J D 6 f 811 I SECRET 38 outstanding bilateral military supply relationship questions Other Western nations including France previously a major supplier have also ceased arms supply to South Africa Our arms transfer policy toward South Africa is one element in a skein of present and proposed sanctions or cutbacks in the economic and commercial areas Arms transfers are not a potential tool in i n g the South African nuclear problem although our policy and those of others undoubtedly contributes to South Africa's incre sing sense of isolation--from which we might expect the motivation for a nuclear SECRET I·• •I • t weapons program to develop DECLASSJFIED Authorityb' D 6 68 1 1 - l SECRET 39 lOi South Korea A Non-Proliferation Status The US intervened effectively two years ago to prevent consummation of a French South Korean deal that would have given South Korea a reprocessing facility • 1 Since then the Park government has placed its nuclear weapons program on hold and shifted resources to other programs We made it clear to Preside nt Park that a Kore an nuclear weapons program would jeopardize our b i lateral relationship across the board The Koreans feel powerful incentives to move toward developing a nuclear weapons capability If the ROK did decide to resurrect its nuclear weapons program it would have a long way to go to attain the range of capabilities necessary for success but given sufficient 1 time perhaps 5 years certainly within 10 and investment it is well within their capabilities However before such an effort could actually produce an explosive device the ROK would have to abrogate the NPT For the foreseeable future the us will continue to have _ sufficient leverage to prevent the ROK from going nuclear if we are prepared to us it nuclear power program our support is vital for the ROK If we threatened to reduce or even cut off our military support it is extremely unlikely that any ROK government could withstand the pressure A head-on US-ROK confrontation however would carry grave risks not only for SECRET Authority I D 6 riff f - I DECLASSIFIED l SECRF T 40 stability on the Korean peninsula but also for our relations with Japan B Motivations i Security The ROKG seems convinced that nuclear weapons are a vital part of the overall deterrent against North Korea The ROK will certainly view our planned removal of all nuclear weapons from Korea by the end of 1980 as significantly lowering the deterrent against North Korea despite our assurances of the continued availability of nuclear weapons in the Western Pacific The vulnerability of peace near the North Korean border adds to the perceived need for an effective and rapidly available deterrent They fear that even if North Korea itself had no nuclear weapons it might be supported in a conflict by its nuclear-armed allies--the USSR and China There has also been a gradual erosion of ROK confidence in the effectiveness of the US security guarantee since the wi_thdrawal of a US division from Korea in 1971 This concern has since been fueled by our withdrawal from Vietnam and by our planned ground force reductions i12 - orea over the next 4 to 5 years To the extent that the ROKG continues to have doubts about our willingness or ability to meet our security commitment to it pressures to develop its own nuclear weapons uill continue r I SECRET 41 ii Political Amongst increasing ROK nationalistic feelings and a resentment of dependence on USJrenewed North-South dialogue if feasible might reduce tensions and lessen incentives for ROK nuclear proliferation iii c Economic US Programs and Activities i Arms Transfer Policy Individual security assistance cases are not necessarily critical to nuclear proliferation but taken collectively and - combined _withour overall policy they have an important impact on ROK perceptions of US reliability and the need for nuclear weaponE As compensation for the troop withdrawal we plan to transfer to ROK at no cost approximately $800 million of equipment virtually all of hich is in the current inventory of US forces in Korea In addition to and separate from the com- pensatory package we are considering the sale of various other equipments including M-48 tanks F-16 A-7 A-10 aircraft and the provision of extensive credits for purchases of military material SECRET I SECRET 42 At the present time there appears to be considerable reluctance in Congress to approve the compensatory package and to provide large amounts of security assistance pending further developments in the Koreagat e affair One of the positive steps we can take which might help to head off a ROK decision to resurrect its nuclear weapons program would be to follow-through with the arms transfer package tied to our troop withdrawals and to generally be as forthcoming as possible in our arms transfer pol y toward the ROK particularly in providing more advanced weapon defense ystems necessary for ROK At the same time we should continue our present policy of restricting Korean access to technology which would contribute to development of an independent missile development program ii Defense Commitment Entire US-ROK defense relationship is most powerful yet I• difficult to use source of leverage OUR US force posture is a most important element bearing on proliferation especially regarding actions on our nuclear_ - weapons in Korea and the pace of withdrawals of conventional forces SECRET r·z TFJ ETES 'p · a' SECRET 4 3 11 Spain A Non-Proliferation Status There are indications of some interest on the part of the Spanish military in a nuclear option but we have no evidence of -- and doubt that there is -- an active research and development effort on nuclear weapons The Spanish have in the past reprocessed spent fuel on a small scale and presumably possess some separated plutonium although most ----- ----- certainly well less than _a__b Qmb' s worth In addition Spain is the only Western European country not to have ratified the NPT None of this suggests that Spain is an immedi ate pro- liferation risk although its combination of capabilities and lack of disincentives to go nuclear is stronger than in most other West European countries Spain's desire for closer ties with Western Europe as well as its clear lack of a rationale for possessing nuclear - weapons are probable inhibiting factors on any Spanish decision to develop nuclear weapons B Motivations i Security There appears to be no security motivations to develop a nuclear capability now although refusal to sign the NPT probably reflects a desire by significant elements within ·Spain not to foreclose the nuclear option r t sr C ET 7 SECRET 44 ii Political Spain's nuclear policy does not in the current or anticipated European setting rank among priority us objectives vis-a-vis Spain Our primary concerns involve maintaining close bilateral polit ical and military ties which provide access to bases in Spain for US forces and encouraging Spanish entry into t NATO which will provide a wider legitimizing framework for Madrid's relations with the US and other European nations Spanish membership in NATO by providing such a framework is likely to reduce even furthe r Spanish interest in nuclear weapons The US is consciously seeking not to overplay its hand in promoting Spanish entry iii Economic The further development of Spain's nuclear power program is of large economic and energy significance Since Spain remains dependent on outside sources of nuclear fuel which could be terminated if a weapons program were pursued the economic pressures deterring proliferation in Spain clearly are overriding in present circumstances C U S Programs and Activities i Arms Transfer Policy -·Our conventional arms relationship with Spain is to a large extent an adjunct of our base rights arrangements which have be n extended through 1981 by the Treaty of· Friendship and SH RET -- UJ LA S SU U U Authoritylf IJ D 6 f R I 1 SECRET 45 Cooperation Specific levels of Security Assistance are spelled out in the treaty over a five-year period $135 million in grant military aid $15 million a year _cost sharinq obliaations marked for modernization projects and $600 million in Foreign Military Sales credits $120 million a year Credit financing thus is involved in most of the FMS arms transfers-$120 million financed of an estimated total of $145 million in FY 1978 We estimate that another $20 million worth of arms will be sold commercially The Treaty also committed the US to supply or to lease--or to help acquire--certain specific items of military equipment such as late generation fighter aircraft ii Arms Control Negotiations Spanish perceptions of their security needs could be influenced by developments in the MBFR negotiations to the extent that they see likely MBFR outcomes as limiting Western capabilities to deal with the Soviet threat If the area subjected to MBFR measures remains limited to central Europe Spanish_ territory becomes increasingly attractive to the West as--a safe haven especially should Spain enter NATO Should MBFR associated measures be extended to include CSCE territory Spanish security interests would be tied more closely to other Western European states and particulary if Spain joined NATO This could reduce Spanish interest in meeting its security needs through strictly unilateral efforts SECRET