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Nuclear News - 2/3/2011
PGS Nuclear News, February 3, 2011
Compiled By: Matthew Kapuscinski

A.  Iran
    1. Iran, Russia Cautious About Stuxnet, PressTV (2/2/2011)
    2. Iran Seeks Salehi's Replacement as Atomic Chief, AFP (2/1/2011)
    3. Brazil Hails Tehran Declaration, PressTV (2/1/2011)
    1. Koreas Move Toward Military Talks, UPI (2/2/2011)
    2. South Korea's Lee Urges North to Improve Ties, AFP (2/1/2011)
C.  Pakistan
    1. US Expert Advocates Nuclear Energy Deal, Trade Program for Pakistan, Associated Press of Pakistan (2/2/2011)
    2. Pakistan Sticks to Credible Minimum Deterrence: Foreign Office, Pak Tribune (2/2/2011)
D.  Nuclear Cooperation
    1. Obama Signs Nuclear Treaty Documents Wednesday, Associated Press (2/2/2011)
    2. U.S. and Russia to Finalize Nuclear Deal on Saturday, Reuters (2/1/2011)
E.  Nuclear Security
    1. WikiLeaks Reveals Smuggled Uranium in the Philippines, ABS-CBN News (2/2/2011)
    2. U.N. Nuclear Body May Step Up Pressure on Syria, Fredrik Dahl, Reuters (2/1/2011)
F.  Nuclear Energy
    1. China Plans to Spend Big on Nuclear Power, High-Speed Rail, Benjamin Kang Lim, Reuters (2/1/2011)
    2. IAEA Team Completes Follow-Up Review of Spanish Nuclear Regulator, IAEA (2/1/2011)
    3. Kazakhstan Increases Uranium Production 27% Year-on-Year in 2010, Platts (2/1/2011)
G.  Links of Interest
    1. The Rise and Fall of North Korea Nuclear Deals, Reuters (2/1/2011)
    2. U.N. Inspectors Could Return Quickly to North Korea -Amano, Reuters (2/1/2011)
    3. Seoul Pursued Civilian Nuke Project with Libya, Kim Young-jin , The Korea Times (2/1/2011)

A.  Iran

Iran, Russia Cautious About Stuxnet
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Amid growing concerns over cyber attacks on world nuclear sites, the UN nuclear chief says Iran and Russia are careful enough to prevent any possible accidents at Bushehr power plant.

"Stuxnet, or cyber attack as a whole, could be quite detrimental to the safety of nuclear facilities and operations," Yukiya Amano told Reuters on Tuesday.

"I think they [Iran and Russia] are giving enough attention to prevent possible accidents caused by cyber attacks," Amano added.

In July, media reports claimed that Stuxnet had targeted industrial computers around the globe with Iran, particularly the country's newly launched Bushehr power plant, being the main target of the attack.

Iranian officials, however, have dismissed the claims, saying that the computer worm caused no serious damage to the country's industrial sites.

Russia's nuclear agency Rosatom has also rejected media reports that Stuxnet infected the Bushehr nuclear plant in southern Iran.

Stuxnet, first indentified by Iranian experts in June, is a malware designed to infect computers using Siemens supervisory control and data acquisition (SCADA) -- a control system favored by industries that manage water supplies, oil rigs, and power plants.

The director general of the International Atomic Energy Agency (IAEA) said that the IAEA had only limited knowledge about the computer worm, but it is gathering information about Stuxnet malware with interest.

The IAEA director general also said the agency was interested in reviewing the issue of cyber attacks on nuclear sites in a meeting with experts.

Iran's Atomic Energy Organization (AEOI) announced on Friday that the nuclear plant in the southern city of Bushehr would join the country's power grid in early April.

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Brazil Hails Tehran Declaration
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Brazil's ambassador to Iran has hailed the Tehran Declaration on nuclear fuel swap as an “achievement”, saying Brasilia is ready to cooperate further to help settle Iran's nuclear issue.

