Strategic hedging

As the prospects for the conclusion of a mutually satisfactory agreement between Tehran and Washington were steadily growing dimmer towards the late 1970s, Iran was stepping up its efforts to attain full-blown independence in the nuclear fuel cycle by reaching out to any source it could lay its hands on. The endeavor was primarily aimed at securing long-term fuel supply sources and its reach was truly global. In the latter half of the 1970s, the Shah’s nuclear footprint was practically everywhere as Etemad was exploring across the world in search of uranium deals, some public, others under wraps. According to a June 1, 1978 report in The Christian Science Monitor quoting Cyrus Manzour, AEOI VicePresident for International Affairs, Tehran was “involved in about 54 joint ventures to seek uranium in ‘fi ve continents’ and in a domestic search for uranium ore costing $38 million.” 1 This policy was in line with the Shah’s avowed objective that Iran was intent on “shopping for uranium wherever it [could] fi nd it.” 2 Tehran’s policy of diversifying uranium resources, according to Dr. Etemad, was based on “the Royal belief” that considering the risk of “being subjected to uranium blackmail,” Iran had to avoid “putting [its] eggs in one basket.” 3

The U.S. documents describe the pace and scope of the AEOI’s rush to procure supplies of uranium and obtain mining concessions as “feverish.” As part of this effort, the AEOI had embarked on a three-year comprehensive uranium-prospecting program focused on aerial radiometric and gravimetric survey of half of Iranian territory for economically viable uranium deposits. 4 On September 18, 1976 The Kayhan International quoted the AEOI offi cials as saying that Tehran had concluded three seismic survey contracts ranging in length from 36 to 42 months with West Germany’s Prakla-Seismos, France’s CGG, and Australia’s Austirex in pursuit of its policy to fi nd indigenous deposits of uranium “to guarantee suffi cient fuel for its reactors in the 1980’s and beyond.” The areas under survey included northwest and east of Iran where fl ights conducted by aircraft and helicopters equipped with Geiger counters were on the hunt for fi ssile material radiation signatures. In the words of AEOI’s Director for Fuels, Exploration and Extraction, Ghassem Arabian this effort was part of the organization’s two-track campaign to secure uranium deposits: “if we fi nd there is no uranium in Iran, if there is not enough of it, or if it is not economic, we will

Another component of Iran’s hedging strategy consisted of adopting a nuclear development policy with maximum supplier diversity. The choice of PWR over heavy water or boiling-water power stations was a refl ection of this policy. Apart from the technical and industrial advantages of PWRs, as Etemad later explained, the decision was informed by a deliberate policy to have maneuverability between suppliers:

We have, for instance, made a comparison between light-water power stations and the Canadian heavy-water power stations. The Canadian power stations seemed to us rather more expensive, and there has been less industrial experience with this type of reactor. Furthermore, we would only have had one supplier. 6

Prime Minister Hoveyda conveyed the same sentiments to the Kayhan International on December 18, 1974 upon his return from Canada accompanied by AEOI director Etemad. Commenting on Iran’s decision not to proceed with the CANDU 7 reactors, the PM quipped, “the purchase is not like that of cloth. Canadian reactors are based on the heavy-water method while we have developed toward those using enriched uranium.” 8

It bears noting that the Canadians, within the framework of a cooperation protocol signed between Canadian Minister of Commerce, Industry, and Trade Alastair Gillespie and Minister of the Economy Houshang Ansary on April 23, 1974, were zealously courting the AEOI to opt for the Canadian-invented CANDU pressurized heavy water reactors for electricity generation. In their advocacy of this especially proliferation-prone reactor type, the Canadians were citing Iran’s capability to locally produce heavy water as one of the advantages the Canadian system had over others. “Heavy water can be produced as a by-product of the petrochemicals industry so Iran could produce the basis for nuclear energy herself,” noted Gillespie during his trip to Tehran. Additionally, the Canadian Minister emphasized CANDU technology’s higher effi ciency compared to “the French, American, and Soviet systems” since it did not require the shutdown of the entire system for refueling and could be refueled “online” using natural uranium. 9

Conclusion of long-term uranium feedstock contracts with international suppliers constituted the most salient component of Tehran’s strategy to ensure maximum security of supply. On this front, the AEOI concluded agreements with Australia, Gabon, and Niger for uranium prospecting. Of special note was the uranium purchase contract with Gabon, which was signed following President Omar Bongo’s visit to Tehran in October 1975. According to U.S. State Department dispatches, within the envisioned arrangement the AEOI had tentatively agreed to purchase some 200 metric tons of Libreville’s 750-ton annual production capacity. 10

