Note from Brazilian Congressman Herbert Levy

STRICTLY RESERVED

New York, December 13, 1982

On December 1, in Brasília, I participated in the group of parliamentarians invited to meet President Ronald Reagan at Alvorada Palace. Having been informed that it would be a collective meeting, I sought contact with Judge William Douglas Clark, chief assistant to the President for security questions, with ministerial rank. The financial executive David Rockefeller, with whom I had had a long conversation a few days before at the close of a luncheon offered by Paulo Villares, a well-known Brazilian businessman and member of the Board of Chase Bank, who had recommended to me to that it was more important to talk about these questions with Clark rather than with the President himself, since he would refer the matter to his assistant in any case.

William Douglas himself suggested that we talk during some opportunity afforded by the presidential visit. Since a collective meeting did not seem to be of much interest, Judge Clark and I went to another room at Alvorada Palace and I made a complete report on the matter. He listened very carefully. I said it was my personal initiative but that the Minister closest to the President was fully informed about it, as well as one of my friends, a military chief deservedly much respected by his peers.      

I explained that for the time being I understood it convenient to limit these contacts to the civilian and military sphere, leaving to the best judgment of President Figueiredo and high rank military chiefs the steps to take the matter further should we find a favorable disposition to solve the issue from the competent American authorities. I stressed that I knew that it was a complex matter and that I did not expect an immediate response but I would be in Washington on 9 December and would like to have the contacts that he considered useful.

I also said that I had already mentioned the issue to general Vernon Walters, with whom I had had personal contacts when he was the military attaché in Brasília at the time when my nephew Robert Dean was minister-counsellor. In fact, I had sent a very detailed letter to my nephew, who in turn sent it to Walters. Their relations became closer in recent times because one of Dean’s daughters (he is married to Doris May, a Brazilian, daughter of my sister Wanda, already deceased) had married a nephew of general Walters.

A few days after learning from Dean that my letter had been sent to Washington, I called the general. Walters received my call with good will and said the Dean had informed him about the letter but that he had not yet received it. I called him again a few days later. He spoke again only in Portuguese and when I said I would be in Washington on the 9^th he offered to receive me at my convenience in the Department of State and would take me to Richard Kennedy, the Undersecretary of State, and not an undersecretary in charge of atomic matters. He was also the representative of the United States at the International Atomic Energy Agency. He warned me, however, that it might be difficult for him to help us because of legal constraints and that until now Brazil had not signed the non-proliferation treaty. I said that this could be the key to a broader understanding between Brazil and the United States and that once the problem I had explained was resolved, it was obvious, in my understanding, that our participation in that treaty was possible.

But coming back to Judge William Clark, he did not make any comment at the end of my presentation, but took me to his office located at Alvorada Palace, directing his secretary Mrs. Hill to set an appointment for me for the 9^th, in Washington, with general Richard T. Boverie, Director of Defense Programs at the National Security Council, together with Mr. Svend Kraemer, whom I understood to be a high rank advisor.

Later on, still on December 1, at the dinner offered to President Reagan at Itamaraty, I saw Mr. William Clark and from his friendly attitude I got the clear impression that he had appreciated our conversation. This was confirmed in Washington because general Boverie and two assistants received me very amiably and respectfully, an attitude I could only attribute to the information sent by Clark. I must add that I had given to the latter, in Brasília, the text in English broadcasted by BBC that revealed with details the help received by Argentina from a former Nazi refugee, Knarr, who after having remained in Argentina for ten years, providing assistance in the manufacture of armaments and in atomic research, was recalled to Germany during the Strauss government in order to manage an arms factory. To demonstrate his gratitude, he sent covertly to that country a complete laboratory of advanced research on uranium enrichment, which provided Argentina with considerable headway in that field.

                                              Washington

In Brasília, at the Reagan dinner, Ambassador Azeredo da Silveira sat at the same table as I. I did not intend to bring him into the matter, because discretion was of the essence. But I could not help telling him that I would travel to Washington on the 9^th since he would come to know and would be offended if I did not inform him. He immediately invited me for lunch at the official residence. I said I would be pressed for time but he assured me that he would fit the luncheon into my schedule.

