oversight

A Comparison of GAO and Executive Branch Positions

Published by the Government Accountability Office on 1977-01-06.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                         DOCUMENT   RESUME

00574 - [A05909131

A Comparison of GAO and Executive Branch Positions; U.S. Nuclear
Non-Proliferation Policy. ID-77-7. January 6, 1977. 2 pp. +
enclosure (9 pp.)

Report to the House   ommittee on International Relations; Joint
Committee on Atomic Energy;  the Senate Committee on Foreign
Relations; the Senate  Committee on Government Operations; by
Elmer B. Staats, Comptroller  General.

Contact: international Div.
Budget Function: International Affairs: conduct cf Foreign
    Affairs (152).
Organization Concerned: Department of Commerce; Department of
    State; Energy Research and Development Administration;
    Nuclear Regulatory Commission.
Congressional Relevance: House Committee on International
    Relations; Joint Committee on Atomic Energy; Senate
    Committee on Foreign Relations: Senate Committee on
    Government Operations.

         A comparison was made of an Administration policy
statement on nuclear proliferation wi*h a GAO Report "Assessment
of U.S. and International Ccntrols over the Peaceful     ses of
Nuclear Energy,"  ID-76-60. There was  general agreement  on the
need for more  effective controls to  curb nuclear weapons
proliferation,   ut the executive branch response did not
indicate planF  for action on specific GAO recommendations.
Recommendations  in the GAO report were designed to strengthen
U.S. agreements for cooperation, upgrade nuclear safeguards,
control exports, and guido future U.S. strategy.
Findinqs/Conclusions: Although the Administration statement took
a positive approach by directing negotiations that would bring
existing agreements into conformity with international and new
U.S. criteria, the statement was not specific encugh. The
Administration supported recommendations for upgrading
safeguards, but disagreed with the need for some of the
procedures for inspection evaluation and monitoring. The
Administration agreed with the need for export ccntrcls, but
legislation to this effect was not enacted. Reccomendations:
Agreements for nuclear cooperation should stress adherence to
the Non-Proliferation Treaty and submission to full fuel cycle
safeguards. U.S. nuclear export policy should be more clearly
defined. (HTN)
            COMPTROLLER G-4RLt. OF THE UNITED STATES
                       WASHINGTON. D.C. 243




B-181963                                               JAB    W7

To the Chairmen of the
Senate Committee on Government Operations
Senate Committee on Foreign Relations
House Committee on International Relations
Joint Committee on Atomic Energy

     The strengthening of U.S. and international controls
over the peaceful uses of nuclear energy will be one of the
most important issues considered in the 95th Congress. As
you Row, both the Administration and the General Accounting
Office have recently issued their assessments of the problems
involved in controlling the worldwide spread of nuclear
weapons and each has proposed corrective actions.

     To assist your Committee in its deliberations on
legislation to advance U.S. non-proliferation objectives,
we have prepared the enclosed comparison of the Administra-
tion's recent nuclear energy policy statement, as it relates
to proliferation, with our report (Arsessment of U.S. and
International Controls Over the Peaceful Uses of Nuclear
Energy ID-76-60), dated September 14, 1976.

     There is genera] agreement that more effective con-
trols to curb nuclear weapons proliferation must be sought.
The Administration's statement discusses, on a policy level,
the areas of major concern addressed in our report. However,
our analysis of the executive branch response to specific
recommendations in our report indicates that the executive
branch does not plan to take some of the specific corrective
actions we considered necessary to further promote U.S. non-
proliferation objectives.

    Our recommendations were designed to:

    -- Strengthen U.S. agreements for cooperation.

    --Upgrade international nuclear safeguards.

    -- Give greater assurances to the world at large that
       such safeguards are effectively implemented.
    -- Establish a focal point within the U.S. Government
       to control the export of nuclear materials, equip-
       ment, and technology.

                                                             ID-77-7
B-181963



     -- Identify key issues that should be included in the
        U.S. pr.)posed international convention on physical
        security.

     -- Guide future U.S. strategy to achieve nuclear non-
        proliferation goals.

