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Cablegate: Day 1: U.S.-South Africa Nonproliferation And

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PP RUEHJO
DE RUEHC #7420/01 2612208
ZNR UUUUU ZZH
P 182145Z SEP 09
FM SECSTATE WASHDC
TO RUEHSA/AMEMBASSY PRETORIA PRIORITY 6339
RUEHJO/AMCONSUL JOHANNESBURG PRIORITY 7100
RUEHUNV/USMISSION UNVIE VIENNA PRIORITY 5517

UNCLAS SECTION 01 OF 09 STATE 097420

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: AF KNNP MNUC NP PARM ENRG SF KN IR
SUBJECT: DAY 1: U.S.-SOUTH AFRICA NONPROLIFERATION AND
DISARMAMENT DIALOGUE: NONPROLIFERATION AND DISARMAMENT
POLICY TOPICS

REF: A. STATE 078766
B. STATE 082147

-------------------------
VISIT SUMMARY AND CONTEXT
-------------------------

1. (SBU) The United States and South Africa launched a new
Nonproliferation and Disarmament Dialogue August 26 - 28 in
Pretoria, South Africa. State Department Special Advisor for
Nonproliferation and Arms Control Robert J. Einhorn and South
African Ambassador Abdul Minty, Special Representative on
Disarmament and NEPAD (New Partnership for Africa's
Development) at the Department of International Relations and
Cooperation (DICO), led their respective interagency
delegations. The meeting followed the decision by Presidents
Obama and Zuma at the July 8-10 G-8 summit to expand our
bilateral dialogue. Secretary Clinton also discussed the
Dialogue with Foreign Minister Nkoana-Mashabane during her
August 2009 visit to South Africa.

2. (SBU) The Dialogue's main objective was to persuade South
Africa to work with (rather than at times against) USG
efforts to shore up the nonproliferation regime. In the
past, South Africa has helped moderate problematic
Non-Aligned Movement (NAM) positions on some issues, but on
others it has supported the NAM, out of its own convictions
or in the interest of group solidarity. Minty over the
years has been alternatively thorny and helpful. In this
Dialogue, he was cooperative, thanks largely to the promising
start the new Obama and Zuma administrations have made in
their bilateral relationship. Pretoria also appreciated our
reaching out to South Africa and treating it as a partner in
our efforts to overcome polarization between the NPT-defined
Nuclear Weapon States (NWS) and Non-Nuclear Weapon States
(NNWS) in the NAM and G-77 contexts-polarization that has
helped erode the global nuclear nonproliferation regime.
The other main objective was to help South Africa improve
security at its nuclear installations, including the
Pelindaba facility, at which U.S.-origin spent nuclear fuel
is stored. In November 2007, Pelindaba experienced a
significant security breach. The delegation made progress in
both areas.

3. (SBU) Discussions in the Dialogue were positive,
constructive, and frank, even on contentious issues. The
participants agreed to a robust agenda for further discussion
and cooperation and found common substantive ground on many
issues. The South Africans applauded our nuclear disarmament
position and also seek to strengthen the IAEA verification
system (including through coordinated efforts with us to
expand adherence to the Additional Protocol (AP)). They also
support developing countries' pursuit of civil nuclear
energy, and disruption of proliferation networks. (In this
connection, they reminded us that countries other than South
Africa still have not prosecuted members of the A.Q. Khan
network.) Indeed, on some issues, such as the vision of a
nuclear-free world and increasing the IAEA budget, we are
closer to South Africa than we are to other P-5 members or
close allies. However, South Africa stuck to the NAM
position that it was premature for the IAEA Board of
Governors to adopt an IAEA-administered fuel bank. South
Africa also persisted in blocking consensus on strengthened
Nuclear Suppliers Group controls on transfer of enrichment
and reprocessing technology, and opposed using coercive
measures against Iran.

