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OBLIGATION EXCHANGES

Another feature of the safeguards system are what are called "obligation exchanges" (colloquially known sometimes as "flag swaps"). "Obligation exchanges" are one aspect of the application of the equivalence principle in nuclear accountancy. As explained by DFAT/ASO:

    II.18 A situation where such an exchange might arise, for example, is where a power reactor operator has several fuel elements each containing a proportion of AONM. Rather than continuing to account for the AONM over several fuel elements, the operator may choose to consolidate all the quantities of AONM into one fuel element, thereby simplifying subsequent record keeping. An obligation exchange of this kind might take place within the fuel inventory of a single reactor, or might involve several reactors operated by the same utility.

    II.19 Obligation exchanges are permitted provided they would not result in reducing either the quality or the quantity of the nuclear material subject to Australian safeguards. An exchange must be between nuclear material within the same material category, e.g., low enriched uranium (LEU) cannot be exchanged for natural uranium, and between equivalent quantities of material, i.e., the quantities must balance based on the content of the fissile uranium isotope uranium-235.

    II.20 Obligation exchanges would usually be limited to a single safeguards jurisdiction, e.g., between material located in the same country or within Euratom, but international obligation exchanges, i.e., between material located in different countries or located within Euratom and a non-Euratom country, may be permitted subject to case-by-case consent. To date, there have been no international obligation exchanges involving AONM although one application has been received at the time of writing. (S 60, II.18-20, 8-9)

Obligation exchange was at the heart of an incident disclosed by Der Spiegel in 1988 which has often been portrayed as illustrating weaknesses in the safeguards system. It figured prominently in a submission from Friends of the Earth Sydney (S 40, Part 2, 90ff).

The Der Spiegel allegations claimed that there had been "flag swaps" between AONM and nuclear material of different national origin; that Euratom, together with the German nuclear firm Nukem, set out to circumvent safeguards controls on Australian obligated nuclear material, in particular, the requirement for Australian consent for enrichment above 20 per cent; that the Australian Government opposed "changing labels" and has a system of "special approvals" which had not been complied with; that Euratom was laundering South African uranium by swapping labels; and that Australian obligated nuclear material had been swapped with "phantom" material.

John Kerin, the then Minister for Primary Industries and Energy, responded that in the case in question, relevant conditions under the Australian Euratom agreement had been met; that the uranium enriched beyond 20 per cent was subject to US safeguards following an obligation exchange in which an equivalent volume of nuclear material remained subject to Australian safeguards; that the exchange occurred wholly within the Euratomic jurisdiction whilst Der Spiegel was referring to policy regarding inter-jurisdictional obligation exchange; that there was no barrier to Euratom purchasing South African or Namibian uranium and using it for obligation exchanges within jurisdiction as provided for in the agreement; and, finally, the claim about "phantom" material had not been substantiated.

Friends of the Earth Sydney state that "[i]t has, however, become clearer and clearer that actual atoms of Australian uranium via the 'equivalence principle' and the Euratom 'pool' can and do get used in both the French and the UK weapons cycle" (S 40, Part 2, 94). The claim is not accepted by relevant Government authorities.

A good deal more evidence would be needed to conclude that the equivalence principle constitutes a loop-hole whereby AONM enters (or has entered) military programs and should, therefore, be abandoned.


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