     We trust that this information furnished at the outset
of the 95th Congress will be helpful in your deliberations.
We are continuing our work on nuclear proliferation and
expect to provide the Congress with additional timely ob-
servations and proposals on domestic and international
nuclear energy and proliferation issues.

     This comparison is also being sent to   h     ertinent
executive branch agencies.




                            Comptroller General
                            o2 the United States

Enclosure




                           2
                                           ENCLOSURE



                       COMPARISON OF
       CONCLUSIONS AND RECOMMENDATIONS IN GAO REPORT
    "ASSESSMENT OF U.S. AND INTERNATIONAL CONTROLS OVER
      THE PEACEFUL USES OF NUCLEAR ENERGY" (ID-76-60)
                          WITH THE
ADMINISTRATION'S NUCLEAR NON-PROLIFERATION POLICY STATEMENT

  AGREEMENTS FOR NUCLEAR COOPERATION
       The United States currently has agreements for coop-
  eration in the peaceful uses of nuclear energy with 28 in-
  dividual nations, the International Atomic Energy Agency
  (IAEA), and the European Atomic Energy Community (EURATOM).
  The proposed U.S. agreements for nuclear cooperation with
  Egypt, Israel and Iran have spurred an intense scrutiny of
  all .S. agreements. Because these agreements provide the
  framewu-k for U.S. assistance and represent the non-prolif-
  eration intentions of the parties, their specific terms
  and conditions are of the utmost importance.
       Over the years, the executive branch has identified
  weaknesses in the agreement provisions and has taker
  corrective actions. At the time of our review,  the
  executive branch was considering several new control
  provisions which would:

       -- Expressly prohibit the use of U.S.-supplied material
          or equipment for peaceful nuclear explosives.

       -- Require the recipient to implement physical security
          arrangements deemed adequate by the United States.

       -- Require U.S. approval of fabrication and storage
          facilities for highly enriched uranium and plu-
          tonium.

       -- Require any replication of U.S.-supplied technology
          within the recipient country to be placed under
          effective safeguards.
       Because the Administration was considering these
  modifications for future agreements, we recommended that
  existing agreements be renegotiated, where possible, to
  conform them to a stronger, more uniform U.S. non-prolif-
  eration policy. We also identified three other issues
  relating to the agreements which should be clarified:
                                           ENCLOSURE

     1.   Residual .S. safeguards rights when large
          amounts of  uclear material and equipment are
          expor ed through international organizations;

     2.   When the U.S. could or would reinstate its own
          safeguards, previously suspended in favor of
          IAEA safeguards; and

     3.   Whether U.S. safeguards rights extend beyond
          the expiration dates of existing agreements for
          cooperation.

     We are pleased to note that the Administration's
nuclear policy statement of October 28, 1976, directs the
Secretary of State to enter into negotiations to conform
existing agreements for cooperation with established in-
ternationzl guidelines and with the Administration's new
criteria. However, the statement did not specify the new
provisions to be incorporated. We continue to believe
that agreements for cooperation should clearly address
the three U.S. safeguards issues identified above.

INTERNATIONAL NUCLEAR SAFEGUARDS

      The term "safeguards" witnin the international con-
text refers to a system of inspection and verification
which, when applied to one country's nuclear activities,
will provide assurance to other countries that nuclear
material is not being diverted for non-peaceful purposes.
The IAEA safeguards are designed only to detect diver-
sions of nuclear material on a national level, and it is
assumed that member nations will protect such material
from terrorist or subnational groups. The principle of
such safeguards is that the risk of early detection and
unmasking in the world community will deter a would-be
diverter.

     Our report points out some inherent limits and con-
straints on international safeguards as they are cur-
rently applied and discusses five general areas tat need
attention in order to strengthen the system: (1) material
accountability, (2) technical limits on accuracy of in-
strumentation, (3) financing, (4) political attitudes, and
(5) availability of qualified inspectors. We recommended
tnat the Administration urge the IAEA to:

     -- Reemphasize that individual material accountability
        systems shoul(] easily interface with the IAEA system.


