News

Israel’s Reactor in Full Swing – With Norwegian Heavy Water

By Gary Milhollin

Aftenposten
July 6, 1989, p. 5

Israel’s Dimona reactor is working fine. Every year, its Norwegian heavy water makes about 32 kilograms of plutonium, which the C.I.A. says is going into atomic bombs. Israel promised to let Norway verify that the heavy water would be used for peaceful purposes, but Israel refuses to keep its word. All of Norway’s requests for verification have been rejected. Instead, Israel has decided to be the first country in the world to break the peaceful use and verification pledges, and has decided to make Norway the first victim of such a breach.

Norway began asking for inspections in February of 1987. First, Israel refused because of “technical problems.” Then, Israel said the International Atomic Energy Agency (which Norway had asked to do the inspections) was “biased.” Finally, Israel offered a humiliating “compromise” in which Norway would be shown a small amount of heavy water in drums with no guarantee that the water had come from Norway.

The compromise, which Norway rejected, was made one year ago. Since then there has been no progress at all in the talks. The delay has not affected Dimona. In the year since Israel offered the compromise, it has made enough plutonium for 9 bombs. Since February of 1987, when the talks began, it has made enough for 21. The heavy water scoreboard now reads: Israel 21 bombs–Norway zero inspections.

Norway’s efforts seem to be at a dead end. What should Norway do? One alternative is to do nothing and hope everyone will forget about the problem. The government’s sleepy pace suggests that this is being tried. Mr. Stoltenberg has promised more negotiations, but has not said when they will be. He is clearly not in a hurry. Israel, of course, is in no hurry either as long as the reactor is making bombs.

The other alternative is to ask Norway’s allies for help.

The United States has always opposed nuclear arms proliferation, and has searched for ways to stop the Israeli bomb. In May of 1988, in Congressional testimony on Norway’s rights in Israel, the U.S. State Department said: “The United States does support, in principle, Norway’s efforts to obtain an arrangement including inspection of the heavy water.” But it also said: “since our involvement has not been requested by either Norway or Israel, we have not attempted to become engaged in the discussions….”

Why hasn’t “U.S. involvement been requested”? The U.S. voice has been the strongest in the world against the spread of the bomb. It could not decently fall silent simply because an ally is involved. The strong U.S. ties to West Germany did not prevent the United States from condemning German exports of poison gas equipment to Libya. Once the facts became known, the U.S. stand was clear. Once the facts of Israel’s behavior are known, the U.S. stand would have to be just as clear in Norway’s favor. The peaceful use and inspection pledges are the foundation of U.S. policy as well as Norwegian policy. The United States is bound to defend the pledges just as strongly as Norway is.

Norway also needs help in Romania. That country imported 12.5 tons of Norwegian heavy water in 1986 under a pledge not to reexport it without Norway’s consent. Romania immediately broke its promise, however, and sent the water to an unknown buyer. Romania has refused to tell Norway where the heavy water is.

Canada would like to sell Romania 900 tons of heavy water to run two large reactors that Bucharest is now building. But Canada is worried about selling such a large amount of heavy water to an unstable country that cannot be trusted with 12.5 tons. If Romania’s dispute with Norway is not resolved before the sale, there will be a public outcry in Canada. If the sale is stopped, Bucharest will wind up with two empty reactors and the loss of far more money than Norway’s heavy water was ever worth. Norwegian experts have told Canadian experts about the problem with Romania, but have not asked for help. They should ask at once, to get Canada to start applying pressure.

Norway’s dispute with Israel is truly an international problem–a precedent for the whole world. If Israel can break its promises, defy Norway, and use a peaceful nuclear import to make atomic bombs, anyone can. Israel’s actions threaten all the countries that belong to the Non-Proliferation Treaty, not just Norway. To solve this international problem, Norway needs an international solution. Norway should ask all the members of the Treaty–beginning with the United States–for help now, before the score in Israel’s favor is thirty or forty to zero.

The author, who is American, has been strongly engaged in the debate over Norway’s exports of heavy water to Israel and other countries.  Gary Milhollin is a Professor of Law at the University of Wisconsin.  He now lives near Washington, D.C., where he directs the Wisconsin Project on Nuclear Arms Control.

Bombs for the World

By Gary Milhollin

Die Zeit (English Translation)
January 13, 1989, p. 44

Why should Germany, an otherwise responsible country, shelter nuclear blackmarketeers? Germany’s help to Libya’s poison gas plant–just revealed by the New York Times–is but a footnote to an even more sordid history of nuclear exports. For at least a decade, German firms have been the main suppliers of secret A-bomb programs around the world.

To South Africa German firms sent low-enriched uranium, which multiplied that country’s ability to make high-enriched uranium for bombs; to Israel went heavy water, which increased the output of Israel’s bomb-making reactor at Dimona; to Argentina went heavy water that could run a secret bomb-making reactor in the future; to Pakistan went an entire factory to help process uranium for bombs, plus tritium and tritium-making equipment that multiply the explosive power of its first-generation bombs; to India went “reflector material”–probably beryllium for the core of the bomb itself–and enough heavy water to let India run for the first time three large bomb-making reactors outside international controls. German firms have been the greatest single supplier of the South Asian nuclear arms race, and the greatest single threat to the Nuclear Non-Proliferation Treaty. Most of the exports were expressly forbidden by German pledges under the Treaty, and raise the question whether Germany cares about the Treaty at all.

Outside protests have failed. A U.S. memo in 1981 asked Germany to stop the Hempel group in Dusseldorf from sending enriched uranium to South Africa and heavy water to Argentina. Switzerland asked in 1985 for information about the same Hempel group’s sale of heavy water to India through Zurich. A U.S. memo in 1986 asked Germany to stop Hempel from sending India heavy water through a Swiss subsidiary, and another U.S. memo warned of an even larger secret scheme to sell heavy water “coordinated from within West Germany by Hempel Company officials.” Norway asked Germany in 1988 to investigate Hempel’s sale of Norwegian heavy water to India through Basel. In every case, Germany refused to provide information, investigate, or acknowledge any gap in its laws.

There are no benign explanations for this behavior: Germany is committed to exports, but what country honestly prefers export earnings to world security? Negligence in regulation exists, but doesn’t linger for a decade. The truth lies deeper, and has finally exasperated U.S. officials. They have named the Libyan poison gas culprit–Imhausen-Chemie–outright to the Times, and even revealed that President Reagan asked Chancellor Kohl for help in November. They also say privately that the German nuclear culprits are benefitting from the same web of corruption that managed to bribe all the German nuclear utilities in the recent waste scandal.

Are things really as bad as they look? Is Germany really corrupt at high levels? The Christian Democrats and Free Democrats, who run the country, have banded together in Parliament to defend Hempel despite the unquestioned fact of his outrageous deals_. Rather than shun a blackmarketeer, as elected officials would normally do, Germany’s ruling parties argue that Hempel has not violated German law! They refuse to ask whether the law should be changed, or whether he and others like him have violated Germany’s Treaty obligations. Their behavior encourages one to believe the worst.

Germany must act soon to save its reputation. It should condemn its guilty companies simply on moral grounds. Regardless of gaps in its law, Germany should not defend the sale of nuclear and chemical bomb making materials to the third world. If German foreign trade law is inadequate, as it obviously is, Germany should admit that fact and change it.

But most important, Germany should pursue the items illegally taken. Many of the nuclear exports lacked the required licenses and moved through conspiracies with the recipients. The items did not go to outer space–they are here on earth in known locations. If a thief stole Mr. Kohl’s car and sold it to his neighbor, would Mr. Kohl watch it being driven to work every day without saying anything? The surest way to halt the nuclear black market is for countries to publicly demand their goods back. Norway has just asked India to account for the Norwegian heavy water that Hempel’s group delivered to India illegally in 1983. Norway may confront India in the United Nations if India refuses. Germany should now demand publicly that its recipients account for their illegal gains.

Germany can still show the world that it is not a renegade exporter of mass destruction, but time is short.

Bonn’s Proliferation Policy

By Gary Milhollin

The New York Times
January 4, 1989, Page A21

It should come as no surprise that a West German company has been accused of helping Libya build a plant to produce poison gas. If true, this is only the latest in a long line of irresponsible West German exports.

Citing intelligence reports, Reagan Administration officials charge that the West German company Imhausen-Chemie played a central role in the design and construction of the Libyan plant.

The company’s president, Dr. Jurgen Hippenstiel-Imhausen, has denied any participation, and Libya insists the installation will be used only to make pharmaceuticals. The West German Government says that its investigation so far does not prove that the company is guilty of the charges.

But Bonn has rarely done much to discover or stop dangerous exports.

A West German company, Karl Kolb, was identified in 1984 as the unwitting source of equipment that Iraq used to manufacture the nerve gas it used against Iran. And, for at least a decade, West German companies have been the principal suppliers of secret atom bomb programs around the world.

To South Africa, West German companies sent low-enriched uranium, which multiplied Pretoria’s ability to make high-enriched uranium for bombs.

