BRAZIL'S NUCLEAR PROGRAM: DYNAMICS AND PROSPECTS

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06826647
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13
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March 9, 2023
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September 18, 2020
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F-2017-01987
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September 28, 1979
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Approved for Release: 2020/09/11 C06826647 National Foreign Assessment Center 'Seem& ...Z"-e International Issues Review 28 September 1979 -Scent_ PA IIR 79-008 28 September 1979 Copy 635 Approved for Release: 2020/09/11 C06826647 Approved for Release: 2020/09/11 C06826647 bELKLI INTERNATIONAL ISSUES REVIEW 28 September 1979 CONTENTS NUCLEAR POLITICS BRAZIL'S NUCLEAR PROGRAM: DYNAMICS AND PROSPECTS In the seven years since Brasilia and Bonn signed the broad bilateral agreement establishing the foundations and directions for Brazil's nuclear development program through the early 1990s, mounting domestic problems have forced the Brazil- ians to make major modifications in their original nuclear development plans. ARMS CONTROL REGIONAL ARMS CONTROL: REGIONAL STATE RESPONSES TO MAJOR POWER ACTIONS Recent experience indicates that the military and diplomatic activity of major powers is of only limited importance in affecting the willingness of regional states to commit themselves to regional arms control arrangements. Regional security and related concerns are considerably more important. INTERNATIONAL TERRORISM COMBATING TERRORISM: EXTRADITION AS A STUMBLING BLOCK Disagreements over the political motivations of terrorist suspects have led to tensions among West European states, in US relations with several Mid- dle Eastern countries, and within the UN regarding the draft Convention Against the Taking of Hos- tages. Language allowing several interpretations of the convention has, however, permitted antiter- rorist cooperation among otherwise like-minded governments. �5E-C-REI_ Approved for Release: 2020/09/11 C06826647 Approved for Release: 2020/09/11 C06826647 -SECRET---� Brazil's Nuclear Program: Dynamics and Prospects The comprehensive character of Brazil's nuclear development program, especially the Brazilians' inten- tion to build uranium enrichment and spent fuel re- processing facilities, has been a matter of continuing concern to the United States primarily because of the increased risk of nuclear proliferation that is inher- ent in the acquisition of such technology. The fact that Brasilia refuses to sign the Non-Proliferation Treaty, on nationalistic grounds, adds to this con- cern. Mounting problems indigenous to Brazil, how- ever, have forced the Brazilians to make major modifi- cations in their original nuclear development plans. This article analyzes the scope, causes, and im- plications of these changes It is based an a much longer assessment Latin America Analysis. by the International Issues and Divisions of the Office of Political The Policy Setting Four years have passed since Brasilia and Bonn signed the broad bilateral agreement establishing the foundations and directions for Brazil's nuclear program through the early 1990s. For the record both govern- ments still maintain that the accord--which envisages construction of eight pressurized-water power reactors (PWR) and a complete nuclear fuel cycle complex--will be fulfilled in its entirety. It is now virtually cer- tain, however, that parts of the original agreement will be scaled down or left unimplemented as Brazil reassesses its position in the light of experience and changing political and economic circumstances. Implementation 28 September 1979 1 -SECRET_ Approved for Release: 2020/09/11 C06826647 Approved for Release: 2020/09/11 C06826647 TEM-T-7 The Brazilian Nuclear Plan Power Reactor Original Target Date Earliest Estimated Completion Date Type Power (MWe) Status 1978 1980 (Angra 1) PWR 626 Under construction ' 1983 1986 (Angra II) PWR 1,245 Under construction 1984 1987 (Angra HI) PWR 1,245 Contracted, delayed 1986 1989 PWR 1,245 Planned 1987 1991-92 PWR 1,245 Planned 1988 Indefinite PWR 1,245 Proposed ' 1989 Indefinite PWR 2x1245 Proposed' 1990 Indefinite PWR 1,245 Proposed Nuclear Fuel Cycle Original Target Date Revised Target Date Facility Capacity 1979 1980 Uranium concentration 500 metric tons per year 1980 1980 Pilot fuel fabrication 100 metric tons per year NA' 1982-83 Pilot uranium enrichment NA 1983 1983 Commercial-scale fuel fabrication 250 metric tons per year 1981 1983 Conversion plant (UFJ 500 metric tons per year 1984 1985 Pilot fuel reprocessing 3 metric tons per year (25 kg of plutonium per year) 1982 1988-89 Demonstration-scale uranium enrichment 200,000 Separative Work Units (SW1.1) per year NA Probably mid-1990s Commercial-scale reprocessing 150 metric tons per year ' Westinghouse-supplied. ' These four reactors probably will not be constructed. 