i DECLASSIFIED i Authority 8 2 5r 4 -3w DEPARTMENT oF STATE L b'm f March 17 1978 TO See Distribution FROM PM - Leslie H Gelbj'Hca SUBJECT The Dirty'Dozen Broadening Our Approach to Non-Proliferation US non-proliferation policy since 1974 has focussed heavily on containing the spread of nuclear technologies which provide direct access to weapons-grade material This continues to be an urgent and essential first priority which has been 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 1% extend the same approach to consumers This approach does have shortcomings however It con- centrates 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 rele vant to proliferation The attached paper is an initial effort to explore more comprehensively the capabilities and motivations which seen most relevant to proliferation in Eleven sens vd 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 Argentina 7 Israel 2 Brazil 8 Pakistan 3 Republic of China 9 South Africa 4 Egypt 10 South Korea 5 India ll Spain 6 Iran SECRET DECLASSIFIED Authority 2 I OF ST ii SECRET -2- I Our 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 devise specific non proliferation strategies for each country which explOit all of the 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 country rEcEg iEi _from the outset that not all Ef fHEEe-eiements will necessarily be of 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 3' LJ established and which might EhefEfore-beccme components strategy A final stage will be to recommend specific actions on 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 3 17 78 21835 SECRET DECLASSHHED Authorin 2 Distribution Ambassador Smith - Mr Nye Mr Lake 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 - - - Authority ENDCG 2 SECRET 1 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 fabri cating 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 fore- closing 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 compeeted sometime in 1980 and which could produce approximatef 16 lograms of plutonium per year more than a bomb's of plutonium Since this plant will be of indigenous Origin it could be operated free of safeguards and international accounting for the plutonium produced SECRET Authority 8 2 SECRET 2 The undertaking by the West Germans to sell Argentina's regional rival Brazill facilities for enriching 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 com- petition 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 carry- Thus ing nuclear warheads in the absence of comprehensive safeguards and given Argentina's nearness to a significant lreprocessing capability Argentina must be considered a real proliferation threat US strategy with regard to Argentina rests heavily on Argentina'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 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 2 Argentina is seriously considering these possibilities but has indicated that a reprocessing deferral would only be possible if Brazil took parallel action B-Mgmitisa Lee-rm Argentina's principal security concerns stem from regional Chile has rival claims to rivalries with Chile and Brazil SECRET DECLASSIMM MMA Authority ENDCG 2 - 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 disposi tion of Falklands and the major powers on jurisdiction over Antarctica and surrounding waters Isolation from US and loss of contact with US military the absence 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 SECRET Authority 2 0 DEPARTMENT that Argentina'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 1 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 to avoid falling behind Brazil in any specific nuclear i technology if Bragil reprocesses so must Argentina to obtain heavy water production technology on a commercial scale greatly reducing dependence upon outside help and to press ahead as a nuclear exporter 1- SECRET DECLASSIFIILU Authority ENDCC 2 SECRET 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 reprocessing prOgram which has no economic rationale in a system based upon heavy water reactors C 0 5 Programs and Activities i Arms Transfer Policg Because of the human rights situation in Argentina the Congress has prohibited any security assistance or the issuance of munitions centrol export licenses for commercial arms pur chases after September 30 1978 For the same reason we refused FMS credits to Argentina in FY 77 and 78 Argentina still has about530 3 million in unused prior year FMS credits and is continuing to try to purchase defense articles and services commercially or for 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 tankers helicopters and naval periscopes as exceptions to the Department s wait andusee policy possibly averted a breakdown of the nuclear talks X SECRET 1 '3 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 objec tives 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 Authority SECRET 2 Brazil A Non-Proliferation Status The Brazilians and the FRG are embarked on the largest proposed transfer of nuclear technoloqy 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 safe- guards Nonetheless Biazil'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 It Authority 2 SECRET 8 portions of the ERG Brazil deal We may want to examine further the relationship between our non proliferation strategy in Brazil and our politico military relations with the PBS to see if there are ways to conduct our relations with the FRG which would allow us to influence more effectively the FRG's actions in the non proliferation area We have not made as much progress in furthering our 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 competi- tion 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 w- acceptance 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 