Canadian Coalition
for Nuclear

Regroupement pour
la surveillance
du nucléaire

Canada's Nuclear Industry and
the Myth of the Peaceful Atom

Part Three

by Gordon Edwards

. . . back to TABLE OF CONTENTS

The Collapse of the CANDU Market

Throughout the turbulent 1970s, the CANDU salesmen never slackened their efforts. Prior to 1975, overtures were made by AECL to Mexico, Romania, Australia, Greece, Italy and Denmark, without any success. Each separate effort cost $1 million or more. In the latter half of the decade, Great Britain, Japan, China, Venezuela, Romania, Yugoslavia, Indonesia and Ireland (among others) were targets of CANDU marketing efforts. This ambitious sales push resulted in only one further sale of a single 600 MW CANDU reactor to Romania in 1978. Even that sale came under attack from Conservative MP Flora MacDonald who did not believe that Canada should be selling nuclear technology to Warsaw Pact nations.

By the end of 1978, the future was beginning to look bleak for the Canadian nuclear industry. Domestic markets for CANDU reactors had evaporated. Electrical growth rates had been dropping steadily since 1973, and most provincial utilities were beginning to experience large surpluses of electrical capacity. A similar phenomenon was occurring all over North America and Western Europe. Yet a report commissioned by the Canadian Nuclear Association (CNA) indicated that two sales per year would be needed to keep the CANDU industry alive. Where would these orders come from?

The American light-water reactor had already captured the European mark et, while Japan and Great Britain were more interested in developing their own reactor systems than importing Canadian technology. Not a single reactor vendor had yet turned a profit anywhere in the world, yet the competition was extraordinarily keen. Only Third World countries were seen as potential customers for CANDU reactors, but the obstacles were formidable. It soon became apparent that nuclear power is not a suitable energy source for most developing countries, for a variety of reasons.

To begin with, only a handful of Third World countries have electrical grids large enough to accommodate a nuclear power plant. Even then, in many cases the majority of people live in areas where there are no electrical services. Amulya Reddy of India's Bangor Institute has observed that "most Third World countries are in fact dual societies with small, affluent, largely urban-based elites (10-20 per cent of the population) and large masses of poverty-stricken people, most of whom live in rural areas. When electricity is introduced into rural regions, it rarely penetrates beyond the richer farmers of agribusiness who are close to major distribution grids. So the development impact of nuclear power transfer, for the majority of rural poor, will not be great." Even in the cities, few are rich enough to afford electricity.

In most cases, then, nuclear power actually concentrates more economic and political power in the hands of those who already have too much. David Rogers, a Canadian nuclear physicist, wrote that, for this reason, nuclear programs generally increase "the degree of undemocratic social control exerted in developing countries." At a 1979 conference at the Massachusetts Institute of Technology hosted by the World Council of Churches, delegates from over fifty developing nations signed a declaration asserting that the only Third World governments wanting nuclear power were dictatorial regimes with ulterior motives: "The motivation for importing reactors in these states derives from military-political considerations and aspirations for prestige." The declaration was read out to the assembly in support of a resolution calling for a global moratorium on nuclear power plants, which passed by a wide margin.

These observations are valid even in the more technically advanced Third World countries. Dr. Miguel Ussher, a special assistant to the president of Argentina, appeared on a panel in Knoxville, Tennessee in November 1981 to discuss the role of nuclear power in developing nations. He said:

...if we consider the amount of money invested, [nuclear power] is the most costly electricity ever made. But from other points of view it has been entirely convenient. Militarily and strategically, it's not exactly the same.

For example, since we [Argentina] have 70 years reserve of gas, we could cover the country with gas turbines and that would solve all the problems. We know that perfectly, and it would cost less. But this is a different matter. We have to deal with the problem under the conditions that really exist. Brazil is in the same case.

When asked if this meant that Argentina wanted nuclear technology in order to have a nuclear weapons option, Dr. Ussher said "Right."

Once a developing nation decides that it wants nuclear power, the biggest obstacle is lack of capital. Romania is a case in point. Despite a billion-dollar line of credit advanced by the federal government's Export Development Corporation in 1979 to help finance the CANDU sale, Romania had still not ordered a single CANDU component three years later. During the intervening years, tortuous trade negotiations took place. In order to earn enough foreign currency to pay for the CANDU, Romania wanted Canada to buy (or find buyers for) Romanian farm machinery and textiles. In June 1981, to keep the negotiations alive, Romanian officials initialed an agreement to purchase a second CANDU -- but still no orders were placed for the first. In the spring of 1982 the Export Development Corporation finally withdrew the Romanian line of credit.