4. (SBU) On nuclear security, South Africa, like some other
countries, is wary that securing nuclear materials and
facilities will involve intrusive inspections. It is
defensive about the 2007 break-in at Pelindaba and other
perceived security deficiencies. But officials seemed to
consider in a positive light some U.S. proposals on expanding
nuclear security cooperation, including securing radiological
sources (material that can be used in dirty bombs) in the
run-up to the 2010 World Cup in South Africa, nuclear
security assistance provided jointly to the Democratic
Republic of the Congo, and the creation of a Nuclear Security
Training Center. South African officials expressed
sensitivities when the U.S. officials indicated a clear
interest in visiting the Pelindaba facility as part of a
bilateral physical protection consultation. To make nuclear
security cooperation more reciprocal and palatable, the U.S.
delegation invited South African experts to visit U.S.

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nuclear facilities and observe U.S. security practices-an
offer they immediately accepted. In part to avoid intense
interagency and political scrutiny in South Africa,
cooperation on security upgrades for Pelindaba in the near
term is being pursued by Sandia National Laboratories (with
DOE/NNSA funding) and the Nuclear Energy Corporation of South
Africa (NECSA) via "lab-to-lab" cooperation.

5. (SBU) During the Dialogue and in sidebar meetings (see Day
2 Septel for sidebar meeting readout), Special Advisor
Einhorn offered a new, senior-level bilateral energy dialogue
focusing on nuclear and renewable energy. He also asked the
SAG to complete the necessary internal bureaucratic steps to
sign the bilateral agreement on civil nuclear energy research
and development, and to announce the new dialogue on the
margins of the September IAEA General Conference. (The
agreement was signed; dialogue remains to be announced.)
Additional details are provided below and in Septels for
agencies working these issues.

---------------
OPENING REMARKS
---------------

6. (SBU) Ambassador Minty opened the Dialogue and was "keen
(and) excited" to begin a bilateral series of engagements in
this area, noting that we have "a great deal of work to do
together." He said the two nations had overcome difficulties
before and could do so again, noting "we all faced a new
danger"-- nuclear terrorism. He noted the strong partnership
and close cooperation between the United States and South
Africa at the 1995 Nuclear Non-Proliferation Treaty (NPT)
Review Conference (RevCon), and that despite NAM opposition,
we were able to get consensus on indefinite extension of the
Treaty. (Note: Minty cited the 1995 RevCon multiple times
throughout the dialogue as a prominent example of bilateral
cooperation towards commonly held global objectives.) He
said he had sensed in recent consultations that the NPT was
in crisis. Minty noted the recent Nuclear Threat Initiative
challenge grant to provide a multilateral nuclear fuel bank
and President Obama's Prague Speech as heartening
developments and relayed hope that the United States will
lead efforts to rebuild consensus. He cautioned, however,
that the Prague Speech and the prospect of U.S.-Russian arms
reductions have created high expectations among many
developing countries and that the United States will need to
manage these expectations carefully to avoid disappointment.

7. (SBU) Special Advisor Einhorn stated that he was very
encouraged to hear Minty's statements on the NPT. On
disarmament, Einhorn declared that the United States and
Russia deserve more credit for the reductions they already
have taken, but indicated that he appreciated the
international perspective that, even with these reductions,
the numbers are still far too high. He reviewed U.S.
perspectives on strategic developments, including Russia's
increased reliance on nuclear weapons amid the deterioration
of its conventional capability, China's modernization effort
and lack of transparency about its strategic plans, and the
vigorous competition in South Asia as India and Pakistan seek
to increase fissile material production and expand their
delivery system capabilities. On nonproliferation, Einhorn
noted that the international community has thus far failed to
curb DPRK and Iranian nuclear ambitions, noting that the
verification system has not proven to be fully adequate. He
also cited the challenge of the spread of sensitive
technology via illicit procurement networks and the expected
nuclear energy renaissance, noting that care should be taken
to ensure that neither increases the risk of proliferation of
nuclear weapons or the acquisition of fissile material by
terrorists.