“I think our participation in this initiative with our Turkish friends regarding the nuclear issue in Iran was a very positive experience, and it showed that Brazil … and Turkey also can make a difference in international relations,” Antonio Luis Espinola Salgado said in an exclusive interview with Press TV.

“We had this meaningful role working for the Tehran Declaration … Of course the idea of a nuclear fuel swap deal is still on the table,” he added.

Iran issued a declaration with Turkey and Brazil on May 17 under which Tehran expressed readiness to exchange 1,200 kg of its low-enriched uranium on Turkish soil with 20 percent-enriched nuclear fuel.

The trio's agreement was issued as part of efforts for ending the standoff between Iran and the West over Tehran's nuclear program.

The US and its European allies, however, snubbed the declaration and used their influence on the UN Security Council to impose a fourth round of sanctions against Iran over its nuclear work.

Bilateral trade

In other parts of his remarks, the Brazilian Ambassador to Tehran also underlined that Iran-Brazil trade is on the rise.

“I'd like to stress that bilateral trade has reached a historical record in 2010. The volume of trade [between Iran and Brazil] has reached USD 2.2 billion,” Salgado said.

He also mentioned that Brazil's imports from Iran rose five-fold in 2010 year on year and added that “agriculture-related products” make up over 90 percent of Brazil's exports to Iran.

He said both sides are set to raise mutual trade and investment.

The top Brazilian diplomat also touched upon growing relations between Tehran and Brasilia, hailing efforts by Iranian President Mahmoud Ahmadinejad and his former Brazilian counterpart Luiz Inacio Lula da Silva to forge closer cooperation between the two nations.

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Iran Seeks Salehi's Replacement as Atomic Chief
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Iran will soon find a successor to atomic chief Ali Akbar Salehi, who this week officially took over as foreign minister, a top aide of President Mahmoud Ahmadinejad said on Tuesday.

"God willing, his successor in this organisation will soon be known," Esfandiar Rahim Mashaie, chief of staff of Ahmadinejad's office, told the ISNA news agency.

Iran's parliament on Sunday endorsed Salehi as the Islamic republic's foreign minister.

Salehi, 61, who is also a vice president of the Islamic republic, has led the Atomic Energy Organisation of Iran since July 2009.

He has been a driving force behind Iran's nuclear programme. It has been during his tenure that Iran brought its first nuclear power plant on line and started higher-level uranium enrichment amid Western concerns.

Iranian media have cited Ali Asghar Soltanieh, Iran's envoy to the International Atomic Energy Agency, as well as Salehi's deputy Mohammad Ahmadian and nuclear research chief Mohammad Ghanadi as possible successors.

Former energy minister Parviz Fattah and current minister of higher education Kamran Daneshjoo, an ally of the president, have also been named as potential candidates.

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Koreas Move Toward Military Talks
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South Korea accepted an invitation by the North to restart face-to-face military talks next week in an attempt to reduce tensions on the peninsula.

North Korea's Asia-Pacific Peace Committee sent a written message to South Korea's Ministry of Unification to open the north-south dialogue at an early date.

The APPC also suggested Red Cross delegates from both sides discuss humanitarian issues, such as reuniting families that have been separated since the 1953 cease-fire line created the two Koreas.

"Now is the time for the authorities of the North and the South to sit face to face and have exhaustive and constructive talks now that the (North) Korean People's Army's magnanimous proposal for holding high-level military talks removed all the hurdles lying in the way of the inter-Korean dialogue," the APPC message said.

North Korea "urged once again the South side to seek a sincere negotiated settlement of humanitarian issues, including the reunion of separated families and relatives and all other issues of mutual concern."

South Korean President Lee Myung-bak welcomed the move by North Korea as a "good chance" to improve relations that may lead to ministerial talks this year.

"I can hold a summit if necessary," Lee said in a television talk show.

"For North Korea, now is a good opportunity to show a change in its attitude. We plan to start working-level dialogue and test (North Korea's) seriousness. If (the North) seeks sincere dialogue, rather than military provocations, we can have dialogue, and resume economic exchanges and talks about the six-way talks."

