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The Commission of the European Communities categorically rejects the allegations, published recently by certain sections of the press, that its departments, including the Euratom Supply Agency and the Euratom Safeguards Directorate, have allowed nuclear materials to change hands either illegally or in violation of the agreements that Euratom has concluded with supplier countries such as Australia, Canada and the United States. Background ---------- 1. "Flagswapping" is not a secret or illegal practice : it is compatible with the bilateral agreements that Euratom has concluded with Australia, Canada and the United States. The prior agreement of these third countries is required only in respect of "flagswaps" involving nuclear materials outside the Community. The US therefore recognizes that both internal and international flagswaps are implicitly permitted under the Euratom-US agreement. The Euratom-Australia agreement permits internal flagswaps in an arrangement that covers all aspects of the management of the agreement and expressly accepts the principle of equivalence, and thus of interchangeability, of nuclear materials. Australia has not, however, so far accepted international flagswaps, and therefore no such operations have been carried out. The Euratom-Canada agreement provides for both internal and international flagswaps. These operations are also, from a legal standpoint, legitimate in international law. The International Atomic Energy Agency (IAEA) in vienna expressly permits "swaps" between nuclear materials, whether or not subject to its safeguards, in all its agreements with States that are not signatories to the Non-Proliferation Treaty (NPT) but are subject to sectoral IAEA safeguards. The problem of swaps cannot arise in agreements between the IAEA and States that are signatories to the NPT, which are subject to full-scope safeguards. ./.. - 2 - 2. Flagswaps can be explained and justified above all for economic and security reasons. A simple example to illustrate a swap : In the Community, an operator, e.g. manufacturer of fuel elements for nuclear power stations, has 80% Canadian uranium and 20% Australian uranium, these being required for the manufacture of the elements. As he needs the full quantity, but this is subject to the safeguards obligations of two different countries (Canada and Australia), the situation can be complicated for the end-user : the latter has to keep complex accounts when managing his fuel and runs the risk of his spent fuel being refused by the reprocessing plant on account of its dual origin. The operator therefore wishes to have it officially certified, by Euratom, that the full quantity of uranium he requires is from the same "origin". This is when the swap takes place. Operator "A" approaches a second operator, "B", in the Community, who accepts that "A"'s 20% uranium of Australian origin should be relabelled as being "of Canadian origin" and that, in exchange, 20% of the Canadian uranium in his possession should become "Australian". In general, this practice is justified not only for economic reasons (risk of production delay, etc.), but also for security reasons. The swap makes it possible to avoid having physically to transfer nuclear material from one location in the Community to another. 3. The various arguments and allegations that appeared in a major German weekly regarding the illegality of some of these swapping operations, claiming in particular that Euratom was circumventing an embargo on South Africa and organizing unauthorized operations with the Soviet Union, are without foundation. It must be pointed out that the European Community as such has not put an embargo on uranium imports from South Africa. The US did not have an embargo on uranium from South Africa until 31 December 1986. The issue of the US embargo on uranium from South Africa and Namibia is, moreover, a highly complex one : - from 1 January 1987 to 2 July 1987, it was permissible to import South African uranium in certain forms into the US for processing on behalf of a non-American user and, in other forms, for all users; - from 2 July 1987, the importation of uranium in a certain form into the US has been officially prohibited but for the time being it is still perfectly legal, under a US Treasury regulation, to import uranium mined in South Africa and converted in another country. The regulation states that, in such operations, the country of origin of the materials becomes that of the country in which conversion took place. ./.. - 3 - As far as operations with the Soviet Union are concerned, the claim that uranium under US safeguards has been sent to that country is false. Under its present policy, the US is not prepared to authorize the Community to make such exports and, for their part, the Community authorities make sure that such exports do not take place. Uranium subject to Canadian and Australian safeguards, on the other hand, may be exported to the Soviet Union with the agreement of the Canadian and Australian authorities and provided that all the uranium enriched in the Soviet Union and the waste from the operation are fully recovered. Here, too, the Community authorities check both the authorizations and the re-imports. Generally speaking, and provided the Community is fully informed of Soviet policy in this field, the Soviet embargo on imports of uranium from South Africa is not total : in particular, materials covered by old contracts may be imported into the Soviet Union without breaking the embargo. 4. Lastly, the main point in this matter concerns the "interchangeability" of nuclear materials. It is quite obvious that, for example, in the case of enriched uranium it is impossible to identify the origin of the various atoms that make up the final product. The crucial point is therefore not the origin of the uranium, but the application of the physical and accounting checks that make it possible to trace the quantities and qualities of products obtained from the uranium ore.