None of these bleak realities jibed with the magnificent vision of a nuclear-powered planet that had been conjured up earlier by nuclear enthusiasts. For example, in 1974, AECL vice-president A.J. Mooradian had stated that, thanks to nuclear power, "For the first time in human history, mankind can look forward to a world civilization of 10 or 20 billions, well-clothed, well-housed, well-fed, living in peace and harmony for thousands of generations." Four years later without domestic or export markets, the CANDU manufacturing industry was facing inevitable collapse. While the full ramifications were not to be felt for several more years, the handwriting was on the wall as early as 1978.

And so it was a lean and hungry sales team that returned to Argentina in 1978-79 to try to sell a second CANDU reactor. Admiral Madero, head of the Argentine Atomic Energy Authority, offered the Canadians a lukewarm reception. Lengthy delays and serious cost overruns had plagued the EMBALSE reactor, and there had been the irksome negotiations necessitated by Canada's evolving safeguards requirements. The Argentinians were not pleased.

By April 1979, however, AECL had come up with an offer which (it was hoped) Argentina could scarcely refuse. For $1 billion, Argentina could acquire not only a second 600 MW CANDU reactor, complete with a five-year supply of heavy water and uranium fuel, but also an NRX-type research reactor, a heavy-water manufacturing plant, a CANDU fuel fabrication plant, uranium exploration and exploitation technology, and a licensing arrangement which would allow Argentina to build and sell its own CANDU reactor in future -- in short, everything needed to make Argentina self-sufficient in CANDU technology. Meanwhile, a German and Swiss consortium offered a very similar package at a much heftier price of $1.5 billion. Moreover, the European deal involved a 600 MW heavy-water reactor which had not yet been designed, whereas the Pickering reactors in Ontario had already proven themselves to be the best electricity-producing reactors in the world. The Canadians were jubilant. It seemed the contract was in the bag.

In the summer of 1979, longshoremen and other workers in Saint John, New Brunswick, refused to load a shipment of heavy water bound for the EMBALSE reactor. They demanded the release of sixteen trade unionists who had been imprisoned without charges in Argentina. The action was organized by the No CANDU for Argentina Committee, and had the full backing of the Canadian Labour Congress, representing 2.5 million Canadian workers. A few days after the boycott, six of the trade unionists were released from Argentine prisons. In October of that year, speaking at the United Nations, External Affairs Minister Flora MacDonald denounced the atrocious human rights record of the Argentine regime. Within days, the Argentinians announced that they were accepting the more expensive German-Swiss deal over the AECL offer.

Disappointed and angry, AECL spokesmen lashed out at the Canadian government for its vacillations on nuclear safeguards, and at Flora MacDonald for her ill-timed remarks. "Canada's standards are too tough," lamented Ray Burge, chief of public relations for AECL. Ross Campbell, chairman of AECL, bitterly criticized Ottawa's "waffling" on nuclear safeguards, saying that AECL's position internationally had been "thoroughly undermined." He also referred to Flora MacDonald's remarks as a "gratuitous offence by Canada." "The ripples from this will be far greater than we've estimated," said Mr. Campbell, warning that the CANDU system was in danger of becoming extinct. Liberal external affairs critic Allan MacEachen took up the refrain in the House of Commons, blaming the loss of the sale on "imprudent remarks at a critical time. It was a very ham-handed way to deal with a very important international negotiation involving billions of dollars."

However, it seems that if anyone deserved such sharp-tongued criticism, it was the German government. In April 1980, the Canadian embassy in Bonn publicly expressed disappointment that "non-proliferation safeguard requirements did become an element of the competition" for the Argentine sale, despite a previous commitment from West Germany to accept Canada's position on the need for full-scope safeguards as a non-negotiable condition of the sale. Just before the contract was awarded, the German-Swiss consortium apparently broke this agreement with Canada by dropping the requirement for full-scope safeguards. At the time, a confidential memorandum circulated within the German cabinet warned Chancellor Schmidt that there would probably be hostile reactions from Ottawa and Washington. Nevertheless, combined Canadian-American pressure exerted in the spring of 1980 was unable to prevent the sale on non-proliferation grounds. Thanks to the Germans and the Swiss, Argentina would soon be able to build a complete nuclear fuel cycle of its own, free from any kind of international safeguards.

