Cablegate: Brazil and Argentina Cooperation On Uranium Enrichment

VZCZCXRO8564
RR RUEHRG
DE RUEHBR #0323/01 0671326
ZNR UUUUU ZZH
R 071326Z MAR 08
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 1170
INFO RUEHSO/AMCONSUL SAO PAULO 1716
RUEHRI/AMCONSUL RIO DE JANEIRO 5884
RUEHRG/AMCONSUL RECIFE 7781
RUEHBU/AMEMBASSY BUENOS AIRES 5347

UNCLAS SECTION 01 OF 02 BRASILIA 000323

SIPDIS

SENSITIVE

SIPDIS

DEPT FOR ISN/RA, ISN/NESS, IO/T, WHA/BSC

E.O. 12958: N/A
TAGS: KNNP ENRG IAEA PREL ECON AR BR
SUBJECT: BRAZIL AND ARGENTINA COOPERATION ON URANIUM ENRICHMENT

REF: A) BUENOS AIRES 236, B) 2007 BRASILIA 2047

1. (U) THIS CABLE IS SENSITIVE BUT UNCLASSIFIED AND NOT FOR
INTERNET DISTRIBUTION.

2. (SBU) SUMMARY. Brazilian President Lula and Argentine President
Kirchner met on February 22 and announced a joint effort regarding
uranium enrichment. This new initiative is part of Brazil's overall
policy of reinvigorating its nuclear activities. On a related note,
Brazil still has concerns over accepting an IAEA Additional Protocol
and now sees waning interest in such an Additional Protocol on the
part of Argentina. END SUMMARY.

3. (SBU) On February 27, 2008, Environment, Science, Technology and
Health (ESTH) Counselor met with the Deputy Director of the Ministry
of External Relations' Department of Disarmament and Sensitive
Technologies, Counselor Luiz Fernando Abbott Galvao, to discuss,
among other things, Brazil-Argentina nuclear cooperation. The
prospects for such cooperation have recently increased dramatically
(See REFTEL A).

4. (SBU) In recent years, Brazilian-Argentine bilateral nuclear
cooperation had been a rather quiet, routine matter. The
Brazilian-Argentine Agency for Accounting and Control of Nuclear
Materials (Agencia Brasileiro-Argentina de Contabilidade e Controle
de Materiais Nucleares or ABACC) would meet regularly once a
quarter. ABACC has its headquarters in Rio de Janeiro, and it
provides on-site inspections of nuclear facilities in Argentina and
Brazil and maintains an inventory of nuclear material in each
country.

5. (SBU) Lately, however, energy has become a front-burner topic in
both countries. Brazil has announced ambitious plans to build new
electric generation facilities, including hydroelectric facilities
(some in cooperation with Argentina and Bolivia), and a third
nuclear reactor at Angra (1MW), which would increase total capacity
from nuclear reactors to more than 3MW. One major hurdle is that
there is an outstanding contract from the 1970s to build the third
reactor. According to World Bank contacts, the Brazilian government
is faced with quandary of honoring the contract and building a
1970's reactor or wasting an entire warehouse of already purchased
equipment. Articles have appeared in the Brazilian press warning of
possible energy shortfalls in the near and medium term due to lack
of rainfall for hydropower and increasing demand. However, national
energy plans from now until 2011 show static levels of
nuclear-generated energy, remaining at 2MW of the over 109MW
capacity projected for 2011.

6. (SBU) For its part, Argentina has confronted energy shortages in
recent years. During a February 21-23 visit by Brazilian President
Luiz Inacio Lula da Silva to Argentina, Argentine President Cristina
Kirchner asked for help to meet Argentina's energy needs.
Specifically, Kirchner asked Brazil to provide Argentina with some
of the natural gas supplied to Brazil by Bolivia. Lula demurred on
the natural gas, though he offered to help with electricity.
Reports in the Argentine press that nuclear cooperation would extend
to joint development of a nuclear powered submarine have been denied
by the Brazilian Ministry of Defense. COMMENT: It is difficult to
imagine what contribution Argentina could make to Brazil's submarine
program. END COMMENT.

7. (SBU) The Lula Administration seeks to expand its activities in
the nuclear area: building more nuclear reactors; completing the
enrichment cycle; developing its uranium sector; and increasing
cooperation with other countries (e.g., India - see REFTEL B). In
this vein, as highlighted in REFTEL A, Lula and Kirchner in their
February 22 meeting announced a program of joint cooperation in the
field of uranium enrichment. The pertinent parts of the text of the
announcement are in paragraph 10 below.

8. (SBU) Galvao explained that the idea was to set up a joint
enterprise to enrich uranium. Its first priority would be to supply
the nuclear fuel supply needs of the two countries. However, he
envisioned the joint enterprise becoming a supplier for other
countries. Brazil has the uranium reserves to become a major
nuclear fuel supplier. It ranks sixth in global uranium reserves
behind Kazakhstan, Australia, South Africa, the United States, and
Canada. When asked what Argentina would bring to the joint effort
on enrichment (such as uranium, money, or expertise), Galvao did not
have a clear answer and seemed unsure.

FADING INTEREST IN AN IAEA ADDITIONAL PROTOCOL?

9. (SBU) Galvao said that the cabinet had not decided whether to
accept an IAEA Additional Protocol. He noted that, among other
things, the Ministry of Defense had unspecified concerns over an

BRASILIA 00000323 002 OF 002

Additional Protocol. He recognized that Argentina was unlikely to
agree to an Additional Protocol unless Brazil were to do so. Galvao
went on to say that in the latest round of bilateral meetings on
nuclear matters (ABACC), Brazil detected waning interest on the part
of Argentina in an Additional Protocol, but he did not provide
details on why he thought interest was less.

KEY PORTIONS OF JOINT ANNOUNCEMENT

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10. (U) BEGIN TEXT
-------------------

President Luiz Inacio Lula da Silva's visit to Argentina - February
21 through 23, 2008 - Casa Rosada Declaration

On February 22, 2008, accepting an invitation from the President of
the Republic of Argentina Cristina Fernandez de Kirchner, the
President of the Federative Republic of Brazil, Luis Inacio Lula da
Silva made an official visit to Argentina where both countries
reviewed their broad bilateral relations.

+ + +

President Lula and President Cristina Kirchner agreed to:

B. Sub commission of Energy, Transports and Infra-structure

+ + +

7. Nuclear Cooperation

Determine the competent organs of Brazil and Argentina to create a
bi-national commission, responsible for the development of a nuclear
reactor model that meets the needs of the electrical systems of both
countries and, eventually, the region's. And to also determine, by
August 2008, that the bi-national commission prepare a specific
action report for this purpose.

Determine that the competent entities elaborate, on the same
deadline, a common project in the area of nuclear fuel cycle and
also elaborate, by August 2008, a specific action report for this
purpose.

Express the intention to build a bi-national company for the
enrichment of uranium. With this goal, instruct the competent
organisms and initiate the necessary negotiations within the next
120 days.

Determine the realization, by May of 2008, of a seminar for
Brazilian and Argentine researchers to discuss the strategy for
future cooperation in the nuclear field, as well as to identify
concrete projects of bilateral cooperation, including gathering
mutual capacity needs in terms of human, technology and financial
resources, as well as regarding industrial complementation material.

Schedule

March 1: Bi-national Commission Meeting.

May 7: Bi-national Technical Seminar.

By the end of June: Begin negotiation for the constitution of a
bi-national company for the enrichment of uranium.

August 30: Presentation of specific reports.

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END TEXT
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CHICOLA

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