                            2
                                            ENCLOSURE
     -- Conduct a thorough analysis of its future finan-
        cing needs.
     -- Seek strict compliance, and uniformly enforce,
        safeguards implementing procedures.

     -- Implement, as soon as practical, its plan for an
        independent safeguards training program for IAEA
        inspectors.

     -- Establish standards for the number of inspectors
        needed to meet IAEA needs and have each country
        accredit enough inspectors to meet these standards.

     The Administration's nuclear policy statement recog-
nizes that the IAEA inspection system remains a key ele-
ment in the U.S. non-proliferation strategy and that the
United States must further strengthen IAEA safeguards
functions.  In this regard, the Secretary of State and
Administrator of the Energy Research and Development
Administration (ERDA) were directed to undertake a major
international effort to upgrade IAEA safeguards functions
and capabilities by ensuring that adequate resources are
made available and that the best U.S. scientific talent
supports the IAEA.

     The Department o State blieves that our report
takes an overly pessimistic view, of the effectiveness of
IAEA safeguards inspections. Neiertheless, both State
and ERDA support the specific recommendations in this
part of our report. 1/

U.S. RELIANCE ON INTERNATIONAL SAFEGUARDS

     The United States has been promoting the concept of
international safeguards throughout the world and has
accepted IAEA and EURATOM safeguards standards as satis-
fying U.S. requirements. Therefore, it is important that
the United States and other nations receive sufficient
assurance that these safeguards are adequately, fairly,
and consistently applied.




1/Under provisions of Section 236 of the Legislative Reor-
ganization Act of 1970, agencies are required to submit
statements to the House and Senate Appropriations and
Government Operations Committees advising them of actions
taken on GAO recommendations.

                            .3
                                          ENCLOSURE



     We recommended several ways to obtain greater assur-
ances that IAEA and EURATOM safeguards are effectively
implemented.   In responding to the specific recommendatiorns
in our report, agency officials generally agreed with us
that the (1) IAEA should lift, to the fullest extent
possible, its restrictions against disclosing information
on safeguards effectiveness to member nations, (2) United
States should obtain access, with the consent of the
inspected nations, to IAEA inspection reports for U.S.-
supplied material and equipment, and (3) United States
should evaluate the effectiveness of IAEA safeguards
inspections in the United States.   Recent U.S. efforts
to obtain greater assurance of IAEA safeguards effective-
ness are encouraging.
     With regard to our recommendation concerning confi-
dence in the EURATOM safeguard system, executive branch
officials said that they opposed reconstituting the Joint
U.S.-EURATOM Technical Working Group. However, they hoped
to intensify consultations with EURATOM to verify the
effectiveness of safeguards on U.S.-supplied material
and equipment.

     Agency officials disagree with our rcommendations
on the need for (1) onsi-e evaluations of IAEA safeguads
inspections by the IAEA Standing Advisory rot.p on Safe-
guards Implementation, (2) an IAEA annual report showing
the amount of nuclear materials subject to safeguards and
an, discrepancies, and (3) periodic onsite monitoring of
IAEA inspections by representatives of supplier nations.
It was indicated that our recommendations would not be
acceptable to IAEA member nations unless strong initia-
tives were undertaken by the United States and other
influential members. We believe that the United States
can and should provide the strong leadership necessary
to gain acceptance of these recommendations.

     The United States, in order to maintain a high level
of credibility and leadership in the international
safeguards arena, must be sure that its own safeguards
system is sound. However, our July 22, 1976, classified
report "Shortcomings in the Systems Used to Control and
Protect Highly Dangerous Nuclear Material" (EMD-76-3),
points out limitations in the U.S. systems for safe-
guarding special nuclear materials. We recommended that
ERDA:




                            4
                                                   ENCLOSURE


     -- update and clarify accountability and
        material control and physical security
        requirements.