8. (SBU) Einhorn commented that these developments are
driving the Obama administration's plans to reinvigorate the
nonproliferation regime. In the past, a small group of
developed countries (NSG, G-8) dominated the discussion of
these issues; but, today, much broader cooperation is needed.
He explained that a major impediment to this cooperation is
polarization between the NWS and the NNWS, the non-aligned in
particular, and cited the need to bridge this divide and find
common ground. He described the Obama administration as
reaching out beyond our traditional U.S. allies to support
these efforts. Einhorn asked for SAG views on how to
strengthen the three pillars of the NPT in a balanced manner
and suggested that preventing nuclear terrorism should be
considered a fourth pillar because of its growing importance.


9. (SBU) Minty replied that South Africa is just as concerned
as the United States about polarization, which he said is

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rooted in a lack of trust and confidence. Minty emphasized
the need to look at how to manage differences in the various
fora as we respond to constituencies at home and abroad,
including the P-5, Western Group for the United States, and
others. He expressed appreciation for Einhorn's assessment
of Russia and China, stating that South Africa does not
underestimate U.S.-Russian progress on arms control, but
repeated what he told President Obama at the G-8 Summit: "We
welcome reductions, it is just a question of where it stands
versus the NPT concept of disarmament, which is complete and
total, 'zero' disarmament." Nevertheless, he said these
developments are welcomed and encouraged.

--------------------------------------------- ------
FULFILLING NPT ARTICLE VI COMMITMENTS: DISARMAMENT
--------------------------------------------- ------

10. (SBU) Einhorn reviewed the Obama Administration's pledge
to seek a world without nuclear weapons, but noted that this
would take time and would be difficult and that the United
States would remain committed to maintaining a safe, secure,
and reliable nuclear deterrent as long as nuclear weapons
exist. At the same time, we will take concrete steps towards
a 'zero' vision, such as reducing our arsenal and reducing
the role of nuclear weapons in our policies. The
congressionally-mandated Nuclear Posture Review (NPR) will
guide how we move towards this, and our efforts towards
fulfilling NPT Article VI commitments will help generate
support for restoring the nonproliferation regime. Jeff
Eberhardt, Director of the Nuclear Affairs Office in the
State Department's Bureau of Verification, Compliance, and
Implementation, gave a brief presentation on the NPR and the
Strategic Arms Reduction Treaty (START) follow-on process,
noting that the completion of the START follow-on process
would not be the end, but the beginning of other treaties in
the future for further reductions. Ken Baker, Principal
Assistant Deputy Administrator for Defense Nuclear
Nonproliferation at the Department of Energy's National
Nuclear Security Administration, noted the importance that
both the United States and Russia place on concluding
negotiations quickly.

11. (SBU) Einhorn recognized that at the upcoming NPT Revcon
in 2010, as well as in the future, the United States will not
be "circling our wagons" with the P-5 to defend our
positions, but rather working with South Africa and others to
bring the P-5 along towards the ultimate goal of disarmament.
Einhorn noted that on many key issues, such as working
towards a world free of nuclear weapons, the U.S. positions
are actually closer to those of South Africa than to some of
the P-5.

12. (SBU) Minty said that South Africa follows these
developments closely and encouraged more information sharing,
suggesting that, if kept informed of latest developments, the
SAG could help convince the NAM that NWS are working to
fulfill their NPT disarmament obligations. He warned not to
be disappointed if some developing countries still complain,
noting that President Obama's statement about working towards
global zero will go a long way in undermining these
criticisms. He did expressed concern, however, about NATO
statements that nuclear weapons preserve the peace, and
questions regarding Indian and Pakistani nuclear doctrines
and regional stability.

13. (SBU) Einhorn provided an update on U.S. efforts towards
ratification of the Comprehensive Test Ban Treaty (CTBT). He
noted the U.S. hope that Egypt will reverse its stated
position that it will become party to the CTBT only once
Israel becomes party to the NPT. Einhorn predicted that
India and Pakistan would be difficult cases, but said he
believed India would join if it became the final holdout.
Xolisa Mabhongo, Chief Director of Disarmament and
Non-Proliferation at the South African Department of
International Relations and Cooperation (DICO), replied that
U.S. efforts to ratify the CTBT will help, and that the
United States and South Africa should consult on likely
holdout countries.