The heavy water boycott may have been taken as a warning by Argentina t o tread cautiously with Canada. Still, the Canadian reactor being built in Cordoba province was vitally important. "If the Cordoba plan fails," declared Mario Bancora, director of the Argentine utility Thermomission, "then I feel all our atomic program will be affected. We need this desperately to achieve our future Argentine atomic program." With this in mind, Admiral Madero went to Ottawa in April 1980 to placate the Canadians and to ensure that the EMBALSE reactor would be finished without any hitches. The Canadians were relieved to learn that they would not be losing any more than the $130 million they already knew they would lose on the project. They were also encouraged to think that Argentina might order more CANDU reactors later on if Canada was not too demanding.

In July, Ian Adams published an article in Today magazine entitled "Nazi A-Bomb," telling the story of Argentina's nuclear ambitions. Referring to Madero's visit to Ottawa, Adams wrote:

Of course there was no press conference. The Liberal ministers, willing to shake hands with fascists in private, were not about to let themselves be photographed doing so. Some two weeks later, on May 16, General Videla and President Joao Figueiredo of Brazil signed a nuclear accord and weapons development treaty. The dream of the generals -- engineered by former German Nazis, fueled by the CANDU reactor, and subsidized in part by the Canadian taxpayer -- moved one step closer to reality.

On 1 May 1980, immediately after Admiral Madero's visit to Ottawa, Prim e Minister Trudeau declared to the House of Commons that only urgent action would salvage the CANDU industry. "The time schedule for keeping our industry viable is very, very short," he said. "We are now in danger of seeing the Canadian industry become obsolete and lose its chance to sell in other countries unless we make some quick decisions on some basic questions." Trudeau revealed that an in-depth review of the nuclear industry would be undertaken by the Department of Energy, but he rejected opposition demands for a public inquiry. While there was "no intention" of preventing the Canadian public from expressing its views, Trudeau maintained that "we cannot wait for a long inquiry to decide whether we stay in the game or get out of the game."

The nuclear review was carried out by an interdepartmental committee of government officials, with assistance and advice from AECL, Eldorado Nuclear Limited, the Atomic Energy Control Board, and the Canadian Nuclear Association -- all organizations which are dedicated to the promotion of nuclear technology. However, there was no opportunity for groups critical of nuclear power to make their views known effectively. Despite a written mandate from sixty-five organizations across Canada, which was communicated personally to Marc Lalonde, then minister of energy, the Canadian Coalition for Nuclear Responsibility was prevented from even making a presentation to the minister or to the review committee.

A draft version of the committee's final report was leaked to the Ottawa press in June 1981. The review committee noted that it was doubtful "whether the nuclear industry in Canada will survive the 1980s." With no domestic demand for CANDU reactors, "virtually all firms in the industry could be out of business by the mid-to-late 1980s." The committee observed that export sales were hampered by safeguards requirements and financial constraints, as well as soft markets and fierce competition. Significant relaxation of safeguards could open up the possibility of "nuclear cooperation with a number of countries: South Africa, the Middle East and Taiwan," not to mention the "U.S. military program," but only at great political cost. The report urged Ottawa to offer "concessional financing" in relation to potential CANDU sales -- in effect, large "implicit subsidies" to the nuclear industry, to be paid for by the taxpayer. Meeting the terms being offered by competitors such as France and Germany" may involve subsidies equivalent to 25% to 30% of the cost of a reactor sale." Since the federal government had already invested more than $3 billion in the Canadian nuclear industry, Ottawa mandarins argued that Canada could not afford to let the nuclear industry collapse.

Two months earlier, in April, the federal government "forgave" $825 million in loans owed by AECL's Heavy Water Division. The draft report made it clear that there was no "plausible scenario in which the output of all Canada's heavy water plants will be required. The stark alternatives are to accumulate costly inventories or to shut plants down. Even with the most optimistic sales scenario, [heavy water] inventories could total 15 reactor loads by 1990 at a cost of about $2 billion." The only alternative market for heavy water, according to the report, was the U.S. nuclear weapons program.

