Foreign Relations of the United States, 1969–1976, Volume E–11, Part 2, Documents on South America, 1973–1976

117. Telegram 5292 From the Embassy in Brazil to the Department of State¹

Brasília, June 27, 1975, 1845Z.

5292. Subject: Effects on U.S./Brazilian Relations of the German Agreement.

Summary: The German/Brazilian agreement on nuclear cooperation signed in Bonn on June 27 has been described in the press as the most important economic agreement Brazil has ever entered into, but it has far greater importance as a step in Brazil’s drive for major power status. Motivated by future energy needs, the attraction of an explosives option and the potential for a nuclear industry, and alleging the uncertainty of U.S. supplies of enriched uranium, Brazil has decided on the German contract as the key element of its nuclear strategy. The mistrust of the U.S., generated in the average Brazilian by well publicized portrayals of U.S. reactions as an attempt to modify or block the agreement and to maintain Brazil dependent, is likely to support the movement of Brazilian foreign policy away from the U.S., especially on nuclear proliferation issues and as Brazil’s nuclear export potential comes into being. On the commercial level, it is doubtful that U.S. firms would participate in joint ventures and sell new technology in the future, that the U.S. will continue to sell Brazil enriched uranium for new reactors, or that Brazil would be interested in participation in a regional or U.S. enrichment plant. In non-nuclear areas, Brazil’s enhanced status could also affect U.S./Brazilian relations. Brazil will continue to rely on the U.S. nuclear shield, but appears to want to develop, over time, an explosives capability. The U.S. will have to keep the development of Brazilian nuclear capability under close scrutiny. Barring a radical change in U.S. nuclear policy, a new and divisive element has been added to U.S.-Brazilian relations. End summary.

1. US/Brazilian differences over nuclear energy policy are not new. Two decades ago, the U.S. blocked, for an extended period, delivery to Brazil of some early model—and unsuccessful—German gas centrifuges. More recently, Brazil refused to sign the NPT on the grounds that it limited Brazil’s sovereignty. In its qualified adherence to the LANFZ, it specifically reserved its rights to PNE’s. For some time, therefore, Brazil has made clear that it wished to acquire a nuclear option beyond constructing and operating reactors, and purchasing enriched fuel from abroad. Four long-term objectives have motivated Brazil’s aims: A) nuclear-powered generating capacity fueled from domestic sources is the most secure way in the long run to satisfy rapidly rising electricity demands in the center/south and northeast; B) with a large domestic market, substantial hydroelectric potential, and potentially recoverable uranium deposits, Brazil could eventually develop an efficient, high-technology export-oriented domestic uranium-enrichment industry; C) a nuclear capability supports Brazil’s drive to acquire a national high technology industrial base; and D) Brazil needs to have a nuclear explosives option to fulfill its “destiny” as a great power, and to offset Argentina’s head start in developing a nuclear capability which might some day become an effective political, or even military, resource. President Costa e Silva’s 1969 statement to the effect that the logical conclusion of nuclear research was the testing of its results in an explosive device made explicit that Brazil had no intention of renouncing PNE’s. There is every evidence, also, that some influential elements chafed under the nuclear tutelage of the United States, this appearing most markedly in the running debate over the commitment of Brazil to (American) light water reactors and occasional statements by Brazilian scientists and federal legislators to the effect that Brazil should develop its own nuclear technology based on natural uranium and thorium. (Of course, the agreement with the FRG does not invalidate these arguments, but, under the changed circumstances, they are unlikely to have any impact for the immediate future.)

2. Several events and trends have coincided over the past two years to affect Brazil’s nuclear policy: A) the reiterated refusal of the U.S. to sell its proven, efficient enrichment and reprocessing technology encouraged the determined Brazilians to pursue the industrially-unproven German enrichment alternative which offers Brazil independence from foreign-enriched fuel; B) the U.S. was unable, the Brazilians claim, to give Brazil ironclad guarantees of supply of nuclear fuels, and the confusion and frustration which resulted from the “conditional contract” problem made the U.S. appear to be less than dependable in that respect. (It is difficult to estimate to what extent the supposed “unreliability” was exaggerated within GOB circles by those already intent upon a relationship with the FRG, the first steps in the establishment of which had been taken well before the “conditional contract” issue arose.); C) The GOB became increasingly aware that U.S. Government policy was moving toward ever-tighter safeguards; D) the Arab oil embargo and the resultant high prices for oil made nuclear energy relatively cheaper and emphasized the dangers of dependence on foreign sources of supply of energy; E) the inception of the Geisel government brought into play an outward-looking foreign policy, based on the oft-repeated formula of “ecumenism”, “responsible pragmatism” and “no automatic alignments” that not only implied broader relations with the Arabs, Eastern and Western Europe and China, but also a loosening of ties with the U.S. in search of foreign policy “independence” and “grandeza” (greatness, grandeur); F) the Indian nuclear explosion of mid-74 and the limited U.S. response to it seemed to the Brazilians to signal the end of effective non-proliferation practices—about which they had been consistently skeptical—and, in that sense, represented both a threat and an opportunity.

