Nuclear Madness: What was Special About the Brazil-Germany Nuclear Accord of 1975, T Kollmann

Tags: Brazil, Argentina, West Germany, nuclear energy, U.S., nuclear proliferation, Foreign Policy, nuclear fuel cycle, nuclear technology, enriched uranium, international controls, the Agreement, Germany, pp, Beverley Hills, Edward A. Kolodziej, Marvin Howe, David J. Myers, United States, Washington D.C., the Agreement for Nuclear Co-operation, John R. Redick, John Pastore, Energy Commission, nuclear power plants, research reactors, National Council for Nuclear Energy, Westinghouse, West German, nuclear energy program, International Atomic Energy Agency, nuclear commerce, American Enterprise Institute for Public Policy Research, Directorate for Scientific and Technical Intelligence, Nuclear Madness, Minister of Foreign Affairs, Minister Araujo Castro, President Gerald Ford, Hans-Dietrich Genscher, nuclear arms race, Thomas Kollmann, Nuclear Accord, North Atlantic Treaty Alliance, Jimmy Carter, Annual Cold War History Research Center International Student Conference, Non-Proliferation Treaty, Antonio Francisco Azeredo da Silveira, nuclear industry, Defense Intelligence Agency, Riordan Roett, nuclear weapons, Federal Republic of Germany, fuel cycle, nuclear reactors, Corvinus University of Budapest, Arms Control and Disarmament Agency, nuclear power industry
Content: Nuclear Madness: What was Special About the Brazil-Germany Nuclear Accord of 1975? Paper presented for the Third Annual Cold War History Research Center International Student Conference at Corvinus University of Budapest Thomas Kollmann July 10, 2012 The 'Nuclear Madness' in the title of this presentation refers to a New York Times editorial from the June 13, 1975 edition responding to news of the Agreement for Nuclear Co-operation (hereafter the Agreement) signed in Bonn, West Germany on the 27th of June, 1975 by the Foreign Minister of the Federal Republic of Germany (Germany), Hans-Dietrich Genscher and the Minister of Foreign Affairs of Brazil, Antonio Francisco Azeredo da Silveira. Nearly two years in the making, the Agreement was an $8 billon contract with the German engineering consortium Kraftwerk Union (KWU) to provide Brazil with it own nuclear power industry over a 10-15 year period, including 8 power stations. It still looks boldly ambitious today. Three aspects stand out. First, it was the largest and, at the time, the most expensive transfer of advanced technology to a developing country; it was the first breach of the U.S. monopoly over the world export market for nuclear reactors by a non-American vendor and it set an ominous precedent by contracting for the transfer of the complete nuclear 'fuel-cycle' including the capability for reprocessing and enriching nuclear fuel - the 'sensitive' elements in the
non-proliferation view - which allow for the production of plutonium by the recipient country. This third feature of the Agreement would also foster a rift between the United States, Brazil and West Germany, described by one legal scholar as "one of the most acrimonious debates of the post World War II era." 1 The furore over the Agreement died down in 1976 but was soon revived by U.S. President Jimmy Carter's diplomatic efforts at non-proliferation and continued throughout his tenure in office. The aforementioned New York Times editorial was mainly critical of Brazil and Germany and described the Agreement as "a reckless move that could set off a nuclear arms race in Latin America, triggering the arming of a half-dozen nations elsewhere, and endanger the security of the United States and the world as a whole."2 Hostility to the Agreement within the U.S. was exemplified by John Pastore - Senator (D, RI) Chairman of Joint Committee on Atomic Energy. Pastore insisted on the Agreement's nullification and suggested a reconsideration of the U.S.'s NATO commitments to Germany to demonstrate the U.S.'s stance on nonproliferation. The United States and Germany are signatories to the Non-Proliferation Treaty (NPT), the legal instrument that sets out the terms for the regulation of trade in nuclear technology and material. The impetus that gave rise to the NPT was the attempt by the superpowers to halt the 'horizontal' or international spread of nuclear weapons. The Soviet Union co-operated with the U.S. in part to block a possible attempt by Germany to acquire nuclear weapons through its affiliation with the North Atlantic Treaty Alliance (NATO). Germany's interpretation of Article IV of the Treaty allowed for access to nuclear energy by non-nuclear weapons states for peaceful purposes. 'Peaceful' explosions such as those used in the creation of canals were
