A Radioactive Project Hits a Snag with Bush Administration
By Adam Zagorin
Time Magazine
March 1, 2004

A proposed uranium enrichment plant in New Mexico is getting extra scrutiny from senior officials, as it involves a company linked to leaked nuclear secrets.

If the U.S. government approves, several thousand inhabitants of Eunice, New Mexico are about to get a new corporate citizen: URENCO, the state-owned European consortium whose centrifuge designs have leaked to most of the world's rogue nuclear states. The consortium is revving up to build a new uranium enrichment facility just outside of Eunice not far from the Texas border. But the deal is anything but sealed. The massive project is raising eyebrows among Bush administration officials concerned that a company linked to the spread of nuclear weapons technologies would be operating on U.S. soil.

In the past few weeks U.S. regulators have begun processing an application to construct the $1.8 billion plant, which has strong backing from powerful state and federal officials, including Republican Pete Domenici, who is chairman of the Senate Energy Committee. URENCO , an Anglo-Dutch-German consortium, hopes to build in New Mexico as part of Louisiana Energy Services, or LES, an alliance that includes the big American firms Exelon, Duke and Entergy, as well as Cameco, a uranium mining company and Westinghouse, a nuclear fuel manufacturer. If it is built, the plant would produce fuel for nuclear power generation in the U.S. and abroad.

But the plantıs construction is facing some tough questions in the wake of President Bush's recent call for strict nuclear non-proliferation safeguards, and new revelations from A. Q. Khan, a Pakistani atomic scientist who has admitted passing nuclear design secrets on to Iran, North Korea and Libya. Khan obtained those design secrets, allegedly based on URENCO drawings, after being employed in the 1970's by a subsidiary of a Dutch company that worked closely with URENCO.

National security sources tell TIME that the New Mexico plant could face closer scrutiny and a more rigorous approval process. "What U.S. technologies might become available to URENCO as a result of its operations here?" asks a senior U.S. national security official. "Given the President's non-proliferation initiative, we will need to go beyond technical aspects of the plant and look at the strategic policy implications." A high-level U.S. nuclear administrator raised nearly identical concerns last year about URENCO/LES plans to build a comparable facility in Tennessee, but those plans were withdrawn by the company. If the New Mexico project moves forward, the senior U.S. national security official said that the National Security Council would likely get involved in a more extensive, high-level review.

At this point, however, approval for the New Mexico project rests with the Nuclear Regulatory Commission, a federal agency which reviews technical aspects such as the reliability of the plant's enrichment equipment, but not national security implications. The review process normally takes about three years, but Senator Domenici has promised to introduce legislation in Congress that would cut that to two years or less. Domenici's proposal would also make approval of the plant more likely by limiting review of the plant's environmental impact, truncating the appeals process for those who object to the plant and allowing the US government to process the facility's radioactive waste using a tax-payer subsidy.

If the plan meets federal approval, the consortium will eventually install enrichment machines at the New Mexico site worth over $1 billion, nearly all of which would probably be built in Europe to URENCO specifications. The company has said its centrifuge technology will be subject to the strictest safeguards, and has denied authorizing the leaks of any of its technology to rogue states. LES has described the link between URENCO and nuclear proliferation as "long ago and far-fetched at this point."

The first supposed leak of URENCO technology occurred in the 1970's and involved Pakistan. Since then, components associated with URENCO technology, consultants or sub-contractors have been said to have turned up in Iran, Iraq, Libya and North Korea. Last week, for example, the United Nations nuclear agency said it found undeclared components compatible with advanced uranium-enrichment centrifuge designs in Iran. The components were compatible with a so-called "P2" uranium-enrichment centrifuge, a Pakistani version of the URENCO "G2" centrifuge. The P2 can be used to produce material for nuclear weapons.

In 1998, Ernest Piffl, managing director of the German firm Team GmbH near Stuttgart, received a three and half year prison sentence for illegally exporting thousands of centrifuge components to a Pakistani nuclear laboratory. An expert at the trial testified that Piffl had in his possession a classified drawing of a URENCO component .

In Febraury 1986, components en route to Pakistan were seized by Swiss authorities that had apparently been manufactured from URENCO designs in West Germany.

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