3. The tremendous amount of publicity that USG efforts with the FRG received here brought into sharp public awareness the unhappiness of the U.S. over the deal. Unfortunately—and undoubtedly, in part, by official inspiration, from Brazilian FRG sources—U.S. objections were held locally to be based on U.S. resentment and frustration at losing a lucrative commercial contract and on the U.S. desire to perpetuate Brazil’s dependence on the U.S. in general and in nuclear matters in particular. Except in the most thoughtful and politically sophisticated circles, short shrift was given to the real U.S. concerns over non-proliferation. When these were mentioned at all, they were usually dismissed as a cover for the “true,” i.e., commercial and political concerns of the U.S. The U.S. was presented as a disappointed suitor trying meanly and deceitfully to prevent Brazil from trysting with a new beau, and, more seriously, as attempting to prevent Brazil from realizing its destiny and economic development potential. Some serious commentary did recognize the logic of the U.S. position in regard to non-proliferation, but also presented the Brazilian position that the U.S. had neither right nor wisdom on its side in attempting to restrict Brazil’s sovereignty. These feelings are very broadly shared, with varying degrees of sophistication, by Brazilians of every shade of political opinion. Moreover, these sentiments are accompanied by a great outburst of national pride, principally because of the validation of Brazil’s candidacy to the nuclear club but also because of Brazil’s independence, even defiance, of the United States. The repercussions are likely to be felt for an indefinite period. They will complicate our bilateral relations in that they feed what has become, during the Geisel/Silveira administration, a tendency in official circles to suspect—or to play upon suspicions of—U.S. motives. The fact that the GOB–FRG agreement is widely hailed as a great triumph of Brazilian diplomacy (and its slogans of pragmatism and no automatic alignments) is certainly not going to diminish the prickliness of GOB stances.

4. A growing nuclear capability is also likely to enhance the already pronounced Brazilian movement toward a foreign policy as independent as possible of U.S. influence and will probably increase the potential for policy conflict with the U.S. in a number of fields, a potential already inherent in the Brazilian drive to world power status. As Brazil acquires its nuclear capability through the German agreement and other arrangements, the U.S. relationship with Brazil on nuclear proliferation issues will be strained. In the short and medium run, Brazil is likely to refuse to agree to any “nuclear club” initiatives on multilateral non-proliferation controls which would restrict Brazil’s freedom of action. At this point we have only the FRG statements that all aspects of technology and facilities transferred in the long run, Brazil may export nuclear technology, perhaps less skillfully and less scrupulously than the major powers, which would quite possibly bring Brazil and the U.S. into direct conflict over non-proliferation. Similarly, Brazil probably would not be receptive to new initiatives on the denuclearization of LA although this attitude might change in the long run as other LA countries develop nuclear capability.

5. The German contract will undercut U.S. sales of nuclear technology and fuel to Brazil, but future technological developments or German failures could affect this. Both GE and Westinghouse believe that there will be no contracts with U.S. prime-contractor reactor vendors during the 8-reactor program. U.S. companies also question the attractiveness of participation through local joint ventures in building German reactors. Although some GOB officials continue to state that there will be a role for U.S. firms in joint ventures with Brazilian enterprises, we share the companies’ pessimism about this possibility and, indeed, question the sincerity of the Brazilian statements. Secondly, whether Brazil will continue to buy U.S. enriched uranium depends critically on the terms of the amended agreement for cooperation. We seriously doubt that the GOB would accept a new agreement if it does not permit the reprocessing of U.S. fuels within Brazil and retention of the plutonium. This would mean that the GOB would not buy any more fuel from the U.S. after Angra I. Thirdly, new developments in reactor technology could affect Brazil’s German commitment but not necessarily. Like the U.S., the FRG also has a major program in the HTGR (uranium/thorium or plutonium/thorium fueled) and an excellent fast breeder program. The line of progress could well go:

(1) PWR—Enriches uranium fuel,

(2) PWR—uranium or plutonium/thorium fuel—so-called “light water breeder”,

(3) HTGR—Enriched uranium/thorium,

(4) HTGR—plutonium/thorium,

(5) Gas-cooled fast breeder, within a continuing joint program with the FRG.