-------------------------------
FISSILE MATERIAL CUT-OFF TREATY
-------------------------------

14. (SBU) Einhorn declared, with respect to the Fissile
Material Cut-Off Treaty (FMCT), that we all need to encourage
Pakistan to play a constructive role in the process rather
than prevent the negotiations from moving forward. He said
the USG has concluded that a legally binding FMCT should ban
new production of fissile material for use in nuclear weapons
and not address existing stocks-the position long held by the

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POLICY TOPI
P-5 and India. However, we cannot ignore existing stocks,
especially given the threat of nuclear terrorism. We are
therefore considering voluntary measures that would apply to
existing stocks (e.g., transparency and declaring more excess
material from former weapons stocks for irreversible removal
from weapons use). Einhorn noted that verification of
existing stocks would make an FMCT much more expensive. In
reviewing South Africa's 2002 working group paper on a
Fissile Material Treaty, he said commonalities were evident
between the U.S. and South African approaches. However, one
questionable aspect of the South African proposal is that
countries can decide how much material (or even whether) to
declare stocks excess. This would make an inherently
voluntary provision part of a supposedly binding treaty.

15. (SBU) Johann Kellerman, Deputy Director of Nuclear
Disarmament and Non-Proliferation at DICO, explained that
when the South African working paper was introduced, they
envisioned a continuous flow of material so that the stocks
declared excess would grow and more materials would be
unavailable for making weapons. South Africa's preference,
he said, is for a legally-binding treaty that is as
comprehensive as possible. He said that we can work towards
confidence-building measures, voluntary measures, etc., but
noted that anything not legally-binding would be a tough-sell
for the G-21 block of developing countries in the Conference
on Disarmament (CD).

16. (SBU) Einhorn noted that an agreement on which provisions
should go in a legally-binding treaty and which should be
implemented via voluntary measures would go a long way toward
preparing for next year's January CD session. Minty cautioned
that if there are to be legally-required commitments and
voluntary actions, we need to make sure that more than the
legally-required minimum is actually done. Minty noted that
bilateral agreements present optics challenges for developing
countries whereas multilateral agreements do not, but this
challenge can be managed if addressed with sensitivity to
developing countries' concerns. Mabhongo agreed that the
United States and South Africa shared some of the same broad
concepts but that we would need to work together on specifics
of our approach.

-------------------------------
PEACEFUL USES OF NUCLEAR ENERGY
-------------------------------

17. (SBU) Einhorn noted that U.S. Government and industry saw
several opportunities for expanded cooperation on peaceful
uses of nuclear energy with South Africa. Einhorn offered a
new senior-level energy dialogue to discuss nuclear and
renewable energy options. He suggested Deputy Secretary of
Energy Dan Poneman would likely lead the U.S.-side in such a
dialogue, solicited SAG views on the mechanism, and noted a
desire to develop the idea with them jointly. Einhorn
conveyed U.S. interest in having the Secretaries of Energy
sign the bilateral agreement on cooperation in research and
development (R&D) of nuclear energy, and announce the new
energy dialogue on the margins of the September 14-18 IAEA
General Conference. (Note: The R&D Agreement was signed
September 14, but the energy dialogue has yet to be
announced.)

18. (SBU) Einhorn reiterated the Prague speech language on
creating a new international framework for civil nuclear
cooperation and sought South Africa's reactions, including to
the idea of cradle-to-grave fuel services (i.e., fuel leasing
and spent fuel take-back). He also provided an update on the
Global Nuclear Energy Partnership (GNEP), noting that the
domestic component of GNEP has been converted to long-term
"science-based" research, but that, as the international
component has received broad support, it would likely be
retained. He mentioned the October 23 GNEP Executive
Committee meeting in Beijing and encouraged South Africa to
attend as an observer. Acknowledging South Africa's past
reservations about GNEP, he highlighted that there would be
discussion on the future direction of GNEP and SAG input
would be useful. (Note: South Africa objected to the
original GNEP Statement of Principles language about making
proliferation resistant reactors available to developing
countries because of concerns about developing countries'
"rights".) Einhorn explained that the original language
would likely be abandoned and that new language would affirm
rights, and encouraged Minty to take another look as GNEP
evolved. NSC Senior Director for WMD Terrorism and Threat
Reduction Laura Holgate said that the Obama administration is
discussing the idea of a new mission statement, thus the
Statement of Principles may be treated as a historical
backdrop. Minty said he was interested in the substance and
open to discussing the evolution of GNEP, but that

