DEPARTMENT OF ST 1 1 E ACTION MEMORANDUM s 1 -8iGRB'P -HODii TO The Deputy Secretary THROUGH T - Matthew T Nimetzl FROM OES - Thomas R Pickerirt EUR - Georges Ves SUBJECT Proposed Demarche On Italy-Iraq Nuclear Cooperation -1 NOV 1980 The Italians recently provided us unofficially with considerable detailed information on their nuclear cooperation with Iraq We have reviewed this and con sider it very important that we advise Prime Minister Forlani soon about our deep concerns concerning Italian Iraq nuclear cooperation In particular we wish to ensure that the new government is fully aware of the nature of our concerns abides by the assurances that Cossiga gave President Carter last June and does not enter into new arrangements or engage in nuclear cooper ation under existing arrangements with Iraq in ways damag ing to our non-proliferation and other foreign policy inter ests The attached demarche will request Ambassador Gardner to make such a demarche RECOMMENDATION That you approve the attached cable Attachment As stated - 2 - Drafted by OES NEP MGuhi8 - Ext 27036 10 29 80 Clearances 5 P R alluccf D RDe1tz P MPatterson EB IEP EMorse T WSalmon DOE HBengelsdorf ACDA CVanDoren ' · NSC GOplinger _ _ - - • - OES N LVNosenzo EUR RPE WBarmon EUR WE EBeigel PM NPP Warren S AS ALocke INR RMP NS BFrisa NEA MWiznitzer DOE IA AHegburg ---- SECRE't OES NEP MGUHIN S P RGALLUCCI JW 10 29 0 EXT 27036 D IIICHRISTOPHER OES TPICKERING D RDEITZ T IIISALMON ACDA NP CVANDOREN IMMEDIATE ROME NODIS EUR GVEST EB IEP EMORSE DOE HBENGELSDORF NSC GOPLINGER E O 12065 -RDS-1 10 29 00 THOMAS PICKERING OES TAGS SUBJECT ENRG TECH MNUC PARM IT ITALIAN-IRAQI NUCLEAR COOPERATION REFS A SECTO 4006 8 ROME 22014 C STATE 23970 1• S ENTIRE TEXT 2• WE BELIEVE IT IS VERY IMPORTANT THAT YOU UNDERLINE OUR DEEP CONCERNS ABOUT ITALIAN-IRAQI NUCLEAR COOPERA TION AT THE EARLIEST OPPORTUNITY WITH PRIME MINISTER FORLANI• YOU SHOULD DRAW ON THE PRESIDENT'S DISCUSSIONS AND COSSIGA'S ASSURANCES AS WELL AS ON RELEVANT POINTS IN PARAS BELOW OUR MAIN PURPOSES ARE TO MAKE CLEAR THAT ldE EXPECT THE GOI A TO CONTINUE TO ABIDE BY THE COSSIGA ASSURANCES REF A 8 NOT TO ENTER INTO ANY NEW ARRANGEMENTS WITH RESPECT TO NUCLEAR COOPERATION WITH IRAQ IN SENSITIVE AREAS PARTICULARLY REPROCESSING C IN PARTICULAR NOT TO ENGAGE IN ANY COOPERA TION RELATED TO PILOT SCALE OR COMMERCIAL REPROCESSING PHASES II AND III OF THE PROGRAM AS DESCRIBED TO US blC M ffRtr TP GY - RD EM IIIS HB CV __ GO MP __ LVN ___ Id AL4- Bf 111 l-- AH1 --- S S-0 ------------ ---- ----- · - - A -· llli 'f 2 2 tl ---- - SECRET I 2 BY CNEN PRESIDENT COLOMBO D TO LIMIT COOPERATION UNDER