'This facility was not originally planned. 'This plant will produce no usable enriched product. ' To be supplied by France. 2 Approved for Release: 2020/09/11 C06826647 Approved for Release: 2020/09/11 C06826647 has already already run into trouble on several fronts. Plan- ning and construction of the nuclear facilities involved are proceeding slowly and somewhat haphazardly and the agreement is coming under increasing criticism within the Brazilian scientific community. The Brazilians in fact have already had to stretch out their nuclear program and acknowledge unofficially that it will have to be curtailed. They have also altered the specifications of some facilities ordered from the Germans. While none of the changes made last December in Brasilia's nuclear plans reflect any loss of interest in obtaining uranium enrichment and spent fuel reprocessing facilities (and thus an autonomous complete fuel cycle capability), the chances of full implementation of the power reactor construction provi- sions of the Brazilian - West German accord are even more remote than before. In particular, the Brazilians continue to be fully committed to the construction of a pilot nuclear reproc- essing plant. Because of planning difficulties and de- lays in reactor construction, however, the development of a pilot reprocessing facility may be a decade away, and commercial reprocessing probably will not be justi- fiable before the late 1990s. Highlights of Brazil's recently revised nuclear plan are presented in the table. President Joao Figueiredo, who took office last May, is the first military president with a specific mandate to ease the political restrictions of the authoritarian system erected by the Brazilian armed forces some 15 years ago. Since his accession, the political climate in Brazil has continued to become more open and lively-- although gradually and under the watchful eye of the military. As a result of these political developments, Brazil- ians feel much freer than before to examine and criti- cize the whole spectrum of national policies. Brazil's nuclear program and its nuclear accord with West Germany have become fair game for debate in the Brazilian press, and thus public attitudes toward these issues are ac- quiring greater political significance. 28 September 1979 3 Approved for Release: 2020/09/11 C06826647 Approved for Release: 2020/09/11 C06826647 Since early last year, various aspects of Brazil's nuclear effort have drawn public fire from a number of politicians, journalists, and scientists--some question- ing whether the nuclear agreement with West Germany should have been made at all. This criticism should not, however, be construed as a flagging national commitment to the development of nuclear power. Acquisition of this sophisticated technology is still generally viewed as an important and tangible measure of Brazil's move- ment toward becoming a major nation and is thus directly tied to the achievement of great power status. Moreover, both Brasilia and Bonn have compelling reasons to imple- ment as much of their swee ing 1975 nuclear accord as possible. The Case for Going Ahead: Brazil's View From Brasilia's vantage point, the development of nuclear power and the acquisition of a complete nuclear fuel cycle are seen as key national objectives for a wide variety of reasons--not the least of which is the Brazilian desire to secure independent and lasting sources of energy to support their top-priority economic development efforts. The need to develop new power sources for Brazil's growing cities--especially Sao Paulo, Rio de Janeiro, and Belo Horizonte, which are South America's leading industrial centers--is becoming increasingly urgent. For the near term, at least, hydropower will remain sub- stantially cheaper to develop in Brazil than nuclear energy. The cost of developing remote hydroelectric sites in the far north is higher, but available evidence suggests that the expense of exploiting Brazil's hydro- electric potential will not reach the cost of generating nuclear power until 60 percent of that power has been tapped. Indeed the policymakers have accelerated the development of Brazil's vast hydroelectric resources and intensified exploitation of indigenous coal reserves. Nonetheless they remain concerned that delays in bring- ing new capacity onstream could result in electrical energy Oortaaes in the 1980s in the face of rapid urban growth. 