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Nuclear News - 08/25/99
RANSAC Nuclear News, 25 August 1999

A. Nuclear Cities Initiative (NCI)

  1. Progress Seen With Russia Scientists, Associated Press(08/20/99)
  1. Lawmaker: U.S. Blocking Start II Ratification, Xinhua(08/23/99)
C. Nuclear Waste
  1. Liquid Radwaste Leakage Confirmed, Bellona(08/23/99)
  2. Minatom Sticks To Reprocessing,Bellona (08/23/99)
  3. No Faith in MOX at Novovoronezh NPP, Bellona(08/24/99)
  4. NPT disagrees with Bellona,Bellona (08/23/99)

A. Nuclear Cities Initiative (NCI)

Progress Seen With Russia Scientists
        Nick Wadhams
        Associated Press
        August 20, 1999
        (for personal use only)

MOSCOW (AP) -- A U.S. congressional delegation working to keep underpaidRussian defense scientists from selling their knowledge to rogue nationsmade progress in talks this week, officials said Friday.

Ellen Tauscher, a California Democrat, and other delegation membersspoke in Moscow after traveling to the closed city of Snezhinsk in Russia'sUral Mountains. Members of the delegation said defense scientists in Snezhinskare warming to the idea of using their expertise in the private sectorinstead of selling their knowledge of weaponry to the highest bidder.

The delegation was in Russia on behalf of a U.S. government projectcalled the Nuclear Cities Program. It aims to bring private sector high-techjobs to Russia's scientific centers so the scientists there aren't luredabroad.

The program will ``not only help us with national security but is clearlymoving Russians toward the new economy, toward stability, toward selfsustaining,long-term gainful employment,'' Tauscher said.

According to U.S. intelligence estimates, at least 3,000 underpaid scientistswith expertise in weapons of mass destruction have left the country inthe last eight years. The problem, industry experts say, is wages.

Scientists and other workers at Russia's defense centers saw their highwages and benefits disappear with the Soviet collapse. They now earn anestimated $150 a month, the delegation said.

The United States fears that countries like Iran, Iraq, Libya and NorthKorea will try to hire on those scientists to help build weapons of massdestruction.

``At some point in time your hope just can't last forever without someencouragement,'' said delegation member Ron Cochran, executive officerat Lawrence Livermore Laboratory in northern California. ``What we needto avoid is any situation which causes them to lose hope.''

Snezhinsk in particular was a large concern. It has the site of severalstrikes by scientists demanding wage payments, and the Commerce Departmenthas warned that institutes there may have been involved in nuclear proliferationactivities.

But members of the delegation said Friday they were encouraged by whatappeared to be a shift in the scientists' thinking.

Previously, ``it was just beneath the dignity of the scientists to thinkthat they would stoop so low as to produce a product that didn't make abig light in the sky and lots of energy,'' said Janet Hauber, with LawrenceLivermore. ``This time when we traveled there we were almost overwhelmedwith commercial-style proposals.''

Bringing the scientists around, though, is only half the battle forthe Nuclear Cities Program. It also is trying to match the scientists withhigh-tech U.S. companies that could use their expertise.

The goal: to create a high-tech commercial sector in Russia similarto America's Silicon Valley.

Though the project just started last year and no deals have been signed,computer chip maker Intel and software-maker Oracle are interested. Officialsbelieve medical technology and telecommunication firms also may invest.

This week's trip had political implications as well. It was part ofa booster effort for the Nuclear Cities Program before what is expectedto be a tough appropriations vote in Congress next month.

Tauscher admitted that it has been difficult to get the program moving.Obstacles, she said, include Russia's struggling economy and a dauntingbureaucratic system that makes closed cities like Snezhinsk hard to visit.

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Lawmaker: U.S. Blocking Start II Ratification
        August 23, 1999
        (for personal use only)

MOSCOW (Aug. 23) XINHUA - The United States is not interested in Russia'sratifying the START II treaty although Washington publicly keeps appealingfor its approval by Russian parliament, a ranking lawmaker said here Monday.

Roman Popkovich, chairman of defense committee of the State Duma, thelower house of parliament, said the United States is actually trying todisrupt ratification, the Interfax news agency reported.

He said the U.S. does not want Russia to ratify the START II, underwhich Moscow and Washington are to cut their nuclear warheads each to 3,000 to 3,500, for both political and military reasons.

"They are trying to portray us as a country unwilling to divest itselfof nuclear arms, a kind of nuclear monster that does not want to disarm," he said.

"The military aspect of the problem boils down to the fact that Russianeeds START II more than the U.S. does," he said.