prohibited, but the transfer of all other stages of the fuel cycle were allowed, including systems classified as sensitive by nuclear weapons states. The German Government ratified the NPT in May 1975. According to William Lowerance, at a meeting in that month between U.S. President Gerald Ford and German Chancellor Helmut Schmidt the Agreement was not discussed.3 The Brazilian attitude toward the NPT was best summarised in 1971 by Former Foreign Minister Araujo Castro, Brazil's ambassador to the United Nations, as the core component of the superpowers' effort to "freeze" the prevailing Cold War distribution of power.4 Reviewing the U.S. record, a special National Intelligence Estimate from September 1974 views "political considerations" as the "principal determinant" of the spread of nuclear weapons, and foresees the capacity and technological competence to produce nuclear weapons becoming more widespread by the 1980s. The report describes the elements of the international environment which the Agreement embodied, namely "the policies of suppliers of nuclear materials and technology and regional ambitions and tensions." The report concludes that in the absence of successful methods of preventing proliferation by the US and USSR and others opposed to proliferation, Pakistan and Iran were the leading candidates in acquiring the capability to produce nuclear weapons, with Egypt and Brazil falling into "a second category of likelihood."5 A U.S. Defence Intelligence Agency report on nuclear programs in Latin America published two months later concludes that Brazil, is "seeking foreign cooperation in all phases of the nuclear fuel cycle including uranium enrichment," but that the size of capital investment involved puts large-scale uranium enrichment capability out of
its reach in the near-term. Both Argentina and Brazil are noted as "deserving attention as potential proliferators in the foreseeable future." An attempt at acquiring the technological basis for the complete fuel-cycle by either country is not anticipated. The Agency surmises that Brazil with its "modest nuclear energy program is attempting to achieve nuclear independence as rapidly as its limited economic and technological base will permit." Brazilian nuclear activities appear "to be unrelated to weapons proliferation aspirations, though weapons material is more easily derivable from an independent civilian nuclear energy power program." 6 The wording of the Agreement made it dependant on safeguards agreed with the International Atomic Energy Agency. However, as Norman Gall notes, the semi-official commentary published with the text in the Brazilian press states: "For Brazil, this does not represent a commitment to forgo nuclear devices in the future."7 The controversy surrounding the Agreement can be put into clearer perspective with some historical background vis-a-vis Brazil in the late 1960s and early 1970s that also illustrates the politically promiscuous nature of nuclear commerce. The U.S. role as sole supplier of enriched uranium requirements for the non-communist world came to an end in 1971 with the arrival of the Soviet Union in the nuclear marketplace. From the 1950s, the delivery of enriched uranium supplies from the U.S. for the operating lifetime of nuclear reactors was obtained through several bilateral agreements. Prices were subsidised and the U.S. supplies were seen in Washington as a way of concentrating the sensitive enrichment technology under its control as a strand of its nonproliferation policy. However, after raising prices unilaterally in 1971 and 1973, the U.S. came to be seen in Hanns Maull's
