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Cablegate: Encouraging Kazakhstan to Meet Its Bn-350 Spent

VZCZCXRO7834
RR RUEHAG RUEHAST RUEHBI RUEHCI RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW
RUEHLA RUEHLH RUEHLN RUEHLZ RUEHNEH RUEHNP RUEHPOD RUEHPW RUEHROV
RUEHSR RUEHVK RUEHYG
DE RUEHTA #2316/01 3291018
ZNR UUUUU ZZH
R 241018Z NOV 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 3919
INFO RUCNCIS/CIS COLLECTIVE 0837
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNCLS/SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0236
RUEHKO/AMEMBASSY TOKYO 0946
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEKJCS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHDC 0319
RHEHNSC/NSC WASHDC 0404
RHEFAAA/DIA WASHDC
RUEAIIA/CIA WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 ASTANA 002316

SENSITIVE
SIPDIS

STATE FOR SCA/CEN

E.O. 12958: N/A
TAGS: PARM PGOV PREL ENRG MNUC KNNP TRGY UK KZ
SUBJECT: ENCOURAGING KAZAKHSTAN TO MEET ITS BN-350 SPENT
FUEL TRANSFER FUNDING REQUIREMENTS

REF: A. STATE 89507
B. ASTANA 02298

1. (U) Sensitive but unclassified. Not for public Internet.

2. (U) This is an action request. Please see paragraph
nine.

3. (SBU) SUMMARY: In the 1997 agreement, &Implementing
Arrangements between the Department of Energy of the United
States of America and the Ministry of Sciences ) Academy of
Sciences of the Republic of Kazakhstan Concerning Long-term
Disposition of BN-350 Nuclear Material,8 the government of
Kazakhstan committed to funding the transfer of BN-350 spent
fuel. On November 12, the U.S. Department of Energy/National
Nuclear Security Administration (DOE/NNSA) stated that the
fiscal year 2009 budget request for DOE,s contractor in
Kazakhstan was denied by the government of Kazakhstan.
DOE/NNSA requested assistance in urging the Kazakshtani
government to meet its 1997 commitments by funding this
budget request. In September, per the instructions in reftel
A, post delivered letters from then-Ambassador Ordway to the
Minister of Energy and Mineral Resources and to Prime
Minister Masimov urging the government of Kazakhstan to
provide extra-budgetary funding to transport BN-350 spent
fuel. The Kazakhstani government has stated they will not
contribute additional funds for this project. The U.S.
Department of Energy,s contractor for the U.S.
government-funded sodium processing facility, which processes
contaminated sodium from the BN-350 reactor, also requested
assistance in seeking budgetary support from the government
of Kazakhstan (reftel B). Post requests detailed guidance on
encouraging the government of Kazakhstan to meet its various
BN-350 funding commitments. END SUMMARY.

REGULAR BUDGETARY FUNDING REQUEST FOR BN-350 SPENT FUEL
TRANSFER DENIED

4. (SBU) In article two, paragraph three of the
&Implementing Arrangement Between the Department of Energy
of the United States of America and the Ministry of Science
) Academy of Sciences of the Republic of Kazakhstan
Concerning Long-Term Disposition of BN-350 Nuclear
Material,8 signed on November 18, 1997, the government of
Kazakhstan agreed to provide financial and logistical support
for the transfer of spent fuel from the site of the BN-350
reactor in Aktau to the designated fuel storage site of
Baikal I in Semipalatinsk. Kazakhstan,s Ministry of Energy
and Mineral Resources (MEMR) has subsequently taken
responsibility for implementation of the BN-350 Spent Fuel
Program. DOE/NNSA,s current contractor in Kazakhstan is the
Kazakhstan Atomic Energy Company (KATEP). On November 12,
DOE/NNSA reported that KATEP,s fiscal year 2009 budget
request for the BN-350 Spent Fuel Project was denied by the
government of Kazakhstan. KATEP,s Vice President, Alexander
Baldov, stated that KATEP and Kazatomprom are working
together to prepare a proposal for funding from an
alternative source, and DOE/NNSA requested assistance in
urging the government of Kazakhstan to follow through on its
funding commitments.

