MOUNTING COSTS OF THE FRENCH NUCLEAR PROGRAM

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• Publication Date: May 23, 1963
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CONFIDENTIAL
NO FOREIGN DISSEM
Current Support Brief
CIA/RR CB 63-50
23 May 1963
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
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CONFIDENTIAL
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This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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MOUNTING COSTS OF THE FRENCH NUCLEAR PROGRAM
The French nuclear energy program is growing progressively more
expensive as a result of its expanding size, unforeseen increases in costs,
and greater emphasis on its military aspects. From a modest beginning
in 1946, when the budget of the Commissariat a 1'Energie Atomique (CEA)
amounted to only about $1 million, expenditures have risen to a point at
which it is estimated that in 1963 the program will cost more than $800 mil-
lion. * This figure is about 30 percent higher than the estimated expendi-
tures on the program in 1962 and represents an extension of the trend of
the past 4 years. ** If this trend continues, annual expenditures will
average approximately $1 billion for the period 1963-66 and by 1966 will
be approaching $2 billion. This latter figure would represent expenditures
in a single year amounting to 80 percent of the $2. 5 billion estimated to
have been expended on the program in the 17 years from its inception in
October 1945 through 1962. *** In spite of the sharp increase in the costs
of the nuclear program, these outlays are regarded as well within the
capabilities of the French economy.
Cost figures in this publication were developed in francs and con-
verted at the official rate of exchange of 1 new franc to $0. 2041. Result-
ing figures have been rounded.
** Expenditures are estimated to have been $190 million in 1958 and
$280 million in 1959. Figures for more recent years are shown in the
table, p: 2, below. The average annual rate of increase in expenditures
during the period 1958-62 is estimated to have been about 35 percent.
Expenditures for the nuclear program in years after 1963 have been esti-
mated on the basis of an average annual increase of about 33 percent.
*** More than one-third of the total expenditure of $2. 5 billion has been
expended for parts of the French nuclear program that are exclusively
of a military nature. Most of the remaining expenditures must be re-
garded as joint costs of military and nonmilitary projects. It is difficult
to separate these costs, but it is estimated that at least two-thirds of the
total has been associated with military aspects of the program. A func-
tional breakdown of the expenditures through 1962 is shown in the Appen-
dix. Expenditures prior to the detonation of the first atomic device in
1960 are estimated to have been $1. 1 billion.
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C -O-N-F-I-D-E -N- T-I-A-L
Sources of Funds for the French Nuclear Program
1960-63
1960 a/ 1961 21 1962 21 1963 1/
Budgetary Allocation to Commissariat
a 1'Energie Atomique (CEA), loans
from the Fund for Economic and Social
Development (FDES), and income from
sales of nuclear products by CEA 224 247 275 325
Transfers from the defense budget 86 200 260 390
Allocation by Electricite de France
(EDF) to nuclear power programs,
allocations to international agencies,
transfer from the Ministry of Public
Works, and investment by private
industry J 40 )+3 90 95
350 X90 625 810
Total as percent of GNP 21 0.6 0.8 0.9 1.1
a. Data for 19 0 and 1961 were derived from CEA and EDF reports and from
budget data. /
b. Data for 1962 represent adjustment of authorizations on the basis of
preliminary reports of actual expenditures. /
c. Based on CEA and defense budget data. The estimate for the third cate-
gory shown is based primarily on partial budget data for international
organizations and on an estimate of the increase in expenditures by the EDF.
d. Only identifiable items have been included. The amount of funds ex-
pended by the government for international cooperation in the atomic field
and by private industry for investment in new materials and equipment un-
doubtedly is greater than the amount included above for such expenditures.
e. Based on official French GNP data, in current market prices, as re-
ported in source /. GNP for 1963 is estimated on the basis of the average
annual increase of 9 percent achieved between 1959 and 1962.
- 2 -
C-O-N-F-I-D-E -N- T-I-A-L
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1. Aggregate Costs
There has been a steady rise in expenditures for the French nuclear
program. As a share of the French gross national product (GNP), these
expenditures on the nuclear program have grown from about 0. 6 percent
in 1960 to an estimated 1. 1 percent in 1963. This latter figure is equal
to the share in the GNP of the United States represented by funds appro-
priated for the US Atomic Energy Commission in 1953, the peak year
for the period 1950-62. (In recent years, US Atomic'Energy Commission
funds have represented about 0. 5 percent of the GNP of the United States.) 4/
If present trends continue, the costs of the French nuclear program may
equal approximately 2 percent of the French GNP by 1966.