To Israel went heavy water, which increased the output of Israel’s bomb-making reactor at Dimona. To Argentina went heavy water that could run a secret bomb-making reactor in the future.

To Pakistan went an entire factory to help process uranium for bombs, plus tritium and tritium-making equipment to multiply the explosive power of its first generation of nuclear bombs.

To India went ”reflector material” – probably beryllium for the core of the bomb itself – and enough heavy water to let India run for the first time three large bomb-making reactors outside international controls.

Many of the nuclear exports lacked the required licenses. Companies are likely to have conspired with the recipients to move the goods across borders. The fact is, most of the exports were expressly forbidden by West German pledges under the Nuclear Nonproliferation Treaty, and raise strong questions whether Bonn cares about the treaty at all.

Outside protests have failed to stop the transfers. The United States asked Bonn in 1981 to stop the Hempel Group, in Dusseldorf, from sending enriched uranium to South Africa and heavy water to Argentina. Switzerland asked in 1985 for information about the same Hempel Group’s sale of heavy water to India through Zurich.

In 1986, Washington asked Bonn to stop Hempel from sending heavy water to India, and warned in a memo of an even larger scheme to sell heavy water ”coordinated from within West Germany by Hempel Company officials.” Norway asked West Germany in 1988 to investigate Hempel’s sale of Norwegian heavy water to India through Basel. In every case, Bonn refused to provide information, investigate or acknowledge any gap in its laws.

Why is West Germany so lax? To promote trade, Bonn has deliberately kept its export laws weak, and it doesn’t want to think about tightening them. And the staff for policing sensitive exports is woefully inadequate, making it easy for an unscrupulous operator to evade controls.

But it’s not just a matter of Bonn overzealously promoting exports or neglecting to plug gaps in the regulations. The illegal exports have been going on for more than a decade, and Bonn has been warned repeatedly about violations.

The truth lies deeper, and has finally exasperated American officials, leading them to the extraordinary step of publicly naming the company they think is involved in building the Libyan plant and even revealing that President Reagan asked Chancellor Helmut Kohl for help in their November meeting. They have told me privately that West German nuclear exporters are being protected by powerful political allies.

We have no proof that West German political leaders are being paid to look the other way. But the behavior of the Christian Democrats and Free Democrats, who run the country, is not encouraging. Some of them have banded together in Parliament to defend Hempel, arguing that the company has not violated German law. Moreover, they refuse to consider whether the law is so full of holes that it must be tightened.

This attitude not only threatens world security but will harm West Germany’s international reputation unless Bonn acts immediately to curtail illegal exports and better monitor those sensitive items that could be misused by importing nations.

Regardless of gaps in its laws, the West German Government should not be in the position of defending the sale to third world nations of materials to make nuclear and chemical bombs. If West Germany’s foreign trade law is inadequate, as it obviously is, officials should admit that fact and change it.

If Bonn is determined to act responsibly, then it should talk to the governments of the importing countries about returning items that were obtained illegally. The surest way to halt the nuclear black market is for countries to publicly demand their goods back.

Norway, for example, has just asked India to account for the Norwegian heavy water that was delivered by Hempel illegally in 1983. Norway may confront India in the United Nations if India refuses.

West Germany can still show the world that it is not an exporter of mass destruction. First, however, it must quit pretending that nothing is wrong.

CORRECTION-DATE: January 6, 1989, Friday, Late City Final Edition

An article on Wednesday incompletely identified a West German company allegedly involved in illegal shipments of nuclear materials to third world countries. The company is Alfred Hempel KG GmbH & Company of Dusseldorf, not the F. W. Hempel Company Inc., also of Dusseldorf.

Gary Milhollin, professor of law at the University of Wisconsin at Madison, is director of the Wisconsin Project on Nuclear Arms Control.

Testimony: Possible German Export Control Violations

By Gary Milhollin

Testimony of Gary Milhollin

Director, Wisconsin Project on Nuclear Arms Control

Before the Second Committee of Investigation,
Duetscher Bundestag

October 13, 1988

I am pleased to have this opportunity to appear before the Committee. My name is Gary Milhollin. I hold a degree in engineering from Purdue University and a degree in law from Georgetown University. Since 1976 I have been a professor of law at the University of Wisconsin, where I have specialized in contract law, private international law, and nuclear arms proliferation. I have served as an Administrative Judge, part time, at the United States Nuclear Regulatory Commission for twelve years, and been a consultant to the United States Department of Defense on nuclear arms proliferation.

During the past two years, I have published studies on the import, export, and production of heavy water in India, Israel, Norway and France.

My remarks here today are my own; they do not represent the views of any branch of the United States Government.

The Second Committee has asked me to present evidence on the question whether the Alfred Hempel group of companies has violated the Nuclear Non-Proliferation Treaty or other relevant rules of international or national law. I will do my best to tell the Committee what I know about these questions.

I have been told that the Committee may already have a translation of my study, “Germany’s Heavy Water Laundry.” The study’s findings have been reported in Germany in Der Spiegel and Die Zeit. I have revised the study recently, and am providing the revised copy to the Committee today.

I have also been told that the Committee would like to see as much documentation is possible on the sources of my information. To comply with that request, I have put together a set of notes and attachments that describe the sources and documentation that are available. I have submitted the notes and attachments today with the revised version of my study.

The Committee’s first question is whether there has been a violation of the Non-Proliferation Treaty.

One of the Treaty’s main goals is to put all sensitive nuclear exports under international inspection. Sensitive exports are ones that can be used to make atomic bombs. Heavy water has been used to make bombs in the United States, the Soviet Union, France, and–I believe–China. It also made the “peaceful nuclear device” that India tested in 1974, and is the backbone of Israel’s nuclear program. About twenty tons of heavy water–when used to run a natural uranium fueled reactor–can produce enough plutonium for one bomb per year.

Each country that adheres to the Treaty has promised not to provide heavy water to any non-nuclear weapon state unless there is an agreement to place the water under inspection. Norway and Germany adhere to the Treaty.

In 1983, the Alfred HeMpel group applied for a license to export 15 tons-of heavy water from Norway. The Hempel group gave the manufacturer, Norsk Hydro, an international import certificate stating that the water would be imported into the Federal Republic. The group had obtained the certificate from the German government after making an application in which the group promised to import the water. The group also gave Norsk Hydro an “end use statement” promising to use the heavy water in “deuterated labelled compounds and in peaceful research projects,” and promising that “the goods will not be reexported to countries not having signed the Non-Proliferation Treaty.”

The group submitted these documents in order to obtain an export license from Norway to Germany, which was granted.

Despite the promise to Germany to import the water into Germany, and despite the promise to Norway not to reexport the water to a country not having signed the Non-Proliferation Treaty, and despite the Norwegian export license (which restricted the export to Germany) the Hempel group sent the water to India. It did so by changing the destination of the aircraft. Instead of going to Frankfurt, it went to Bombay.
The Hempel group therefore broke its promises to Germany and Norway, and transferred a dangerous nuclear material in violation of the Nuclear Non-Proliferation Treaty.

It also violated the terms of the international import certificate. I have a copy of the certificate that the Hempel group signed. It provides that:
“the importer has undertaken to import into Bundesrepublik Deutschland the above-mentioned goods or, if they are not imported, not to divert them to another destination except with the authorisation of the competent German authority.”
The transfer of the water to India obviously violated this provision. The Hempel group falsely stated that the water would be imported into Germany, and then diverted it to another country without the required authorization.

The certificate also had other requirements. The version of the certificate that seems to have been in effect in 1983 provided:
“if the import identified in the application for the International Import Certificate is converted into a transit trade operation, I/we [meaning the importer] will not transfer the goods outside Germany without the consent of the German government.”

This seems to cover the case where there is a change of intention. That is, a trade that begins as an import is converted at some point into a transit operation. If the Hempel group originally intended to import the water and later changed its mind, it also broke this promise, because it transferred the water in transit to India without obtaining the German government’s consent.

Further, the certificate provided a blank space where the applicant was required to state the destination of all goods traded in transit. The Hempel group violated this requirement also when it failed to state the water’s true destination, which was India. Instead, it stated that the water was to be imported into Germany. The Hempel group still appears to be violating this requirement today, because it still refuses to reveal the true destination of the goods. Moreover, the Hempel group knew when it applied for the certificate that the water would go to India, and therefore gave false information in its application. An investigation would reveal that there was never any intention to sell the heavy water to a buyer in Germany.

Finally, the certificate says that it “may only be used for the operation indicated in the application, and must be returned at once if this operation is not carried out or is carried out in a different way.” The Hempel group violated this provision also, because the application indicated an import into Germany, whereas the real operation was a transit trade to India.

Therefore, the Hempel group broke a series of promises to the German government.
Does this mean that Germany has broken the Non¬proliferation Treaty?
Either Germany broke it or Norway did, because the water was provided without international inspection.

