Cablegate: Ambassador Wolcott Discusses Civil Nuclear Cooperation

VZCZCXRO2514
RR RUEHAST RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHTM
DE RUEHHI #1048/01 2590008
ZNR UUUUU ZZH
R 150008Z SEP 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 8442
INFO RUEHHM/AMCONSUL HO CHI MINH 5102
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 04 HANOI 001048

DEPT FOR T (JWOLCOTT, MHUMPHREY), ISN/NESS (ABURKART,PMCNERNEY),
ISN/RA (RBEISECKER) AND EAP/MLS
STATE PLEASE PASS TO NUCLEAR REGULATORY COMMISSION
(KFOGGIE,SBURNS,JRAMSEY,KHENDERSON)
DEPT OF ENERGY FOR DOE/NE (EMCGINNIS, CWELLING), NNSA/NA-21
(JMCLELLAND-KERR, KAPT, DKOVACIC, SDICKERSON, IBOLSHINSKY, SMOSES,
ABIENIAWSKI)
COMMERCE PLEASE PASS TO USTDA (DROSSITER)
COMMERCE FOR ITA/MAC/HONG-PHONG PHO

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ENRG ECON TRGY BEXP PARM KNNP VM
SUBJECT: AMBASSADOR WOLCOTT DISCUSSES CIVIL NUCLEAR COOPERATION
UNDER JOINT DECLARATION WITH VIETNAMESE COUNTERPARTS

REF A: HANOI 898
REF B: STATE 54213
REF C: HANOI 713

HANOI 00001048 001.2 OF 004

SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY.

1. (SBU) Summary: Ambassador Jackie Wolcott, the Secretary of
State's Special Envoy for Nuclear Nonproliferation, led an
interagency delegation to meet with several high-ranking Government
of Vietnam (GVN) officials to advocate for U.S. nuclear energy
cooperation and nonproliferation initiatives. Vietnamese officials
praised ongoing U.S. assistance and sought continued cooperation to
develop a safe and secure civilian nuclear power sector, showing
particular interest in assistance with treaty analysis, legal
framework formulation, human resources development, and technology
selection. Ambassador Wolcott highlighted potential cooperation
under the Joint Declaration on Nuclear Energy and Nonproliferation
(Joint Declaration), urged Vietnam to consider joining the
Convention on Supplementary Compensation for Nuclear Damage (CSC),
encouraged Vietnam to participate in the Global Nuclear Energy
Partnership (GNEP), and advocated for the GVN to finalize
negotiations towards a framework Memorandum of Understanding (MOU)
on nuclear energy cooperation. Ambassador Wolcott also sought
Vietnamese support for a U.S.-funded World Bank study on the cost
competitiveness of nuclear power and requested that Vietnam join
three technical conventions on nuclear safety and security. The
Vietnamese made no mention of Nuclear Nonproliferation Treaty (NPT)
rights or of interest in sensitive technologies, and indicated that
fresh and spent fuel services would be managed through the market,
perhaps in conjunction with reactor contracts. End summary.

Visit Details
-------------

2. (SBU) From August 16-20, Ambassador Jackie Wolcott led a
delegation of U.S. policy officials and technical experts from the
State Department and the U.S. Nuclear Regulatory Commission (NRC) to
visit the Dalat nuclear research reactor and to meet with several
high-level GVN officials at the Ministries of Science and Technology
(MOST), Industry and Trade (MOIT), and Foreign Affairs (MoFA) to
discuss nuclear energy cooperation and nuclear nonproliferation.
Meetings were also held with officials from the Vietnam Atomic
Energy Commission (VAEC) and the Vietnam Agency for Radiation and
Nuclear Safety & Control (VARANSAC). Ambassador Wolcott also
provided a press briefing on existing and proposed U.S.-Vietnam
cooperation that resulted in positive local media coverage.

Vietnam's Nuclear Power Plans
-----------------------------

3. (SBU) MOST Vice Minister Tran Quoc Thanh, VARANSAC Deputy
Director General Le Chi Dung, and VAEC Vice Chairman Le Van Hong
provided an update on Vietnam's plans for nuclear energy
development. Following the approval of a long-term "Strategy for
Peaceful Utilization of Atomic Energy up to 2020" (January 3, 2006)
and a "Master Plan for Implementation of the Long-term Strategy"
(July 23, 2007), Vietnam's National Assembly passed a comprehensive
Atomic Energy Law on June 3, 2008. (Comment: GVN officials
repeatedly cited the helpful role played by the NRC and NNSA in the
preparation of this law, which will become effective on January 1,
2009. End Comment.) A Pre-feasibility Report, envisioning a 2,000
MW nuclear power plant (NPP) at Phuoc Dinh (Ninh Thuan province), is
currently being finalized for submission to the National Assembly
for approval. A feasibility study would be completed by 2009 and
the NPP's license application would be submitted by 2011. In
2012-2013, bids for an engineering, procurement, and construction
(EPC) contract would be received. Construction would begin around
2014, and the NPP would come online around 2020. MOST officials
commented that since Vietnam lacked the experience necessary for the
development of a nuclear power program, it would rely heavily on
nuclear cooperation with advanced nuclear energy states.