Talks are tentatively planned Feb. 8 but a South Korean Unification Ministry official downplayed the outcome unless North Korea is willing to discuss its denuclearization.

"We don't plan to respond to the proposal," he said on condition of anonymity. "It is no different from earlier proposals that we have dismissed as lacking substance."

The latest offer by North Korea comes after a more general proposal at the beginning of January when the communist government said it is prepared to unconditionally restart the stalled inter-Korean negotiations.

"We do not want to see the present South Korean authorities pass the five-year term of their office idly without North-South dialogue," North Korea's Committee for Peaceful Reunification of Korea said in a written statement to the official government media outlet Korean Central News Agency.

"There is neither conditionality in the North's proposal for dialogue nor need to cast any doubt about its real intention."

Pyongyang suggested at the time that the talks take place in Kaesong, the main town in the Kaesong Industrial Region on the two countries' border. The industrial park project was set up in 2002 as a special economic zone where South Korean firms are allowed to set up a business to take advantage of cheap North Korean labor.

Western countries and North Korea's main ally China will welcome the restarting of a dialogue this month between the two Korean governments after relations between the countries plummeted in the last half of last year.

In November, an aggressive war of words erupted between the two countries -- which never signed a peace treaty after the 1953 armistice and officially remain at war -- after North Korea unexpectedly shelled the South Korean island of Yeonpyeong in the Yellow Sea and several miles from the North's mainland.

Dozens of houses and several military buildings were damaged in the attack that killed two South Korean marines and two civilians and injured at least 20 people. South Korean forces returned fire but there were no known causalities.

Even before the shelling, military relations had been tense. In March, South Korea blamed North Korea for the sinking of the 1,200-ton South Korean patrol boat Cheonan and the loss of 46 sailors.

North Korea repeatedly denied it had sunk the vessel, despite an international investigating team that said it found strong evidence that the Cheonan, which split in half, was hit by a torpedo of North Korean manufacture.

This month's talks, if they go ahead, could lead to the revival of the stalled six-nation talks to denuclearize North Korea. The talks, which involve the two Koreas, Japan, Russia, China and the United States, were abruptly halted in April 2009, shortly before North Korea conducted a test nuclear explosion.

North Korea always has maintained its nuclear development is for peaceful and defensive purposes, as well as maintained the number of its nuclear facilities as a secret.

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South Korea's Lee Urges North to Improve Ties
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South Korea's President Lee Myung-Bak urged North Korea Tuesday to seize a "good chance" to improve relations in upcoming military talks, and raised the possibility of a summit with leader Kim Jong-Il.

"We can hold a summit if necessary... this is a good chance for North Korea," he said in his first direct response to recent peace overtures from Pyongyang.

After weeks of high tensions following the North's deadly November artillery bombardment of a South Korean border island, the two sides agreed last month to the military dialogue.

They will hold preparatory talks between colonels on February 8 to set the date, place and agenda for a higher-level military meeting, possibly between defence ministers.

But Seoul said the high-level meeting would only go ahead if Pyongyang took responsibility for two attacks last year and promised no repetition.

Apart from the shelling of Yeonpyeong island, which killed four people including civilians, the South accuses the North of torpedoing a warship last March with the loss of 46 lives -- a charge the North denies.

Lee said he believed a "strong response" to provocations could prevent any repetition and the North may now believe it did not have to take such actions.

"I have great expectations that this may be time for North Korea to change," he said.

"If the North shows willingness for sincere dialogue instead of military provocations, we can hold inter-Korean dialogue, economic exchanges and talk about the six-party talks."

The six-nation negotiations on the North's nuclear disarmament -- grouping the two Koreas, China, the United States, Russia and Japan -- have been stalled for more than two years.

The United States, South Korea and Japan say the North must improve cross-border ties before they can resume.

The two Koreas held summits in 2000 and 2007. But relations turned frosty after Lee came to power and ended a decade of near-unconditional aid to the impoverished and hungericken communist state.