     -- Further emphasize to Congress the need
        for additional funds to correct physical
        security deficiencies in U.S. systems.
We are now reviewing the extent to which ERDA has taken
corrective actions on our recommendations.
SANCTIONS AGAINST PROLIFERATION

     No system of proliferation controls is likely to be
effective if a potential violator believes the interna-
tional community will be indifferent to a violation. We
recommended that the United States urge IAEA member na-
tions to establish adequate sanctions against countries
that divert nuclear material to fabricate explosive
devices or that knowingly supply material or technology
to another country for developing nuclear explosives.
In line with our recommendation, the Administration
has invited all concerned governments to affirm
publicly that they will regard nuclear wrongdoing as
an intolerable violation of acceptable norms of inter-
national behavior, which would set in motion strong and
immediate countermeasures."   The policy statement says
that the United States will, at a minimum, respond to
serious violation of any of its safeguards agreements
by immediately cutting off nuclear fuel supplies and co-
operation. The statement is particularly adamant about
the diversion of nuclear material to make explosives.
Moreover, the United States will consider further steps
(not necessarily confined to the area of nuclear cooper-
ation) against a violator nation and not confine its
actions just to violations of agreements in which it
is directly involved.

     We fully support this strong affirmation of the
seriousness with which the United States should face
the abrogation or violation of nuclear non-proliferation
agreements.

U.S. NUCLEAR EXPORT AND RETRANSFER CONTROLS

     Although IAEA and EURATOM safeguards provide the
primary control over U.S. nuclear material and equipment
supplied to foreign countries, various U.S. agencies must
still ensure that such exports will not be detrimental
to U.S. common defense and security.  From our review,
we concluded that the agencies involved should more
fully coordinate control over peaceful nuclear exports

                             5
                                                ENCLOSURE




and that the Nuclear Regulatory Commission (NRC) should
become the focal point for such coordination.

     Executive branch officials state that effective
cooperation alLeady exists but that the Administration
stands ready to work with the Congress in any effort to
help further clarify the respective agency roles.
     GAO also recommended that NRC, ERDA, the Department
of State, and the Arms Control and Disarmament Agency
jointly establish criteria for the quantities and types
of nuclear materials and equipment that may be transferred
under government-to-government arrangements without the
complete licensing review process. Although the Admini-
stration's nuclear policy statement did not specifically
address this matter, the executive branch did support
export legislation in the 94th Congress that would limit
ERDA's government-to-government transfers of special
nuclear materials to small quantities. However, this
export control legislation was not enacted and should
be taken up in the new session.

PHYSICAL SECURITY OF NUCLEAR MATERIAL
     Physical security encompasses measures to deter,
prevent, and promptly detect the theft, sabotage, or
other unauthorized use of nuclear material and equip-
ment by subnational groups.     The IAEA currently has no
authority  to require  member  countries  to establish
acceptable physical   security  systems  nor  can it super-
vise, control, or implement    such  systems.   Nevertheless,
since stolen nuclear material    may  be used  anywhere,
effective worldwide physical security should be a con-
cern of all nations.
     The United States and other suppliers are now
requiring that recipients of sensitive nuclear materials
and equipment meet stringent physical security standards
and are reviewing the adequacy of the physical security
systems of such recipients.  In the long-term, however,
continued reviews of one country's security by another
may be unacceptable. Countries may find it more polit-
ically and economically feasible to have IAEA assume
this responsibility. We concluded that the United States
should continue to pursue its proposal for an interna-
tional physical security convention, and recommended that
it include (1) acceptance of common physical security
standards, (2) assurance that each member would implement
these standards, (3) guarantees that no member nation

                               6
                                              ENCLOSURE



would provide safe haven for nuclear terrorist or sabo-
teurs, and (4) physical security reviews as part of IAEA
safeguards inspections.

     The Administration's nuclear policy statement rec-
ognizes the need to improve physical security measures
against theft, sabotage, or other unauthorized use of
nuclear material and equipment.  To this end, the Sec-
retary of State was directed to address the poblen of
physical security at both bilateral and multilateral
levels, including exploration of a possible international
convention.

FUTURE U.S. STRATEGY AND. OPTIONS

     The United States, as the world's leadin nuclear
exporter, has a particular responsibility to n    e
that its policies are designed to deter other nations
from developing nuclear explosives. Clearly, U.S.
policy must strike a balance between two extremes--
overzealous pursuit of foreign nuclear sales without
regard to proliferation and withdrawal from the inter-
national nuclear market.