words as "a supplier of limited reliability". 8 As the developing world's leading oil importer - Brazil imported 75% of its, mostly crude, oil. Adding to its woes at this time, the country had experienced severe balance-of-payments difficulties since the October 1973 Yom Kippur war. According to Journal do Brasil between 1969 and 1973 France, Japan, Switzerland, the United Kingdom, Germany and Canada all expanded their investments in Brazil at a faster rate than the U.S. in the early 1970s. In the year following the world recession of 1973-1974, the country's foreign debt ballooned. By early 1976 Brazil was the largest single debtor nation, with over $3 billion in the loan portfolios of U.S. commercial banks, as well as being the principal borrower from the World Bank.9 Amongst other benefits, acquisition of the technology and knowledge necessary for the complete nuclear fuel cycle would allow Brazil to earn critical foreign exchange, and thereby reduce the costs of its nuclear program, while the capability to draw on diverse energy sources would give it leverage in bargaining with energy suppliers, particularly the Organisation of Petroleum Exporting Countries (OPEC).10 Brazil's economy had long been dominated by the U.S. and was in some measure dependent on U.S. trade, the country's principal source of foreign investment with $3.5bn committed by 1974.11 Luckily for Brazil the country's bounty of natural wealth meant it could provide a steady supply of iron ore, bauxite, manganese and meat to the U.S., as well as quartz crystals used in electronics that are unavailable elsewhere. 12 Brazil's economic exposure led it to send out diplomatic solicitations for co-operation in nuclear science. By the early 1970s Brazil had signed nuclear co-operation accords with France, Israel, West Germany, the U.S., Canada, Bolivia, Peru, Chile,
India, Italy, Paraguay, Portugal & Switzerland as well as European Atomic Energy Community (Euratom).13 Relevant in this context is the use of the provision of enriched fuel services by the U.S. to exert political pressure on Brazil. John Redick, notes that when the U.S. Atomic Energy Commission Chairman (AEC), Glenn Seaborg, visited Brazil in 1967 he asserted that enrichment services would continue "unconditionally" even if Brazil stuck to its plans to develop peaceful nuclear explosives. The U.S. also provided Brazil with research and consultation on techniques for the use of nuclear energy in various fields in the early 1970s and signed a new co-operative agreement with the country in 1972. Brazil's agreement for nuclear co-operation with France, announced in May 1967, less than two months prior to Seaborg's visit to the country, included terms for co-operation in the development of research and power reactors and the acquisition of French equipment for Brazilian nuclear centres. Joint research on fabrication techniques of thorium fuel and the prospective construction of a thorium/heavywater power reactor, a more expensive process that results in large amounts of easily separated plutonium, were prominent features of the agreement with France. In exchange, France lent Brazil $6 million for uranium prospecting. Redick suggests that Brazil may have used this agreement as a means of both inducing further technical assistance from the U.S. and as a reaction to U.S. proliferation initiatives. The precedent for the Agreement was set during the negotiations and subsequent construction of the Atucha natural uranium power plant in Argentina, built by the German firm Siemens AG in 1968. This involved the purchase by Argentina of a 'sensitive' element of the nuclear fuel cycle, heavy water, from the U.S. Atomic
Energy Commission - the only U.S. sale of heavy water to a foreign power in that year. According to Redick, the AEC only approved the sale when Argentina threatened to return to the marketplace.14 It's worth noting here that the leader of Argentina, General Ongania gave the nuclear-power contract to Siemens, despite a lower bid by Westinghouse of the U.S. because the Siemens technology was for a natural-thorium reactor, meaning freedom from dependence on the U.S. monopoly over enriched uranium and the controls over waste that could be reprocessed into weapons-grade materials. During the late 1970s, according to David J. Myers, Argentina's supply of plutonium from Atucha I passed beyond the critical threshold for weapons production.15 As the Brazilian regime ventured deeper into nucleonics in 1969, it laid the groundwork for the Agreement by establishing an arrangement with West Germany for nuclear research. The Brazilian CNEN (National Council for Nuclear Energy) created a working party of West German and Brazilian technicians