From Dallas I confirmed my departure and the luncheon, and he was kind enough to send a car for me at the airport and assigned Secretary Carvalho to assist me. I excused myself and left immediately after dessert since my first meeting with general Walters had been set for 2:15 PM, asking for excuses for acting like a skinny dog. From Dallas I had not re-confirmed that meeting but general Boverie also agreed to see me at my convenience on that day, setting an appointment with me for 3:30.

My first meeting was at the New State Department at General Walter’s office, number 6313. He received me very effusively, speaking only in Portuguese.

I had a proof of his great prestige as Ambassador-at-large for President Reagan since instead of taking me to Undersecretary Kennedy’s office, Walters called him on the phone and asked him to come to his office. Apparently, Kennedy was already expecting to be called.

Undersecretary Richard Kennedy is an amiable, white haired person who seems to be 65 or over.

I repeated to both gentlemen the exposé I had made to William Clark in Brasília, which I summarize below:

“ - In December 1944 I was in Buenos Aires and participated in a luncheon with my father in-law, Professor of Law Waldemar Ferreira, and the vice-president of the Argentine Republic, professor Leopoldo Melo, a friend of Dr. Waldemar. He said that we Brazilians had done the right thing by fighting alongside the Allied forces, which were going to win the war and we would be politically and economic rewarded as a result of our position. Whereas they in Argentina, (five months before the end of the war) had military chiefs firmly positioned with the Nazis who still believed a victory of the latter, due to secret arms that were being prepared.     

• Once the war was over, it was a well-known fact that Argentina had become a refuge for Nazi leaders. Among them was a specialist in explosives, Walter Schnurr.
• When the Malvinas (Falklands) war broke out, a BBC broadcast on April 22, 1982 (whose integral text in English was handed to me by the Ambassador in Brasília, my personal friend), gave a detailed account of German cooperation in nuclear research in Argentina. It should be noted that the “Estado de São Paulo” published a summary of the BBC denunciation and informed that it had caused quite a stir in Western Germany, but instead of a denial, the respected magazine Der Spiegel confirmed it entirely.
• I had singled out  some relevant passages in the original copy I had handed to my interlocutors in Washington, which I reproduce below:

“Spy novels and movies made the Nazi link with South America seem like a bad taste joke, but in the case of Argentina this link was very real and the nuclear consequences are today immediate and potentially dangerous. Former explosives expert Walter Schnurr managed arms factories in Christianstadt, today Polish territory. After the war he refused to remain in occupied Germany and flew to Argentina, where he joined other German refugees in the attempt to build the country’s industrial and military strength. He stayed in Argentina for a decade, working in explosives for Perón, and then went back to Germany at the invitation of Franz Joseph Strauss, the prime minister since 1955, to be the scientific director of the new German nuclear research center, located in Karlsruhe”.

The following BBC report clarifies that Walter Schnurr devoted himself wholeheartedly to the task of solidifying the controversial nuclear relationship with Argentina.

The plan was shifted to Argentina and a mysterious reactor, the MZFR, was built. One of the features of this reactor is that it produces an irradiated fuel which, when reprocessed, yields high quality plutonium, of the level needed for the manufacture of nuclear weapons. The Americans still use a similar reactor for plutonium production for nuclear weapons in their Savannah River plant, in the state of Georgia. In 1968, a secret agreement between Germany and Argentina for nuclear cooperation was concluded. This is what allows Admiral Castro Madero, added BBC, to say today that “Argentina will not renounce its right to make a “peaceful nuclear explosion”.

Having presented those preliminary points, I dealt with the central issue:

“Brazil has no interest in producing an atomic bomb. But it cannot accept that in its area of influence, a neighbor known by the presence of truculent military, as was seen by the threats to Chile and the war imposed on England, has in its hands with exclusivity an instrument so threatening as the capability to produce atomic bombs. This is the political and moral question that is before the United States government: can the Americans deny Brazilians – their allies in the defense of the ideals of democracy and freedom that led us to fight alongside the Allied forces in the battlefields of Europe, since we had no other interest to uphold – the right not to be placed in an inferior position in their area of influence?  Can a country that has biased leaders and solutions of force,  –  which stayed politically and morally side by side with the Nazis during the last war, that is, alongside our common enemies – end up by profiting from such position? A country that served as refuge to notorious Nazi leaders and war criminals and received as reward in gratitude from one of them, the acquisition of means to advance dangerously in nuclear research?