     Continued leadership in nuclear sales, with the
strongest practical precautions, will give the United
States the best opportunity to influence +'> e inter-
national nuclear market. However, as the number of
supplier countries grows, multilateral efforts will
be increasingly necessary.

     The United States, recognizing the need for multi-
lateral cooperation, has been working with other nuclear
suppliers to prevent one supplier from offering less
stringent safeguards than another in order to promote
nuclear sales. We recommended that the Department of
State, the Arms Control and Disarmament Agency, and
the Energy Research and Development Administration, with
the advice of the Nuclear Regulatory Commission, develop
and implement a diplomatic and technical strategy to:

     --Achieve continued dialog and conclude further,
      more binding arrangements on common exp(; c poli-
      cies, particularly for sensitive technologies.

    -- Reestablish the United States as a reliable
       supplier of uranium enrichment services and
       discourage individual foreign countries from
       developing their own enrichment capacities.


                           7
                                          ENCLOSURE



     -- Assist developing countries to evaluate their
        total energy needs in determining whether and
        how much of their energy requirements should
        be filled by nuclear energy.

     -- Establish adherence to the Non-Proliferation
        Treaty, or at least a guarantee by the recipient
        country to subject its entire peaceful nuclear
        program to international safeguards, as a general
        prerequisite for future U.S. nuclear cooperation
        and promote this policy as a standard for coop-
        eration by all supplier countries.

     In substantive accord with our recommendations, the
Administration's recent nuclear policy statement provides
for the executive branch to:

     -- Submit legislation permitting the United States to
        expand enrichment capacity to make it a reliable
        long-term nuclear fuel supplier to countries which
        agree to accept responsible restraints over sensi-
        tive nuclear technologies and spent reactor fuels.

     -- Intensify discussions with other nuclear suppliers
        to expand common guidelines for peaceful coopera-
        tive agreements to include providing fuel services
        rather than sensitive technologies and to agree to
        at least a 3-year mcratorium on the transfer of
        enrichment and reprocessing facilities or tech-
        nology.

     -- Expand cooperative efforts with other countries in
        developing their non-nuclear energy resources by
        establishing an International Energy Institute to
        help developing nations match the most economic
        and readily available sources of energy, including
        non-nuclear sources, to their power needs.

     The executive branch has apparently revised its posi-
tion on adherence to the Non-Proliferation Treaty. The
State Department position had been that strong U.S. insis-
tence on adherence was an overly severe requirement which
could result in a breakdown of supplier cooperation. The
State Department indicated that the United States should
espouse this requirement only if ther suppliers would
also agree to these terms. However, the Administration's
recent nuclear policy statement indicated that new cri-
teria will be used in determining whether to enter into


                            8
                                              ENCLOSURE



new or expanded nuclear cooperation and that either Treaty
adherence or submission to full fuel cycle safeguards
will be strong positive factors favoring cooperation.
It is implied that these new criteria will be unilater-
ally followed by the Urited States. We believe that
such action would be a major step toward achieving
desired non-proliferation objectives; however, U.S.
nuclear export policy should be more clearly defined.
Fiuture nuclear cooperation should require either adher-
enice to the Non-Proliferation Treaty or full fuel cycle
safeguards.

     The Administration's October 28, 1976, policy state-
ment disclosed that U S. commercial reprocessing of
nuclear fuel and plutonium recycle will not be allowed
to proceed "unless there is sound reason to conclude that
the world community can overcome effectively he asso-
ciated risks of proliferation."  This statement is directly
pertinent to U.S. effor s to develop a commercial liquid
metal fast breeder reac r (LMFBR).   Our November 29, 1976
report "Considerations of Commercializing the Liquid Metal
Fast Beeder Reactor" (EMD-77-5) concluded that the
Administration's policy statement creates doubts about
the viability-of the LMFBR as a future energy source since
a nuclear fuel reprocessing industry is an indispensable
prerequisite to-the commercial operation of the LMFBR.




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