The shelf life of Russia's strategic missiles is much shorter than thatof the U.S.'s because Russia has refurbished and updated them.

"The expiration date for our missiles will have been reached by 2007-2008,while it will be 2020-2025 in the case of America's," Popkovich said.

"They understand very well that if we do not ratify the treaty and donot achieve a simultaneous reduction of the maximum number of warheads,their nuclear strength will be four to six times greater than ours by2008-2010,"he said.

He accused Washington of "putting obstacles in the way of our ratifyingthe START II treaty by violating the Anti-Ballistic Missile treaty of 1972."

As to the chances of START II being ratified by the Duma, Popkovichsaid Washington's intention to amend the treaty casts doubts on ratificationsince the danger of "disrupted balance" may arise.

He said Russia should understand Washington's proposals "to the extentthat we must have an ABM location scheme to be able to control the processof creating and deploying anti-missile facilities," he said.

"The argument that the (U.S.) continental ABM system would be createdto counter possible acts of terrorism from third-world countries that possessnuclear weapons does not stand up to criticism," he said.

He warned that "if the U.S. decides to set up a continental ABM system,Russia should work on the creation of new striking means -- missiles withmultiple warheads, that is, a new kind of weapon that will be a weaponof nuclear deterrence."

"Appropriate changes need to be made to Russia's military doctrine,including considering the possibility of war, the use of armed forces,and most importantly, reconsidering who are our friends and adversaries," he said.

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C. Nuclear Waste

Liquid Radwaste Leakage Confirmed
        Igor Kudrik
        August 23, 1999
        (for personal use only)

Incident on board naval tanker for liquid radwaste in the Russian FarEast is officially confirmed.

Valery Maslakov, the manager of Zvezda shipyard, confirmed the incidenton board a naval liquid radioactive waste tanker in the Russian Far East.Two weeks ago, Bellona Web reported on this incident which was largelydenied by the local military and civilian officials.

Maslakov said in an interview with local daily Vladivostok that theBelyanka class tanker Pinega carried a container with 40 cubic meters ofliquid radioactive waste. During last winter the radioactive water frozebecause the boiler on board the ship was not operational. The containerthen cracked, leaving the water free to leak out as spring thawed it. Thecrew tried to drain the damaged container into an 800 cubic meter liquidwaste storage tank, which was also on board. Something went wrong duringthis process, and a part of the radioactive water penetrated into compartmentsnot outfitted to store radioactive water.

Maslakov said, however, that the reports on radioactive water dischargesinto the sea were not true.

The tanker is stationed in the vicinity of Zvezda shipyard, the cityof Bol'shoy Kamen, in Ussuriyskiy Bay. A western designed barge equippedwith a liquid waste processing facility is also stationed at the shipyard,pending final testing. Initial plans suggested that the barge would beput into operation in 1996.

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Minatom Sticks To Reprocessing
        Igor Kudrik
        August 23, 1999
        (for personal use only)

Minatom plans to hit international fuel reprocessing market with Americanassistance; the Non-Proliferation Trust seems to have failed to convertMinatom into non-reprocessing policy.

The Russian Ministry for Atomic Energy, or Minatom, continues promotionof spent nuclear fuel reprocessing services for export. The Non-ProliferationTrust, a U.S. entity that proposed to Minatom the transfer of spent fuelto Russia for intermediate storage, seems to have failed in preventingeventual reprocessing of this fuel.

Loosing control over Minatom
NPT's plans assumed that Russian lawmakers would allow imports of onlythe amount stipulated in the contract between Minatom and NPT, i.e. 10,000metric tons. But Minatom wants a legal permission granted for unlimitedspent fuel imports. Minatom's lobbyists are working hard on separatingthe issues of spent fuel and radioactive waste in the bill amending theLaw on Environmental Protection of the Russian Federation. The currentversion of the law says that any import of radioactive materials is prohibited.Once 'spent fuel' and 'radioactive waste' are separate issues, fuel willbe considered a resource eligiblefor import. The amended version will gothrough hearings in the Russian State Duma, the lower house of the Russianparliament, shortly.

Last week, a Russian governmental daily, Rossiyskaya Gazeta, publishedan article by Vladimir Schidlovsky, head of the Nuclear Fuel Cycle Departmentin Minatom. Mr. Schidlovsky justifies in his article the spent fuel reprocessingpolicy Russia is adhering to and talks about the bright financial perspectivesfor Russia once Minatom starts reprocessing for export purposes. Mr. Schidlovskyalso says that Russia could earn up to $10 billion by importing foreignspent fuel for reprocessing. A part of  this sum will be used to remediateradioactively contaminated areas in Russia.