The diversion was of goods in transit. Such goods, like others, are owned and controlled by someone. Here they were owned and controlled by the Hempel group. The Norwegians
themselves could have delivered the goods to the buyer in Germany. If they had, German responsibility would have begun in Germany. But they didn’t. They delivered the water in Oslo. The sale was “ROB Oslo,” which transferred ownership and control to the Hempel group at the Oslo airport. The group’s responsibility began there and continued until it transferred the water to India.

Was Germany responsible for its company during this time? It is obvious that the Norwegians thought so. Norway gave up control and ownership because of the international import certificate, signed by the German government, in which the Hempel group promised to import the water into Germany and not divert it elsewhere. The Norwegians would not release the water without the certificate. The Norwegians assumed that Germany would force its firm to keep the promises.

It is true that the international certificate is not a direct promise by the importing government to the xporting government. But it is a statement (a certification) by the importing government that the importing firm has made certain promises. The certificate is issued so that the exporting government can rely upon those promises–that is the certificate’s purpose. Norway was entitled to believe that Germany would enforce the promises because Germany was the only country that could enforce them: If Germany did not enforce the promises, they would have had no meaning, the certificate would have had no purpose, and no country would have been responsible for the goods in transit.

The conclusion has to be that responsibility under the Treaty goes with control over the goods. The goods here were in the hands of a German firm under the authority of a German certificate. This means that Germany had the duty to force its firm to do what the certificate said. If Germany refuses that duty, I believe that it violates the Treaty.

The Treaty says that a member shall not “provide” heavy water without international inspection. This language covers any transfer of water within the member’s control, including material in transit. The German certificate itself recognizes this because it prohibits transfer trades without German governmental permission. If the Treaty did not cover German-controlled transit trades, there would be no reason to regulate such trades in the certificate.

The possibility that the Hempel group sent a letter and telex to the seller, Norsk Hydro, is covered in my study. According to the Hempel group, the letter and telex informed Norsk Hydro that the water was going to Switzerland. However, the group knew that Norsk Hydro had an export license limited to Germany, which meant that it would be illegal for Norsk Hydro to send the goods anywhere else. It could not, for example, send them to Switzerland or India without a Swiss or Indian import certificate, which Hempel’s group would have to provide.

Hempel’s group, therefore, knew that it was participating in an illegal act when the water did not go to Germany, regardless of the telex and letter. It also knew that it was breaking its promise to Norway “not to reexport [the goods] to countries not having signed the Non-Proliferation Treaty,” and knew, as I have said already, that it was breaking the series of promises it made to Germany in the international import certificate. Norsk Hydro may have been naive in dealing with the Hempel group, but the law does not pardon fraud because the victim was gullible.

I do not know whether Germany has a false statements law. In the United States, it is a felony to make false statements to federal authorities. If the Hempel group had made these statements on the application for a U.S. international import certificate, the persons responsible would face Punishment up to five years in prison. There is a similar punishment for misusing the certificate after it is issued.

My study also discusses the Hempel group’s other trades, and refers to U.S. complaints about the group to the German government. I have enclosed news stories quoting U.S. officials’ statments about the complaints, and have enclosed a report on the group’s other transactions that is said to come from British intelligence.

My study also states that the Hempel group sent large quantities of Chinese heavy water to India in the early 1980s. These shipments were reported in briefings by U.S. intelligence when the U.S.-China agreement for nuclear cooperation was being considered. The Hempel group was identified as being responsible. The shipments allowed India’s nuclear program to escape international inspection and begin to make plutonium free for atomic bombs. India’s new plutonium stockpile has encouraged Pakistan to push its nuclear weapon program forward, and spurred the nuclear arms race in the Subcontinent.

In closing, I would like to point out that if the Hempel group’s position is correct, there is a .giant hole in export controls and in the Non-Proliferation Treaty. If what the Hempel group did in 1983 were legal, any broker could take a German import certificate to any country in the world tomorrow and use it to send plutonium or high-enriched uranium secretly to any buyer in the world. This endangers everyone, including generations to come. Until Germany makes it clear that the Hempel group is wrong, there will be no assurance that these transfers will stop.

I have made a list of recommendations that the Committee might consider in responding to the Hempel group’s activities. They are as follows:

  1. The German government should demand that the Hempel group report immediately the true destination of all the Norwegian heavy water covered by the group’s German import Certificates. The certificates clearly require this, and there is no excuse for not complying.
  2. The German government should examine each international import certificate that the Hempel group has received for nuclear-related goods, and demand that the true destination of the goods be reported, as the certificates require.
  3. The Bundestag Committee should also examine the ‘certificates. It should obtain copies of them from the – government and should ask the government and the Hempel group to report the true destination of all the goods that the certificates cover.
  4. The penalties for violating the obligations of the certificate should be increased. A fine of 50,0000M–the penalty now in the certificate–does not deter a profit of a million DM. The Norwegian shipment in 1983 was worth nearly 4 million dollars on the legitimpte market. It must have been worth far more than that to India, which received it without controls. Under U.S. law, a person who makes a false statement to obtain an international import certificate, or who misuses the certificate, can be punished by up to five years in prison. The Hempel group has made large profits by deliberately violating the certificates, and does not appear to be subject to any sanction.
  5. Administration of German controls should be improved. German authorities should be able to find out what happens to sensitive nuclear material that is supposed to be imported into Germany but does not arrive. There should be a staff adequate to track materials on a timely basis, and make inquiries when something goes wrong. The records should be open to the Bundestag.
  6. To help reestablish confidence in its nuclear industry, Germany should create a -special list of companies authorized to deal in, possess, or transport sensitive nuclear materials. Because such companies control the means to make atomic bombs, the list would be confined to companies that deserve the highest confidence. Any company that had violated an international import certificate would be barred from the list.

Germany’s Heavy Water Laundry

By Gary Milhollin

In early May of this year, Norway confirmed that a German company had diverted 15 tons of its “heavy water” from international controls in 1983. Heavy water, or deuterium oxide, is tightly controlled because it can be used in reactors to make plutonium, a nuclear weapon material. In 1985, the same German company diverted a shipment of 6.8 tons of Soviet heavy water, putting it on a series of air flights destined for India. Also in 1983, the company apparently diverted to India about 5.5 more tons of heavy water that the company had imported previously and accumulated.

After the diversions were discovered, Norway and Switzerland publicly asked Germany to investigate. However, Germany refused –it even refused to ask the company where the heavy water went. Because the company operates under German law, and used German import certificates as part of its illegal scheme, Germany’s refusal to investigate is quite serious. It raises the question 3 whether Germany is fulfilling its obligations under the Nuclear Non-Proliferation Treaty.

To read the complete report, click here:  Germany’s Heavy Water Laundry

3 Scandals Oslo Must Put to Rest

By Gary Milhollin

International Herald Tribune
October 7, 1988, p. 6

WASHINGTON – Norway is facing three scandals this fall, all caused by the sale of heavy water, which is used in nuclear reactors that produce plutonium, the preferred material for making atomic bombs.

Heavy water, enriched in deuterium, is difficult to produce; Norway is one of the few countries to export it. Part of its production has gone astray.

Israel’s Dimona reactor, which the CIA says is producing plutonium for bombs, is being operated with Norwegian heavy water sold in 1959. India’s newest reactors are also making weapons-grade plutonium, using Norwegian heavy water diverted by a West German firm in 1983. And Romania appears to have illegally re-exported Norwegian heavy water it bought in 1986, probably to India or Israel.

All the importers broke their word. Israel pledged to use the Norwegian water for peaceful purposes. and to allow on-site inspection of its reactor. Israel now refuses inspection. West German authorities gave a German firm a certificate promising the water would be used only in that country, but the firm sent the water to India. Romania promised not to re-export the Norwegian water without permission. but will not say where it is.

Norway may have been naive, but the importers are in open breach of agreements. Oslo should put the blame where it belongs.

Israel is offering a “compromise.” It admits running the Dimona reactor with Norwegian heavy water since 1963 and thus making plutonium — probably enough by now for more than 100 atomic bombs.

Israel offers only to let Norway inspect 9 tons of heavy water in drums outside the reactor —all that remains, Israel claims, of 20 tons imported in 1959 and 1 ton imported in 1970. This offer could never be accepted by the United States or the International Atomic Energy Agency, both of which demand to see all the plutonium made by a reactor using even the slightest amount of controlled heavy water.

In the West German case, the shipment consisted of 15 tons of heavy water licensed to be sent to Frankfurt. The plane left Oslo one day in December 1983, landed in Basel, then flew to Bombay after a stop in Dubai. The flight plan is in the records of the Swiss Air Ministry.

Romania still has not said where the Norwegian water is.

In each case. Norway has a choice: It can stand on its rights or it can compromise. Israel’s offer is unacceptable, and West Germany and Romania will make similar offers if Norway accepts Israel’s. Oslo must confront these countries publicly and demand that they keep their word. Confronting Israel would make its bomb a public issue — something Israel has tried to avoid. For Israel to be branded as the first country to break the pledges of peaceful use and inspection would look bad in the United Nations. Norway should force a de-bate on what these pledges mean, and whether other countries, America in-chided, should help enforce them.

