SUBJECT
fJio tor Africa
OER Contribution to the Draft of IIM: South Africa's Nuclear Options and Decision-Making Structures
Attached is OER's contribution to IlM: South Africa's Nuclear Options and Decision Making Stru^-nr^
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uiiice or Economic Research
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II. Organization and Decision Making D. How is che program financed? Energy Expenditures
Reported expenditures by government and industry on nuclear development and operations have totaled aboutillion since South Africa began producing uranium oxide2
Industry expen-
ditures for mining and processing are estimatedillion, orercent of the total. Nuclear expenditures reported in government budgets haveillion.
Spending by private industry on mining andmore than doubled7illion/ reflecting increased investment in response to new export contracts. Production is rising sharply, reachingons7 comparedons5
Nuclear spending by the government is listed in tho public budget under allocations for the Ministry ol Labor and Mines. Aboutillion;unded construction and operation of the pilot enrichment plant at Valindaba. Allocations
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in the same period for the Atomic Energy Board (AEB(0 nillicn. About one quarter of AEB funding was for capital construction and equipment and the remainder for administration and operating expenses.
The AEB operates the National Research Center at Pelindaba and is tasked with development of processes to produce nuclear material, electric power, and radioisotopes. It also is responsible for licensing, safety, nuclear waste disposal, and library and computer services for nuclear researchers. AEB employeest tho end of
Total government nuclear spending increased rapidly during, reflecting construction outlays for the pilot enrichrtent plant. Spending then leveled off0ear in7B.
Weapons Expenditure
None cf the expenditures that are openly identified as being for nuclear progrnns are flagged for weapons development or construction. Pretoria either nosks such expenditures under other budget allocations or withholds reporting on then altogether.
There is no doubt that South Africa can afford to develop anduclear explosive if it chooses. The pilot enrichment plant at Valindaba is believed to be capable of producing weapons-grade enriched uranium. Given tho enriched charge, the cost of constructing andrude explosive would be almost Intelligence estimates, for example, put
lircct cost for plutonium and the actual
detonation5 kiloton device in4 at only aboutillion. ortion of the capital costs of the materials production facilities would have brought the cost toillion.
would raise the costs considerably.
Inflation4 plus added technical costs if South Africa wereore sophisticated device;
0 million, however, would be easily handled in South Africa's Sll billion budget.
IV. Nuclear Politics and Economics
b. Role of Economics in Nuclear Decisions Hue1ear Weapons
The small direct costs ofevice would noteterrent to developing and testing nuclear explosives. Much more important would be the certain heightening of international pressures for economic sanctions. Pretoria's unwillingness to liberalize apartheid or to push through faster change in Namibia or Rhodesia already have raised substantial pressures for sanctions.
Nevertheless, positions on nuclear explosive issues by major policy officials in the south African government probably are influenced as much by political or personal feelings as by economic concerns. Almost all key economic figures in tho government are Afrikaners and long time members of the inner circles of the Nationalist Party. Most share the general Afrikaner belief in the desirability of the country to go it alono rather than yield to outside pressures. The sole English-descended Cabinet member. Finance Minister Horwood, has openly expressed his defiance
and anger against foreign pressures on South African nuclear affairs.
Although concerned about possible economicmany officials probably feel that broad sanctions are unlikely, given the importance of South African minerals to Western countries. Stockpiling and other precautions have created confidence that the country could withstand sanctionsumber of years. Official statements have cited options that Pretoria might take in case of sanctions rather than concessions that might relieve the pressures for sanctions. Nuclear Energy
Economic considerations are the driving force behind nuclear energy development. Taking advantage of its abundant uranium resources, South Africa hasajor uranium oxide exporter since thes. Exports7 are estimated at0 niilion, fifth among South Africa's total exports.
Pretoria is steadily developing nuclear energyajor facet of an economy-wide program to ease the country's heavy dependence on gold sales for foreign exchange earnings. Long tho mainstay of the balance
of payments, gold production and sales have decreased by almost one-third0 as the mines have moved into lower grade ores. To help fill the gap, nuclear energy is being developed in three ways; 1) uranium mining is being rapidly expanded and exports are projected to double} ommercialplant is planned for completion4 to take advantage cf the large export price advantage of the enriched product over uranium oxide, and 31 W reactors are under construction to ease the consumption of coal in electricity production, freeing coal resources to take the place of expensive imported oil.
Pretoria has not admitted any motivation for weapons construction in its development of uranium mining and constructionilot plant for The government also has given only economic reasons for itsillion investment in the commercial enrichment plant and the two reactors. These reasons are valid whether or not weapons are built. Nuclear energy is highly profitable in terms of foreign exchange earnings and mining profits and jobs, and promises toey contributor to the balance of payments if production and exports of enriched uranium car. be established.
Policy at Loggerheads
The conflict between-the positive economic contribution of energy development and the possible negative economic consequences of weapons constructionerious policy dilemma for Pretoria. The entire nuclear energy program is dependent on foreign trade and highly vulnerable to sanctions. Both the enrichment plant and reactors require imported equipment and technology. Uranium oxide exports could be stopped by sanctions if France, Western Germany, Japan, and other majcr customerstrong commitment to enforcement.
vorster and other officials have acknowledged their vulnerability, publicly expressing fears that the US will withhold enriched fuel for the reactors and proposing to broaden the South African enrichment program if necessary to include fabrication of enriched fuel elements. These concerns presumably have had an important influence on decisions about nuclear weapons (as well as policy on apartheid and the Rhodesian and Namibian issues).
The danger to the nuclear energy program, however, is very unlikely toritical deterrent to developing
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or testing weapons. Nuclear energy is only oneumber of economic and political considerations that Pretoria would have to take into account. Equally important are factors such as the vulnerability of oil supplies and consumer and capital goods.
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