U.S. relaxes bid to halt atom enrichment tech sales

VIENNA (Reuters) - The United States has given up efforts to ban uranium-enrichment technology sales to non- nuclear states, instead proposing criteria for such trade to win over critics in the Nuclear Suppliers Group, diplomats say.

But Canada and possibly some others in the 45-nation NSG may not be satisfied with parts of the new approach, the diplomats, familiar with the matter but asking for anonymity due to political sensitivities, told Reuters.

Washington's shift was the subject of a two-day consultative NSG meeting that began in Vienna on Monday. A decision on the U.S. move -- which must be made by consensus -- would be left to the group's next plenary session in Berlin on May 19-23.

The NSG seeks to prevent nuclear proliferation by curbing transfers of technology of possible use in building atom bombs. But enriched uranium is also the basis of peaceful nuclear energy, for which demand in developing nations is rocketing.

Diplomats said leading world uranium producer Canada spearheaded pressure on Washington to relent on a full ban in enrichment-related sales, which has been renewed annually by G8 industrialized powers at U.S. behest since 2004 amid mushrooming concern over Iran's secretive uranium enrichment campaign.

"The United States was for years the only holdout in the NSG against sales criteria. This new language shows some U.S. flexibility on criteria," said one Western diplomat.

A U.S. State Department spokesman confirmed the change. He said the ban was only meant as a stopgap pending a deal on a system to govern such transactions that was both "reasonable" and strict enough to forestall diversions into nuclear weapons.

"Until now, proposals for amending NSG guidelines...that currently call for 'restraint'...have not been stringent enough for the U.S. to endorse," Tom Casey told Reuters in Washington.

The closed-door Vienna meeting was considering a fresh "criteria-based approach" from the United States.

Casey said this meant enrichment-related sales only to states that have joined the Non-Proliferation Treaty and permit intrusive, snap inspections under the Additional Protocol of the watchdog International Atomic Energy Agency.

It would also require that any equipment transferred be immune to duplication -- so-called "black box technology" operated only by supplier personnel in the recipient state to minimize risk of diversions to military ends.

CANADIAN CONCERNS

But Canada, diplomats said, may balk at the black-box provision because it wants to exercise a right under the NPT to develop its own nuclear fuel technology and possibly sell it to countries who fulfill the other anti-proliferation criteria.

Brazil, Argentina, South Africa and South Korea could have reservations similar to Canada, some diplomats said.

Most countries now using atomic fuel buy it rather than make their own. Just six -- the United States, Russia, France, Britain, Germany and the Netherlands, the first four of which have nuclear weapons -- enrich uranium and sell it abroad.

Nations seeking enrichment capacity see sales curbs as a possible maneuver to dominate profitable markets, or want to be immune to cutoffs in supply amid international tensions fanned by Iran's nuclear activity, which has drawn U.N. sanctions.

"There are very understandable political and commercial issues in the picture here," said a European diplomat.

Daryl Kimball, head of the Arms Control Association think tank in Washington, said the U.S. proposal would effectively bar enrichment-related sales to India, with which the United States struck a controversial nuclear cooperation deal in 2005.

India never joined the NPT and launched its nuclear arsenal with tests in the 1970s, spurring the creation of the NSG.

The U.S.-India accord remains in limbo because of leftist opposition in India. Among requirements for it to take force is an NSG waiver. Some NSG members may want to attach conditions likely to be unpalatable to New Delhi, diplomats say.

(Editing by Ralph Boulton, additional reporting by Arshad Mohammed in Washington)