28 September 1979 4 Approved for for Release: 2020/09/11 C06826647 Approved for Release: 2020/09/11 C06826647 SEC The Brazilians clearly feel that there are other economic benefits to be derived from their ambitious nuclear program, including the expansion and diversifi- cation of foreign markets for their exports. Moreover, they believe that mastery of nuclear technology will greatly enhance their international image as an indus- trially sophisticated nation. In this spirit, Brazil has recently shown signs of interest in building new regional bonds through nuclear cooperation with neigh- boring Latin American states. This July, for example, Brazilian Foreign Minister Guerrero signed a bilateral memorandum of understanding on nuclear cooperation for peaceful purposes with Venezuela. So far, the Brazilians have only agreed to provide the Venezuelans with train- ing and to exchange information on uranium prospecting and uranium concentration. Under Brazil's well-established and elaborate de- fense doctrine, economic development is seen as essen- tial for national security--which Brazilians define very broadly to include social, political, and economic sta- bility. Hence, whatever contributes to national develop- ment enhances national security. Classic military and defense preoccupations, on the other hand, do not now loom large in the calculations of Brazil's nuclear policy planners. Brazil is still largely isolated from the main currents of international tensions and has no fear of military attack from neighboring states. Even its longstanding and, at times, bitter rivalry for regional influence with Argentina--which has the most advanced nuclear program in Latin America--is not at present a major motivating factor behind Brazil's nuclear ambitions. On the contrary, the relationship between Brazil and Argentina has become increasingly cooperative wiith the rapid expansion of bilateral trade. There has even been considerable talk--both public and private--about potential bilateral nuclear coopera- tion between the two countries. Fundamental differences in reactor design as well as issues of nationalist com- petition will probably continue to restrict the degree of cooperation, but it is possible that the two nations 28 September 1979 5 SECrtET Approved for Release: 2020/09/11 C06826647 Approved for Release: 2020/09/11 C06826647 SECRE might adopt a common strategy in opposition to supplier- imposed restrictions on the transfer of nuclear tech- nology. Argentina and Brazil might also agree to exten- sive cooperation in the production of radioactive isotopes for medical and industrial purposes. Nonetheless, Brazilian leaders are well aware that their regional security concerns could become more press- ing over the next few years. They would see their inter- ests threatened if any of the continent's simmering dis- putes--for example, the territorial disagreements between Chile and Argentina and between Chile and Peru--were to erupt in fighting. Moreover, no conscientious Brazilian planner would be willing to gamble on Argentina's ulti- mate intentions or, despite the currently peaceful na- ture of Brasilia's nuclear program, to argue that Brazil should unilaterally foreclose the nuclear weapons option. . .and West Germany's View The Schmidt government is dismayed at the complica- tions that have delayed implementation of joint nuclear projects with Brazil. But there are several considera- tions that will strongly motivate the West Germans to follow through on the commitments they made in the 1975 agreement. In general they believe that the Federal Republic must protect its reputation as a reliable SUD- plier of nuclear equipment and technology. Perhaps the most important specific consideration for the West Germans is the huge economic stake they now have in the Brazilian deal. If the agreement flounders, the consequences would be catastrophic for the West German nuclear industry, which is already in serious financial difficulties. The prospect of government sub- sidies to save the nuclear industry--on top of the $8 billion Bonn has already invested in that sector-- could become a serious political problem for Chancellor Schmidt when he faces national elections in October 1980. The West Germans have other important reasons for wishing to keep their nuclear cooperation agreement with Brazil alive. One of the factors that originally en- couraged them to send advanced nuclear technology to 28 September 1979 6 SECRET Approved for Release: 2020/09/11 C06826647 Approved for Release: 2020/09/11 C06826647 Brazil was was the prospect of guaranteed access to Brazilian uranium. While the current freeze