They may perceive some security SECRET ILU Authority SECRET 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 regiona1 role except possibly in Africa leads the military governe ment to 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 This situation could change SECRET UELLAEBIIU LU SECRET lO 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 imageebuilding considera- tions 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 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 SECRET UbLLAhalr lnu Authority SECRET 11 its order books for future fuel contracts and the conversion of existing Brazilian contracts to conditional contracts was traumatic for Brazil's nuclear planning and probably had my much to do with its sequent conclusion of the agreement huh H - with the PEG 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 knowledge- able Brazilians probably recognize that little economic justi fication for reprocessing will exist for at least a decadE Many Brazilian scientists believe however that the ERG 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 pro- viding sophisticated equipment a desire to alter the Brazil- before or US military relationship which dates back to World War IQ 7plans 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 Authority SECRET l2 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 C1 Jngressionalr objections Brazil refused 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 munitions 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 Arms transfers remain a sensitive issue within the context of Brazilian relations 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 military installations there and virtually no military cooperation 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 19805 Authority ENDCG 2 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 MGM SECRET 14 3 epublic of China A NDn-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 Council or 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 may have completed sufficient experimental high explosive work to be reasonably confident of producing an effective first-generation nuclear explosive 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 ROC could have assembled a nuclear weapon within a year or two The ROG probably anticipate the date when they may wish to resume a greater nuclear weapons effort In addition further isolation of SECRET Jul al - AuLhority 2 SECRET -n 1 15 of the Taiwanese may well bring to an end IAEA safeggapgp and inspections which even now are tenuous B Motivations 1 Security Given the Pm's overwhelming conventional superiority and its modest nuclee _arsenal the RDC probably sees a nuclear weapons capability as a potential deterrent against absortion by the PRC in circumstances where US protection has diminished or disa peered i1 Poli ical 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 Lwould risk a break in US relations When and 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 Economic The ROC has no clear economic motivation for the develop ment of a reprocessing capability except for the desire to keep its nuclear research program and personnel at a high level of competence There are substantial economic consi- derations in the possible loss of US support for fueling the SECRET DECLASSIFIED Authority 5 Beer 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 2' of cutting off cooperation in nuclear power on at least two q r flj- occasions to force the ROC away from nuclear weapons research we may need to do so again C US Programs and Activities i Arms Transfer Policy The continued sale of defensive military arms will sustain the ROC's confidence in its conventional deterrent capabilities and will thereby reduce the prospects that the ROC would in a mood of desperation seek to produce 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 continue and willingness to help defend Taiwan after these remaining symobolic forces are gone SECRET Du Authority SECRET 17 Defense Treaty 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 DELLassuuLu re Authority ENDCG 2 SECRET 13 4 Egypt A Non-Prolferation Status Egypt's nuclear plans and capability are modest and are projected to remain so Egypt has one nuclear peuer 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 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 1L1 Authority 069 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 The Administration has recently proposed the sale of 50 aircraft to Egypt A decision to increase arms transfers to Egypt would be linked almost exclusively to enhanc- ing Mideast 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 sub stantial and is a positive source of non proliferation influence In SECRET DELLASDIPILU Authority SECRET 26 5-_In_dies 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 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 exporte 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 PNE Although the Indians are capable of exploding a second nuclggi'rj c they haVe not for at least two reasons the US could cease 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 a 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 its ability to counter hostile moves by conventional means SECRET i DELLADDIF 115 11 Authority N b g SECRET 21 Whatever threats China or the USSR might pose to stability in the sub continent India is unlikely to develop 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 Indiars fundamental insecurity is not aIWays forth- admitted but relates to the continued divisions withhilndia along regional or sub national lines and the revolutionary and secessionist potentials of radi calization of the Indians 75 million huslims 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-termIr 