The West German nuclear industry is already embroiled in scandal. The diversion of the Norwegian water is the most serious charge. It violates the Nuclear Nonproliferation Treaty, which forbids the transfer of heavy water without international controls. West Germany’s position, like Israel’s, would crumble under public view.

Romania too is vulnerable. It wants to import about 900 tons of Canadian heavy water to run two reactors it is building. If Romania will not account for Norway’s 12.5 tons, Canada will find it awkward to send 900 tons to such a buyer. Romania will either face more stringent controls from Canada, or two empty reactors.

The question for Norway is whether to make these issues public. By doing so it could convict all three importers in the court of world opinion. Norwegian authorities could demand the heavy water back. And Norway could force other countries to stand up in the United Nations and oppose proliferation. If, instead, it makes a series of weak compromises, Oslo will continue to look, and be, guilty.

The writer is a resident scholar of the Natural Resources Defense Council in Washington. He contributed this to the International Herald Tribune.

Norway’s Heavy Water Scandals

By Gary Milhollin

Aftenposten (Oslo)
September 14, 1988

This autumn, Norway faces three heavy water scandals. Israel is running the Dimona reactor–which the CIA says is making plutonium for atomic bombs–by using Norwegian heavy water sold in 1959. India is running its newest series of reactors–also making plutonium for atomic bombs–by using Norwegian heavy water diverted by a German firm in 1983. And Romania seems to have secretly and illegally reexported–probably to India or Israel–the Norwegian heavy water it bought in 1986. The German and Romanian diversions were revealed in May, and the talks with Israel about Dimona have just ended.

All the importers have broken their word. Israel pledged to use Norway’s water for peaceful purposes, and to allow on-site inspection. But Israel refuses any inspection, so Norway cannot find out what its heavy water was used for. Germany gave one of its firms a certificate promising to import the water to Germany and not divert it elsewhere, but after Norway shipped the water on the faith of the certificate, the firm diverted the water to India. Germany says it can’t investigate because the water didn’t reach German borders. Romania promised not to reexport Norway’s water without permission, but won’t say–after being asked–where the water is. Norway may have been naive in these matters, but the importers are in open breach of their agreements.

It is time for Norway to stand up for its rights, and put the blame for these scandals where it belongs.

Israel hopes to escape its obligation through a “compromise.” Israel admits running the Dimona reactor with Norway’s heavy water since 1963 and admits that the reactor has made plutonium. There is enough plutonium by now in Dimona’s spent fuel for more than one hundred atomic bombs. Norway has the right to verify that the plutonium made with its water has not gone into bombs, but Israel is only offering to let Norway inspect nine tons of heavy water in drums outside the reactor. The nine tons are what Israel claims are left of the 20 tons imported in 1959 and one ton imported in 1970.

Israel says that 12 tons were lost–a rate of more than 2% per year. Reactors like Dimona normally lose .5% to 1% per year, two to four times less than Israel claims. French engineers who helped build Dimona say the Israelis were expert operators, so the 12 ton loss is not credible. Finally, Israel refuses to promise that the nine tons in drums will all be Norwegian–Israel says the water is mixed with water from other suppliers. Israel therefore expects Norway to forget about verification, and inspect a small amount of mixed water that Israel could have bought on the black market. It is no surprise that former Prime Minister Kare Willoch, commenting on this, said that “it is impossible for Norway to give up its right to inspect the use of Norwegian heavy water in Israel.”

Israel has treated U.S. heavy water differently. Israel imported 4 tons from the U.S. in 1963 which Israel put under international inspection and claims was never used. If Israel had put the water in a reactor, the U.S. would demand to see the plutonium. If Israel told the U.S. that it had put the water in a reactor but would not show the plutonium–which is what Israel has told Norway–U.S. officials would be outraged. They would be more outraged if Israel refused to exhibit the whole 4 tons because of operating losses and still wanted to hide the plutonium–Israel then would be hiding both the plutonium and part of the water. The U.S. and the International Atomic Energy Agency have recently confirmed their policies on this point: they demand to see all the plutonium made by a reactor using any controlled heavy water–even the slightest amount. Thus, they could not accept the offer Israel has made to Norway.

With respect to Germany, the shipment consisted of 15 tons of Norwegian heavy water licensed to go to Frankfurt. The plane took off from Olso in December 1983, landed in Basel where it took on 6.8 more tons of cargo, and went to Bombay after a stop in Dubai. The flight plan is in the computer records of the Swiss air ministry. The cargo added in Switzerland was owned by the same broker who owned the 15 tons, and must have been part of the heavy water he had bought from Norway in small quantities since 1976. Thus, the Norwegian police will probably report that more than twenty tons of Norwegian water is illegally in India.

Romania still has not said where Norway’s water is.

For each of these countries, Norway has the same choice. It can stand on its rights or make compromises. Israel’s offer is too weak to accept, and Germany and Romania will make weak offers too if Norway accepts Israel’s. To stop its exports from making bombs, Norway must confront these countries publicly, and demand that they keep their word.

Confronting Israel will make its bomb a public issue–something Israel has tried to avoid. It will not be easy for Israel to explain why it has broken an international obligation in order to make atomic bombs. Israel will be the first country to break the peaceful use and inspection pledges, upon which the world nuclear trade depends. This will not look good in the United Nations. Norway should force a debate on what these pledges mean, and whether other countries–such as the United States–should help Norway enforce them.

Confronting Germany will heap another scandal on the pile already covering its nuclear industry. The Norwegian diversion is the most serious scandal yet because it violates the Nuclear Non-Proliferation Treaty, which forbids the transfer of heavy water without international controls. Germany’s position, like Israel’s, will crumble under public view.

Romania too is vulnerable. It wants to import about 900 tons of Canadian heavy water to run the two power reactors it is now building. If Romania won’t account for Norway’s 12.5 tons, Canada will find it awkward to send 900 more tons to such a buyer. Romania will either face more controls from Canada, or two empty reactors.

Norway can also demand its heavy water back. The water was sold on condition that its use could be verified. If it can’t be, the buyers have no right to keep it. Norway never agreed to let its water be used for unrestricted purposes. This demand could even be made of India, because official Swiss records show that Germany’s 20 tons are in Bombay.

The question for Norway is whether to make these issues public. If Norway does, it can convict all the importers in the court of world opinion and put the blame where it belongs. Norway can also force other countries to stand up and oppose proliferation in the United Nations. If instead, Norway makes a series of weak compromises, it will continue to look and be guilty itself. The choice seems obvious for the country of the Nobel Prize.

Gary Milhollin is a professor at the University of Wisconsin Law School.

The Case of Missing Heavy Water

By Ed Foster-Simeon

The Washington Times
June 16, 1988, p. E1.

In the case of the purloined heavy water, Gary Milhollin is on the trail.

Something of a private citizen turned private eye, he has earned an international reputation as a tracker of black market sales of nuclear materials to Third World nations racing to get the bomb.

“If countries are doing things that they’re not supposed to, I try to find out about it and embarrass them in the newspapers,” says the University of Wisconsin law professor and Washington-based nuclear arms proliferation specialist. “That’s one of the things I like to do.”

Mr Milhollin, who is deadly serious about what he considers a deadly serious business, has charged India with diverting nuclear materials from international inspection or secretly importing them to build a nuclear arsenal.

He has accused Israel of breaking the “peaceful-use pledge” -cornerstone of civilian nuclear exports- and even suggested that the United States may be engaged in “selective proliferation.” Most recently, he uncovered clues that point to nuclear exports from Norway being used to produce bombs.

“He’s a crusader,” says Per Paust, press attache at the Norwegian Embassy here. “He’s monitoring everything going on in the [nuclear] reactor world, trying to uncover any attempts at utilizing reactors for unpeaceful purposes.”

One source at the U.S. Arms Control and Disarmament Agency first describes Mr. Milhollin as a “loyal dissenter” of U.S. policy, then adds: “Truth be known he’s a pain in the side of the establishment.”

Central to Mr. Milhollin’s concern is the international trade in heavy water, or deuterium oxide, which allows reactors to run on natural uranium as opposed to expensive and tightly controlled enriched uranium.

Under the 1970 Nuclear Nonproliferation Treaty, plutonium and enriched uranium-the materials used to make the Nagasaki and Hiroshima bombs-are exported internationally only after recipients pledge to confine use to peaceful purposes and accept systematic inspection by the International Atomic Energy Agency.

Although the same peaceful-use pledge applies to heavy water, the material is not subject to IAEA inspection if it goes to a country that is a member of the treaty.

That “loophole,” Mr. Milhollin says, has allowed malefactors to secretly re-export or divert heavy-water shipments to countries not subject to treaty controls.

Mr Milhollin describes the problem that this lack of oversight poses with a simple equation: Heavy water is used to run some reactors, a by-product of the nuclear reaction is plutonium and the plutonium can be used to make bombs.