Schidlovsky avoids mentioning directly the project he is talking about,but throughout the article it  becomes clear that the project in questionis the one proposed by the Non-Proliferation Trust (NPT).

Non-Prolifiration Trust
A group of German and U.S. industry, an NGO and several well-connectedformer government and Navy officials have set up a company with the goalto take title of 10,000 metric tons of spent nuclear fuel from variouscountries (excluding the United States and Russia), with the aim to leasestorage space in Russia for up to 40 years. Thereafter, Russia will beleft with the fuel without international support of financing.

The proceeds of the lease would pay for design and construction of thecentral Russian radwaste and spent fuel repository, for remediation ofradioactively contaminated areas in Russia and for social projects. NPTplans to raise between $6 billion and $15 billion from wealthy industrialisednations trying to rid  themselves of their spent nuclear fuel. NPTguarantees that the fuel will not be reprocessed to avoid conflict withU.S. non-proliferation policy. Washington has to give its consent to thedeal.

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No Faith in MOX at Novovoronezh NPP
        Igor Kudrik
        August 24, 1999
        (for personal use only)

Antinuclear camp at Novovoronezh NPP protests against MOX fuel program,while NPP management says the plant is not designed to handle MOX fuel.

An antinuclear camp settled two kilometres from Novovoronezh nuclearpower plant, in southern Russia, on 17 August. The camp protests againstthe Russian Nuclear Ministry's - Minatom's - MOX fuel program, of whichNovovoronezh NPP is part. But as it turns out, the management at NovovoronezhNPP does not consider the plant's reactors technically able to burn MOXfuel.

MOX program
MOX fuel, a mixed oxide of plutonium and uranium, made it onto theRussian agenda when the United States and Russia faced the problem of safedisposal of their vast stockpiles of plutonium. The solution should preventaccess of terrorists and reuse by either of the countries.

Russian stockpiles of plutonium are estimated at 75 metric tonnes, whilethe U.S. is said to possess around 50 metric tonnes. The disposition ofplutonium can be done in two ways: it may be immobilised in ceramic orglass along with highly radioactive waste, or turned into MOX fuel foruse in civilian reactors.

The U.S. seems to rate the two options as equally interesting, whileRussia has ambitious plans to pursue the MOX option.

Russia, unable to cope with the financial expenses for the program onits own, pursues other countries' funding in exchange for being a testfield for MOX technology. Currently, co-operation is underway with U.S.A.,Germany, France and Japan.

Meanwhile, experts believe the safest way to deal with plutonium wouldbe to dispose of it. Moreover, Russia is believed to be better positionedto immobilise its existing stocks of plutonium rather than to burn it.This assumption is based on the fact that Russia has already a significantinfrastructure to immobilise plutonium, while the plans drawn for MOX fuelproduction and utilisation are in most cases far beyond reality.

Novovoronezh NPP in MOX program
The Russian MOX program assumes utilisation of MOX fuel in 10 VVER-1000reactors, three of which are not yet completed. At Novovoronezh NPP, 2.8metric tonnes of plutonium are to be burnt at reactor unit no. 5.

Novovoronezh NPP operates on two VVER-440 reactors, commissioned in1971 and 1972, and on one VVER-1000 reactor commissioned in 1980 (unitno. 5).

Reactor unit no. 5 must be upgraded to utilise MOX fuel. Earlier planssuggested that the upgrade would be completed by 2001.

Vladimir Slivyak, an antinuclear campaigner at Russian largest environmentalNGO, Socio-Ecological Union, says the Minatom plans are far removed fromreality.

"One can load reactor unit no. 5 with MOX fuel. The only problem isthat the reactor would not work," Anatoly Krutskikh, representative fromthe local Nuclear Regulatory (GAN), told the protesters. The manager ofthe plant told the local daily last week that the reactors at NovovoronezhNPP "were not  designed to accept MOX fuel."

Antinuclear camp heavily guarded
The camp was launched on 17 August, and was put under surveillanceby local police and the security service (FSB) on the very same day. Policemenare patrolling the area and even put up a roadblock on the road leadingto the camp. Both the FSB and the police are trying to negotiate with protestersto move beyond the so-called five-kilometre security zone. There has beenno attempt to use force yet, although the protesters have received threatsfrom the police.

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NPT disagrees with Bellona
[text of NPT, Inc. letter and Bellon'a responses (in italics) to thisletter, as posted on the Bellona website]
        Thomas B. Cochran
        August 23, 1999
        (for personal use only)

Thomas Cochran, the director for nuclear programs at the Natural ResourcesDefense Council, who works on the Non-Proliferation Trust project, disagreeswith Bellona's conclusions on the issue of fuel imports to Russia and pointsout that a new draft of the agreement has made factual changes not yettaken into consideration by Bellona's Position Paper.

