No one should have been surprised when Canada's elderly nuclear research reactor near Ottawa sprang a leak last month, prompting a shutdown that removes 40 percent of the world's supply of a medical isotope widely used in the diagnosis and treatment of cancer.

After all, the government-owned reactor was fired up in 1957, the year that the Soviet Union launched Sputnik and Elvis Presley starred in "Jailhouse Rock." But the reactor's second unscheduled shutdown in as many years left health officials in Canada and the United States scrambling to find alternative sources of the isotope. Hospitals in both nations rescheduled thousands of tests and treatments.

This debacle stirred Stephen Harper's Conservative minority government into a decision. It says it'll divide AECL, the state-owned atomic-energy company, in two, privatizing all or part of its division that makes and services nuclear power stations while winding down the research reactor. Eventually, said Harper, Canada will get out of making isotopes altogether. His spokesman used blunter language, saying AECL was "dysfunctional" and a "sinkhole" that has cost the Canadian government $26.5 billion (USD) since its creation in 1952.

Critics worry that the government is getting out of the nuclear business just when concerns about fossil fuels are prompting its renaissance. They believe demand will rise not just for medical isotopes but also for Canada's CANDU reactors, which use a different technology from many elsewhere. Canada led the world in the development of radioactive isotopes for medical diagnosis and therapy, said Jacalyn Duffin, a medical historian at Queen's University in Ontario. "Why quit now?" But supporters of privatization such as the C.D. Howe Institute, a think tank, say AECL is too small to survive, and the sale of its potentially profitable parts is the only way a nuclear resurgence in Canada is possible.

Canada's dream of being a nuclear power began in 1943 when Mackenzie King, the prime minister, agreed with Winston Churchill and Franklin Roosevelt to cooperate on nuclear research. But government backing for peaceful nuclear operations later withered, a casualty of deficit reduction under the past two Liberal governments and the Conservatives' preference for smaller government.

In search of a U.S. supplier

Health officials in the United States are seeking an American supplier of medical isotopes, having decided that Canada is no longer a reliable source of molybdenum-99, which when processed into technetium-99m, is used in two-thirds of all diagnostic medical-isotope procedures south of the border. As long as AECL was working on two replacement reactors, American processing firms were content to wait. But Canada canceled the replacement program last year when the new reactors, already eight years behind schedule and hundreds of millions of dollars over budget, failed tests.

In Canada the isotope shortage has become a liability for Harper. Lisa Raitt, the minister responsible for AECL, apologized to cancer patients after she was caught on tape discussing how her career might benefit if she solved the "sexy" isotope crisis. Leona Aglukkaq, the health minister whom Raitt also criticized in the taped conversation, says she has arranged for new supplies from Australia.

Yet Australia has problems of its own with its single, albeit newish, reactor and has recently been importing isotopes from South Africa. AECL's nuclear-power business has also suffered in recent years. Its CANDU reactors were once thought superior because they could be refueled without shutting down. But rival technologies have improved. Potential foreign buyers of the company are waiting to see whether AECL's latest, previously untried design wins a competition this summer to build a new reactor for Ontario's provincial government.

Should the province select either of two rivals -- a French consortium headed by Areva or an American consortium headed by Westinghouse, both of which use different reactor technology -- the new CANDU design will probably be aborted. AECL's business would be limited to servicing the 48 nuclear-power plants around the world that use its technology. And Canada's nuclear dream would have died.