Brazil and India announce trade deals with uranium and aircraft in the mix
The BBC reports that Brazil will re-start work on a long stalled nuclear reactor and simultaneously begin enriching uranium possibly for export to India.
Brazil signs up to help India's nuclear program
India has been shut out of a wide ranging nuclear technology deal with the US over its insistence that it be allowed to continue reprocessing of spent nuclear fuel. India also wants to keep open the option of underground nuclear weapons testing as a deterrent to its next door nuclear rival Pakistan. As a predictable consequence of its failed negotiations with the US, India has seen the door swing shut on buying uranium from Australia which objected in June to India's diplomatic challenges to nuclear nonproliferation regimes.
Brazil is a member of the 45-nation Nuclear Suppliers Group. India is not, but wants to join so it can buy nuclear fuel from member states. Officially, Brazil has told India it needs to sign up for nonproliferation programs. The deal with Brazil will provide India with an opportunity to step up its diplomacy with the 45-nation Nuclear Suppliers Group (NSG) of which Brazil is an influential member. A diplomatic spokesman for Brazil told the Indian news media, Brazil will help India in civilian uses of nuclear energy. "We understand India's growing need for energy and appreciate its emergence as an important world power," said the envoy.
In the same breath, he added that Brazil will take a formal position on this issue after India's bilateral 123 pact with the US and New Delhi's safeguards agreement with the International Atomic Energy Agency (IAEA) is in place. It's a clear case of carrot and stick and perhaps the unseen hand of US diplomatic and IAEA pressure on Brazil.
Secretary of State Condoleezza Rice on June 28th acknowledged difficulties in negotiations on a US-India nuclear cooperation deal, but said the accord could be settled by the end of the year. This means US envoy to the negotiations, Nicholas Burns, kicked the issue upstairs to be addressed by Rice and perhaps President Bush.
Interestingly, trade issues have entered the mix as bargaining chips. Brazil and India have criticized the United States for its failure to offer deep enough cuts in the billions of dollars of subsidies it pays annually to American farmers. The European Union and the United States say the two emerging economic powers refuse to offer new market opportunities for manufacturing exports. Clearly, India is looking for leverage outside of the bilateral negotiations over its nuclear policies as a way to close the deal with the US. Is trade, with new partner Brazil also at the table, one of them?
India isn't the only potential customer for Brazil's enriched uranium. China has taken notice. Brazil has the world's sixth largest reserves of uranium and currently ships it abroad to Canada to be enriched, so it can be used at its two nuclear energy plants near Rio de Janeiro. That may change making Brazil an exporter of enriched uranium. China is a member of the Nuclear Suppliers Group and can buy fuel from any exporter.
Brazil's deal with India is being sweetened by a promise that India's Paramount Airways was set to order 40 planes from Brazilian maker Embraer in a deal worth about $2B. So what will China offer to buy as an offset to get Brazil's enriched uranium?
Brazil to re-start third reactor project
Brazil's national energy council has recommended restarting a stalled and troubled project to build the country's third nuclear reactor. Brazil currently has two nuclear energy plants, located at Angra dos Reis some 150km (100 miles) from Rio de Janeiro. Work on the third stopped two decades ago in the 1980s over security fears, poor management, and lack of funds. The plants has been considered by some to be a white elephant that would never be finished. Brazil currently gets about 4% of its electricity from nuclear energy.
Angra 3 would require an investment of about US$3.6 billion according to the Mines and Energy Ministry. Late last year, Brazil announced plans to build four new nuclear plants, each with a generating capacity of 1,000 megawatts, starting in 2013 in the country's northeast and southeast. Brazil has signed the Nuclear Nonproliferation Treaty, and its constitution bans the military use of nuclear energy.
Brazil to enrich uranium
Brazil has announced it will begin enriching uranium officially, saying it has received the approval of the United Nations' nuclear watchdog. International Atomic Energy Agency (IAEA) inspectors paid a "successful" visit to the Resende enrichment plant in October, a Brazilian minister told reporters. Science and Technology Minister Eduardo Campos said production of enriched uranium would start within months. However, an IAEA official told the BBC no final agreement had been reached. The spokesman told the BBC the IAEA was still completing its assessment of Resende.
Privately, agency officials say a deal with Brazil is close and could be announced in the next month. Apparently, in its excitement the Brazilian government jumped the gun. They added it could be eight months before production of fuel for nuclear reactors would begin.
The government had been refusing to show all of its centrifuge technology responsible for enrichment. This had led to protracted negotiations with the IAEA over the past few years. Apparently, Brazil decided that the value of the uranium enrichment plant was enough to overcome their political fears of IAEA inspections.
Brazil is a party to the Nuclear Non-Proliferation Treaty, the cornerstone of global efforts to stop the spread of nuclear weapons, and as such could not operate the plant without approval from the IAEA.