The program has been financed from a wide variety of sources as indi-
cated in the table. * The most significant increase, however, has been in
the funds transferred from the defense budget. These funds in 1963 will
be nearly double the amount of such transfers in 1961 and must be regarded
as indicative of the emphasis on the military aspects of the program. **
Among the military aspects of the program to be emphasized in 1963 are
(a) production of nuclear weapons to be used with the Mirage IV, (b) re-
search and. development for improved weapons technology, (c) development
of an atomic test site in the Pacific, (d) further work on the nuclear sub-
marine program, and (e) continued construction on the gaseous diffusion
plant at Pierrelatte. 5/
Illustrative of the rising costs of the program have been the steadily
increasing expenditures and estimates of probable total cost for the gaseous
diffusion plant under construction at Pierrelatte. An initial appropriation
of $50 million was made for this plant in July 1957. 6/ At that time it was
P. 2, above.
Transfers from the defense budget probably do not include all military
expenditures on the nuclear program. Some expenditures on military
aspects of the program undoubtedly are treated as normal military expendi-
tures.
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estimated that the total cost would be about $120 million. 7/ The plant
was originally scheduled for completion in 1963-64, but technical and
perhaps financial difficulties have forced postponement. It soon became
apparent that the original cost estimates were too low. In fact, the
French press has speculated that the first public estimates of cost were
cautiously held below the real estimate, lest the cost be regarded as too
high. Early research and pilot plant studies alone accounted for $130 mil-
lion, including $50 million for theoretical and industrial studies, $40 mil-
lion for prototype studies (barriers and compressors), and $40 million
for pilot plants at Saclay and Pierrelatte. 8/ By 1960 the estimate for the
entire project had risen to approximately $360 million. 9/
In July 1962 the government asked the National Assembly for a sup-
plemental appropriation of $40 million for Pierrelatte on the grounds
that by the end of the year more than $290 million would have been spent
and that authorizations amounted to only $250 million. During the course
of the debate on the supplemental appropriation, the total cost of Pierre-
latte was indicated as about $1 billion. Of the approximately $710 million
remaining to be spent, about 66 percent was expected to be for construc-
tion and 34 percent for testing and startup. * 12/ Government spokesmen
explained the gross underestimation of the cost of Pierrelatte by pointing
out that French technicians had to make their estimates on a purely
theoretical basis because they had neither experience nor benefit of
foreign experience in building such a plant.
In spite of considerable opposition, the supplemental appropriation
was approved. On the basis of statements made during the debate on the
supplemental appropriation, it is estimated that expenditures on the plant
in 1962 totaled about $90 million. M. Dorey indicated that the probable
The cost of the plant was indicated by M. Dorey (MRP), Special Re-
porter for the Finance Committee for Military Credits and Certain Opera-
tions in the Assembly, as 4, 536 million new francs ($926 million) 10/ and
by M. Gaston Palewski, Minister of State for Scientific Research and
Atomic and Special Questions, as 4, 436 million new francs ($905 million).
M. Palewski gave the cost of construction as 3, 400 million new francs
($694 million), with a margin of error of about 15 percent and the cost
of testing and startup as 1, 036 million new francs ($21 1 million). 11 /
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C -O-N-F-I-D-E?-Na-T -I-A-L
financing required for the plant in 1963 would be about $130 million. 11/
Six months later, when the budget for 1963 was being discussed, M. Pierre
Messmer, Minister of Defense, indicated that the estimate for 1963 had
risen to $155 million. 14/ In March 1963, M. Le Theule, Reporter for
the National Defense Committee of the Assembly, stated that the cost of
the first three parts of the plant alone probably will reach $1 billion and
that the cost of the fourth part cannot now be estimated. 15/ (Completion
of the latter part is necessary for production of weapons-grade U-235).
If the cost of the fourth part of the plant continues to bear the same rela-
tionship to the cost of other parts as anticipated in previous French esti-
mates, the total cost of the plant may be about $1. 2 billion, approximately
10 times the amount originally estimated. Such an investment is equiva-
lent to more than one-half of the total investment ($2. 3 billion) by the
United States in its three gaseous diffusion plants, 16/ any one of which
is much larger than the plant at Pierrelattea Compared with the US
plants, Pierrelatte therefore represents a very inefficient investment
of funds
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C-O-N-F-I-D-E-N-T-I-A-L
APPENDIX
FUNCTIONAL DISTRIBUTION OF ESTIMATED EXPENDITURES
ON THE FRENCH NUCLEAR PROGRAM a/
1946-62
Capital
Investment
Operations
Total
Percentage
Distribution
Administration
0
70
70
2.8
Exploration and mining
80
120
200
8.0
Ore concentration plants
20
130
150
6e0
Feed materials plants
30
120
150
6.0
Dual-purpose reactors
200
20
220
848
Chemical separation
65
20
85
3.