Vietnamese Officials Seek Continued Cooperation
On Nuclear Infrastructure Development
--------------------------------------------- --

4. (SBU) Vietnamese officials reaffirmed their commitment to the
safe and secure development of civilian nuclear power and noted GVN

HANOI 00001048 002.2 OF 004

support for the NPT and other treaties that minimized the risk of
nuclear weapons proliferation. All expressed their appreciation for
ongoing U.S. assistance, notably the conversion of the Dalat nuclear
research reactor from highly enriched uranium (HEU) to low-enriched
uranium (LEU) fuels. They noted the return of unused fresh HEU fuel
from that facility to Russia, and expressed their desire to also
repatriate spent HEU fuel (which was still currently stored in the
research reactor pool). GVN officials expressed interest in
continued cooperation with the United States as Vietnam develops the
physical and regulatory infrastructure for its civilian nuclear
power sector. VARANSAC officials stated that their greatest needs
included development of human resources (HR), drafting of a legal
and regulatory framework, analysis of technical safety and security
conventions, and emergency preparedness and response capacity. To
address the HR challenge, DDG Dung noted that his agency was
drafting a decree on this subject to be submitted to the National
Assembly next year, and he suggested expert-level visits to the U.S.
for consultation and training. VAEC officials cited infrastructure
development, as well as assistance with technology (reactor)
selection, as cooperation areas of greatest interest. Regarding the
latter, Vice Chairman Hong suggested the U.S. should hold a workshop
to introduce nuclear newcomers to "state of the art" nuclear
reactors. In response, Ambassador Wolcott encouraged him to attend
the IAEA General Conference in late September, where many
representatives of the U.S. nuclear industry would be available to
discuss their products in detail.

Reliable Access to Nuclear Fuel
-------------------------------

5. (SBU) During her meetings with Vice-Ministers at MOST, MOIT, and
MoFA, Ambassador Wolcott reviewed how the United States might
provide immediate assistance to Vietnamese nuclear safety and
security efforts pursuant to the Joint Declaration. The Ambassador
explained that one important element of the Joint Declaration is the
reliable provision of nuclear fuel services to encourage states to
choose the international market for fuel supply and offer a viable
alternative to the development of sensitive nuclear fuel cycle
technologies. The Vietnamese made no mention of NPT rights or of
interest in sensitive technologies, and indicated that fresh and
spent fuel services would be managed through the market, perhaps in
conjunction with reactor contracts.

Global Nuclear Energy Partnership (GNEP)
----------------------------------------

6. (SBU) Ambassador Wolcott highlighted the recent invitation to
Vietnam from the United States and the other twenty GNEP partner
countries to join the Partnership and attend the upcoming GNEP
Ministerial in Paris on October 1. Following up on points made by
Department of Energy Deputy Assistant Secretaries Ed McGinnis and
Craig Welling during their recent visit to Hanoi (Ref A), the
Ambassador noted that GNEP provided a framework for longer-term
nuclear cooperation consistent with the Joint Declaration and
International Atomic Energy Agency (IAEA) initiatives.

U.S.-Vietnam Nuclear Energy MOU
-------------------------------

7. (SBU) Ambassador Wolcott urged her GVN interlocutors,
particularly Vice Minister Thanh at MOST -- which has primary
responsibility for nuclear cooperation agreements -- to respond to a
draft Memorandum of Understanding Concerning Cooperation in Nuclear
Energy and Other Energy Fields (MOU). The MOU was first proposed in
June by the United States, and Wolcott urged Vietnam to sign it
prior to the IAEA General Conference in early October (to facilitate
conversations with U.S. industry representatives in attendance).
While not legally binding, this agreement would serve as a
high-level government endorsement of growing nuclear cooperation and
will form a political framework under which our two countries can
expand our nuclear cooperation. Like GNEP and the Joint
Declaration, Ambassador Wolcott noted the MOU promotes the assurance
of reliable access to nuclear fuel without the need for establishing
new enrichment or reprocessing capacity. The MOU forms a stepping
stone to a broader "Section 123" Agreement, which is required for
significant nuclear exports from the U.S. (including nuclear
material and major reactor components).

HANOI 00001048 003.2 OF 004

8. (SBU) While MOST Vice Minister Thanh stated that the GVN needed
further internal discussion of the MOU, Vice Minister Khu of MOIT,
which has responsibility for the commercial development of nuclear
power, stated that the GVN was preparing to finalize and sign the
agreement. Similarly, MoFA Vice Minister Pham Binh Minh indicated
likely support from his ministry. Officials within MOST and at VAEC
and VARANSAC have already provided technical comments to MOST
leadership and stressed their desire to commence a dialogue on the
MOU's provisions, but noted that the document remained stuck
somewhere within MOST (the responsible section of which is the
Department of International Cooperation). VAEC Vice Chairman Hong
commented that following Wolcott's meeting at MOST, he had discussed
acceleration of the MOU process with the MOST Director of
International Cooperation. Consistent with input from Embassy
contacts at MOST, following her meetings, Ambassador Wolcott sent a
letter to Vice Minister Thanh noting the apparent support for the
MOU throughout the GVN and seeking his assistance to submit the
document for inter-agency review and then to begin discussions with
the United States.