Last month, the Norwegian government admitted that a 1983 sale of 15 tons of heavy water to a German company never reached Frankfurt as intended.

Instead, the pilot of the West African Airlines plane carrying the cargo made a last-minute flight change at Oslo Airport and flew to Basel, Switzerland. Then the cargo reportedly was shipped to Dubai in the United Arab Emirates, where it disappeared into the black market.

Three weeks later, the Norwegians announced that they were looking into whether a 12.5-ton shipment of heavy water sent to Romania in 1986 also had gone astray.

“It’s shipped out without a mechanism to determine whether it arrived” explains Mr. Milhollin, who says “circumstantial evidence” suggests the errant shipments went to India and Israel, respectively. “It just seems like another example of governmental incompetence, which is not rare in any country.”

According to experts, 20 tons of heavy water can produce enough plutonium to manufacture one Nagasaki-caliber bomb a year. Mr. Milhollin says the lack of controls on heavy water facilitates the spread of nuclear weapons to unstable countries in the Middle East and South Asia.

This represents a serious threat to world peace, says Mr. Milhollin, who is fearful that Third World countries would be more inclined than the superpowers to use nuclear weapons in an armed conflict. Treaties and alliances could then draw the United States and Soviet Union into a series of events beyond their control.

But government officials suggest that Mr. Milhollin overstates the scope of the problem-pointing out that heavy water itself is not a component of nuclear weapons.

“I’m not going to label him a fringe type, but the [International Atomic Energy Agency] takes a much more benign view of heavy water,” said one State Department source who asked not to be identified. “I don’t think anyone gets as exercised or as upset as he does.”

Mr. Milhollin also is criticized for a “confrontational style” and going against the grain of international diplomacy with public accusations based on circumstantial evidence. However, Charles William Maynes, editor of Foreign Policy, believes Mr. Milhollin is on to something.

“This is an issue that the professional non-proliferation community inside the government has over-looked for 20 years,” says Mr. Maynes, who has published two of Mr. Milhollin’s articles. “I think it’s an embarrassment. He’s bringing to light an issue that should have been looked at more carefully.”

Heavy water was not expected to be on the official agenda at last week’s IAEA board of governors meeting in Vienna, Austria, but another State Department official said that, in light of recent events, it almost certainly would be discussed “around the periphery.”

Leonard Spector, a senior associate at the Carnegie Endowment for Peace in Washington and a leading authority on nuclear arms proliferation, agrees: “We know that one of the primary ways to stop the spread of the bomb to [certain countries] is to deny them the materials they need. Now here we are learning that a key commodity isn’t really controlled.

“I’m supposed to be a big expert in this field, and I didn’t know about this until [Mr. Milhollin] unearthed it.”

At 49, Gary L. Milhollin has the appearance of someone who works too hard and enjoys too little. His features are gaunt and his expression solemn, giving him the pained and all too serious look of a long-distance runner.

He operates out of a cluttered office at the Natural Resources Defense Council in downtown Washington. His desk is littered with stacks of documents and press clippings from around the world. There also is a small bottle of clear liquid labeled “Ontario Hydro Reactor Grade Heavy Water.”

“I enjoy pretty good relationships with all of the countries I’ve worked with,” he says, pointing to a colorful figurine of an elephant he received from the Indian Embassy at Christmas.

How does a university law professor become a nuclear arms proliferation specialist and authority on of all things, international trade of heavy water?

In Mr. Milhollin’s case, it appears to have been by accident-more precisely, the nuclear power plant accident at Three Mile Island, Pa.

Twelve years ago, he followed a friend’s suggestion and applied for a part-time administrative judgeship with the U.S. Nuclear Regulatory Commission’s Atomic Safety and Licensing Board Panel.

With a mechanical engineering degree from Purdue and law degree from Georgetown University, he brought an unusual combination of technical and legal knowledge to the job.

As one of the NRC judges hearing testimony following the 1979 accident at Three Mile Island, he came to the conclusion that the integrity of the plant management had been so compromised that it should be totally replaced before allowing the undamaged reactor to come back on line. His view did not prevail.

It was the critical juncture in his career, after which he became convinced that the benefits of nuclear energy were going to be smaller than originally thought.

“I decided that the main effect of exporting nuclear technology was going to be to spread the bomb around the world rather than produce a lot of cheap energy,” says Mr. Milhollin, who lives in Chevy Chase with his wife, Monique, and their two children.

Although he maintained his part-time post with the NRC, Mr. Milhollin shifted his research efforts at the University of Wisconsin from contracts and conflict of laws to nuclear arms proliferation.

He became intrigued with the trade of heavy water while preparing a 1984 NRA report on India’s nuclear power program. Three years ago he received a grant from the Rockefeller Brothers Fund and, like an archaeologist on a dig, left the classroom for Washington to research the issue full time.

Poring over public records, newspaper reports and Indian government documents, he began putting together the pieces of an intricate puzzle. Using that information in connection with a close study of India’s known demand, supply and imports of heavy water, Mr. Milhollin concluded that India was obtaining heavy water under the table to run reactors outside international safeguards for the purpose of building a nuclear arsenal.

He broke onto the international scene in 1986 with an article published in Foreign Policy magazine under the headline “Dateline New Delhi: India’s Nuclear Cover Up.”

Excerpts of the article appeared in newspapers worldwide. India, which exploded a nuclear device in 1974 and is in a heated arms race with neighboring Pakistan, angrily denied the charges. It refused, however, to produce any information to support the denial.

Mr. Milhollin struck again in the winter issue of Foreign Policy, with an article titled “Heavy Water Cheaters.” This time he charged, among other things, that Israel was using heavy water obtained from Norway in 1959-on the basis of a peaceful-use pledge-to build nuclear bombs at its secrecy-shrouded reactor at Dimona in the Negev desert.

The Israelis deny any improprieties and last week tentatively agreed to let Norway inspect some 10 tons of heavy water. But the Norwegians will not be allowed to visit Dimona to determine if the heavy water has been used to make plutonium for nuclear weapons.

In addition to what colleagues describe as his “extraordinary detective work,” Mr. Milhollin has become quite adept at working the news media. In Norway, he focused attention on the heavy water issue by writing newspaper opinion pieces and feeding reporters enticing bits of information.

“His revelations got media interest rolling,” says Jon Roessum, a foreign desk reporter with the Norwegian Broadcasting Service in Oslo. He has worked closely with Mr. Milhollin on several in-depth programs regarding Norway’s export of heavy water and has plans for a major documentary to be aired in the fall. “I’m sure the Foreign Ministry wishes he would go away.”

Mr. Milhollin is at no loss for criticism of his own country, which he scolds for turning a blind eye toward the development of nuclear weapons in some countries while being openly critical of others.

“The difficulty has been that we’ve just continued to put this issue off and not be serious about it because of a desire to achieve some short-term objective,” he says, adding that the United States has lessened its criticism of Pakistani attempts to build a nuclear arsenal, since Pakistan began providing support for refugees during the war in Afghanistan.

“But long after Afghanistan is over and forgotten, Pakistan’s nuclear capability is going to be a problem for everyone in the world, including us,” he says. “Once we get nuclear weapons throughout the Middle East and South Asia, then we are going to be in a world that is literally on a hair trigger everywhere.”

In recent months, Mr Milhollin has been pressing Norway to exercise its inspection rights of 20 tons of heavy water sold to Israel in 1959 that hasn’t been inspected in some 25 years. Now, he has his eye set on West Germany, which he accuses of being lax in enforcing safeguards on nuclear materials.

According to Mr. Milhollin, the owner of the West German company involved in the 15 tons of Norwegian heavy water that went missing in 1983 has been suspected of illegally trading nuclear materials since about 1980.

“The struggle to prevent the spread of the bomb is a struggle we can’t afford to lose,” says Mr Milhollin, “but we’re losing it.”

A Heavy Water Whitewash

By Gary Milhollin

Arbeiderbladet (Oslo)
April 20, 1988

Seventeen months ago, the world learned of Norway’s nuclear deal with Israel. The deal was simple: Israel got 20 tons of heavy water and Norway got two promises. The first was that Israel would not use the heavy water to make atomic bombs–Israel would restrict it to “peaceful use.” The second was that Norway could do on-site inspections, to be sure that the peaceful use pledge was kept.

Heavy water does not go into atomic bombs; it runs reactors that make plutonium that goes into atomic bombs. In 1945, plutonium made the world’s first nuclear explosion and destroyed Nagasaki. So Israel’s peaceful use pledge meant that none of the plutonium made with Norway’s heavy water could go into atomic bombs, and the inspection pledge meant that Norway would have the right to keep track of the plutonium. The heavy water went in 1959, and Norway’s last inspection was in 1961, two years before Israel started its reactor at Dimona.

After the deal became known seventeen months ago, Norway began asking for inspections. During negotiations, Israel admitted that it used Norway’s heavy water to start the Dimona reactor in 1963. High sources in both governments have confirmed the admission. Thus, Israel has admitted making plutonium that Norway has a right to inspect and restrict to peaceful use. The Dimona reactor loses very little heavy water in operation, so Norway’s water is still making plutonium in Israel today.

