BRAZIL-US: THE NUCLEAR FUEL ISSUE

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 06827296
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 7
• Document Creation Date: March 9, 2023
• Document Release Date: September 18, 2020
• Case Number: F-2017-01987
• Publication Date: October 20, 1977

Approved for Release: 2020/09/11 C06827296
National
Foreign
1, Assessment
Center
Latin America
Weekly Review
ay October 1977
ARCHIVAL, RECORD
'Pr r
"
Secret
RP ALA 77062
Copy
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SECR t I
LATIN AMERICA WEEKLY REVIEW
20 October 1977
CONTENTS
Brazil-US: The Nuclear Fuel Issue 1
NOTE: A supplement to today's edition of LATIN AMERICA
has been published and disseminated in special intelli�
gence channels.
Note: As a result of a reorganization, effective 11 October 1977, intelligence
publications formerly issued by the Directorate of Intelligence and by the National
Intelligence Officers are now being issued by the National Foreign Assessment
Center. Publication covers and titles have been adjusted to reflect this change. This
publication was formerly titled Latin America Regional and Political Analysis.
This publication is prepared for regional specialists in the Washington community by
the Latin America Division, Office of Regional and Political Analysis, with occa-
sional contributions from other offices within the National Foreign Assessment
Center and from other agencies within the Intelligence Community. Comments and
queries are welcome. They should be directed to the authors of the individual
articles.
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Brazil-US: The Nuclear Fuel Issue
Brazilian leaders hope that President Carter will
reassure them when he goes to Brasilia next month that
the US will honor its agreement to provide the nuclear
fuel needed to complete construction of their first nu-
clear power plant. A decision to postpone or cancel the
shipment before the President's trip would jeopardize
the visit and cause a further deterioration in bilateral
relations.
While Brasilia is firmly committed to complete three
nuclear power plants--two German and one US--and the en-
richment and reprocessing facilities, there is growing
disagreement within official circles concerning the real
need for accelerated development of nuclear power. In-
deed, economic uncertainties will probably cause Brazil
to stretch out and scale down its nuclear program.
Political Concerns
Brazilian leaders are concerned that the US will
break its contractual commitment to export enriched
uranium to Brazil by mid-December to fuel the nuclear
power plant being built by Westinghouse. A US decision
to deny start-up fuel for the reactor would seriously
damage US-Brazilian relations.
Having purchased the uranium in South Africa and
having shipped it to the US for enrichment in compliance
with the terms of a 1972 agreement, the Brazilians may
launch a media campaign accusing the US of failing to
honor its commitments. They would probably demand full
compensation for the "stolen uranium" and possibly even
consider seizing US property in Brazil in retaliation.
The Geisel government has already indicated that it
would interpret the withholding of the uranium as nuclear
blackmail. Future military administrations probably would
also exploit nationalistic anti-US sentiment by taking a
more vigorous approach to establishing indigenous re-
processing and enrichment facilities.
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the nuclear
fuel issue was a key factor in Brazil's recent decision
to renounce its remaining military accords with the US.
These accords had facilitated frequent and close consul-
tations on security matters since World War II.
President Carter's decision to visit Brasilia in
November gives the fuel issue additional importance.
Any indication before the trip that the US plans to de-
lay further or to deny export of enriched uranium could
lead to an abrupt decision by the Brazilian Government
to withdraw its invitation. If no announcement is forth-
coming, President Geisel and Foreign Minister Silveira
will press for reassurances regarding the fuel during
the visit.
In any event, President Geisel will be politically
committed to a frank discussion with President Carter of
what he and other Brazilians see as continuing US efforts
to prevent their obtaining sensitive nuclear technology.
During the past year, the acquisition of a full nuclear
fuel cycle has become one of the highest priority objec-
tives of the Geisel government.
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The completion dates for
the first two reactors to be built by West Germany have
already slipped a few years, and major construction
problems will probably lead to further delays.
The agreement fully commits Brazil only to the pur-
chase of two power plants from West Germany. If serious
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Nuclear Energy
Geisel has already given clear evidence that he is
not willing to make any concessions to the US that could
be interpreted as impeding Brazil's efforts to become
self-sufficient in nuclear energy. The next several
months will be especially tense ones for him politically,
as he and other members of the military high command de-
cide who will be the next president of Brazil.
Brasilia's economic rationale for developing nuclear
energy is the high cost of Brazil's dependence on im-
ported oil to satisfy its current energy requirements.
Imported fuel accounts for nearly 30 percent of Brazil's
total import bill and has been the largest single com-
ponent of its huge current account deficits in recent
years. Brazil now imports over 80 percent of its petro-
leum. Hydroelectric power is not yet fully developed,
but it will be by the end of the century.
Brazilian leaders currently believe they are laying
the foundation for a nuclear industry to meet future
electric power needs and to supplement hydroelectric
development, which will become increasingly expensive
as resources near the major industrial centers become
more fully exploited. The large investments needed to
establish a complete nuclear fuel cycle may strain Bra-
zil's balance-of-payments situation for the next decade
or so in the interests of reducing dependence on imported
oil and imports of enriched uranium by the turn of the
century. It is possible, moreover, that future Brazilian
administrations may realize that the substantial capital
investment required by the nuclear program would be more
productively channeled into accelerated hydroelectric
development or export promotion.
The Treaty with West Germany
President Geisel and Foreign Minister silveira have
staked their political reputations on implementing the
nuclear accord they negotiated with West Germany two
years ago. Yet some believe
will force significant modifications in the
agreement.
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foreign exchange exchange constraints persist, it will be diffi-
cult for future administrations to justify the purchase
of the additional six West German reactors originally
contemplated
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