I recalled that Brazil is the heir in Latin America of the Portuguese humanistic traditions that abhor violence and bloodshed, to the point of not slaughtering the bulls in their bullfights. We solved all our border questions, without exception, through diplomatic negotiations and never resorting to violence. If there is a country worthy of credibility for its repudiation of violence and respect to international law, that country is Brazil.

I knew quite well that it was a complex problem for the United States. But may I say, without pretending to solve this difficult question for the Americans, we had a right to expect from them not to neglect their comrades in the common fight with the necessary comprehension and understanding, not permitting our inferiority in this situation.

I added emphatically that the Brazilian government, to escape this inferiority, had made an agreement which in my opinion, and in that of many others, including important specialists in nuclear energy, was ruinous, by accepting the condition imposed in exchange for the acquisition of uranium enrichment technology, to build eight nuclear plants for the production of energy. Plants that we do not need and cost us the prohibitive sum of 30 billion dollars, at a time when were already are facing the problems of external indebtedness.

We do not need these plants (and I presented the data – see Annexes I, II and III) because we have the capability to produce hydroelectric power, at a third of the cost, by almost the year 2010 and possibly beyond, where almost every country with nuclear plant programs are giving them up and even losing their investment (see annex). And Engineer Eduardo Celestino Rodrigues, one of our leading specialists in energy, just appointed by the government to the position of Secretary General of the National Energy Commission, proposed at an energy Congress held in Brazil only three months ago, that we should give up the scrap of the nuclear plants because of their high cost and lack of utility. And this proposal was approved by the Congress with only two abstentions.

Therefore, he called for attention to the economic aspects that would end by ruining us, given the understandable endeavor to avoid being in an inferior situation in atomic research.

My interlocutors – all of them, from Mr. William Clark, in Brasilia, general Vernon Walters, Undersecretary Kennedy, the head of defense issues at the National Security Council, general Boverie and his two assistants, Sven Kraemer and the other one whose name I did not take down, in Washington, listened attentively and sometimes interrupted me to  ask for some clarifications.

General Walters did not repeat the objections he had made by telephone. He said that Argentina would need at least three years before it could think of producing the bomb.

I reminded him that this delay was irrelevant because the moment would come when they would possess the necessary technology with certain exclusivity.

General Walters added emphatically that the United Nations could and would pressure Argentina through all available means, including denying arms that they now wanted to buy in America and also by exerting economic and financial pressure.

I replied that I understood that position, but it could not provide security as to the results and thus, could not be considered a solution.

I said that I would then go to the Security Council in order to meet the people mentioned by Minister Clark, whom both knew well, and that I would apprise them of our meeting so that all involved could exchange ideas in search of a common solution.

Undersecretary of State Richard Kennedy, deputy to Secretary Schultz, who had a very friendly and receptive attitude during the meeting, informed me at the close that he would travel to Brazil in January. We exchanged cards and he said he would contact me upon arrival.

I want to close this report to the two Brazilians with whom I have been talking, one a civilian authority and the other a military chief, by stating that my interlocutors gave me the impression that I was bringing them a problem deserving their utmost attention and good will. I have no doubt that we are creating conditions that can make possible a decision that takes into account the interests of Brazil.

I shall contact Undersecretary Kennedy when he visits me in January. But I believe it is already necessary that President Figueiredo be apprised of the efforts we have been exerting and that he names a trustworthy person to pursue these understandings.

(Signed) Herbert Levy – Federal Congressman

Cc/ Minister Leitão de Abreu

      Gen. Sergio Ary Pires

ANNEX I –

3.4 Nuclear   

Uranium: reserves of 266.300 tons of U₃O₈ (Uranium oxide).