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participation in the Beijing meeting would require
interagency review.

---------------
FUEL ASSURANCES
---------------

19. (SBU) Einhorn said fuel assurances are not about denying
or restricting rights, but about expanding options; what
countries do to meet their fuel needs should be their choice.
Minty informed Einhorn that G-77 and NAM representatives
considered it premature to make any decisions on fuel
assurance measures, such as on the proposals for an
IAEA-administered fuel bank. Regarding India's actions at
the last Board of Governors meeting, he said that many other
countries agreed with India but, out of respect for the
Chair, did not walk out. (Note: India made multiple
interventions and later walked out in protest of the Chair's
support for moving forward on fuel bank consultations.)

20. (SBU) Minty said there has been very little dialogue on
these issues and many countries had not yet solidified their
views. Some concerned countries perceive Western countries
as "holding developing countries to the gun" and pressuring
them to reach a decision soon. Minty thought some countries
seemed more invested in the Russian fuel reserve proposal,
suggesting that they may have done better "diplomatic
homework." He explained that because none of the proposals
is from recipient countries, but only from suppliers, this
gives more fodder for concern that fuel assurance efforts are
designed to deny developing countries access to technology.
He said the fact that the United States had not already heard
these concerns directly from the countries themselves is a
reflection of deep-seated mistrust. Minty suggested that the
IAEA Secretariat collect ideas.

21. (SBU) Minty suggested part of the reason recipient
countries may not be putting forward proposals, and may be
skeptical of those already put forward, could be due to fear
that commercial suppliers may be directed by countries to
break fuel delivery contracts. Several countries have asked
if any country is considering such a possible interruption,
but no country provided an answer. Minty also pointed out
that if some countries interrupted fuel supply and the
affected recipients took the issue to the IAEA, it was not
clear whether the Director General could decide the case
without the Board of Governors. Minty recommended more
discussion on the circumstances under which fuel supply would
be interrupted and how those cases would be administered by
the IAEA.

22. (SBU) Einhorn pointed out that fuel assurances would only
back up the commercial market. He expected that fuel supply
would be interrupted only in rare cases, possibly involving
misbehavior regarding nonproliferation obligations. Einhorn
noted that the NAM/G-77 position seemed to be linked to its
overall skepticism and lack of trust and encouraged South
Africa to discuss these issues with other developing
countries as it could alleviate this suspicion better than
the United States. Holgate suggested that South Africa and
the United States seek input from developing countries about
a decision-making process that would alleviate their
concerns, commenting that countries most skeptical about fuel
banks have not participated in the many IAEA-hosted meetings
to discuss this issue. Minty said that fuel assurances are
unpalatable for many countries and that they feel tied to the
positions they have crafted with other countries. Minty
suggested using the Future of the Agency forum for discussion
of this issue and, if that proved successful we could
identify specific concerns and propose discussion in early
2010, along with consultations for holdout countries.

