Margaret P Grafeld Declassified Released US Department of State EO Systematic Review 04 MAY 2006 Message Text SECRET PAGE 01 SEOUL 00292 131041Z 17 ACTION SS 25 INFO OCT OI ISO OO SSO OO NSCE-OO 1026 W 072033 OP 130952ZJAN76 FM AMEMBASSY SEOUL TO SECSTATE WASHDC IMMEDIATE 4959 INFO AMEMBASSY OTTAW A PRIORITY AMEMBASSY PARIS PRIORITY AMEMBASSY TOKYO PRIORITY USMISSION VIENNA IAEA PRIORITY SECRETSEOUL0292 EXDIS EO 11652 XGDS 3 TAGS MNUC PARM KS CA FR SUBJECT ROK NUCLEAR REPROCESSING CANADIAN PROBLEM REF SEOUL 0252 I CANADIAN AMBASSADOR STILES INFORMED ME JANUARY 13 THAT HE WAS CALLED IN JANUARY 12 BY VICE FOREIGN MINISTER LHO AND ASKED BLUNTLY WHETHER CANCELLATION OF FRENCH REPROCESSING CONTRACT WAS SINE QUA NON FOR COMPLETION OF CANDU REACTOR SALE LHO'S INQUIRY WAS GENERATED ACCORDING STILES BY CONVERSATION IN OTTAWA BETWEEN ROGERS AND ROK AMBASSADOR PREVIOUS WEEK DURING THIS CONVERSATION ROGERS MADE CLEAR CANADIAN CONCERNS ABOUT REPROCESSING CONTRACT INCLUDING PARLIAMENTARY QUESTIONS RAISED BUT DlD NOT GO AS FAR AS MAKING CANDU SALE CONTINGENT UPON CANCELLATION OF REPROCESSING CONTRACT STILES TOOK SAME LINE WITH LHO BUT AGREED TO SEND LHO'S QUESTION BACK TO OTTAWAoFOR RESPONSE STILES' MEETING WITH LHO WAS APPROXIMATELY SAME TIME AS MY MEETING WITH KIM REFTEL 2 STILES ALSO MENTIONED THAT FINANCIAL ASPECTS OF CANDU PACKAGE PUTTING PRESSURE TO COMPLETE SALE SINCE ROKG APPARENTLY PREPARED NOW TO PROVIDE $45 MILLION DOWN PAYMENT SECRET SECRET PAGE 02 SEOUL 00292 IJI041Z MOST OF WHICH DERIVED FROM COMMERCIAL LOAN Margaret P Grafeld Declassified Released US Department of State EO Systematic Review 04 MAY 2006 Margaret P Grafeld Declassified Released US Department of State EO Systematic Review 04 MAY 2006 3 I REVIEWED WITH STILES MY CONVERSATION OF JANUARY 12 WITH PRESIDENTIAL SECRETARY GENERAL KIM CHONG-YOM REFTEL I GAVE HIM MY IMPRESSION THAT PRESSURES APPARENTLY ARE MOUNTING UP ON ROKG TO CANCEL CONTRACT IN THIS CONNECTION ROKG BUSINESS MAN REPRESENTING WESTINGHOUSE WASHIN PARK CALLED ON ME TODAY HE WAS THOROUGHLY FAMILIAR WITH NUCLEAR REPROCESSING PROBLEM HAVING BEEN BRIEFED BY KOREAN GOVERNMENT AND HA VlNG DISCUSSED PROBLEM IN WASHINGTON WITH KEY US OFFICIALS WHOM HE SAID MADE CLEAR STRENGTH OF USG POSITION ON THIS ISSUE PARK COMMENTED THAT HE NOW HAS IMPRESSION MOST CHOl WHO IN PAST HAD BEEN ONE HUNDREDTWENTY PERCENT IN FAVOR OF GOING AHEAD WITH FRENCH REPROCESSING CONTRACT IS NOW TWO-THIRDS SURE OF THE NEED TO CANCEL CONTRACT DECISION IN ANY EVENT IS NOW OUT OF HIS HANDS AND AT POLITICAL LEVEL 4 SUBSEQUENT TO DICTATING ABOVE STILES CALLED ON ME SECOND TIME JANUARY 13 TO FILL ME IN ON CONVERSATION WITH ADEPUTY PRIME MINISTER NAM HE SAID THAT NAM HAD FOCUSED ON FINANCIAL ARRANGEMENTS FOR CANDU SALE LOAN CONTRACT MAKING ROKG RATHER THAN KECO BORROWER IS TO BE SIGNED JANUARY 16 ON JANUARY 26 FINANCIAL AGREEMENT COMES INTO EFFECT NAM MADE CLEAR THAT DELAY IN FINAL SIGNING OF CANDU AGREEMENT ON THIS DATE WOULO INCUR FINANCIAL RESPONSIBILITY ON PART CANADIAN GOVERNMENT RATHER THAN ROKG HE URGED RAPID COMPLETION OF AGREEMENT THEREFORE 5 AMBASSADOR STILES REASSURED NAM THAT THERE WERE NO POLITICAL MOTIVATIONS IN HANDLING OF FINANCIAL ARRANGEMENTS BUT THAT THESE AROSE IN PARLIAMENTARY CONSIDERATION OF OVERALL AGREEMENT HE MENTIONED TO NAM CONCERN ABOUT REPROCESSING FACILITY IN PARLIAMENT AND FEAR THAT CANADIAN GOVERNMENT WOULD BE SERIOUSLY EMBARRASSED IF USG DID NOT CARRY THROUGH ON KORIll WHILE CANADIANS HAD APPROVED ANDU AGREEMENT NAM RElTERA TED KOREAN RATIONALE FOR REPROCESSING FACILITY AND STILES THEN MENTIONED HIS UNDERSTANDING THAT FRENCH CONTRACT HAD BEEN POSTPONED NAM ACCORDING TO STILES RESPONDED THAT IT WAS MORE THAN POSTPONEMENT IT WAS CANCELLATION IF US SECRET SECRET PAGEO SEOULOO292 13104IZ PROVIDES APPROPRIATE ASSISTANCE NAM FURTHER SAID THAT US GROUP EXPECTED SHORTLY TO DISCUSS ASSISTANCE AND HE ANTICIPATED AGREEMENT IN VERY NEAR FUTURE WITH USG SNEIDER SECRET Margaret P Grafeld Declassified Released US Departmenl of State EO Systematic Review 04 MAY 2006                     National Security Archive    Suite 701  Gelman Library  The George Washington University    2130 H Street  NW  Washington  D C  20037    Phone  202 994‐7000  Fax  202 994‐7005  nsarchiv@gwu edu