to assess the construction of a power plant in Rio de Janeiro or Sбo Paulo by 1976. A statement by CNEN called, "Nuclear Plans Based on Natural Uranium Supply" states that the main goal of the Brazilian nuclear program was the development of all stages in the production of nuclear energy and the development of auxiliary industries as well as the prevention of brain drain and the creation of the scientific and industrial infrastructure for the "nuclearization" of Brazil. The contract to build the first nuclear power plants in Brazil with enriched uranium from the United States, went to the U.S. firm Westinghouse. This contract continued Brazil's dependence for enriched fuel on a single supplier, a restriction that continued the arrangement instituted by Brazil's 1956 admission to the U.S. Atoms for Peace
program under which the first research reactors in Brazil were built and maintained.16 Competition in the nuclear reactor export market during 1968 - 1975 was cutthroat and the Germans alleged several cases of U.S. interference in this period. In 1973 KWU considered a sale to Yugoslavia closed when they were suddenly beaten to the punch by Westinghouse. This, and a similar case in Spain, led to speculation that U.S. firms had told Yugoslavian and Spanish authorities they could not expect to receive U.S. enriched uranium if they did not buy U.S. reactors. There were also charges that the U.S. had threatened to withhold economic assistance from Argentina if it bought another German reactor, and that U.S. interests had spread rumours of the liquidation of KWU just as that company was negotiating to sell two reactors to Iran.17 Although it steadfastly refused to yield to U.S. pressures to withdraw from the Agreement, the West German administration of Helmut Schmidt was consistently flexible and responsive to political pressure on the question of safeguards in the case of Brazil. A digest of a question and answer session with the German Chancellor from a press conference in the West German government reveals that Germany had been explicit about soliciting methods for enhancing IAEA controls over the transfer of nuclear knowledge and material.18 The Chancellery also intervened to hold up the transfer of blueprints for pilot enrichment facility to Brazil from October 1976 until after the inauguration of President Carter.19 With all this in mind, the Brazil-Germany agreement can be interpreted as a dramatic example of the drive for alternate sources of reactor fuel, triggered by the AEC's suspension of new contracts for fuel enrichment in July 1974 and the U.S. refusal to sign contracts committing U.S. sources to investment in further enrichment capacity.
A New York Times article from July 1975 gives some further indications for the move away from the United States and towards European suppliers. By this time European suppliers were strongly entering Latin American markets due to saturated markets at home. The article reports that Brazil's special military relationship with the United States ended in 1970 when General Orlando Geisel, brother of President Ernesto Geisel and Minister of War, decided to nationalise the military equipment industry and buy arms from companies that would establish plants in Brazil because "what was wanted most was the technology," the Agreement being a case in point, providing, as it did the technology to build additional reactors. A state-run arms industry was also created to give the country a greater independence from foreign suppliers and create a domestic capacity to produce advanced weapons. These developments were likely reinforced by the imposition by the U.S. of a ceiling on arms sales within the continent in 1968, in addition to attacks on the Brazilian regime's repressive practices in Congress and the U.S. press . France, Britain and the Soviet Union fulfilled demands for arms unmet by U.S. largesse, according to Alexandre Barros.20 By mid-1974 negotiations between Brazil and Germany to draft the Agreement were underway. Several German government officials visited Brazilia in the middle of 1974, including State Secretary of Technology Hans Hilgar Haunschild, former Defense Minister Franz Josef Strauss, and State Secretary of Foreign Affairs, Hans George Sachs. Following visit by Brazilian Mines and Energy Minister Shigeaki Ueki to Bonn, the Brazilians decided to build a nuclear program founded on the scientific agreement of 1969.21 The terms of the deal were agreed on February 12, 1975. The U.S. Ambassador in Bonn, Martin Hillenbrand, was informed a week later on the 19,