--------------------------------------------- ------
NUCLEAR SUPPLIERS GROUP AND EFFORTS TO RESTRICT
TRANSFERS OF ENRICHMENT AND REPROCESSING TECHNOLOGY
--------------------------------------------- ------

23. (SBU) On efforts within the Nuclear Supplies Group (NSG)
to restrict transfers of Enrichment and Reprocessing
equipment and technology (ENR), Minty deferred largely to
Mabhongo, who stated that South Africa is very sensitive to
the fact that it is the only African country, and one of the
few developing countries, in the NSG. He said it is
politically difficult for South Africa to associate with a
"club" viewed by outsiders as a body that would deny
developing countries rights under the NPT. Both the
preservation of rights and decision making via inclusive
multilateral bodies are key principles in South Africa's
foreign policy. (Note: These values came up on several
issues during the discussions.) When Einhorn later asked

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whether South Africa's concern with the proposed ENR criteria
was based on South Africa's own enrichment options, or on
these broader matters of "rights" and other principles, Minty
averred that South Africa was "in the middle."

24. (SBU) Minty subsequently asserted that the existing NSG
guideline (calling for restraint in enrichment and
reprocessing transfers) are sufficient and questioned the
current "criteria-based' effort to strengthen it further.
With respect to both ENR and the AP as a condition of ENR
supply, Mabhongo reiterated that South Africa was trying to
be constructive and help bridge gaps, but that it had to bear
in mind the political implications. South Africa is fine
with the principle of the AP as a condition of supply, but
asked how the NSG could push an AP condition when not all NSG
partners have concluded APs themselves. Minty later
suggested that it is a double standard to impose conditions
of supply from which certain NSG Members would be exempt,
implicitly referring to Argentina and Brazil. He said South
Africa will not accept this condition until NSG countries
adhere to the AP, and only then would they "consider" it.
Einhorn noted later that there did not appear to be specific,
practical problems with the proposed criteria-based approach
for restricting ENR transfers and said he hoped that by
November there could be agreement on a way ahead. Minty
responded that the South African position was approved by
government and that they will continue to consider the issue,
but he did not want to give the USG "false hope."

--------------------------
ADDITIONAL PROTOCOL ISSUES
--------------------------

25. (SBU) More broadly on the AP, Minty commented that many
countries are concluding APs just to get more aid. He said
we need to focus AP adherence efforts on newly
industrializing countries that actually have structures and
capacity for working with nuclear materials. He reiterated
the need for Comprehensive Safeguards Agreements (CSA)
outreach, because many countries did not even have this
baseline, much less an AP. Einhorn agreed that countries
with advanced infrastructure should conclude APs, but said it
is especially important for countries pursuing sensitive fuel
cycle technologies to do so. Minty suggested, and Einhorn
agreed, that South Africa and the United States coordinate on
outreach to approach high priority countries, but without
making those countries feel like targets. Minty also
suggested that we undertake such outreach before the May 2010
NPT RevCon and that we seek foreign minister statements on
this issue to spur more solid commitments regarding the AP.

-----------------------------------------
STRENGTHENING THE NONPROLIFERATION REGIME
-----------------------------------------

26. (SBU) Einhorn observed that our objective is not just to
yield positive results at the 2010 NPT RevCon, but to take
steps over the next four years to strengthen the regime
beyond the RevCon. He noted that all countries, both those
with and without nuclear weapons, have the responsibility to
help shore up the regime. This includes a number of efforts
to prevent and control proliferation, such as: strengthening
safeguards, enforcing compliance, discouraging abuse of the
withdrawal provision in the Treaty, Nuclear Weapons Free
Zones (NWFZ), counterproliferation, and building capacity in
other countries to prevent and control proliferation.

----
IRAN
----

27. (SBU) Einhorn stated that the USG had reached out in
public, privately, and via the P5 1 to engage Iran. He said
that if Iran's response continues to be unsatisfactory, there
will be growing sentiment for action on sanctions in and
outside the UN Security Council, but even then, the door will
still be open for talks. He said it would be helpful for
Iran's friends to relay these messages to Tehran, so that we
can work to resolve common concerns. Minty said that South
Africa has always told Iran that it needs to resolve IAEA
concerns, regardless of what happens at the UN Security
Council. They have also told Iran that progress in resolving
this issue at the IAEA could help build momentum in other
fora. South Africa does not want to see a nuclearized Iran
and also does not want to see a war that would have
"disastrous effects on the region." He said Iran views
anything that comes out of the P5 1 as being against it
automatically, so offers from this group start out with no
chance of consideration.