5. (SBU) During NNSA,s last project meeting in Almaty in
October, Baldov indicated that KATEP, working together with
MAEC Kazatomprom and Kazakhstan,s National Nuclear Center
(NNC) had developed the extensive documentation package that
was needed by the government of Kazakhstan for funding
consideration. Baldov said meetings had been held with MEMR
on GOK funding. KATEP originally requested approximately $25
million in regular budgetary funding. This amount included
the $15 million necessary for the entire transport project,
as well as $5 million for infrastructure upgrades, and $5
million for physical protection services. The minimum
necessary to adhere to the current schedule for 2009 would be
$5 million to provide physical protection support services

ASTANA 00002316 002 OF 002


and pave the road from the Kurchatov transfer station to the
Baikal I storage facility to ensure a safe &dry-run8 and
the first several &hot-fuel8 cask shipments. To date, the
U.S. government has spent over $150 million on the BN-350
Spent Fuel Program, and every year the Kazakhstani government
assured DOE/NNSA of its intention to honor its commitments to
fund the BN-350 Spent Fuel transfer.

6. (SBU) The U.S. and Kazakhstan held their most recent
high-level meeting on the BN-350 Spent Fuel Program on
September 24 in Astana and on September 25 and 26 in Almaty.
The September 24 meeting primarily discussed the reactor
conversion project at the Institute of Nuclear Physics.
Regarding the logistics of the BN-350 spent fuel transfer,
Kazakhstani officials affirmed that all equipment necessary
for transfer operations had been received and that the
National Nuclear Center expected to complete the storage site
at Baikal I on time. The issue of regular budgetary funding
for the BN-350 spent fuel program was not specifically
discussed at the September 24 meeting.

U.S. REQUESTS FOR SUPPLEMENTAL FUNDS TO SUPPORT TRANSFER OF
BN-350 SPENT FUEL ALSO REPEATEDLY DENIED

7. (SBU) In September, per the instructions in reftel A,
post delivered letters from then-Ambassador Ordway to the
Minister of Energy and Mineral Resources and to Prime
Minister Masimov urging the government of Kazakhstan to
provide extra-budgetary funding to transport BN-350 spent
fuel. The Senior MEMR representative at the September 24
meeting, Almaz Tulebayev, Director of the Department of
Nuclear Power and Industry, confirmed that the letters had
been received, and that MEMR was carefully considering the
request. However, Tulebayev also stated that MEMR,s budget
had already been sent to Parliament, and it was unlikely that
the funding requested in the letters could be obtained.
Mynbayev made a similar response during his discussion with
then-Ambassador Ordway on September 8.

NORMAL BUDGETARY FUNDING FOR SODIUM PROCESSING FACILITY
MAINTENANCE AT BN-350 ALSO DENIED

8. (SBU) Funding for all projects related to BN-350 appears
to be limited for fiscal year 2009. On November 5, U.S. and
Kazakhstani officials met in Aktau to celebrate the
completion of the $3.35 million U.S. government-funded sodium
processing facility. The Kazakhstani government committed to
fund maintenance of the facility after construction was
completed. However, on November 5, representatives from
Kazakhstan,s MEMR, Kazatomprom, and MAEC-Kazatomprom
informed U.S. officials that MAEC,s budget request had been
denied. Instead MAEC received limited &plan of priority
measures8 funding. The contractor in charge of building the
facility, Kazakhstan,s National Nuclear Technology Safety
Center (NTSC), requested U.S. government assistance to lobby
seem more budgetary assistance for long-term maintenance
requirements (reftel B).

ASSISTANCE REQUESTED TO SECURE FUNDING FOR BN-350 SPENT FUEL
TRANSFER

9. (SBU) ACTION REQUEST: DOE/NNSA, KATEP AND NTSC have made
three separate requests for U.S. assistance in encouraging
the government of Kazakhstan to fund BN-350 projects. Post
requests detailed instructions from Washington, concerning
all funding commitments by the Government of Kazakhstan which
have been documented in writing, and requests specific
instructions on how much, and for what purposes, funding is
to be requested from the government of Kazakhstan. END
ACTION REQUEST.
HOAGLAND

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