While we consider these factual changes (we refuse to call them errors,as we were not made aware of the
recent changes in the agreement) insignificant with respect to ourconclusions, we are of course interested in publishing the latest facts.Furthermore, for the sake of open debate of this important issue, we havegiven Mr. Cochran the opportunity to respond to Bellona's position.

Mr. Cochran's letter is supplied with Bellona's comments.

Thomas Cochran writes:

The Bellona USA Position Paper "Exporting Spent Fuel toRussia¾NationalSecurity & Environmental Aspects," August 12, 1999, is based on aNon-ProliferationTrust, Inc. ("NPT, Inc.") proposal that is now out of date, and the Bellonapaper contains numerous errors and mis-characterizations of both the earlierand the most recent NPT, Inc. proposals.

The NPT, Inc.-Minatom project is a creative joint private-governmentaleffort designed to aid the non-proliferation of nuclear materials and weaponsand to advance environmental restoration and other worthy causes withinthe Russian Federation. The NPT, Inc. effort has the support of the NaturalResources Defense Council, and it cannot go forward without the supportof the United States and the Russian Federation. With support of the twogovernments the NPT, Inc.-Minatom project as presently
conceived will (a) provide $3 billion for the cleanup of radiologicallycontaminated sites in Russia and other deserving environmental initiativesin Russia; (b) at least $1.8 billion to site, qualify and construct a geologicrepository for spent fuel and high-level nuclear waste in Russia; (c) $1.5billion to improve the physical security and material control and accountingof weapon-usable fissile materials stored in Russia; $2 billion for a generalfund to create and foster within Russian nuclear cities non-nuclear industriesand jobs and additional programs for radiological cleanup, nuclear materialsecurity and repository
development; (d) $2 billion for economic support for senior Russiancitizens; and (e) $250 million to support Russian orphans and orphanages.

To raise the revenues to accomplish these good works, NPT, Inc. proposesto store for an interim period up to 10,000 tons of spent fuel in Russia.Spent fuel customers will be selected on the basis of their willingnessto pay the minimum prices necessary for the project to go forward, andon the non-proliferation benefits associated with their selection. As Bellonashould know the real and postulated risks to human health associated withmanaging the spent fuel in a dry cask storage facility are far less thanthe tangible benefits associated with any one of the above mentioned programs,i.e., a $3 billion cleanup program, a $1.5 billion
fissile material security program, a $2 billion pensioner assistanceprogram, or $250 million for Russian orphans.

In so many words, Bellona says do not do this project because (a) itis a bad precedent; (b) it "subsidizes" nuclear power in Russia and incountries from which the spent fuel is derived; (c) one cannot trust Minatom,and (d) there is no final solution for the waste.

I say this project (a) represents a new paradigm for conducting businessin an environmentally and socially responsible manner¾if this projectis going to set any kind of precedent, it does so only insofar as futureprojects are consistent with the environmental and non-proliferation objectivesof this project; (b) it provides a strong economic incentive for Minatomto cleanup the environment and promote sound non-proliferation objectives;(c) the success of the project is not dependent on the West trusting Minatom,rather the project incorporates safety mechanisms and some unique elementsin the form of contractual
conditions enforceable in U.S. courts, requirements backed bygovernment-to-governmentagreements, and mechanisms for managing the funds, to obviate the needto rely on personal trust; and (d) the project has been modified to fundthe qualification and construction of a geologic repository for spent fueland high-level waste.

Moreover, we have an obligation to reduce the proliferation risks associatedwith spent fuel currently stored in countries such as Taiwan and SouthKorea, including the risk that their fuel will be reprocessed to recoverplutonium; and if some countries have no viable geologic repository alternative,we should be willing to "subsidize" the nuclear power industry at leastto the extent necessary to find a better storage alternative.

In addressing further some of the issues raised by Bellona, I will skipthe Executive Summary, and take up the issues in your position paper beginningwith the first of the three main arguments you raised in the body of thereport.

Bellona claims: The 'monetarization' of nuclear waste opens aPandora's box for trade in fissile materials.

NPT's Response: NPT, Inc. is also opposed to "uncontrollabletrade in fissile materials," and is opposed to the current version of nuclearwaste legislation that was drafted by Minatom and circulated in the Dumaon Minatom's behalf. NPT, Inc. would support alternative legislative languagethat: (a) would limit the amount of spent fuel that could be imported intoRussia; (b) specifies how the revenues from such a project would be allocated;and (c) insures that the project's benefits greatly outweigh the risks.The NPT, Inc. project meets these criteria.