and an outline of the agreement was first reported in the next day's edition of the U.S. trade journal Nucleonics Week. On April 7, according to William Lowerance, a four-man delegation from the State Department and the Arms Control and Disarmament Agency (ACDA) was sent to Bonn to negotiate over the agreement, and apparently helped induce Germany to take a less lenient approach toward existing safeguards. On all sides decisions were made at the level of ministerial and industrial personnel.22 German officials rebutted critics of the Agreement by stressing that the treaty's safeguards exceeded those required by Canada for its exports of nuclear technology to India and that Brazil had the capability of eventually developing a nuclear industry without foreign assistance. If this occurred, the Germans contended, there would be no international controls on the Brazilian nuclear industry. Anxiety over Brazil's rivalry with Argentina was flaring up at this point, with news that Argentina was planning to construct a nuclear bomb and that plans were afoot for France to supply Argentina with a plant to produce plutonium, later denied by French sources. Furthermore, the German press had observed that France, which had not signed the NPT, was prepared to provide Brazil with a complete nuclear cycle. Had Germany not agreed to assist Brazil, a far greater danger of nuclear proliferation would have been posed, the Agreement's German supporters argued.23 Of the factors that may have compelled the Brazilians to negotiate with Germany for the Agreement in 1973 - 1974 two stand out in importance. The first was the AEC's notification that it could not guarantee the delivery of previously promised enriched uranium. The second was the refusal of the U.S. to permit Westinghouse to build enrichment and reprocessing facilities in Brazil on the grounds that Brazil refused to
adhere to the NPT. Westinghouse had tried to persuade Brazil to participate in an enrichment plant to be built in the U.S. but Brazil insisted that the entire nuclear fuel cycle be under Brazilian control.25 Also noteworthy in 1974-1975 was Brazil's need to expand and diversify her resources of oil and other raw materials. This fact made the Soviet Union an increasingly attractive trading partner. The soaring cost of Western capital goods had also made Soviet products and, in particular Soviet technology, more attractive. In addition, Brazil had attempted to promote greater exports of her semi-manufactures such as shoes and textiles and import more specialised items including Rumanian oil, Polish coal, and machinery and electronic equipment from East Germany and Czechoslovakia.26 Additionally, U.S. nonproliferation policies in the 1970s were inconsistent. Why for example, asks Robert Wesson, was the U.S. so concerned with the German-Brazilian Agreement when it was prepared to sell reactors to Israel and Egypt, neither of which - unlike Brazil - accepted international controls? Why also not pressure another ally, Canada, over the building of a plant by Atomic Energy of Canada Lt. in Argentina, as the Agreement was taking effect, without any safeguards or even a contract?27 To offer a provisional answer to the question posed one could plausibly suggest that it was Brazil's overt and substantial moves towards national independence especially in the realm nuclear self-sufficiency, backed by West Germany's technology and its late start in the nuclear power plant field (its first plans for a plant were three years behind Argentina's)28 that made Brazil rather than its regional rival the convenient focus of anxiety over U.S. loss of influence in South America and the harbinger of