Lorne Gray, who had been president of AECL, during the signing of the Korean and Argentinian contracts, and who had been reprimanded by the House of Commons Public Accounts Committee for mismanagement and evasion, addressed the Annual Meeting of the Canadian Nuclear Association on 9 July 1981. He ridiculed Canadian efforts to restrain the proliferation of nuclear weapons, portraying Canadian officials as quixotic knights wearing blinkers, out of touch with reality. On 15 July 1981, James Donnelly, then president of AECL, told the House of Commons Committee on Latin American Relations that Argentina already had everything it needed to make atomic bombs, so selling it a second CANDU reactor would make no difference in terms of proliferation. He said it would be "poor sales tactics" for him to discuss the stability of the military government in Argentina or the likelihood of its seeking nuclear weapons. In fact, he admitted, "the consideration as to the political regime of the country with which we are trading has not been an uppermost consideration" to AECL.

Senior cabinet members intensified their efforts to sell CANDU reactors abroad. During the summer, Energy Minister Marc Lalonde's parliamentary secretary, Roy McLaren, went to Romania to try to sell more CANDU reactors. In September, Prime Minister Trudeau went to South Korea with the same objective in mind. Since the murder of General Park in 1979, political repression had not been lifted in Korea. Martial law had remained in force throughout 1979 and 1980. In May 1980, violent clashes with Korean police and paratroopers had resulted in 1,200 civilian deaths and countless arrests. Only government-controlled trade unions were allowed to exist, so that "cheap labour" practices could be perpetuated. However, human rights issues were not even mentioned by Prime Minister Trudeau for fear of jeopardizing the sale of a CANDU reactor.

Meanwhile, in October, AECL had submitted a bid for four CANDU reactors to be built in Mexico. Competitive bids were also submitted, in sealed envelopes, from France, Germany, Sweden and the U.S. Mexico, however, did not like Canada's safeguards requirements, particularly the clause requiring "prior consent" from the Canadian government before any high-level enrichment or reprocessing could be carried out. Accordingly, the Department of External Affairs had for some time been searching for a more "non-intrusive" arrangement which would not prove so irksome to potential customers. In a paper prepared by External Affairs in the spring, it was pointed out that "the Canadian Government is not opposed to reprocessing and plutonium use or to high enrichment per se, but does wish to satisfy itself that effective measures to minimize the risk will be developed and applied."

In January 1982, the Canadian cabinet approved a financing package in support of the Mexican bid. Canada offered to pay 100 per cent of the capital costs of the project, to be repaid at a very attractive interest rate -- less than 8 per cent. This was at a time when the Canadian government would have to borrow on the international money markets at a rate of about 16 per cent. Trudeau visited Mexico to promote the deal. A few days later, Marc Lalonde was signing a nuclear cooperation agreement with Egypt. The nuclear industry was still hoping for a miraculous recovery, but its hopes were dashed in May, when Mexico returned all the bids unopened. The Mexican government had decided that it could scarcely afford to invest in nuclear reactors that it did not need.

Despite these setbacks, the Trudeau cabinet continued to act as if recovery of the CANDU industry was just around the corner. The problem of proliferation of nuclear weapons was publicly downplayed.

In the spring of 1982, when Argentina invaded the Falkland Islands, there was the added dilemma that Argentina had provoked a war with a Canadian ally, the U.K. At the time of the invasion, 3,000 CANDU fuel bundles were being manufactured in Moncton, New Brunswick, for the EMBALSE reactor. The Trudeau cabinet met to consider whether to discontinue nuclear cooperation with Argentina. Should Canada withdraw all AECL and Ontario Hydro personnel from Argentina, who were now putting the finishing touches on the reactor? Should the fuel bundles be delivered as promised?

In April, a secret cabinet briefing document was leaked to Margaret Munro at the Ottawa Citizen. The document reveals that

Argentina continues to show no inclination to accept Canadian policy requirements. In fact, Admiral Madero has in recent statements been unequivocal in rejecting the NPT and full-scope safeguards, while reaffirming his country's desire to retain a nuclear explosives option. Argentina is well on the way to developing an indigenous fuel cycle that is completely free of safeguards. Fuel fabrication, heavy water production and reprocessing facilities are all nearing completion.