EXISTING ARRANGEMENTS IN ORDER TO MINIMIZE ANY FURTHER TRANSFERS TRAINING OR OTHER ASSISTANCE THAT WOULD HELP IRAQI REPROCESSING AMBITIONS OR UPGRADE THE EXISTING FACILITIES IN THIS REGARD AND E NOT TO MAKE ANY COMMITMENTS AT THIS TIME TO SUPPLY TO IRAQ A NATURAL URANIUM FUELED REACTOR LIKE CIRENE 3 YOU MAY WISH TO INFORM CNEN PRESIDENT COLOMBO OF OUR VIEWS AND APPROACH AND THAT WE HAVE COMPLETED A PRELIMIN ARY REVIEW Of THE INFORMATION HE PROVIDED AND WILL WISH TO PURSUE SOME FURTHER ASPECTS AND QUESTIONS WITH HIM DETAILS OF THIS FOLLOW-UP WILL BE SENT SEPTEL• 4 UNLESS EMBASSY COUNSELS OTHERWISE WE WOULD PLAN TO TELL THE UK THAT WE NO LONGER REQUEST THEY DEFER THEIR OWN DEMARCHE TO THE GOI ABOUT NUCLEAR COOPERATION WITH IRAQ REF C WE WOULD EXPECT TO DO THIS SHORTLY AFTER YOU MEET WITH PRIME MINISTER FORLANI AND AT THE SAME TIME WOULD PROVIDE UK WITH OUTLINE Of ITALIAN PROGRAM OF COOPERATION WITH IRAQ AS WE UNDERSTAND IT WITHOUT REFERENCE TO OR DETAILS FROM CNEN DRAFT PAPER s WE RECOGNIZE THAT GOI MIGHT CONSIDER ITSELF VULNER ABLE TO IRAQI OIL CUTOFF EVEN THOUGH IT IS NOT CLEAR THAT IRAQ WOULD RESPOND TO ITALIAN RESTRAINT ON NUCLEAR EXPORTS BY REFUSING TO RESUME OIL SHIPMENTS IN RECENT BILATERAL HIGH-LEVEL CONSULTATIONS ON OIL SUPPLIES THE ITALIANS HAVE NOT EXPRESSED CONCERN OVER THIS LINKAGE AND HAVE INDICATED TO US THAT THEIR SUPPLY SITUATION RESULTING FROM THE WAR IS MANAGEABLE OVER THE SHORT TERM• HOWEVER If THE ITALIANS RESPOND TO YOUR DEMARCHE BY RAISING THE HYPOTHETICAL PROBLEM OF IRAQI LINKAGES TO OIL SUPPLY IN A MANNER WARRANTING RESPONSE YOU MAY DRAW ON THE FOLLOWING A WE UNDERSTAND THE SERIOUSNESS OF ITALY'S OIL DEPEND ENCE AND ARE INTERESTED TO LEARN OF ITALIAN VIEWS ON THIS ISSUE B AS A FIRST REACTION WE ARE NOT CONVINCED OF THE SERIOUSNESS OF THE IRAQI THREAT ONCE CONDITIONS RETURN TO NORMAL I E WHEN IRAQI EXPORTS RETURN TO NEAR PRE WAR LEVEL AS WE EXPECT THE MARKET TO REMAIN SOFT WITH 5£CRET - --- - ------- - -- ------- - - --- - --- -- -- --····- -___ ____ __ _ ---·---- SECRET EXCESS PRODUCTION AVAILABLE ELSEWHERE C FURTHERMORE THE IEA SYSTEM IS DESIGNED TO MEET THE SPECIFIC THREAT OF A SINGLE-COUNTRY EMBARGO THAT CAUSES A SUPPLY SHORTFALL Of AT LEAST SEVEN 7 PERCENT AND D IN THAT EVENT WE ARE PREPARED TO STAND WITH OUR ITALIAN PARTNERS IN THE IEA CONTEXT AND TO SUPPORT THEM IN THEIR EFFORTS TO SECURE ALTERNATIVE OIL SUPPLIES• b BELOW ARE SOME FURTHER POINTS YOU MAY WISH TO DRAW ON OR AMPLIFY IN YOUR PRESENTATION TO FORLANI A WE RECOGNIZE THAT IRAQ IS PARTY TO THE NON PROLIFERATION TREATY AND MAINTAINS THAT ITS PROGRAM IS WHOLLY PEACEFUL AND DIRECTED TOWARD AUTONOMY IN EVERY STEP