Lee expressed regret that the two nations are spending an "enormous budget" on an arms race, saying the North could probably overcome its persistent food shortages if it cut its defence budget by 20-30 percent.

The South for its part was spending nearly 30 trillion won ($27 billion) a year on defence "and if we can cut it by 10 percent, or three trillion won, a lot could be spent on education".

Three Seoul newspapers reported Tuesday that the North is building a new hovercraft base that would allow it to launch a quick invasion of South Korean islands near the disputed Yellow Sea border.

The base is under construction just 50-60 kilometres (30-35 miles) from Baengnyeong, the closest island to the North Korean coast, they cited military or government sources as saying.

The defence ministry declined to confirm the reports.

A government source told Chosun Ilbo that South Korean and US intelligence late last year detected construction at Koampo in Hwanghae province.

It could apparently accommodate up to 70 hovercraft, which could each carry a platoon of commandos and travel up to 90 kilometres per hour across the sea and tidal mudflats, the daily said.

Once the base is completed, North Korean troops would be able to land on the South's strategically important frontier islands in 30 to 40 minutes, it said.

The North's newly disclosed uranium enrichment plant is also fuelling security fears and complicating efforts to restart six-party dialogue.

The plant at Yongbyon was shown off last November to US visitors including scientist Siegfried Hecker.

The North says it will be part of a peaceful power project but Hecker and other experts say it could be converted to produce weapons-grade uranium.

Diplomats at the United Nations said a report by a panel of experts to the Security Council had concluded that the North must have at least one secret nuclear facility, in addition to the newly disclosed plant at Yongybon.

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C.  Pakistan

Pakistan Sticks to Credible Minimum Deterrence: Foreign Office
Pak Tribune
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Dismissing an “unnecessary alarmist reporting” about Pakistan’s nuclear programme, The Foreign Office on Tuesday said that it would continue to follow a responsible policy of maintaining credible minimum deterrence.

“Pakistan is mindful of the need to avoid arms race with India but would never compromise on its national security,” a foreign office spokesman said while responding to an article in New York Times by David E Sanger and Eric Schmitt, “Pakistani Nuclear Arms Pose Challenge to US Policy.”

The spokesman in a statement said, “In the nuclearised environment of South Asia, Pakistan continues to attach importance to ensuring peace, security and stability in South Asia and was mindful of the adverse implications of “selectivity” and “exceptionalism” in evidence on issues of nuclear non-proliferation.

The spokesman said Pakistan had consistently advocated to India the need to resume stalled bilateral dialogue, including on issues of peace and security. “In this context, Pakistan’s proposal for strategic restraint regime in South Asia, including nuclear and conventional forces as well as resolution of all issues and dispute is of extreme importance,” the statement said.

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US Expert Advocates Nuclear Energy Deal, Trade Program for Pakistan
Associated Press of Pakistan
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The Obama Administration should offer Pakistan a civilianuclear energy deal as well as a trade program under a “much more expansive” U.S. relationship with the key regional country as part of efforts to win more Pakistani cooperation toward a successful outcome of the Afghan conflict, a prominent American expert argued Tuesday.In a policy brief, Michael E. O’Hanlon, who is director of research for the Foreign Policy program at the Brookings Institution, endorses the Obama Administration’s policy to build a relationship of trust with Pakistan but underlines that bold new measures are needed to get greater and sustained Pakistani cooperation in the anti-terror fight along the Afghan border.

“Two major incentives would have particular appeal to Pakistan. One is a civilian nuclear energy deal like that being provided to India, with full safeguards on associated reactors,” says Dr O’Hanlon, who has also authored a book on Afghanistan.

He advocates that “Pakistan’s progress on export controls in the wake of the A.Q. Khan debacle has been good enough so far to allow a provisional approval of such a deal if other things fall into place as well, including Islamabad’s compliance with any future fissile production cutoff treaty.”

On the importance of U.S. striking a free trade accord, the expert says struggling economically, Pakistan needs such a shot in the arm.