STATE 00097420 007 OF 009

28. (SBU) Einhorn said the United States expects an Iranian
proposal soon, but Iran has a track record of doing the
minimum necessary to defuse pressure. He said it needs to be
made clear to Iran that this will not work and that the
international community will demand more. Minty said South
Africa has told Iran that it has to comply with the UN
Security Council Resolutions and suggested the United States
and South Africa keep in touch and consult on this issue.

----
DPRK
----

29. (SBU) Einhorn highlighted some recent positive gestures
by the DPRK (release of the journalists, invitation for
Ambassador Bosworth to visit Pyongyang, North-South dialogue,
etc.). He said the DPRK wants a bilateral dialogue with the
United States in part to legitimize its nuclear weapons
status, but Einhorn noted that the USG is not prepared to
engage on that basis. He said that DPRK needs to go back to
the 2005 Joint Statement and that the United States would
have a bilateral dialogue with the DPRK only as part of the
Six-Party process. Einhorn cited recent provocative actions
as reflections of succession politics in the DPRK, with Kim
Jong Il seeking military support for his third son to take
over. He commented that the DPRK military is also trying to
verify its nuclear and missile capabilities through testing
and demonstrate them to the world in an effort to strengthen
its deterrent.

---------------------------------
IAEA BUDGET ISSUES, VERIFICATION,
COMPLIANCE, AND ENFORCEMENT
---------------------------------

30. (SBU) Einhorn said that in his view, the IAEA needs more
authorities and more resources and asked how this situation
could be improved. On the IAEA budget, he said the United
States and South Africa have very close positions. Minty
agreed with the U.S. position on increasing the budget,
stating that South Africa fully supports the IAEA's role in
helping developed countries reap the benefits of civil
nuclear technology and in safeguarding and verifying that the
spread of that technology is used exclusively for peaceful
purposes. He said members should support providing the IAEA
with the necessary resources to fulfill its mandate.

31. (SBU) Minty said that we need to look more
comprehensively at the IAEA's verification reports. He said
these reports should focus on what has been achieved, what is
still in progress, what actions are needed and, if
appropriate, whether the reported issue can be resolved.
Minty said that reports of this nature would convey to the
world that the IAEA has the capacity to verify, and reports
could be linked to a timeline of action.

32. (SBU) On compliance issues, in response to Einhorn's
point about the different approaches taken on the Romanian,
South Korean, and Egyptian cases, Minty said he did not
believe there were concerns that the Board of Governors(BOG)
addressed compliance cases unevenly, and there had been no
discussion standardizing these responses. He said these
cases were not considered serious or in any way reflected
intent to "cheat" on obligations. If countries raise an
issue with the IAEA, the IAEA should do reports and let the
BOG decide the case instead of going to the UN Security
Council frequently.

--------------------------------------------
ABUSE OF THE WITHDRAWAL PROVISION IN THE NPT
--------------------------------------------

33. (SBU) Einhorn presented the U.S. position on abuse of the
withdrawal provision in the NPT. Minty cautioned about the
potential to violate international law when discussing
changes to the withdrawal provision, but noted that abuse of
the withdrawal provision was definitely a problem. He asked
which forum was best to discuss this issue and what measures
should be taken. Einhorn replied that he was not by any
means suggesting a renegotiation of the withdrawal provision,
on which the United States was a main player when the Treaty
was drafted. Einhorn suggested that abuse of the provision
be considered at the upcoming NPT RevCon. Minty
wholeheartedly agreed with that approach, as it involved NPT
Members discussing the issue within the NPT structure-- a
solid multilateral channel. He suggested considering a
subsidiary body at the RevCon (as there was at the 2009
PrepCom) to discuss these issues and their implications,
noting that the Parties might decide to create a new NPT
mechanism to deal with questions of withdrawal. (Note: This

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POLICY TOPI
subsidiary body is not included in the current draft for
discussion on subsidiary bodies, which only includes groups
on Negative Security Assurances and the 1995 Middle East
Resolution.)