The choice, according to the document, was to "continue with business as usual, suspend cooperation, or terminate the relationship." If either of the latter two options were chosen, then with EMBALSE "added to RAPP and KANUPP, Canada's reputation as a reliable reactor supplier might be irretrievably damaged." The cabinet therefore opted for a "business as usual" policy.

The Saint John longshoremen announced that they would refuse to load the fuel bundles. If necessary, they would go to jail rather than comply. The Canadian Labour Congress again supported the longshoremen, and hundreds of letters and telegrams of support were received from across Canada. The brutal reality of the Argentine regime was now more evident than ever. Thousands of Canadians joined in expressing opposition to the shipment of uranium fuel to Argentina -- fuel that could be used to breed plutonium for bombs. To avoid trouble, with cabinet approval, the fuel bundles were secretly trucked to Mirabel airport in Quebec and airlifted to Argentina.

The future of the CANDU industry is not looking good. Ontario Hydro, with 50 per cent overcapacity above peak demand and a $14 billion debt, has begun to cut back on the Darlington nuclear station (already under construction). Quebec and New Brunswick are the only other provinces with CANDU reactors operating, and, in both cases, those plants are entirely surplus to provincial needs for electricity. Hydro-Quebec announced in December 1981 that it would make no further nuclear investments until at least 1990. In the fall of 1982, AECL recommended that its two heavy water plants in Cape Breton be closed, and hundreds of nuclear scientists from AECL's Mississauga research centre have been laid off. Those countries which have opted for CANDU technology are in dire financial straits, and it is questionable whether they will ever be able to pay for the reactors they have ordered. Of course, the problem of raising additional capital for waste disposal and decommissioning -- two enormously expensive undertakings which yield no return on investment -- will become a monumental problem for the future. Canada accepts no obligations for these future expenses.

It is to Canada's role as a supplier of nuclear fuel that we now return .

. . . back to TABLE OF CONTENTS

Canada and the Uranium Cartel: The South African Bomb

As we saw earlier, the Canadian uranium industry started out as part of the American war machine. In 1942, Ottawa expropriated a privately-owned radium company and turned it into a crown corporation now known as Eldorado Nuclear Limited. Its original job was to mine and refine uranium for atomic bombs. In the ten years following World War II, Canada sold uranium only to the U.S. and the U.K., for their nuclear weapons programs. After 1956, however, no new defence contracts were signed, since both countries had developed alternative sources of supply -- Colorado, Portugal, Australia and South Africa. Without the lucrative military markets, Canadian uranium production declined rapidly: by 1965, production had fallen below 3,000 tonnes per year (down from 12,000 in 1959), and only three mines (out of twenty-three) remained in operation. By that time, Elliot Lake was in danger of becoming a ghost town, and there had been virtually no uranium exploration in Canada for almost a decade.

The practice of selling Canadian uranium for use in nuclear weapons was officially terminated in 1965, when Prime Minister Pearson told the House of Commons that henceforth any uranium exported from Canada "is to be used for peaceful purposes only." Under the circumstances, Pearson's words simply reflected the status quo. However, selling uranium for peaceful purposes turned out to be exceedingly difficult, partly because of American protectionist policies which were soon to emerge.

From 1964 to 1967, over sixty electricity-generating reactors were ordered in the United States. It was the first major commercial breakthrough for the nuclear power industry anywhere, precipitating a blizzard of reactor orders from overseas. The American light-water reactor system very quickly dominated the world market. Uranium exploration resumed in Canada in 1966, in anticipation of rapidly expanding demand for nuclear fuel. However, U.S. markets were effectively closed to foreign suppliers of uranium because of policies adopted in Washington, and the expected economic recovery did not occur. World uranium prices dropped to an all-time low of about $4 per pound. In a desperate attempt to keep the Canadian uranium industry alive, Ottawa paid for the stockpiling of more than $100 million worth of uranium during the late 1960s. By 1971, when all diplomatic efforts had failed, the Trudeau cabinet decided to embark on a different course of action.