“A trade deal could arguably do even more than aid at this point,” he observes.

However, O’ Hanlon stipulates, that Pakistan should be given these deals if the U.S. comes out successful in Afghanistan as he claims that the Afghan militants use Pakistani tribal regions to sustain insurgency and need to be tackled strongly by Pakistan.

The expert suggests if Afghanistan turns around in a year or two, the deals can be set in motion and implemented over a longer period.

Favoring the current U.S. policy toward Pakistan, O’ Hanlon notes in the policy brief, that “part of the right policy is to keep doing more of what the Obama administration has been doing with Pakistan -building trust, as with last fall’s strategic dialogue in Washington; increasing aid incrementally, as with the new five-year,$2 billion aid package announced during that dialogue; encouraging Pakistan-India dialogue (which would help persuade Islamabad it could safely move more military forces from its eastern border to its western regions) and coordinating militarily across the Afghanistan-Pakistan border region. But President Barack Obama needs to think bigger.”

The clarification that the U.S.-led ISAF mission will continue until 2014, and indeed beyond, at the November Lisbon summit was a step in the right direction but more is needed.

“Obama should offer Islamabad a much more expansive U.S.-Pakistani relationship if it helps win this war.”

Entitled “Improving Afghan War Strategy,” the policy brief also emphasizes promoting Afghan political organizations built around ideas and platforms, not individuals and ethnicities, in a change from longstanding American policy that could improve the quality of governance in the country.

The breif also proposes taking pressure off the bilateral U.S.Afghan relationship on the issue of anticorruption, largely by creation of an international advisory board consisting of prominent individuals from key developing countries like Indonesia and Tanzania that have had considerable success improving their own nations’ governance in recent times.

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D.  Nuclear Cooperation

Obama Signs Nuclear Treaty Documents Wednesday
Associated Press
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President Barack Obama pushed a key foreign policy goal a step closer to completion Wednesday with the signing of documents for a nuclear arms treaty with Russia.

The treaty is a cornerstone of Obama's efforts to "reset" U.S. relations with Russia.

The New START treaty, negotiated last year, limits each side to 1,550 strategic warheads, down from 2,200. The pact also re-establishes a monitoring system that ended in December 2009 with the expiration of an earlier arms deal.

Although Obama, Secretary of State Hillary Rodham Clinton and other administration officials had argued strongly and repeatedly that the treaty was a key foreign policy goal of the president's, he signed the documents in the Oval Office in the presence of news photographers only.

Obama also did not issue a statement afterward.

He was joined by Clinton, Defense Secretary Robert Gates, Senate Foreign Relations Committee Chairman John Kerry, D-Mass., Sen. Richard Lugar, R-Ind., the committee's top Republican, among others.

Russian President Dmitry Medvedev signed similar documents last week after the treaty cleared the Russia's parliament. The U.S. Senate approved the pact in late December after Obama and others had lobbied hard for passage.

Ratification becomes final when the U.S. and Russia exchange the signed papers. Clinton and her Russian counterpart, Foreign Minister Sergei Lavrov, are set to make the swap this weekend when they meet on the sidelines of the Munich Security Conference in Germany.

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U.S. and Russia to Finalize Nuclear Deal on Saturday
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The United States and Russia will formally inaugurate their new START nuclear arms pact on Saturday, launching a deal that commits the two former Cold War foes to cutting their atomic arsenals.

Secretary of State Hillary Clinton and Russian Foreign Minister Sergei Lavrov will exchange the final ratification papers for the START treaty in Munich, where both will be attending an annual security conference, the State Department said on Tuesday.

"With new START, the United States and Russia have reached another milestone in our bilateral relationship," a State Department statement said.

Russian President Dmitry Medvedev and U.S. President Barack Obama signed the deal in April after a year of tough negotiations, a move that both sides cited as proof of their efforts to "reset" the relationship after several years of tension.

The U.S. Senate approved ratification last month in a victory for Obama, and Russia's parliament gave its final approval in a unanimous upper house vote last week.