OF THE NUCLEAR ENERGY FUEL CYCLE HOWEVER SOME OF THE FUEL CYCLE CAPABILITIES IT IS ACQUIRING EXCEED IRAQ S FORESEEABLE PEACEFUL NUCLEAR NEEDS AND MOST SIGNIFI CANTLY OULD SUBSTANTIALLY CONTRIBUTE IN TIME TO A NUCLEAR EXPLOSIVES _OPTION WE BELIEVE THAT IRAQ S PLANNED ITS PROGRAM TO PROVIDE SUCH AN OPTION IN THE FUTURE• THE ACQUISITION OF SENSITIVE FACILITIES AND WEAPONS-USABLE MATERIAL BY IRAQ WOULD SIGNIFICANTLY INCREASE REGIONAL TENSIONS AND INSTABILITY• IF IRAQ WERE ACTUALLY TO ACQUIRE A NUCLEAR EXPLOSIVES CAP ABILITY US AND ITALIAN SECURITY INTERESTS WOULD BE THREATENE CURRENT HOSTILITIES STRONGLY UNDERLINE THESE POTENTIAL DANGERS • B THE ITALIAN GOVERNMENT HAS ASSURED US THAT IT WILL KEEP ITS NUCLEAR COOPERATION WITH IRAQ UNDER STRICT CONTROL IN ORDER TO AVOID ANY TRANSFER OF SENSI TIVE TECHNOLOGIES NOT IN LINE WITH THE NON-PROLIFERATION TREATY AND LONDON SUPPLIER GUIDELINES WE WELCOME THESE ASSURANCES AS WELL AS THE ASSURANCE THAT THE ITALIAN GOVERNMENT WILL CONSULT WITH THE US GOVERNMENT BEFORE MAKING ANY NEW COMMITMENTS TO IRAQ FOR NUCLEAR COOPERA TION • C THE ITALIAN GOVERNMENT IS WELL AWARE OF OUR CONCERNS ABOUT TRANSFERS OF SENSITIVE TECHNOLOGIES PARTICULARLY TO STATES IN VOLATILE REGIONS DIS CUSSIONS WITH OTHER KEY SUPPLIER COUNTRIES HAVE INDICATED A SHARED CONCERN ABOUT THE NEED FOR RE STRAINT IN THIS REGARD AND INDEED IN ADDITION TO THE US DEQ ASSIFIED l lW'310$f 11 a-ea 'JIW• 1 SECRET --- - - ---- -- - -- - - ------- ----·-- -·------- BOTH FRANCE AND THE FEDERAL REPUBLIC OF GERMANY HAVE PUBLICLY ANNOUNCED POSITIONS OF NOT ENTERING INTO ANY NEW COOPERATION IN THE REPROCESSING AREA • D WE APPRECIATE THE CONSIDERABLE EXCHANGE OF INFORMATION WHICH HAS OCCURRED AT THE TECHNICAL LEVEL AND LOOK FORWARD TO A CONTINUING DIALOGUE THE EXCHANGES WE HAVE HAD SO FAR INDICATE SOME KEY CONCERNS • IN PARTICULAR -- ITALIAN ASSISTANCE TO DATE IN RADIOCHEMISTRY AND CHEMICAL ENGINEERING IS DEFINITELY RELATED TO REPRO CESSING IT WILL PROVIDE ALL OF THE BASIC STEPS FOR MOCK REPROCESSING AND THUS WILL FURNISH THE UNDER STANDING NEEDED FOR THE SEPARATION OF SIGNIFICANT QUANTITIES Of PLUTONIUM THE RADIOISOTOPE FACILITY IS ALSO OF CONCERN IF THE IRAQIS WERE TO MISUSE THIS FOR REPROCESSING -- IN ADDITION TRAINING OF IRAQI NATIONALS IN REPROCESSING AT ITALIAN FACILITIES WILL HELP PROVIDE A CADRE OF IRAQI EXPERTS IN THIS AREA THAT COULD SUPPORT PEACEFUL OR NON-PEACEFUL OBJECTIVES -- THE IRAQI PROGRAM CALLS FOR FURTHER EFFORTS TO ACQUIRE REPROCESSING CAPABILITIES INCLUDING A PILOT REPROCESSING PLANT AND EVENTUALLY A LARGER PLANT • EITHER OF THESE WOULD BE CAPABLE OF SEPARATING ENOUGH PLUTONIUM FOR SEVERAL