World Bank Study on Nuclear Energy
----------------------------------

9. (SBU) In each meeting, Ambassador Wolcott emphasized the
importance of NPP financing as Vietnam moved to develop nuclear
power. Vietnamese officials had not yet seriously considered this
challenge, noting that they had assumed financing could be secured
via loans from the World Bank, the International Monetary Fund, or
the Asian Development Bank, or via export credits. Currently,
however, the World Bank and Asian Development Bank do not provide
financing for nuclear power projects, limiting potential sources of
financing for these capital-intensive endeavors. Therefore,
Ambassador Wolcott noted, the United States had joined with France
and Japan to fund a World Bank study on the cost competitiveness of
nuclear power in hopes that a favorable report on nuclear power
could help to overturn the World Bank's policy against nuclear power
(and thereby result in similar changes at other multilateral
development banks). Wolcott reported that this study has been
temporarily suspended as a result of interventions by countries
opposed to nuclear power, preventing World Bank management from
re-evaluating its position on nuclear power financing. Noting the
critical importance of backing from countries that may receive World
Bank financing, Ambassador Wolcott suggested that the Vietnamese
representative at the World Bank communicate with the U.S.
representative to support this study. MOIT Vice Minister Khu and
MoFA Vice Minister Minh both expressed particular interest in
pursuing this possibility.

Technical Conventions
---------------------

10. (SBU) Ambassador Wolcott stressed the importance of Vietnam
joining the Convention on Supplementary Compensation for Nuclear
Damage (CSC), a liability convention which reaffirms that
jurisdiction over a nuclear incident lies only with the courts of
the country where the incident occurs (Refs B and C). The CSC was
designed to be a universal liability regime open to many nuclear
energy states (e.g., the U.S., Japan, the Republic of Korea, and
Canada) that cannot be party to existing liability conventions due
to conflicts with national laws, so its ratification would greatly
broaden the range of potential suppliers to the Vietnamese market.
In addition to encouraging Vietnam to sign and ratify the CSC,
Wolcott raised concern that Vietnam's recently-drafted Atomic Energy
Law set a nuclear liability minimum of 150 million Special Drawing
Rights, only half the basic level that the CSC would establish.
Ambassador Wolcott therefore suggested that Vietnam revisit this
provision during the implementation process of the Law.

11. (SBU) Noting that Vietnam is not party to three important
technical conventions (the Convention on Nuclear Safety, the
Convention on the Physical Protection of Nuclear Material, and the
Joint Convention on the Safety of Spent Fuel Management and on the
Safety of Radioactive Waste Management) Ambassador Wolcott
encouraged the GVN to carefully consider ratification of these to
help it develop and maintain the highest safety and security
standards. VARANSAC DDG Dung noted that Vietnam is currently
considering the first two of these, and that this requires his
agency to draft a report summarizing the convention, outlining the

HANOI 00001048 004.2 OF 004

GVN's obligations once it is ratified, and assessing the GVN's
capacity to meet these. Due to this labor-intensive process, Dung
noted, the GVN did not have sufficient resources to analyze
additional conventions. He therefore requested USG assistance in
performing these analyses, and the delegation undertook to identify
an appropriate USG contact for this.

Comment
-------

12. (SBU) Overall, the delegation was impressed by the carefully
considered approach and the determination the GVN has shown toward
developing nuclear power. Vietnamese officials made clear that
safety and security are their topmost concerns, and noted that
U.S.-Vietnamese civil nuclear cooperation towards these ends is
functioning well without serious gaps or overlap. Consistent with
previous conversations with high-level U.S. nuclear energy
delegations (Ref A), the Vietnamese responded positively to
Ambassador Wolcott's points, but did not commit to move forward on
any specific issue. This most likely stems from the normal,
slow-moving and consensus-based decision-making process on all
nuclear-related issues, in which several ministries have a stake.
Our working-level GVN interlocutors stress to us that their
superiors often respond more attentively to external stimulus than
to internal recommendations - as we learned during ultimately
successful negotiations for the Arrangement for Technical
Cooperation between VARANSAC and the NRC in the run up to Prime
Minister Nguyen Tan Dung's recent visit to the United States.
Therefore, we expect that Ambassador Wolcott's visit will spur
Vietnamese decision-makers to focus on joining U.S.-supported
bilateral and multilateral initiatives and to ultimately conclude
the nuclear cooperation MOU.

13. (U) This cable has been cleared with the Wolcott delegation.

MICHALAK

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