Fourthly, any Brazilian interest in U.S. proposals for regional enrichment appears doubtful, even though the jet nozzle technology has not yet been proven efficient on an industrial scale. The fact that the FRG could furnish only the jet-nozzle process at this time because the tripartite deal with the UK and Holland (Urenco) restricts dissemination of the gas centrifuge is not immutable. In a few years, this could well change and the FRG might furnish the gas centrifuge to Brazil as a proven process.

6. In non-nuclear areas, U.S./Brazilian cooperation will be affected by Brazil’s increased international status as a potential nuclear power, the boost this gives to Brazil’s transition to becoming a second-tier developed country, and the resultant effects on Brazil’s willingness to assume greater international responsibilities and to exercise more leadership. The latter two considerations are consistent with long run U.S. objectives and will give Brazil a pattern of international interests more like ours, but it will also enhance Brazil’s capability for political and economic independence from the U.S. and other big powers.

7. Ultimately, the question that must be answered is, will Brazil develop a nuclear explosive device? Up to now, Brazil has been content to operate behind the protective nuclear shield offered by the U.S., a situation quite well suited to Brazilian priorities, needs and general ideological view of the world. Partly because of the high cost of bombs and delivery systems, Brazil has at least publicly eschewed nuclear weapons; it will continue to rely on the U.S. shield against any other superpower’s nuclear might. The Brazilian authorities, however, clearly believe that non-proliferation is a dead letter, and they will not leave Brazil open to the possibility of nuclear blackmail on the part of its neighbors or other middle powers, nor renounce a policy tool that they appear sure others will grasp. In that sense, the decision to acquire a nuclear weapons capability can fairly be said to have been taken. In the operational sense, however, it seems reasonable to say that no immediate decision has been made, although references to Brazil as a “nuclear power” permeate press treatment of the subject—and with the clear implication of an explosives capability. Rather, it appears that Brazil will concentrate on developing its technology to the point that an explosive device could be constructed within a relatively short time of the decision to do so. Although this judgment is based on our best estimate of Brazilian desires and intentions, there is, of course, no solid guarantee that Brazil would show that much restraint. In our serious pursuit of non-proliferation, world peace and stability, we will have to keep the development of the Brazilian nuclear capability under close and continuing scrutiny, and be prepared to face the need to challenge Brazil should conditions warrant.

8. In sum, the publicity given in Brazil to our attitude toward the contract has resulted in the widespread conviction here that the U.S., for commercial and superpower motives, sought to prevent Brazil from the legitimate pursuit of its highest national interests. The resultant damage to bilateral relations currently appears containable. There are many Brazilian interests that are served by good relations with the U.S. Brazil, in East-West political terms, is conservative and anti-Communist. Moreover, the actual establishment of a full fuel cycle capacity within the country is still a long way off and not assured. The lesson should not be lost on us, however. An issue on which the U.S. and Brazil are in fundamental disagreement, which was previously only abstract, has become concrete. While the level of its potential for conflict and cooperation cannot be fully assessed at this time, it seems clear that, barring a radical change in current U.S. nuclear policy—and the GOB quite possibly assumes that over time the U.S. will accommodate to the Brazilian nuclear reality—a new and divisive element has been added to U.S.-Brazilian relations.

Crimmins

1. Summary: Crimmins informed the Department that the Brazil-FRG agreement on nuclear cooperation reflected Brazil’s desire for major power status. The Ambassador concluded that if Brazil became a nuclear power, it would strain its ties to the United States.

   Source: National Archives, RG 59, Central Foreign Policy File, D750224–0307. Confidential; Priority; Limdis. Repeated to Bonn, Buenos Aires, Rio de Janeiro, and São Paulo. The text of the Brazil-FRG agreement was sent to the Department in telegram 10706 from Bonn, July 2. (Ibid., D750230–0721) Angra I was a nuclear power plant near Rio de Janeiro constructed by Westinghouse.