In April 1972, with the blessing of the Canadian government, an international, with the blessing of the Canadian government, an international uranium price-fixing cartel was established in Paris. The purpose of the cartel was secretly to manipulate world uranium prices using a phony bidding system. Hidden quotas were established by representatives from Canada, France, Australia, South Africa and Rio Tinto Zinc (RTZ), the giant British mining conglomerate that, through its holdings in South Africa, Namibia, Canada and Australia, accounts for about a quarter of both the world's present uranium production and its estimated reserves (excluding the USSR and China). At an Ottawa meeting on 28 May 1972, Jack Austin -- then deputy minister of energy under Donald Macdonald, now a Liberal senator and cabinet member -- intimated that the cartel might be judged illegal under Canadian anti-combines legislation. Nevertheless, by June, the cartel had formal government approval.

The Canadian government's role in the cartel was questionable not only from the point of view of Canadian law, but also from the broader perspective of international morality. In effect, for purely commercial motives, Canada was turning a blind eye to South Africa's brutal apartheid policies and its determination to develop a nuclear weapons capability. Canada was also acting in defiance of the International Court of Justice, which had ruled in 1971 that South Africa's occupation of the territory of Namibia was illegal and that UN members were to "refrain from any dealings with South Africa that would imply recognition of, or the legality of, such presence." Since most of South Africa's uranium is mined in Namibia at RTZ's Rossing mine, Canada was directly contravening the court's ruling by conspiring with South Africa and RTZ to fix world uranium prices. Indeed, when Energy Minister Donald Macdonald was asked in 1981 why RTZ had been involved in the cartel discussions as an equal partner, he replied that the participation of RTZ was essential because of the Namibian uranium it controls.

Beyond the narrow question of legality is the ethical reality of the RTZ operation in Namibia. The Plunder of Namibian Uranium, a booklet published by the United Nations in 1982, describes Namibian uranium as being

mined by virtual slave labour under brutal and unsafe working conditions, transported in secrecy to foreign countries, processed in unpublicized locations, marked with false labels and shipping orders, owned by a tangle of multinational corporations whose activities are only partially disclosed, and used in part to build the nuclear power of an outlaw nation....

Nevertheless, from a business point of view, Canada's collaboration wit h RTZ and South Africa was a great success. In just four years -- from 1972 to 1976 -- the world price of uranium rocketed to $40 per pound. By the end of 1974, the uranium market had improved so much that the cartel was disbanded. However, great secrecy was maintained for several more years in order to circumvent anti-trust laws in various countries.

In 1974, around the time when the Canadian government was scolding India for failing to live up to the spirit of the safeguards agreement associated with the CIRUS reactor, the UN Council on Namibia issued a decree ordering that

no person or entity, whether a body corporate or unincorporated, may search for, prospect for, explore for, take, extract, mine, process, refine, use, sell, export of distribute any natural resource, whether animal or mineral, situated or found to be situated within the territorial limits of Namibia.

The Canadian government completely ignored this decree. The practice of refining Namibian uranium at Eldorado's federally-owned facility in Port Hope, Ontario, was already well established by 1974, and continued uninterrupted into the 1980s. RTZ's Canadian subsidiary, Rio Algom, actually owned 10 per cent of the Rossing mine, and Falconbridge Nickel -- a Canadian subsidiary of Superior Oil of Texas -- had been exploring for uranium in Namibia since the mid-1970s. The Canadian government did not consider itself legally or morally bound to obey the UN Council's decree, or the UN General Assembly's 1981 resolution, which specifically requested that Canada and the other countries involved in the cartel "take measures to prohibit their state-owned corporations, together with their subsidiaries, from all dealings in Namibian uranium."

When news of the cartel finally surfaced in 1976, one result was that Westinghouse Electrical Corporation launched a lawsuit against the cartel. To prevent secret cabinet documents from being released, the Trudeau government responded with an Order-in-Council making it a criminal offence, punishable by five years in jail and/or a $10,000 fine, for any Canadian citizen to discuss details of the uranium cartel in public. This law was never repealed, but it was amended in 1977 to apply only to civil servants, government officials and members of the Canadian nuclear industry.

Other repercussions were not long in coming. Ontario Hydro contracts signed in 1977 guaranteed the Elliot Lake producers, Rio Algom and Denison Mines, over $2 billion in profits for a thirty-year supply of uranium at cartel-inspired prices of about $35 per pound (by 1982, the spot price for uranium was under $20 and still going down). A four-year investigation into the entire affair, launched by Solicitor-General Warren Allmand, was completed in May 1981. Although the report was never made public, six uranium firms were subsequently charged with conspiracy to engage in illegal price-fixing activities, and two senior government officials -- John Runnals and Gordon McNabb -- were named as unindicted co-conspirators. No charges were laid against these men, since they were technically only carrying out the directives of Energy Minister Donald Macdonald and a few of his cabinet colleagues (the combines law dictates that agents of the crown are exempt from prosecution if their actions are in accordance with their mandate).