on new reactor con- struction in the Federal Republic strongly suggests that the uranium contracts already signed with the major sup- plier states might be adequate to meet West German re- quirements for the coming decade, Bonn still has a sub- stantial political interest in diversifying its source of supply. As part of the original nuclear cooperation agreement, the West Germans were given the right to 20 percent of the uranium discovered and exploited by Nuclam, a Brazilian - West German company. During the past year, the Brazilians have raised the estimate of their com- mercially exploitable uranium reserves to more than 100,000 metric tons. In addition to this vested interest in uranium ex- ploration, the West Germans have a general interest in promoting economic relations with the Brazilians. While Brazil only accounts for a small share of West German exports, the West Germans have substantial nonnuclear investments in this country. The Schmidt government wants to nurture and expand this economic relationship as part of a general effort to penetrate the Latin American market. Constraints on Brazil's Nuclear Aspirations Limited political liberalization has made it more difficult for the Brazilian Government to keep the ex- pense of the nuclear program from becoming a divisive political issue, particularly when Brazil is suffering from a sustained high rate of inflation and a relative decline in economic growth. At a time of growing pre- occupation with socioeconomic problems, spending vast sums on projects with no short-term, highly visible pay- off has not gone unchallenged. Nevertheless, the do- mestic debate over Brazil's nuclear program has remained moderate in tone. (It is worth noting that, for what- ever reason, the reprocessing aspects of the nuclear program have been spared from public criticism.) While the shift in the domestic political environ- ment undoubtedly contributed to Brasilia's decision to stretch out and pare down its original nuclear plans, economic constraints were the determining factors. First, soaring costs are undermining Brazil's ability 28 September 1979 7 -� Approved for Release: 2020/09/11 C06826647 Approved for Release: 2020/09/11 C06826647 ,EreemEfi�, to pay for the ambitious program. The original estimate of $5 billion for reactors and associated facilities, for example, may quadruple. Moreover, expensive nuclear power plants have become increasingly difficult to jus- tify in view of the slower-than-anticipated growth in consumption of electricity. Other broad economic developments are also under- cutting Brazil's ability to absorb the escalating costs of the nuclear program. Persistent inflation, combined with less rapid economic growth, is squeezing government funding allocations for infrastructure projects. Brazil's mounting foreign debt--presently over $43 billion--is limiting its ability to import sophisticated foreign equipment in the amounts required for its nuclear pro- gram. Although Brazil's generally favorable credit rat- ing would enable it to secure additional foreign financ- ing for its nuclear imports, the cost would be high and the availability of foreign credits for more productive economic ventures would be reduced. Finally, Brazil's lack of an extensive high tech- nology base has made it difficult to carry out its nu- clear program. Although the infrastructure set up by Brazil and west Germany for the implementation of their accord (including the transfer of technology) is sound enough, the Brazilians remain severely hampered by a lack of trained personnel and, more generally, practical experience in nuclear and related matters. Indeed, the long time required to train the large number of person- nel needed in both the technical and industrial fields has been responsible for much of the slippage in the im- plementation of Brazil's nuclear program so far. In- experience and recourse to trial-and-error methods can also be blamed in part for the soaring costs in all sectors of the program�and in reactor construction in particular. Thus far, foreign events and international pressures have had no discernible dampening effect on Brasilia's determination to implement its nuclear program. Indeed, a number of external developments and pressures--for ex- ample, the dramatic increase in the cost of oil due in large part to the pricing policies of the Organization of Petroleum Exporting Countries--have had precisely the opposite effect. 