The situation has great implications for the Middle East. If Norway enforces its rights, Israel’s nuclear arsenal will have to be scaled back or dismantled, because the Dimona reactor is Israel’s only source of plutonium, and plutonium is the backbone of Israel’s nuclear arsenal. The has reported for more than twenty years that Israel is making bombs with Dimona’s plutonium, and Israel has just sent a technician to prison for revealing how many bombs there are. Because Norway’s rights cover all the plutonium made with Norwegian water, Norway has a great opportunity: it can slow or halt the spread of nuclear arms in the Middle East.

But Norway’s foreign ministry does not see an opportunity–only an embarrassment. And to end the embarrassment, it would end Norway’s rights. In one or two weeks, it will send a delegation to Israel to accept a humiliating offer. Israel is offering to set aside 20 tons of heavy water for Norwegian inspection, or to sell 20 tons of heavy water back to Norway, with no guarantee that the water will be Norwegian, and no explanation of what Norway’s water has been used for. Israel apparently thinks that Norway will agree–that a team of Norwegians will really fly to Israel every few months for the next several years to look at someone else’s heavy water. And, Israel thinks that Norway will forget about the peaceful use pledge, which covers the plutonium made with Norway’s water. Israel justifies its offer by saying that it has mixed Norway’s water with water from “other suppliers” and can no longer tell which water is Norway’s.

Israel’s offer is ridiculous. Israel has a duty to comply with the peaceful use pledge–not to run a heavy water carnival. To comply with the pledge, Israel must explain what it has done with the plutonium that Norway’s water has made. Plutonium–not heavy water–is the material that makes bombs. It was to keep track of plutonium that Norway got the peaceful use and inspection pledges in the first place. If heavy water did not make plutonium, one could export it like beer.

It would be simple for Israel to comply. Every reactor–including Dimona–has operating records. Those records show when the reactor started, how much heavy water it used, where the heavy water came from, and how much plutonium was made. One does not run industrial plants without knowing what goes in and out. Israel admits that Norway’s 20 tons went into the reactor in 1963. Everybody knows that plutonium has come out. The only question is whether other heavy water was in the reactor too. Israel has told Norway that the 20 tons were only half as much as the reactor needed. If that is true, then half of the plutonium the reactor has made is covered by Norway’s rights. “Proportionality” is widely recognized in international agreements. What of the other 20 tons? Where did they come from? In the early 1960s, the only source was France, which had built the Dimona reactor. But the only heavy water France had available without controls was the water that France had imported earlier from Norway. Sources familiar with the French nuclear program say that France shipped several tons of Norwegian water to Israel by air in 1960, despite France’s promise not to do so. Israel seems to be hiding the fact that Dimona has used only Norwegian heavy water.

The final irony involves Romania. In 1986, Norway sold Romania 12.5 tons of heavy water. No one can figure out why Romania bought it. Canada is building a large Romanian reactor that will need hundreds of tons of heavy water, but Canada will supply it all. Norway’s 12.5 tons is insignificant for the reactor, which won’t even start soon. Also, Romania is about to start a heavy water production plant of its own, and has a pilot plant that makes heavy water for research. The only conceivable need for 12.5 tons in 1986 would be for reexport. Romania is the only East Bloc country with close ties to Israel, and there are reports that Romania made an air shipment of heavy water to Israel shortly after Norway’s import arrived. Norway’s water was covered by international inspection, but the inspectors cannot look at the water–they can only inspect the plutonium the water makes if it goes into a reactor. Thus, Romania could have reexported Norway’s water without anyone knowing, or could have exported Romanian water from the pilot plant and used Norway’s water to replace it, or could have exported a larger quantity including both countries’ water.

The possible reexports from France and Romania show how insulting Israel’s offer is. Israel could take water it got from France in 1960, and from Romania in 1986, to make the 20 tons that Norway would be allowed to inspect. Then, Norway would be going to Israel to see its own water–but with the label: “other suppliers” or “origin unknown.”

Israel is simply thumbing its nose at its obligations. Israel refuses to account for the only thing that is important–the plutonium made with Norway’s heavy water. Israel says the plutonium is “unavailable.” Nor will it reveal Dimona’s records. In effect, Israel is saying, “we didn’t keep the peaceful use pledge covering your heavy water, and we are sorry. But here is some other heavy water you can look at, or even buy from us if you like. We hope you are satisfied.” Israel is like the man who tells the bank he is borrowing money to build a house, but uses it to traffic in illegal drugs. After the drug business is going well, and the bank finds out, the man says: “thank you very much; here is some money back.” Should the bank consider the problem “resolved?” Or should it call the police?

There are police to be called. Norway can publicly ask the United States for help in getting Israel to meet its obligations. The United States could not refuse and still claim to oppose proliferation. Norway could also censure Israel in the United Nations. No country–even the United States–could defend an open violation of the peaceful use pledge.

Norway owes the world more than a whitewash. If it really cares about proliferation, it must do more than attend Israel’s heavy water show. Because of years of lax controls, Norway has helped spread the bomb to the Middle East. It has one more chance to do what is right, and should not miss it.

Gary Milhollin is a professor at the University of Wisconsin Law School.

Testimony: Proposed Nuclear Trade Agreement with Japan

By Gary Milhollin

Testimony of Gary Milhollin

Director, Wisconsin Project on Nuclear Arms Control

Before the House Committee on Foreign Affairs

March 2, 1988

Mr. Chairman, I am pleased to testify on the proposed nuclear trade agreement with Japan. I am a Professor of Law at the University of Wisconsin, have acted as an Administrative Judge at the Nuclear Regulatory Commission, and as a consultant to the Department of Defense on nuclear non-proliferation.

The proposed agreement is complicated–it has a text with annexes, an implementing agreement with additional annexes, side letters, and notes verbales. It is endorsed by the Departments of State and Energy, but opposed by the Nuclear Regulatory Commission and former Secretary of Defense Weinberger. It raises many questions that have not been answered.

To better assist the Committee, my statement is arranged to help answer the questions most frequently asked about the agreement.

Questions concerning trade

1. Question: Why has a new nuclear trade agreement with Japan been proposed? The present one doesn’t expire until the year 2003.
Answer: Because the Nuclear Non-Proliferation Act of 1978 (NNPA) asked the President to re-negotiate existing agreements. The object was to increase U.S. non-proliferation controls.

2. Question: What is the main effect of the proposed agreement?
Answer: It would reduce Japan’s dependence upon the United States. Japan would no longer need case-by case U.S. consent to extract plutonium from U.S.- supplied reactor fuel. Japan would have blanket approval–extending into the next century–to extract as much plutonium as the United States has now in its nuclear arsenal. Japan would use the plutonium to reduce the amount of reactor fuel it imports from the United States.

3. Question: What is plutonium?
Answer: A man-made nuclear explosive. Thirteen pounds of it made the world’s first nuclear explosion in 1945. It can also fuel nuclear reactors. Before it can be used for either purpose, it must be extracted from spent reactor fuel.

4. Question: Why does Japan want to extract the plutonium?
Answer: Japan says it wants to use it for reactor fuel. However, Japan plans to extract about 40 tons by 1995, could extract over 80 tons by the year 2000, and will only need about 10 tons for reactor fuel. The rest will be stockpiled. Table 1 shows how much plutonium Japan plans to extract.

5. Question: Why does Japan want to use plutonium reactor fuel?
Answer: To reduce its imports from the United States. The plutonium fuel would replace the natural uranium that Japan is now buying from U.S. producers, and the uranium enrichment that Japan is now buying from the U.S. Department of Energy. The plutonium would either replace U.S. fuel in light water reactors, or run breeder reactors that would replace the light water reactors that now use U.S. fuel. Plutonium fuel costs more for Japan to make than U.S. fuel would for Japan to buy, but Japan is willing to pay the higher cost for energy independence.

6. Question: How would this affect the U.S. balance of payments?
Answer: It would increase Japan’s surplus, which now exceeds $50 billion per year.

7. Question: Would the United States lose Japan’s nuclear fuel business without the proposed agreement?
Answer: The agreement is not connected to the business. Japan would remain free to buy its fuel on the world market–as it is now. Japan buys practically none of its uranium from the United States, but has most of its uranium enriched here under contracts with the U.S. Department of Energy. As long as Japan has a balance of payments surplus with the United States, Japan will need to buy valuable U.S. items such as reactor fuel.

8. Question: According to President Reagan, U.S. nuclear exports to Japan “could amount to $1 billion or more each year in the coming decade.” Is this correct?
Answer: No. Over the next decade Japan is only expected to buy $260-$435 million worth of U.S. enrichment per year, and only 2% of its uranium from the United States, according to DOE figures cited by Dr. Milton Hoenig in a study submitted for the record today. Those amounts are not likely to go up. There are no other major nuclear transfers to Japan on the horizon.