Ontario was not the only province to be affected by the cartel. Following the remarkable rise in the price of uranium, there was a sudden boom in uranium-prospecting activities across Canada. Every province and territory was subjected to intense exploration: holes were drilled, lakes drained, ground bulldozed and rock formations blasted. Logistical and financial support was lavishly provided by the federal and provincial governments, beginning with a $50 million Uranium Reconnaissance Program launched by Ottawa in 1974. Over a hundred multinational corporations became involved. For the most part, these were controlled by British, American, and Dutch oil companies, or by electrical utilities in France, Germany, Spain, Italy and Japan.

As we saw in Chapter 5, many of the companies involved have nuclear weapons connections. In Saskatchewan, for example, the Cluff Lake mine is jointly owned by a provincial government and by Amok, an aptly-named French company. One of Amok's parent companies is le Commissariat de l'Énergie Atomique, a corporation wholly owned by the French government, which is in charge of that country's nuclear weapons program. The entire output of the rich Cluff Lake deposit is destined for France and Germany. These two countries are among the worst offenders in terms of the horizontal proliferation of nuclear weapons, because of their willingness to sell plutonium reprocessing equipment to regimes in Pakistan, Taiwan, Korea and South America.

In March 1978, the Cluff Lake Board of Inquiry absolved itself from all moral responsibility for approving the exploitation of Saskatchewan's uranium resources by French and German transnational corporations. "Because 'wars begin in the minds of men'," reads the Final Report,

all people ought to work to create the political will for world disarmament, the real answer to the problem of proliferation. The withholding of uranium from Saskatchewan from world markets is an action which for all practical purposes is irrelevant to the formulation of that political will for world disarmament.

In the same report, Saskatchewan's uranium reserves were estimated to be "about 30% of the known Canadian reserves, which in turn represent between 10% and 13% of the known total world reserves." Thus Saskatchewan alone controls between 3 and 4 per cent of the world's uranium. The export of this dangerous material was justified by Saskatchewan's NDP government on the grounds that it was to be used "for peaceful purposes only." Premier Allan Blakeney, writing in 1978, sidestepped the proliferation problem with familiar "atoms for peace" arguments:

...for many Third World countries, the only energy available for industrial development is nuclear energy. To refuse them energy is to condemn them to a future of subsistence living. I do not believe that we, in energy-rich Canada, have the right to make that choice for other people.

This attitude so prevalent in official circles at both the federal and provincial levels, was not noticeably ruffled when, on 22 September 1979, a nuclear explosion reportedly took place in the South Atlantic, in a region near the Prince Edward Islands. A bright flash of light, followed by a longer flash, was detected by a U.S. satellite high over the Indian Ocean. Peculiarities in the upper atmosphere at that site make it difficult to detect an atomic test with certainty, but many scientists are agreed that a nuclear weapon was exploded and that South Africa did it. (The Cluff Lake Board of Inquiry heard evidence from competent witnesses in 1977 that South Africa had made preparations for a nuclear test, but aborted it after international diplomatic pressure was brought to bear. The incident was offered as an indication to the board that international safeguards to prevent the horizontal proliferation of nuclear weapons can be made to work.)

As it happens, South Africa's most important ally in the nuclear field has been the U.S., which not only supplied the apartheid regime with its first research reactor, but also gave it access to classified information which the Americans would not even share with the Canadians or the British. In a less conspicuous fashion, Canada has also assisted the South African regime by trading with it and conspiring with it in violation of national and international law.

The Canadian nuclear safeguards policy depends entirely upon the pledged word of the recipient that the spirit and the letter of the law will be respected. As the story of the uranium cartel shows, the Canadian government has proved to be quite adept at twisting the law to suit its own purpose, ignoring important moral considerations in the process. Is there any reason to suppose that other governments will not be equally willing to do so?

[ MORE . . . (Part Four) ] . . . or back to [ TABLE OF CONTENTS ]

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