Arguably the most important aspect of the Shah’s strategic hedging effort to secure a nuclear fuel supply was focused in South Africa where Iran’s

Iran into an indispensable asset for the economic vitality of Pretoria. It is worth remarking here that South Africa in the mid-1970s was deemed by the nuclear expert community a “near nuclear” state on par with Germany and Taiwan and well ahead of Brazil and South Korea. 11

With this in mind, the Republic of South Africa (RSA) was one of the fi rst countries Iran put out its tentacles to explore the possibility of cooperation in uranium enrichment. The occasion was the valedictory audience of the RSA’s Consul General in Tehran on June 26, 1973 where the Shah caught Consul General Alan John Oxley unawares declaring, “I am going nuclear. It may sound crazy when we have all this oil, but I want to develop alternative sources of power.” The RSA Consul General seized on the opportunity and fl oated the idea that a uranium-for-petroleum barter system could be worked out of which the Shah was embracing. 12

With the establishment of the AEOI and the appointment of Argentine Admiral Oscar Quihillat as AEOI advisor additional momentum was built into TehranPretoria nuclear ties. This was largely thanks to the long-standing rapport between Quihillat and Donald Sole, the former Chairperson of the IAEA Board of Governors and South African Ambassador to West Germany when Quihillat served on the IAEA Board. In a May 29, 1974 personal note to Alan Fraser, South Africa Consul General to Tehran, Sole urged him to keep a “close personal relationship” with Quihillat as the Argentine could furnish “valuable inside information on the development of the Iranian nuclear energy program.” Moreover, Sole noted that the appointment of the Argentine admiral could boost nuclear contacts and interactions between Tehran and Pretoria. 13

The Pretoria’s Consul General in Tehran initiated one of the fi rst nuclear-related contacts between Iran and South Africa in early 1973 when he urged the South African Ministry for Foreign Affairs and the Atomic Energy Board (AEB) to provide the Iranians with “certain background information about the atomic power plant proposed for construction near Cape Town.” In General Alan Fraser’s view, the provision of this information was of strategic salience, as it would spark Iran’s interest, early on, to purchase uranium from Pretoria in a “quid pro quo” arrangement “for South Africa’s bulk purchase of oil from Iran.” 14

The AEB and Foreign Ministry complied with the Consul General’s advice and the AEB’s Nuclear Power Committee reports on the Cape Town nuclear reactor were passed on to the Iranians. In a subsequent visit to Pretoria, the AEOI representatives also expressed interest in receiving “copies of two classifi ed reports on Heavy Water Production” that the South Africans had embarked on manufacturing a few years earlier. In a letter dated May 22, 1974, the President of the South African AEB approved the transfer of the documents “via offi cial channels to Tehran.” 15

At this early stage, Tehran’s keen interest in expanding nuclear contacts with Pretoria was especially driven by the Shah’s cordial relations with the South Africans and his desire to capitalize on these ties to acquire uranium enrichment technology from the Apartheid regime. This objective was high on the agenda

Gholamreza Hazrati Ashtiani, the Deputy Minister for Power in the Ministry of Power and Water. During this trip, the Iranians met with South African AEB President Abraham Johannes Andries Roux and toured the Pelindaba Nuclear Research Center and the uranium recovery facility at the Palabora Mine. 16

In parallel with the deepening and proliferating of the Tehran-Pretoria nuclear nexus, one could also notice the emerging signs of a potential Iran-West Germany-South Africa nuclear axis in 1974 where Tehran’s deep pockets would be paired with Pretoria’s uranium endowments and Bonn’s technological know-how in pursuit of a synergetic trilateral nuclear partnership. One of the key architects and advocates of this trilateral nexus was Donald Bell Sole, South African Ambassador to West Germany from 1969 to 1977. In a letter dated July 14, 1974 and addressed to the Iranian Ambassador to West Germany Amir Arslan Afshar, Sole relayed the contours of his exploratory talks with Klaus Barthelt, Chairman of the Vorstand of Kraftwerk Union (KWU) and the latter’s “sketch plan” regarding the feasibility of a “tentative trilateral cooperation” scheme. Sole was fi rmly convinced that since Iran was naturally disinclined to be dependent on a single country like France or even the United States “for meeting the requirements of her nuclear power program,” there was a potential opening for cooperation.