--------------------------
NUCLEAR WEAPONS FREE ZONES
--------------------------

34. (SBU) Minty noted South Africa's longstanding interest in
a Middle East NWFZ. Einhorn offered congratulations on the
recent entry into force of the Pelindaba Treaty for an
African NWFZ, and inquired about its call for the creation of
an African Commission on Nuclear Energy (AFCONE). Minty said
that South Africa would spend the next 18 months consulting
within Africa (first within the African Union, then elsewhere
as needed) and seeking ideas on next steps for AFCONE. He
relayed that the headquarters of the organization will be in
South Africa, but no administrative measures had yet been
taken to that end. Einhorn said that in the context of
broader policy reviews, the United States is looking at NWFZs
on a case-by-case basis, including taking another look at
U.S. ratification of the Pelindaba Treaty's relevant
protocols. He mentioned that AFCONE provided a unique
structure to regulate civil nuclear energy usage and enhance
physical protection in Africa and that, if appropriate, the
United States would be interested in the possibility of
playing a positive role, depending on what came out of the
consultations. Minty said South Africa was interested in any
U.S. ideas on AFCONE.

--------------------------------
ILLICIT NETWORKS AND TRAFFICKING
--------------------------------

35. (SBU) Einhorn noted that closer cooperation is needed to
prevent illicit transfers, and stressed the importance of
addressing the role of financial institutions in
proliferation networks, adding that the Financial Action Task
Force (FATF) recommendations should be implemented. He
mentioned the UN Security Council resolutions on the DPRK and
Iran and said that DPRK will be further cut off from global
financial markets if they do not change their behavior.

36. (SBU) On the topic of illicit networks, Minty immediately
turned to discussion of prosecution. He said that lack of
prosecution means that the machinery of illicit networks
stays intact, whether it is still in active operation or not.
In South Africa, for example, there was a 10-15 year penalty
for trafficking in WMD, whereas trafficking in other areas
carries at most a five-year penalty. In other countries
there is no penalty at all. Minty said that the most
important effort countries can make is not in proliferation
finance, but information sharing. He acknowledged that the
legal structures are not in place to share information across
countries that may need simultaneously to try criminals
involved with networks operating in multiple countries. He
suggested that the IAEA might be able to create a mechanism
to facilitate such information sharing.

37. (SBU) On the financial aspects of proliferation, Minty
said that South Africa is uncomfortable with the FATF
provisions' reinterpretation of UNSCRs in ways not intended
when the resolutions were passed. In the South African
constitution, there is a commitment to implement UNSCRs, so
FATF "reinterpretation' of UNSCRs is problematic. Minty said
FATF guidance papers are written by "financial types" that
seem disconnected from policy communities within their
governments. Mabhongo also expressed concern about FATF
efforts to create a list of proliferators, saying that South
Africa could not implement such a list because it is
inconsistent with its national approach. Minty also voiced
concerns about a recent proposal to look at all "unsecured"
transactions as a risk, noting that South Africa has ongoing
trade agreements in the South African Development Community
(SADC) with countries that lack capacity to stay current with
all the various conventions required for transactions to be
deemed secure. He said these concerns had been voiced
before, but with no response. Minty suggested more
discussion of these topics. Einhorn agreed that an experts
exchange would be useful.

-----------------------------------------
POINTS OF CONTACT FOR FURTHER INFORMATION
-----------------------------------------

38. (SBU) For further information, please contact State POC
(ISN/RA) Krista Fisher (202-647-6793, fisherkk@state.gov,
NNSA POCs Heather Looney (202-586-6772,
Heather.Looney@nnsa.doe.gov) or Andrew Bieniawski

STATE 00097420 009 OF 009

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POLICY TOPI
(202-586-0775, Andrew.Bieniawski@nnsa.doe.gov), or NRC POC
Cindy Rosales-Cooper (301-415-1168,
Cindy.Rosales-Cooper@nrc.gov).
CLINTON

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