Gaseous diffusion plant
290
0
290
11.6
International organization
0
110
110
4.4
Weapons development
and fabrication
400
220
620
24.8
Research centers
365
24O
605
24.2
Total J
450
1
1,050
2,500
100.0
,
a? Estimates were derived largely from data contained in documents
listed in source L7 j,, More detailed definitions and the methodologies
for the derivation of individual figures are available in the files of
this Office.
b. The figures shown above must be regarded as conservative estimates
of expenditures on the program. They do not include the following
additional costs: costs incurred for international cooperation in the
nuclear energy field beyond contributions to the European Atomic Energy
Community (EURATOM), the European Organization for Nuclear Research
(CERN), the International Atomic Energy Agency (IAEA), and the European
Nuclear Energy Agency (ENEA); investment by private industry in new
materials and equipment (except for a few identifiable items); or mili-
tary expenditures beyond the funds actually transferred from the de-
fense budget to the CEA.
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C-O-N-F-I-D-E-N-T-I-A-L
Analysts:
1. France, Commissariat a l'Energie Atomique (CEA). Rapport
annuel, 1960, 1961, Paris. U.
France, Electricite de France. Travaux d'investissement,
1960, Paris. U.
Ibid. , Rapport d'activite comptes de gestion, 1961, Paris. U.
Ambassade de France, Service de Presse et d'Information,
New York.. France and the Atom, Jun 62. U.
State, Paris. Dsp 742, 15 Dec 61. U.
2. State, Paris. Dsp 742, 15 Dec 61. U.
Le.Monde, 26 Jan 63, p. 22. U.
Industries atomiques, no 1-Z, 1963, Paris, p. 93-94. U.
3. State, Paris. Airgram A-1654, 11 Jan 63. U.
4. AEC. Financial Report, 1959, Washington, p. 36-37. U.
Ibid., 1962, p. 46-47. U.
International Monetary Fund. International Financial Statistics,
Sep 62, p. 272. U.
Commerce, Bureau of the Census. Statistical Abstract of the
United States, 1962, Washington, p. 312. U.
5. Le Monde, 24 Jan 63, p. 4. U.
Ibid., 25 Jan 63, p. 2-3. U.
Ibid. , 26 Jan 63, p. 22. U.
State, Paris. Airgram A-2632, 13 Apr 63. C.
6. France, Commissariat a 1'Energie Atomique (CEA). Rapport
annuel, 1958, Paris. U.
7. Le Monde, 27 Jun 63, p. 10. U.
8. Ibid.
9. Ibid., 12 Jul 6Z, p. 5. U.
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10. Le Monde, 12 Jul 62, p. 5. U.
1 1 . Ibid., 1 3 6 2 , p. 2. U.
12. Ibid.
13. Ibid., 12 Jul 6 2, p. Z. U~
14. L'Humanite, 24 Jan 63, p. 4. U.
15. Le Figaro, 21 Mar 63, p. 5. U.
16. AEC. Financial Report, 1962, p. 37. U.
17. Commissariat a 1'Energie Atomique. The French Atomic Energy
Commission, 1945-1960, Paris, Mar 60. U.
Ibid., Rapport d'activite du 1 janvier 1946 au 31 decembre 1950,
Paris, 1952. U.
Ibid. , Rapport annuel, 1955, 1956, 1957, 1958, 1960, 1961,
Paris. U.
Ibid. , The French Atomic Energy Commission, 1945-1960,
Paris. U.
Electricite? de France. Travaux d'investissement, 1957, 1959,
Paris. U.
Ibid., Rapport d'activite comptes de gestion, 1961, Paris. U.
Ambassade de France, Service de Presse et d'Information,
New York. France and the Atom, Jun 62. U.
State, Paris. Dsp 742, 15 Dec 61. U.
Ibid., dsp 1410, 27 Apr 62. U.
OEEC, European Nuclear Energy Agency. Basic Assumptions
for Nuclear Power Estimates in Europe, Paris, 1960. U.
Le Monde, passim.
L'Humanite, passim.
Le Figaro, passim.
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