28 September 1979 8 Approved for Release: 2020/09/11 C06826647 Approved for Release: 2020/09/11 C06826647 SECRET Looking Ahead Predictions concerning the future of Brazilian - West German nuclear cooperation and of Brazil's nuclear program as a whole are difficult because Brasilia will continue to be pulled and pushed in opposite directions by a wide array of political, economic, technical, and security considerations. Soaring costs, economic slow- down, and technical difficulties will operate as in the past to delay and stunt the program. Expected further increases in the price of imported oil, the logic of Brazil's quest for energy independence, and the nation's aspirations to great power status will continue to re- inforce Brazilian determination to preserve and imple- ment as much of the nuclear program as possible. For at least the next year or two these opposing factors seem likely to offset each other and thus allow Brazil's nuclear program to develop along the more modest lines that have been emerging in recent months. Whether this tendency persists will depend in part on the shift- ing political, economic, and technological environment, both regional and global. Nonetheless, Brazil will con- tinue to be highly resistant to outside pressures to alter its plans in the interest of reducing the attend- ant proliferation risks. Over the next several months, Figueiredo will prob- ably not be under much domestic political pressure to make further changes in Brazil's nuclear program, partly because the changes already made have made it easier to defend the program. The worsening economic climate in Brazil will, however, create further problems with re- spect to developing nuclear power that could have a sig- nificant effect in the longer run. To cope with an annual inflation rate of 50 percent (and perhaps more), Brasilia has cut the budgets for government agency ex- penditures. In addition, the government's recent pro- hibitions on commercial bank loans to state entities-- another feature of its anti-inflationary package--place financial restrictions on Nuclebras, the state-owned nuclear holding company, that will limit its ability to fund investments. 28 September 1979 9 SECRET Approved for Release: 2020/09/11 C06826647 Approved for Release: 2020/09/11 C06826647 SECRET Imports of foreign equipment critical to Brazil's nuclear program will also be harder to manage this year because of a record current account deficit of $8-9 billion. Moreover, the rising cost of servicing Brazil's Eurodollar debt will reduce the amount of foreign ex- change available to Nuclebras for purchase of nuclear hardware. Because of Brazil's worsening economic climate, it also seems likely that: Brazil will buy no more than four--and possibly as few as three--of the eight German reactors originally provided for in the 1975 accord. The Brazilians will eventually abandon, because of both cost and technological considerations, tentative plans to expand their projected demonstration-scale Becker nozzle uranium en- richment facility to a commercial-scale plant. Barring serious problems with the commercially un- proven Becker process or unforeseen political or economic difficulties of major proportions, however, we doubt that Brasilia will drop the demonstration-scale uranium en- richment project or otherwise fundamentally alter its current plans to acquire a complete nuclear fuel cycle from West Germany. Nor do we think it likely that Brazil will buy fewer than three power reactors from the Germans. While Brasilia has watched the progress of other aspiring nuclear states (especially in Latin America) with keen intere�st--and while any notable successes achieved by those states might have some stimulating ef- fect on its own nuclear efforts--it is unlikely to be greatly influenced by any of their specific nuclear pol- icies or decisions unless those moves appear threaten- ing. In particular, a decision--whether voluntary or involuntary--on the part of another state to forgo ac- quisition of a complete nuclear fuel cycle would prob- ably not persuade the Brazilians to follow suit. 28 September 1979 10 Approved for Release: 2020/09/11 C06826647 Approved for Release: 2020/09/11 C06826647 bECRE In sum, President Figueiredo, who enjoys the advan- tage of not being publicly indentified with the original 1975 nuclear accord, has quietly but effectively lowered his government's sights on the nuclear program because of major economic and technical problems. Further slip- page and "adjustments" seem likely, especially in the longer run. Nonetheless, there is little reason to ex- pect that Figueiredo--whose term expires in 1985--or any of his most plausible successors will abandon the essential elements of a program so closely tied to na- tional pressure to push Brazil back into a stridently ziationalistic defense of its nuclear plans./ 28 September 1979 11 SECRET Approved for Release: 2020/09/11 C06826647