9. Question: How much U.S. enrichment might Japan buy in the future?
Answer: Japan’s policy is to reduce its nuclear imports. Japan intends to supply one third of its own enrichment needs by the year 2000 with a new enrichment plant. Japan’s dependence on U.S. enrichment is expected to fall to 25%-50% of its needs by that time. If Japan begins to use plutonium fuel to replace imported U.S. fuel, as it would under the proposed agreement, Japan’s U.S. imports will go down further in proportion to the amount of plutonium used.

10. Question: How much of Japan’s plutonium does the United States control now?
Answer: More than 80%. U.S. control will not fall below 75% until the next century. This means that any Japanese plan to use plutonium on a broad scale in this century is subject to U.S. control under the present agreement. The proposed agreement would give up this control by consenting in advance to Japan’s use of plutonium fuel. Table 1 shows the percentage of U.S. control out to 1995.

11. Question: Will the proposed agreement make nuclear trade with Japan “more stable and predictable,” as the Administration asserts?
Answer: Yes, for Japan. The main source of unpredictability is that the United States could use its consent rights tO interfere with Japan’s use of plutonium in the future. The proposed agreement would remove that uncertainty. It would give U.S. consent in advance (blanket approval) to Japan’s plutonium program. This would make trade more predictable for Japan. There would be less predictability for the United States, however, because of its loss of influence over Japan’s program.

12. Question: Is there instability and unpredictability now in U.S. nuclear trade with Japan?
Answer: No. The United States has granted every request Japan has made for plutonium use. Rigid time limits in U.S. law require quick review of Japan’s requests. “Batch approvals” have been given to make sure Japan is not inconvenienced.

13. Question: Will plutonium extraction help dispose of nuclear waste?
Answer: No. An authoritative international study of the nuclear fuel cycle concluded that extraction did not help dispose of waste. Other studies have agreed. The amount of toxic waste and plutonium is the same after extraction as it is before. However, because the extraction step generates additional processing wastes, the total volume of nuclear waste is actually greater after extraction.

Questions concerning security

14. Question: Will Japan be able to keep track of the large amount of plutonium it will extract?
Answer: Not with existing technology. The measurement uncertainty of plutonium in process is plus or minus one percent–even at the best theoretical level. Scores of tons will be extracted in Japan. Over the life of the proposed agreement, there will be enough material unaccounted for to build hundreds of atomic bombs. When commenting on these facts, the Nuclear Regulatory Commission said: ” we have concerns that.. .200-300 kilograms of plutonium could remain unaccounted for each year.”

15. Question: If better accounting technology were developed, would Japan be required to use it?
Answer: No. Under the present agreement–but not the proposed one–there is a U.S. right to consent to plutonium separation on a case-by-case basis. The United States can withhold the consent in the future if Japan refuses an accounting improvement. The proposed agreement, however, would take away U.S. consent and also the leverage. It would be Japan that would have to consent to any change in accounting methods. Japan would also have the right to extract U.S. plutonium at plants that have not been built. Japan would only have to promise to apply the same accounting methods to those plants that it applies to existing plants that are similar.

16. Question: The proposed agreement contains “safeguards concepts.” Could they be used to prevent a,future Japanese plant from using U.S.-origin plutonium?
Answer: No. The “safeguards concepts” are accounting principles–intended to keep track of plutonium in process. When Japan wants to add a plant to the blanket approval list, Japan must send the United States a notice stating that the accounting principles at the plant are in accordance with one of the concepts. The concepts–spelled out in the “notes verbales”–are general statements of what is desirable. The note on plutonium extraction says that “new and improved techniques… [may bel introduced,” but only “to the extent that undue interference in plant operation is avoided.” It also says that new plants will be “designed and operated.. .to facilitate.. .safeguards (i.e., accounting]” but only “as far as practicable….” When Japan sends a notice to the United States stating that a new plant has satisfied the concept, the agreement limits the U.S. response to “a statement that such notification has been received.” The Nuclear Regulatory Commission, after reviewing this procedure, said: “we question whether an exchange of notes.. .is all that is needed to give the U.S. confidence that all material under its control remains in peaceful safeguarded use.”

17. Question: If plutonium were diverted in Japan, would the United States learn of it in time to react (have “timely warning”) before weapons could be made?
Answer: No. The inspection system (safeguards) of the International Atomic Energy Agency is not designed to report a diversion within the time it takes to make a weapon–one to three weeks for plutonium oxide. It is designed only to detect a diversion within that time. It takes the Agency months to evaluate a discrepancy and report it. Weapons could be made long before the IAEA reported a diversion to anyone. U.S. intelligehce might detect a diversion within one to three weeks, but that is a matter of chance, independent of the agreement.

18. Question: Under U.S. law, U.S. reactor fuel can only be transferred for plutonium extraction when it “will not result in a significant increase in the risk of proliferation beyond that which exists at the time the approval is requested.” Does the proposed agreement meet that requirement?
Answer: No. Sec. 131 of the Atomic Energy Act expressly defines a transfer of spent fuel for plutonium extraction as a “subsequent arrangement.” Such arrangements can only be approved if the Secretaries of Energy and State find that there will be “no significant increase in the risk of proliferation beyond that which exists at the time the approval is requested.” The Secretaries must compare the risk that “exists at the time the approval is requested” to the risk that will be caused by–or exist at the time of–the transfer that is being approved. Such a comparison is only valid for risks that will occur during the time period for which the Secretaries’ information is valid. That is, the Secretaries can only compare risks on the basis of information about the risks, and the risks must occur during the time period covered by the Secretaries’ information. The new agreement approves spent fuel transfers for the next thirty years–and thus exceeds the time for
which current information is valid.

19. Question: Is it realistic to worry about timely warning and proliferation risks in Japan, whose government is not likely to divert nuclear material?
Answer: Yes. The primary risk is not the Japanese government. It is Japanese industry. There is now a massive scandal in Germany caused by corrupt industry managers who, in a scheme of bribery and embezzlement, shipped plutonium between Belgium and Germany in drums not authorized to carry it. There are also allegations that Pakistan may have got nuclear weapon material as part of the deal. The material balance accounts of the IAA have been used to determine whether a shipment to Pakistan actually happened. If such a scheme arose in Japan under the proposed agreement, the large amount of material unaccounted for would make it impossible to know where all the material went. The Toshiba affair shows that Japanese industry is not immune to illegal acts that endanger security.

20. Question: Can the lack of timely warning, and the lack of current information on proliferation risk, be offset by political factors, such as Japan’s open, democratic government, strong ties to the United States, and well-known opposition to nuclear weapons?
Answer: No. The Administration asserts that Japan could not–because of the open nature of its government–divert plutonium without first changing its policy on non-proliferation, or its security alliance with the United States. Such changes, the argument goes, would be overt and the United States would learn of them. However, if Japan did change one or all of these things, and the United States did learn of them, the United States would have no right to take action under the proposed agreement. There is no link between any of these political factors and U.S. rights. The only way the United States can, for example, legally demand the return of its plutonium is if Japan breaches the agreement. Unfortunately, such a breach would not occur until Japan diverted the plutonium. The agreement does not require Japan to have a democratic or open government, support non¬proliferation, or maintain.a security relation with the United States. Because the U.S. right to intervene is triggered only by a diversion, the previously-occurring political factors are irrelevant to any U.S. response. The only important factors–those that affect intervention time and thus timely warning–are the speed of detection (safeguards adequacy) and the time it will take the diverter to make a weapon.

21. Question: Would plutonium in Japan be better protected from theft under the new agreement?
Answer: No. Japan would only be required to protect plutonium according to a guideline set by the International Atomic Energy Agency. The Pentagon recently told Congress that a foreign country’s assurance that it follows that guideline does “not.. .permit a confident conclusion in all cases that the physical protection provided is adequate….”

22. Question: Would plutonium in transport be better protected under the new agreement?
Answer: Only for international air transport. The new agreement’s rules on air transport are much stronger than the IAEA’s guideline. Also, the new agreement requires air transport for international shipments. However, the Administration is already thinking of abandoning air transport because a suitable transport cask might not be found.

23. Question: What if air transport is not used?
Answer: The international guideline apparently would apply. In the early 1980s, Japan attempted to ship 250kg (40 bombs’ worth) of plutonium through the pirate-infested Strait of Malacca on a freighter with only one or two guards. The shipment fully satisfied the guideline. Fortunately, the United States used its consent right to hold the shipment up until there was an escort of Japanese, U.S. and French warships (the shipment came from France) and observation by satellite.

24. Question: Would plutonium under the proposed agreement be as well protected in Japan as it is in the United States?
Answer: No. The international guideline is much weaker than the NRC and DOE regulations that protect plutonium in the United States. It is also much weaker than the DOD regulations that protect U.S. nuclear weapons held abroad.

25. Question: Would the United States be able to require Japan to improve the level of protection in the future?
Answer: No. Without the case-by-case consent rights, the United States will have no effective way to challenge Japan’s level of protection in the future.