NUCLEAR EXPLOSIVES IF IRAQ ACQUIRED AND MISUSED SUCH MATERIAL E WE WOULD STRONGLY OPPOSE ANY ARRANGEMENTS BY ANY COUNTRY TO PROVIDE TO IRAQ OR ASSIST IRAQ IN ACQUIRING PILOT SCALE OR LARGER REPROCESSING CAPA BILITIES• F MOREOVER WE URGE THE ITALIAN GOVERNMENT TO LIMIT ITS COOPERATION UNDER EXISTING ARRANGEMENTS IN ORDER TO MINIMIZE ANY FURTHER TRANSFERS OR ASSISTANCE THAT COULD CONTRIBUTE SIGNIFICANTLY TO IRAQ'S CAPABILITY TO ACQUIRE NUCLEAR EXPLOSIVES WE WOULD LIKE TO CONTINUE OUR DIALOGUE WITH YOUR EXPERTS ON HOW THIS MIGHT BE ACCOMPLISHED G WE ALSO HAVE SOME SERIOUS CONCERNS ABOUT ANY SUPPLY OF NATURAL URANIUM FUELED CONTINUOUS LOADING REACTORS LIKE CIRENE IN VOLATILE REGIONS SUCH AS THE MIDDLE EAST SUCH A REACTOR WOULD PRODUCE SUBSTANTIAL AMOUNTS OF PLUTONIUM AND COULD BECOME INVULNERABLE TO ATER MINATION OF FUEL SUPPLY IF IRAQ WERE TO DECIDE TO WITH- DeCLASSlfteD NW g4ojj SE ERE 2lfS 1 izA -- ------------ - - - ---- - -- --- ----- ------ -- - -· -- - - --- ----- - BOTH FRANCE AND THE FEDERAL REPUBLIC Of GERMANY HAVE PUBLICLY ANNOUNCED POSITIONS Of NOT ENTERING INTO ANY NEW COOPERATION IN THE REPROCESSING AREA D WE APPRECIATE THE CONSIDERABLE EXCHANGE Of INFORMATION WHICH HAS OCCURRED AT THE TECHNICAL LEVEL AND LOOK FORWARD TO A CONTINUING DIALOGUE THE EXCHANGES WE HAVE HAD SO FAR INDICATE SOME KEY CONCERNS IN PARTICULAR -- ITALIAN ASSISTANCE TO DATE IN RADIOCHEMISTRY AND CHEMICAL ENGINEERING IS DEFINITELY RELATED TO REPRO CESSING IT WILL PROVIDE ALL Of THE BASIC STEPS FOR MOCK REPROCESSING AND THUS WILL FURNISH THE UNDER STANDING NEEDED FOR THE SEPARATION Of SIGNIFICANT QUANTITIES Of PLUTONIUM THE RADIOISOTOPE FACILITY IS ALSO Of CONCERN If THE IRAQIS WERE TO MISUSE THIS FOR REPROCESSING -- lN ADDITION TRAINING Of IRAQI NATIONALS IN REPROCESSING AT ITALIAN FACILITIES WILL HELP PROVIDE A CADRE Of IRAQI EXPERTS IN THIS AREA THAT COULD SUPPORT PEACEFUL OR NON-PEACEFUL OBJECTIVES -- THE IRAQI PROGRAM CALLS FOR FURTHER EFFORTS TO ACQUIRE REPROCESSING CAPABILITIES INCLUDING A PILOT REPROCESSING PLANT AND EVENTUALLY A LARGER PLANT EITHER OF THESE WOULD BE CAPABLE Of SEPARATING ENOUGH PLUTONIUM FOR SEVERAL NUCLEAR EXPLOSIVES IF IRAQ ACQUIRED AND MISUSED SUCH MATERIAL E WE WOULD STRONGLY OPPOSE ANY ARRANGEMENTS BY ANY COUNTRY TO PROVIDE TO IRAQ OR ASSIST IRAQ IN ACQUIRING PILOT SCALE OR LARGER REPROCESSING CAPA BILITIES• F MOREOVER WE URGE THE ITALIAN GOVERNMENT TO LIMIT ITS COOPERATION UNDER EXISTING ARRANGEMENTS IN ORDER TO MINIMIZE ANY FURTHER TRANSFERS OR ASSISTANCE THAT COULD CONTRIBUTE SIGNIFICANTLY TO IRAQ'S CAPABILITY TO ACQUIRE NUCLEAR EXPLOSIVES WE WOULD LIKE TO CONTINUE OUR DIALOGUE