future troubles in the sphere of nuclear proliferation within the US. Notes 1. Joan Johnson-Freese: "Interpretations of the Nonproliferation Treaty: The U.S. and West Germany," Journal of International Affairs, No. 37 (1984), p. 291. 2. New York Times, June 13, 1975 3. William W. Lowerance: "Nuclear Futures for Sale: To Brazil from West Germany, 1975," International security, No. 2 (1976): p. 163. For further information about nonproliferation activity in the U.S. congress, see Helga Haftendorn: The Nuclear Triangle: Washington, Bonn and Brasilia - National Nuclear Policies and International Proliferation, Washington D.C.: School of Foreign Service, (Georgetown University, 1978), p. 6 and Helga Haftendorn: "Die Nuklearpolitik der Vereinigten Staaten zwischen Autonomie und Independenz," in Lothar Wilker (ed.) Nuklearpolitik in Zielkonflikt, (Kцln, 1980), pp. 13-45. 4. Albert Fishlow, "Flying Down to Rio: Perspectives on U.S.-Brazil Relations," Foreign Affairs, No. 2, (1978): p. 395; Stephen M. Gorman, "Security, Influence, and Nuclear Weapons: The Case of Argentina and Brazil," Parameters, No. 1, (1979): f24. For a summary of Brazil's diplomatic rationale for its position on the NPT in the late 1960s see Rosenbaum, H. Jon and Glenn M. Cooper, "Brazil and the Nuclear Non-Proliferation Treaty," International Affairs, No. 1 (1970), pp. 80-81. 5. Prospects for Further Proliferation of Nuclear Weapons, Confidential, Memorandum, October 2, 1974, NP01382, United States. Central Intelligence Agency, p. 5; 6. 6. Nuclear Energy Programs--Latin America, United States. Defense Intelligence
Agency. Directorate for Scientific and Technical Intelligence, Excised, Report, ST-CS-02-212-75,, November 1974, NP01389, United States. Defense Intelligence Agency. Directorate for Scientific and Technical Intelligence, pp. 16, 17. 7. Norman Gall: "Atoms for Brazil, Dangers for All." foreign policy, No. 23, (1976), pp. 159 - 160. 8. Hanns Maul: Europe and World Energy, Butterworths, (London, 1980), p. 299. 9. Cited in Robert A. Packenham: "Trends in Brazilian National Dependency Since 1964" in Brazil in the Seventies, Edited by Riordan Roett American Enterprise Institute for Public Policy Research, (Washington D.C.: 1976) pp. 99; 111; Thomas E. Skidmore: "Brazil's Changing Role in the International System: Implications for U.S. Policy" in Brazil in the Seventies, Edited by Riordan Roett, American Enterprise Institute for Public Policy Research, (Washington D.C.: 1976), p. 33. 10. David J. Myers: "Brazil: Reluctant Pursuit of the Nuclear Option", Orbis 27, No. 4 (1984), pp. 902-903; Jonathan Kandell, "Brazil Bitter at U.S. Effort to Impose Nuclear Curb", New York Times, March 28, 1977. 11. William Perry: Contemporary Brazilian Foreign Policy: The International Strategy of an Emerging Power, SAGE Publications, (Beverley Hills, 1976), pp. 55; 58. 12. Marvin Howe, "Brazil, Racing for Growth, Tries to Rely Less on U.S.," New York Times, July 2, 1975. 13. Jon H. Rosenbaum, "Brazil's Nuclear Aspirations" in Nuclear Proliferation and the Near-Nuclear Countries, Edited by Onkar Marwah and Ann Schulz, Ballinger Publishing Company, (Cambridge, Mass.: 1975), pp. 255 - 277. 14. John R. Redick: "Nuclear Proliferation in Latin America," in Latin America's New Internationalism - The End of Hemispheric Isolation, Edited by Roger W. Fontaine
and James D Theberge, Praeger, (New York: 1976), p. 273. 15. David J. Myers: "Brazil" in Security Policies of Developing Countries, edited by Edward A. Kolodziej and Robert E. Harvey, Lexington Books, (Massachusetts: 1982), p. 60. 16. John R. Redick: Military Potential of Latin American Nuclear Energy Programs, Sage, (Beverley Hills: 1972), pp. 17-23. 17. Edward Wonder: "Nuclear Commerce and Nuclear Proliferation: Germany and Brazil, 1975," Orbis, No. 2 (1977), p. 293; Die Zeit, "Querschьsse aus den USA", 20 June, 1975, p. 4. 18. Betr. Nuklearabkommen mit Brasilien, Interviews mit Zeitungen und Zeitschriften, pp. 5-5, 1/HSA010630 (Helmut Schmidt Archiv, Archiv der sozialen Demokratie). 19. Klaus Wiegrefe: Das Zerwьrfnis: Helmut Schmidt, Jimmy Carter und die Krise der deutsch-amerikanischen Beziehungen, Propylдen (Berlin: 2005), pp. 88-89. 20. Howe, ibid. 21. Ronald M. Schneider: Brazil: Foreign Policy of a Future World Power, Westview Press, (Boulder, CO: 1976), p. 50. 22. Lowerance, pp. 162-163. 23. Rosenbaum, p. 262. 24. Report for the visit of the Brazilian Foreign Minister, 25.6.75 Oldenkott to Schmidt, 24 June, 1975. 1/HSAA007079. 25. Robert Wesson, The United States & Brazil: Limits of Influence, Praeger, (New York, 1981), p.78. 26. Perry, pp. 71; 73. 27. Mark Gayn, "No Safeguards yet, Canada Building A-Plant in Argentina," Toronto
Star, July, 22, 1975. 28. Redick, 1972, p. 21.

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