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 box India into full-scope safeguards commitments Economic US economic ties with India have been significant but Indian economic diversification has reduced our potential non proliferation leverage 1-4 Authority 8i 2 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 pregram 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 egg mm nu Ting - J'Authority - 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 manu- 4- I facture of nuclear weapons Iran is a party to the NPT and advocates a regional nuclear free-zone does not intend to acquire fuel reprocessing technology For the foreseeable future Iran apparently B Motivation 1 Securitg 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 Soviet military balance Iran cannot hope to use nuclear weapons in effective defense against the USSR While there might be some deterrent 1' Authority 2 SECRET 24 value Iran might also be more heavily targeted But nuclear Options might be perceived as a useful complement to Iran's political 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 Political Iranian uncertainly about US domestic policies and long term attitudes toward Iran spons desire for security independence including divestation of external ties and possibly the nuclear option 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 DEC LASSI 11 1 Authority NDCG SECRET 2 5 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 arms requests This includes more and aircraft and large numbers of self propelled 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 intelligence and communications facilities within its boundaries its role as a supplier of oil to the its purchases of approximately $3 5-4 0 billion of US Civilian goods per yearf win 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 con- ventional arms from 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 4' E- r Authority SECRET 26 Israel A NonHProliferation 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 fift weapons A key facility in Israel's nuclear program is the Dimona research reactor supplied by France in the early 1960's which can produce weapons quantities of plutonium annually We believe Israel has reprocessed some spent fuel from that reactor to obtain plutonium if a significant reprocessing capability does exist the Israelis could produce weapons on demand Israel has maintained 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 demon- stration 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 Given Israel's capabilities we judge it likely requirements that it could and would resort to nuclear weapons if its ULLUHDQI 11 41 Authority 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 insammity is profound because of Israel' precarious location the number size and commonality of its opponents and the intractability of the regional conflict US political and defense commitments remain indispensable but have become more uncertain as the oil factor has grown in w- importance M- US and NATO force postures vis awvis 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 domestically 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 settle ment and may margi nally increase the risks of hostile major power intervention in the region SECRET SECRET mu I m I-I-D- D vvw - ILIU Authority 2 SECRET 28 butxit also provides incentives to Israel's Oppenents to follow suit and there is evidence that Libya and perhaps Iraq would like to Economic C 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 lSs and 75 Fh16s 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 We do not expect to address this rquest in its entirety 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 and the Middle East psace process The existence of this relationship in fact may be responsible for whatever restraint Israel has exercised regarding nuclear weapons SECRET DECLASSIFIEU Authority SECRET 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 scepe safeguards is uncertain and involves complex factors to the entire question of a Middle East peace settlement Moreover any increase in US arms supply to Israel would probably entail additional US 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 unequivocalld and - the clandestine character of the Israeli nuclear program I 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 objectives in Israel - l L i - 5 Authoritym w J 4 r SECRET an r 8 Pakistan A Nonhproliferation 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 ven though at France's insistence the plant would be covered 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 fonn of oo-processiong Pakistan has refused to alter the contract but the French are continuing to press alternative I modification proposals The US has made known its preference for cancellation Pakistan must be considered a proliferation threat even if the French reprocessing plant does not go forward Its - scientists and engineers are competent 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 EECLASSIFIED AuthoriWMiZ 31 power reactor and its spent fuel Pakistan would have access to a source of plutonium Should the Pakistanis acquire a significant reprocessing capabilityIr 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 1 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 SECRET 32 of US non proliferation leverage ii 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 rs DECLASSIFIED Auduw YAAyli u iLZ 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 we also provide defense articles and services on a commercial and FMS cash basis Since 1975 these have amounted to about $50 million per year largely for spare parts ammunitiOn and communications equipment In addition to a request for MK torpedoes now being processed Pakistan has