The treaty commits the nations with 95 percent of the world's nuclear weapons to ceilings of 1,550 deployed strategic warheads in seven years, up to 30 percent lower than in the 2002 Moscow treaty.

It will limit each side to 700 deployed strategic missiles and bombers and establish verification rules, absent since the U.S.-Soviet Strategic Arms Reduction Treaty (START I) expired in 2009, enabling them to keep tabs on each other's arsenals.

Once the treaty takes effect, the two nations are to begin exchanging information about the status of their nuclear forces and, within weeks, hold the first on-site inspections of each other's nuclear arsenals in nearly two years.

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E.  Nuclear Security

WikiLeaks Reveals Smuggled Uranium in the Philippines
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The WikiLeaks website on Wednesday released a confidential cable from the United States embassy in London revealing the possible illicit smuggling of radioactive material in the Philippines in 2007.

The cable was dated November 21, 2007 and was marked as “sensitive”.

The cable revealed that an unidentified male called the US Foreign Service National Investigator (FSNI) unit on November 20, 2007 and revealed he had information about the "possible sale of uranium that formerly belonged to the US."

"The FSNI unit received a phone call from subject, xxxxxx, stating he had worked with divers in the Philippines previously and was recently contacted by them with information that they had found 5-6 Uranim 'bricks' at the sight (sic) of an underwater wreck," the cable said.

It said the caller's contacts expressed a desire to sell the radioactive material for profit.

On the same day, the Regional Security Office Investigation Unit received an unclassified e-mail with 9 photo attachments of the radioactive bricks.

The cable said the unidentified male had sent faxes to the US Embassy and the Central Intelligence Agency but had yet to receive a response. T

At the time the memo was issued, Philippine authorities had not been notified. It noted that the supplier/ origin point and intended destination of the material was still unknown.

The Bagong Alyansang Makabayan, meanwhile, said the sensitive cable raises questions on why US forces are bringing radioactive material in Philippine territory.

Bayan secretary general Renato M. Reyes, Jr. said that under the Visiting Forces Agreement, Philippine authorities are not allowed to inspect the warships of the US forces and US commanders merely issue a general statement certifying the contents of the vehicles.

“Was there a US ship that sunk, and is this what’s being described as the underwater wreck? Was this ship nuclear-powered?” Reyes asked.

Reyes also sought a response from the Department of Foreign Affairs if they were at anytime notified of such a situation and if there were any reports of US ships sinking anywhere in the Philippines.

“Does the DFA even know about this or were they at any point formally notified by the US government? Or was this kept a secret because it will expose the US government’s violation of the constitutional ban on nuclear weapons?” Reyes asked.

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U.N. Nuclear Body May Step Up Pressure on Syria
Fredrik Dahl
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The U.N. atomic watchdog does not rule out using its "special inspections" powers if Syria refuses to allow its experts access to a desert site where secret nuclear activity may have taken place, its head said on Tuesday.

The comments by Yukiya Amano, director general of the International Atomic Energy Agency (IAEA), underlined growing frustration at Damascus' continued stonewalling of the United Nations body's investigation into the issue.

"On the Dair Alzour site, we haven't had progress after I became director general (in late 2009)," Amano told Reuters in an interview. "We cannot wait for ever, of course ... already lots of time has passed."

For more than two years Syria has blocked IAEA follow-up access to the desert site that U.S. intelligence reports say was a nascent North Korean-designed nuclear reactor, intended to produce bomb fuel.

The site, known as either al-Kibar or Dair Alzour, was bombed to rubble by Israel in 2007. Syria, an ally of Iran, denies ever having an atom bomb program.

Amano said he had not yet received a response to a letter he wrote to Syrian Foreign Minister Walid al-Moualem on November 18, the first time the IAEA chief has appealed to Syrian authorities directly, rather than just through his regular reports.

In the letter, he asked the government to provide prompt IAEA access to relevant information and locations related to Dair Alzour and to cooperate with the agency in general.