In his book quoted above, Lester R. Brown stated that “Nuclear energy, once see as the replacement of petroleum, has become less and less interesting as new facts became known” and prepared the following table of change in the Projections for Nuclear Energy in million Kw:

“Many countries gave up their projects in the middle of construction when they realized the high cost… Western Germany is entering the sixth year of a non official but effective moratorium on the construction of its nuclear plants. Its neighbor Austria, suspended in 1978, until a new decision, the construction of a large nuclear plant. Western European countries are decreasing the pace of the use of nuclear power. The same in Eastern Europe. Even in the Soviet Union plans are being delayed.”

“Iran abandoned its plan and South Korea did the same in 1981. Even France, whose initial program was ambitious, is today giving it less importance”.

“There has been total disenchantment. Between 1970 and 1978, 270 nuclear plants were announced, and 9 were cancelled. Between 1977 and 1980, 39 were announced and 34 cancelled. Total data for 1979 show that cancellation surpassed announcements at a proportion of 8 to 3.”

“The risk of nuclear accidents is seemingly greater than initially believed. In 1980, in Czechoslovakia, the Three Mile Island USA incident was repeated and the plant was shut down”.

“The concessionaries that ventured into nuclear programs are now paying a high price for that decision”

From international news:  

• December 1981- Service Electric Gas Co. decided to abandon the construction of the nuclear plant at Slop Creek, in New Jersey, due to the fall in the consumption of electricity and the excessive cost of the nuclear plant. Approximately 18% had already been built.”
• February 1982 - “Washington Public Power Supply System (Washington State, USA) a consortium of concessionaries, decided to abandon the construction of two nuclear power plants in which they had already spent 2.25 billion dollars. Work was stopped in June 1981 due to the enormous increase of cost. The aggregate loss, including financial costs, came to 7.4 billion dollars”
• March 1982: “American TVA decided to discontinue the works after having invested 2.1 billion dollars in the construction of three nuclear power plants”.

ANNEXES II and III

             6.3 - Cost of electric energy at consumption centers:

                      Studies by Eletrobrás reveal the following average costs of production, transmission and delivery of electric power (excluding distribution) at consumption centers (includes interest during construction).

                                                                Hydro            Thermal              Nuclear

Dollars/1.000 Kw  until 1995                 25                  38 to 51                  73                               

                                                          Southeast, Center West and South  

1996-2000                                                  30                  38 to 51                  73

                                                          North to Southeast

                                                                     24

(*) Nuclebrás price: 48 dollars/1.000 Kw) with more realistic financial costs, according to assessment by FURNAS.

A few days ago (March 4) the Board of Directors of TVA, after having invested 2.1 billion dollars in the construction of three nuclear power plants, decided to stop work. At the Board meeting that took that decision, Director David Freeman cast the following vote:

“… These three units are now estimated at eight times the price previously assessed… The average price estimated for electricity produced by these three units is now about 130 dollars per 1.000 Kwh, while the TVA average selling price is today only 38 dollars/1.000 Kwh. Electric power at 130 dollars per 1.000 Kwh does not promote economic growth but will instead be a heavy tax on industry and other consumers besides being probably a burden for the economy.”

As can be seen, the very 73 dollars/1.000 Kwh corrected by FURNAS for the financial part is underestimated. We cannot pretend to install nuclear plants at lower prices than TVA, which possesses one of the largest conglomerates of nuclear power plants in the world.

In this study I avoided giving my personal opinion on nuclear energy. In Chapter 3.4 (Nuclear) I quoted sections of a Lester R. Brown book and news on cancellations of construction of nuclear plants.

I now present official figures and figures of TVA costs.

Information from trusted sources tells me that we are committed to purchasing only four German plants in exchange for technology, and not eight.

We were going to buy initially because we needed energy (in fact we did not).

We do not need energy now, but we are stuck with 8 (they had wanted more) because of the technology.

Portugal discovered the world with only one Sagres School. We need eight to learn, and because we are dumb, eight of the same, which will represent for the country an increased cost of 2.4 billion dollar a year compared with the hydro plants.

Brazil does not deserve this and cannot stand it.