expressed serious interest in acquiring self-proposed howitzers and less explicit interest in 110 aircraft The Glenn earlier the awnington 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 purposesIr 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 sales to ameliorate this reaction and to provide a visibler non nuclear alternative to Pakistan's security concerns As Pakistan is a poor nation however they could not purchase large amounts SECRET -OWW DECLASSIFIED Authorin 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 DECLASSIFI ED Authoritymm SECRET 3 5 9 South Africa A Non-Proliferation Status This past August we learned of the existence of a facility in the Kalahari Desert which could be associated with nuclear 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 with South Africa 3 If the South Africans meet our conditions we would undenfake to supply low enriched uranium LEU for the nuc ear power reactors now under construction in South Africa by the French Since the South Africans will not for several years SECRET DECLASSIFIED FL Aumoriwm w 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 defer 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 Han 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 failing resumption of fuel supply by the US B Motivations i Security Until recently South Africa was assumed to have no per- ceived 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 Wanibia 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 Scuth 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 DECLASSIFIED - Aumo WAmul j ELZ I g 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 ii Political Economic C U S Programs and Activities 1 Arms Transfer Poligi 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 Hence between the US and South Africa there are not SECRET DECLASSIFIED 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 mmum ng the South African nuclear problem although our policy and those of others undoubtedly contributes to South Africa's increasing sense of isolation--from which we might expect the motivation for a nuclear weapons program to develop SECRET DECLASSIFIED Authoriwaml d SECRET 39 10 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 Since then the Park government has placed its nuclear weapons program on hold and shifted resources to other programs We made it clear to President Park that a Korean nuclear weapons program would jeopardize our bilateral 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 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 Our support is vital for the ROK nuclear power program If we threatened to reduce or even out off our military support it is extremely unlikely that any ROK government could withstand the pressure A head on confrOntation however would carry grave risks not only for SECRET I f DECLASSIFIED SEJEE 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 availa- bility 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 with drawal 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 inIKorea over the next 4 to 5 years To the extent that the ROKG continues to have doubts about our willing ness or ability to meet our security commitment to it pressures to develop its own nuclear weapons will continue DECLASSIFIED - 7 Auth orityma gjl 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 Economic E US Programs and Activ1t1es i Arms Transfer Policy Individual security assistance cases are not necessarily critical to nuclear proliferation but taken collectively and combined mi lour overall policy they have an important impact on ROK perceptions of US reliability and the need for nuclear weapon AS compensation for the troop withdrawal we plan to transfer to EUR at no cost approximately $300 million of equip- ment virtually all of Ehich is in the current inventory of a 'l I 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 aircraft and the provision of extensive credits for purchases of military materialo SECRET i is 11 45 r hh DECLASSUWED Authoritng 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 Koreagate 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 policy toward the ROK particularly in providing more advanced weapon ystems necessary for ROK defense 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 defense relationship is most powerful yet difficult to use source of leverage OUR US force posture is a most important element bearing on proliferation especially regard ing actions on our nuclear weapons in Korea and the pace of withu drawals of conventional forces SECRET moms- 51an swam Authorin v- vun 4 SECRET 43 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 In addition Spain is the only Western European country not to have ratified the NPT None of this suggests that Spain is an immediate 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 SECRET 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 political and military ties which provide access to bases in Spain for US forces and encouraging Spanish entry into 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 further Spanish interest in nuclear weapons The US is consciously seeking not to overplay its hand in promoting Spanish entry Economic The further development of Spain's nuclear power pregram 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 4 C U S Programs and Activities i Arms Transfer Policy _Our conventional arms relationship with Spain is td a large extent an adjunct of our base rights arrangements which have been extended through 1981 by the Treaty of Friendship and SECRET UbLLAbolrlnu Lac-arr - 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 yearlJ cast sharing obliga tions 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 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