The United States has suggested that the IAEA may need to consider invoking its "special inspection" mechanism to give it authority to look anywhere necessary in Syria at short notice.


Asked if he could consider this in the case of Syria, Amano said it was one of the tools at the agency's disposal.

"It is not ruled out. It is not decided to call for a special inspection either."

The agency last resorted to special inspection powers in 1993 in North Korea, which still withheld access and later developed a nuclear bomb capacity in secret.

The Wall Street Journal reported on Tuesday that the IAEA may soon issue a critical report on Syria's nuclear program if it did not cooperate with the agency's investigation.

"Nothing has been decided. There are various ways to address this issue," Amano said.

Last year, the IAEA gave some weight to suspicions of illicit atomic activity at the site by saying that uranium traces found in a 2008 visit by inspectors pointed to nuclear-related activity.

The agency wants to re-examine the site so it can take samples from rubble removed immediately after the air strike.

Syria has dismissed calls to grant U.N. nuclear inspectors prompt access to Dair Alzour, saying they should focus their investigation on Israel instead. Damascus has suggested the uranium traces came with Israeli munitions used in the attack.

In a further sign of defiance, President Bashar al-Assad said in a Wall Street Journal interview this week that Syria would not grant IAEA inspectors unrestricted access to possible nuclear sites because it would amount to a violation of sovereignty.

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F.  Nuclear Energy

China Plans to Spend Big on Nuclear Power, High-Speed Rail
Benjamin Kang Lim
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Nuclear power and high speed rail will top the focus of China's plan to invest $1.5 trillion in seven key industries and shift the world's number two economy away from its role as a supplier of cheap goods, sources said.

State-owned enterprises, rather than the government, will play the main role of channeling the investment, said one source with ties to the leadership.

China envisages high-end equipment manufacturing, including high-speed rail and aviation equipment, becoming a pillar of economic growth alongside energy-saving and environmentally friendly technologies, biotechnology and new generation information technology such as telecoms and the Internet.

The other strategic sectors are alternative energy, advanced materials and alternative-fuel cars.

"China needs to innovate if it is to compete against multinationals in the international arena," said Qiu Gang of the Beijing office of Samsung Economic Research Institute.

"China hopes to become an industrial giant by 2015."

It is that push by emerging economies, and China in particular, into high-end manufacturing that was seen as behind U.S. President Barack Obama's call in his speech to Congress last week for a "Sputnik moment", fed by spending in education and research, to make sure the United States does not lose its technological edge.

A source with ties to the leadership told Reuters in December that the State Council, or cabinet, is considering investing up to $1.5 trillion in the sectors. The government has not publicly stated any figure.

The amount is part of a 2011-2015 five-year plan which needs approval the National People's Congress, or parliament, which holds its annual full session in March.

Analysts have expressed scepticism over the size of the investment which equates to about 5 percent of China's gross domestic product on an annual basis.

But they say it is an indication of the government's determination to force a structural shift in the economy.

A second source with leadership ties dismissed the doubts and said nuclear energy and high-speed rail would be the flavour of the decade, rather than wind or solar power.

"State-owned enterprises will play the leading role," the source said, requesting anonymity due to sensitivities.

The private investors will be given incentives such as tax breaks and low interest bank loans, with national and local governments chipping in.

The government is expected to unveil preferential policies later this year, possibly allowing private enterprises to use intellectual property rights as collateral to obtain loans.


The cabinet spokesman's office and parliament, reached by telephone, declined to comment.

China's high-speed rail network has been developing rapidly over the past decade, reaching a total of 8,358 km (5,182 miles), the world's longest.

The government plans to invest up to 4 trillion yuan in high-speed rail between 2011 and 2015, according to the China Securities Journal.

During Chinese President Hu Jintao's U.S. visit in January, General Electric Co (GE.N) signed a deal to bring Chinese high-speed rail technology to the United States, and for GE to manufacture locomotives for China.

A spending spree on railways was an important part of China's 2008-2010 stimulus package.


China has lumped nuclear, solar and wind energy in one group as new, or alternative, energy.