26. Question: In the proposed agreement, how important is the U.S. right to suspend the blanket approval?
Answer: It has no legal significance–it only restates the rights the United States would have anyway under international law. The United States could suspend the blanket approval only “in the most extreme circumstances of exceptional concern….” There would also have to be an “exceptional case,” posing a “threat to…(U.S.1 national security,” or a “significant increase in the risk of nuclear proliferation.” The only examples of such cases cited in the agreement are breaches of–or a withdrawal from–the Non-Proliferation Treaty, breaches of international safeguards, or breaches of the new agreement itself. All such cases would breach both the proposed and existing agreements with Japan, and entitle the United States to suspend its performance anyway under international law.

27. Question: What is the difference between the U.S. right to suspend the blanket approval under the proposed agreement–discussed above–and the U.S. right to consent to plutonium extraction under the present agreement?
Answer: Under the proposed agreement, the United States can suspend the blanket approval only after a problem comes up. To take action, the United States must show that Japan has done something extremely grave and threatening to U.S. security. If Japan disagrees with the U.S. suspension, Japan can regard the suspension itself as a breach, entitling Japan to suspend its own performance. Under the present agreement, however, the U.S. right to consent to plutonium extraction allows the United States to suspend Japan’s use of plutonium without question. The control can be used before a problem comes up, and could never be considered a breach.

Questions concerning the role of Congress

28. Question: What would the role of Congress be under the proposed agreement?
Answer: Congress’ role would end when the agreement took effect. Congress would no longer be informed of case-by-case approvals, because there would be none. Congress could not legislate changes in plutonium use policy affecting Japan in the future because the proposed agreement would bind all future Congresses and administrations.

29. Question: What would the role of the U.S. public be under the proposed agreement?
Answer: No greater than the role of Congress.

30. Question: What benefit would the United States get from the proposed agreement?
Answer: Japan will give the United States detailed accounting of the plutonium balances at the new plants added to the agreement in the future, and use a higher level of physical security for international air shipments. However, these benefits could be had under the present agreement through use of the consent rights.

31. Question: What would the United States give up under the proposed agreement?
Answer: The agreement would allow Japan to make the balance of payments worse by reducing its nuclear imports from the United States, create a large stockpile of nuclear weapon material having no civilian use, escape U.S. control over future accounting practices, escape U.S. control over future protection of plutonium from theft, and exclude the U.S. Congress and public from further participation in nuclear policy concerning Japan.

32 Question: What effect will the proposed agreement have as a precedent?
Answer: It will codify the acceptability of commercial plutonium use throughout the world. The United States now controls 75-80% of the plutonium in South Korea, 85-90% of the plutonium in Sweden, and about 90% of the plutonium in Switzerland. The United States has already used its plutonium control to discourage the Swiss from selling South Africa a heavy water plant that posed a proliferation risk. The United States has also discouraged plutonium use in South Korea, a country with nuclear weapon ambitions in a volatile area. Once Japan receives a blanket approval, however, these countries will expect equal treatment. The Department of Energy is already preparing to approve a technology transfer to South Korea that will aid in the study of plutonium-bearing fuels after they have been irradiated.

33. Question: If the United States gets less from the new agreement than it gives up, why not retain the existing agreement?
Answer: The existing agreement should be retained. It does not expire until the year 2003.

34. Question: If the proposed agreement is approved with conditions, what should the conditions be?
Answer: The blanket approval for future plutonium use should be removed. If it is retained, it should be made subject to the following conditions:
1. That Japan protect U.S.-origin nuclear weapon material (plutonium and high-enriched uranium) from theft under regulations at least as detailed and rigorous as those the NRC and DOE apply to U.S. plutonium and high-enriched uranium held in the United States. The Department of Defense and the Nuclear Regulatory Commission should be required to approve the adequacy of the standard that Japan adopts.
2. That no new Japanese plant be added to the blanket approval list unless, at the time it is added, it satisfies Sec. 131 of the Atomic Energy Act. The Secretaries of Energy and State would be required to have information current enough to find that the plant “would not result in a significant increase in the risk of proliferation beyond that which exists at the time the approval is requested.!’ The addition of such a plant would be a “subsequent arrangement” under Sec. 131 and require the customary findings, reports to Congress, and notice in the Federal Register.
3. That no new Japanese plant be added to the blanket approval list unless, at the time it is added, the materials accounting system applied to it is capable of detecting the diversion of not more than some specified minimum number of critical masses of plutonium or high-enriched uranium per unit of time. The Nuclear Regulatory Commission could be asked to recommend such’a number to Congress for approval.

Table 1
JAPAN
Holdings of U.S. controlled plutonium
(metric tons, cumulative)

Pu created in spent fuel
– light water reactors
– gas cooled reactors
– heavy water reactors
– total Pu
Pu subject to U.S. consent for separation
Pu subject to U.S.
safeguards, peaceful use, and retransfer control
Pu in spent fuel contracted for separation
– light water reactors
– gas cooled reactors
– heavy water reactors
– total Pu
– U.S. controlled
Pu in spent fuel approved by U.S. for separation
Pu separated thus far
– in France
– in the U.K.
– in Japan
– total Pu
– U.S. controlled
Separated Pu produced or received this far
– from the U.K. (retransfer)
– from the U.K. (purchase)
– from Euratom (retransfer)
– from U.S. (direct export)
– separated in Japan
– total Pu
– U.S. controlled

Notes to Table 1
a) Letter fram Carol S. Thorup, Vice President, Nuclear Assurance Corporation, Norcross, Georgia, to Arch Roberts, House Committee on Foreign Affairs, May 15, 1985, enclosing an excerpt from FUel Trac.
b) FUel Trac, Reprocessing Status Report, Nuclear Assurance Corporation, Norcross, Georgia, Oct., 1983.
C) This plutonium was made with U.S. enriched uranium. Therefore, according to the current U.S.-Japan agreement, the United States has the right to approve any separation of this plutonium, the right to approve its retransfer, the right to have the plutonium safeguarded (Japan, as a ratifier of the NPT, has already placed its entire nuclear program under safeguards), and the right to its peaceful use. It is possible that the plutonium created by Japan’s experimental heavy water reactor, called Fugen, is also U.S. controlled. In 1976, shortly before Fugen started up, 159.5 tons of U.S.-origin heavy water was retransferred to Japan from the Federal Republic of Germany. NMNSS Reports TJ-23, TJ-7. From 1979 to 1981, the U.S. supplied 17 tons of heavy water to FUgen in direct exports. NMMSS Report TJ-7. The total amount of U.S. controlled plutonium shown in the Table should be increased slightly if FUgen has consistently used U. S. controlled heavy water.
d) The amount of U.S. controlled plutonium is estimated by assuming that the amount of U.S. controlled plutonium to be separated bears the same proportion to the total to be separated as the amount of U.S. controlled discharged bears to the total amount discharged.
e) Reprocessing and Plutonium Use Cases Requested and Approved Under the NNPA From 1978-83; Requests for Reprocessing Approved Pram 1983-85, U.S. Department of Energy. Through late 1985, Japan had received permission to ship 9.1 tons to the United Kingdom and 8.9 tons to France for separation. Apparently, Japan has actually shipped about 11000 tons of spent LWR fuel to the United Kingdom (1,000 tons will yield about 9 tons of plutonium) and the same amount to France. Nuclear Fuel, Mardi 10, 1986, p 6.
f) Albright, Civilian Inventories of Plutonium and Highly Enriched Uranium, International Task Force on Prevention of Nuclear Terrorism (Background Paper), Spring 1986, Table 4.
g) Through fiscal 1984, the Tbkai Reprocessing Plant had reprocessed about 180 tons of spent fuel. The table assumes that 6.7 kilograms of plutonium were extracted per ton. Present Status of Nuclear Development in Japan, Japanese Atomic Energy Cbmmission, August, 1985, p. 10.
h) Near-Term Plutonium Market Outlook, March, 1983, O1NUSUb/83-4011/1, NUclear Assurance Corporation, Norcross, Georgia.
i) The United Kingdom supplied plutonium to Japan in the early 1970s for use in Japan’s breeder program, but the amount is unknown. Nuclear News, April, 1983, p 82; Sizewell B. Public Inquiry, Transcript of Proceedings, March 17, 1983, p. 71.
j) Japan received 250 kilograms by retransfer from France in 1984. Nuclear FUel, NOV. 26, 1984. Japan also received 177 kilograms (139 of U.S. origin) before 1978. Albright, The Availability of Plutonium in Japan to Meet Fliture Needs, Preliminary Draft, Federation of American Scientists, July 31, 1984.
k) NMMSS Report TJ-25.
1) “Analysis of Consents and Approvals Agreed Upon in Conjunction with New Agreement for Cooperation between the Government of the United States of America and the Government of Japan Concerning Peaceful Uses of Nuclear Energy,” Attachment #7 to Memorandum for the President, Oct. 1, 1987, from John C. Whitehead and John S. He