WITH YOUR EXPERTS ON HOW THIS MIGHT BE ACCOMPLISHED G WE ALSO HAVE SOME SERIOUS CONCERNS ABOUT ANY SUPPLY OF NATURAL URANIUM FUELED CONTINUOUS LOADING REACTORS LIKE CIRENE IN VOLATILE REGIONS SUCH AS THE MIDDLE EAST SUCH A REACTOR WOULD PRODUCE SUBSTANTIAL AMOUNTS Of PLUTONIUM AND COULD BECOME INVULNERABLE TO A MINATION Of FUEL SUPPLY If IRAQ WERE TO DECIDE TO WITH- DECl ASSlf l O _ MN B9oBI SECRET 1 iiA TER- - - - -- ------·--- __________ __ ___ _______ __ __ - - - - - -- I s DRAW FROM THE NPT WE LOOK FORWARD TO TECHNICAL DISCUSSIONS WITH ITALIAN INDUSTRY AND OFFICIALS TO EXPLORE ALTERNATIVE APPROACHES• WE STRONGLY HOPE THAT THE ITALIAN GOVERNMENT WILL NOT MAKE ANY COMMITMENTS FOR SUPPLY Of NATURAL URANIUM FUELED REACTOR LIKE CIRENE AT THIS TIME OR ADOPT POSITIONS NOW THAT COULD LEAD YOU LATER TO CONSIDER THAT AN OBLIGATION TO SUPPLY EXISTS END POINTS 7 WITH REGARD TO POINT b f ABOVE AS YOU ARE AWARE WE HAVE BEEN TRYING STEP-BY-STEP TO GET THE ITALIANS TO TELL US EXACTLY WHAT THEY ARE COMMITTED TO UNDER THEIR EXISTING ARRANGEMENTS AND TO GET THEM TO TERMINATE OR ALTER THOSE ELEMENTS Of GREAT EST CONCERN THE INFORMATION WE HAVE FROM THE CNEN WHILE CONSIDERABLY MORE THAN WE HAD BEFORE STILL LEAVES A SIGNIFICANT NUMBER Of QUESTIONS UNANSWERED WITH REGARD TO ACTUAL ITALIAN ACTIVITIES AND COMMIT MENTS AT THIS POINT THE PURPOSE Of POINT F IS TO GET A POLITICAL COMMITMENT TO CONTINUE THIS DIALOGUE AT THE WORKING LEVEL WITH A VIEW TO MINIMIZING FURTHER ITALIAN-IRAQI COOPERATION IN THE REPROCESSING AREA • WE ARE PREPARING FOLLOW-UP QUESTIONS FOR USE WITH CNEN PRESIDENT COLOMBO TO TRY TO ELICIT ADDITIONAL DETAILS ON THE SCOPE OF SENSITIVE COOPERATION SO THAT WE CAN BECOME INCREASINGLY MORE SPECIFIC WITH THE ITALIANS ABOUT THE AREAS OF THEIR ACTIVITIES IN PHASE I THAT ARE OF SIGNIFICANT CONCERN WE WILL ALSO WANT TO DETERMINE THE EXTENT TO WHICH THE ITALIANS MAY CONSIDER THEY HAVE COMMITMENTS WITH RESPECT TO PHASES II and III a ON US-ITALIAN NUCLEAR COOPERATION AND SECTION 129 OF THE NON-PROLIFERATION ACT TO GIVE FORLANI THE FULL PICTURE YOU MAY WISH TO ADD THAT ANY NEW ARRANGEMENTS FOR REPROCESSING COOPERATION WITH IRAQ WOULD RAISE BOTH MAJOR POLICY AND LEGAL PROBLEMS AND JEOPARDIZE OUR OWN NUCLEAR COOPERATION WITH ITALY AND EURATOM - -- - --------------------- - - -- -- ---·- - - · - _ CONTINUATION PAGE SECRE'f NODIS OES NEP MGUHIN S P RGALLUCCI JW 10 29 80 EXT 27036 D WCHRISTOPHER PLEASE ADD ADDITIONAL CLEARANCES P MPATTERSON OES N LVNOSENZO PM NPP WARREN S AS ALOCKE INR RMP NS BFRISA NEA WIZNITZER DOE IA AHEGBURG SUBS S S-O ACTION - IMMEDIATE - ROME SBCRB'f SUBJECT ITALIAN-IRAQI NUCLEAR COOPERATION