Hans-Hilger Haunschild, 'RE: Nuclear Power Cooperation with Iran; Result of my One-hour meeting with the President of the AEOI , Dr. Etemad, on 4 October 1977'

[Federal Ministry for Research and Technology]

St (FT)^[1]

Bonn, 6 October 1977

[various addressees in several divisions and sectors of the Federal Ministry for Research and Technology]

RE: Nuclear Power Cooperation with Iran

Result of my one-hour meeting with the President of the AEOI^[2], Dr. Etemad^[3], on 4 October 1977

1. Order of Nuclear Power Plants

The AEOI is currently intensively and swiftly negotiating with the KWU^[4] about the export of two additional nuclear power plants (Iran 5 and Iran 6). There seem to be no major problems occurring here. According to information from the KWU (Barthelt^[5]), the funding question including the Hermes Cover^[6] appears to be solvable. Regarding the latter, the KWU is in touch with the Federal Ministry for Economic Affairs and the Federal Ministry for Research and Technology.

The AEOI has indicated its interest to order immediately afterwards two additional nuclear power plants (Iran 7 and Iran 8). In this regard it is expecting from the KWU a significant ‘bulk discount’. In the opinion of the KWU there might be funding problem for those two nuclear power plants since just the dimension (11 billion German Marks for construction and machine part of 4 nuclear power plants) could create problems concerning a Hermes Cover. Etemad and the KWU are expecting understanding and support from the Federal Government here.

2. German-Iranian Trade

Etemad informed that, in association with the large order for nuclear power plants, the Iranian side is expecting a significant upturn of German-Iranian trade also in other directions, apparent especially pertaining to oil and oil products. Here I referred him to the Federal Ministry of Economic Affairs. He has already talked with State Secretary Rohwedder^[7] who supposedly stated his willingness to come to Tehran for this reason. I will talk these days to Rohwedder about this issue and the funding question.

3. Reprocessing

Since with 6 nuclear power plants from the Federal Republic the Persians will later possess significant amounts of used nuclear fuel elements, the Persians are demanding a German assurance to help them in coping with these problems. Unlike with the agreement over the first two nuclear power plants, E. is not thinking here about statements of intention regarding construction of a reprocessing facility in Iran, because he does know that this is currently impossible due to the foreign policy situation. However, since it has been agreed in the contract with France that the French are required on Persian request to reprocess in France the fuel elements used in power plants delivered by them [French), E. is demanding from us as well at least a statement of intention in this vein. I have explained to him that it is impossible this way, just because of the fact that there will not be a German reprocessing facility for many years down the road. Furthermore, we cannot additionally burden the intra-German discussion over the waste disposal center with the problem of reprocessing foreign fuel elements. Etemad is very much aware of the domestic political discussion in the Federal Republic, not the least after his participation in the nuclear energy conference of the Friedrich Ebert Foundation^[8] at the beginning of this week. Nonetheless, in his words -and because of the French precedent-, he must insist on a German statement regarding this issue. I explained to him that such a statement cannot be binding, if it can be provided at all. I have asked [Federal Ministry of Research and Technology Divisions] 22 and 226, together with sub-division 31 and the [Federal] Ministries concerned (Foreign Affairs, Economic Affairs, Interior) to prepare a draft which later will probably have to be approved by the Nuclear Energy Cabinet Committee.

4. Timeline

The Iranian Government is interested to finalize and conclude the agreement with the Federal Republic regarding the 4 nuclear power plants over the next 6 to 8 weeks. Background: The Shah is expecting to come under American pressure to have to order nuclear power plants also in the United States, when he will meet with [U.S.] President [Jimmy] Carter who will also visit Iran^[9] during his global tour. The Shah is willing to do that in principle, but he does not want to be subjected to time pressure in the negotiations with the Americans, which certainly will be dragged out over a long period due to the non-proliferation aspects. This is why he wants to have the contracts regarding the 8^[10] nuclear power plants, which are now definitely needed for the Iranian energy program, concluded when he is talking with Carter. This timeline can create difficulties for us, both regarding the funding issue as well as concerning the reprocessing letter.

5. Nuclear Power Plants from France

The agreements over Iran 3 and Iran 4 are still not signed yet due to differences of opinion regarding the funding. A flying visit by Poniatowski^[11], Special Envoy of President Giscard^[12], on Friday last week ended without a result.

6. Sea Water Desalination Plant
According to Etemad, the German side will have to very substantially lower the price if it still wants to have a chance. The German offer was the most expensive. I hinted that, also with support by the Federal Ministry for Research and Technology regarding F and E work^[13], a new price offer by the Krupp/DEMAG^[14] group can be expected. Etemad confirmed that, due to the good experiences of cooperation with the German industry,  the AEOI would be very happy if there also would be a collaboration in this project. However, he asked for our understanding that the AEOI would have no other choice than to accept the Japanese offer if the significant difference in price would not be drastically reduced. Furthermore, he gave the hint that for domestic political reasons in Persia it would be of great importance, if Krupp/DDEMAG - like also the French - would incorporate the Persian IDRO^[15] group in its offer.

The meeting was held in a completely open and even pronounced cordial atmosphere. There exists no doubt for me that Etemad really wants the comprehensive cooperation with us.

E. urgently asked to keep absolutely confidential that there are negotiations ongoing with the KWU not just about two but actually four additional nuclear power plants.

[signed Haunschild]

Haunschild