China had just 10.8 gigawatts of nuclear power capacity at end-2010. The official nuclear target for 2020 of 40 GW is still less than 5 percent of its current installed electricity generating capacity.

However, officials said that goal is likely to be raised to 80 GW or more for 2020.

The National Development and Reform Commission, the country's powerful economic planner, has said that the wind-power industry is already suffering from overcapacity.

And last week, the Ministry of Industry and Information Technology warned against blindly pursuing the development of new strategic sectors.


Nomura International (HK) Ltd said in a research paper that the five-year plan could give boost research and development investment by over 4 trillion yuan.

"The re-industrialisation is designed to move China away from an export-industrial model to a domestically focused one," Nomura said.

"This will not be all through cash disbursements but achieved by tax credits, privileged import tariff reductions and presumably easier credit and trade finance terms."

R&D spending currently accounts for 1.5 percent of GDP in China. That figure is expected to increase to 2.0-2.5 percent over the next five years, Nomura said.

The value-added output of the seven strategic industries together account for about 2 percent of GDP now. The government has said it wants them to generate 8 percent of GDP in 2015 and 15 percent by 2020.

By pushing these sectors, China would be making a big bet that technology can help bridge the gap between limited supplies of commodities and the rapidly growing demand that has propelled it to become the world's second-biggest economy.

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IAEA Team Completes Follow-Up Review of Spanish Nuclear Regulator
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Nuclear safety experts have concluded an eight-day mission to review Spain´s nuclear regulator, the Nuclear Safety Council (CSN). At the request of the Spanish Government, the International Atomic Energy Agency (IAEA) assembled a peer-review team of five high-level regulatory experts from four nations and two IAEA staff members. They conducted a follow-up assessment of an Integrated Regulatory Review Service (IRRS) mission that was completed in 2008.

This follow-up IRRS mission finished on 1 February 2011 and examined CSN´s progress in acting upon the recommendations and suggestions made during the 2008 IRRS mission. The team reviewed the areas of significant regulatory changes since that review. Both reviews covered the safety and security regulatory aspects of all facilities and activities in Spain.

IRRS team leader Luis Reyes, Senior Executive of the US Nuclear Regulatory Commission, said, "In 2008, the mission found particular strengths in CSN´s policy, its regulatory framework and its regulatory activities. We made a number of suggestions and recommendations for further improvement of the regulatory framework. CSN should be commended for the significant amount of efforts in addressing all the findings identified in 2008 mission."

About 30 IRRS missions, including three follow-up visits, have been conducted since the IAEA began offering the service in 2006.

Denis Flory, IAEA Deputy Director General for Nuclear Safety and Security, said, "This mission is a clear example of the value of regulatory bodies participating in a senior peer review process offered by the IAEA. A particularly important feature of these IRRS follow-up missions is to assess the effective implementation of the recommendations made. This mission to Spain also clearly demonstrates the mutual interest of IRRS missions: they encourage improvements in the host countries and serve as valuable sources of information for the reviewers themselves and for other regulatory bodies."

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Kazakhstan Increases Uranium Production 27% Year-on-Year in 2010
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Kazakhstan state-owned nuclear company Kazatomprom said the country produced 17,803 mt of uranium in 2010, 27% more than in 2009 and just short of its 18,000 mt goal.

Kazatomprom's uranium sales in 2010, excluding uranium belonging to its joint venture partners, reached 9,000 mt of uranium, up from 7,200 mt in 2009, the company said Tuesday.

Net income, driven by growth in uranium sales, increased 24% year-on-year to 53 billion Tenge ($367.5 million), the company said. By the end of 2010, the company said it had an order book worth about $17 billion.

Kazakhstan became the world's largest uranium producing country in 2009.

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G.  Links of Interest

Seoul Pursued Civilian Nuke Project with Libya
Kim Young-jin
The Korea Times
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The Rise and Fall of North Korea Nuclear Deals
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U.N. Inspectors Could Return Quickly to North Korea -Amano
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