Bellona's characterization of Russia accepting payment for providinga spent fuel service as "monitorization of nuclear waste" is misguided.The NPT, Inc. proposal is not a precedent for every bad idea that mightfollow. The NPT, Inc. project can be distinguished from bad proposals byweighing the overall costs and benefits of each.

Bellona's Position: The history of Minatom suggests that no agreementwill stand for very long, unless it fits in the long-term Masterplan, whichincludes importation of large amounts of fuel, its reprocessing and re-export.A perfect example of Minatom's ability to manipulate international partnersis the generally very successful Cooperative Threat Reduction program.While CTR has spent $2.3 billion in Russia, Minatom managed to force CTRto reverse U.S. non-proliferation policy on reprocessing. The U.S. governmenthas granted Minatom a waiver from reprocessing prohibitions when the Russianside began stalling the project.

This scenario is well known to Western businesses and governmentagencies active in Russia. Minatom signs a deal, but then alters it beginningat the moment when too much money has flown to simply cancel the project.The saying goes that possession is nine-tenths of the law. Once Minatomhas physical control over a large chunk of the down-payment, all bets areoff for contract fulfillment. And when the fuel sits in Russia, Russiawill find a reason why old contracts need no longer be fulfilled. Furthermore,if regions continue to drift away from Moscow's influence, whoever governswhatever site the fuel ends up going to could decide that contracts signedby Moscow are of no validity. At least, a governor could add licensingrequirements etc., thus pushing up program cost significantly.

Bellona claims: Minatom is on record saying this project is justa beginning in a $150 billion business. Minatom is now lobbying the Dumafor a change in a federal law prohibiting the import of radioactive materials.

NPT's response: Minatom could never realize such revenues becausemost of the available spent fuel could not be moved to Russia without theconsent of the United States government, since it was either enriched inthe United States or burned in reactors supplied by U.S. reactor suppliers.Bellona's concerns regarding the lack of control on the importation offoreign spent fuel could in theory become a reality only if Minatom issuccessful in getting the Duma to adopt language Minatom has proposed withrespect to amending Russia's environmental laws, and if Minatom does notenter into a contract with NPT, Inc.

If, on the other hand, the Duma adopts language which NPT, Inc.supports¾languagethat limits the amount of spent fuel that can be imported¾and ifMinatom enters into a contract with NPT, Inc., then Minatom surely willnot be able to achieve this goal, at least not for four decades. The proposedNPT, Inc.-Minatom Agreement would prohibit Minatom from entering "intoagreements with third parties that would undermine the basic goals andobjectives of this [the NPT, Inc.-Minatom] Agreement." It would take atleast 40 years and passage of another law by the Duma (or a PresidentialDecree) before Adamov's alleged
wish could be realized. The proposed NPT, Inc.-Manatom agreement isBellona's best hope for avoiding this problem.

Bellona's Position: First of all, Bellona is concerned with thepossibilities40 years from now, not to speak of Presidential Decrees! It should be knownthat many of the elements in question will be lethal for hundreds of thousandsof years. It is Bellona's main bone of contention that this project looksat short-term benefits at the expense of hundreds of future generations.Furthermore, the assertion that the NPT proposal will avoid the risk ofproliferation is absolutely nonsensical. NPT tries to argue that shippingfissile materials to Russia that could under present policy not be sentto Russia will prevent potential proliferation by Russia?!?

Bellona claims: When fuel moves or is reprocessed, it is difficultto account for with accuracy. A global market for spent nuclear fuel wouldincrease these problems of accountability.

NPT's response: Here, Bellona is grasping for straws. Under theproposed NPT,Inc.-Minatom Agreement, it will be easier for the U.S. toaccount for the spent fuel and the plutonium in it, since title to thespent fuel will be transferred to a U.S. company. The proposed contractalso specifies that the spent fuel will be under IAEA safeguards. Moreover,the proposed contract specifies that "the spent fuel stored hereunder .. . will never be used, held in reserve, or processed for nuclear weaponsor explosive use, and will never be processed for its plutonium or uraniumcontent or for any other reason unless Minatom, NPT, and the governmentsof both parties approve."

Bellona's Position: We prefer nuclear fuel to stay in a stable nationsuch as Japan rather than a place we cannot even safely predict will beunder Moscow's rule any more in 10 to 20 years. To claim that the UnitedStates will have more oversight over the fuel in Russia or any of its potentialfuture break-away regions than in Japan or another allied country doesnot warrant further discussion.

Bellona claims:  Privatizing national security concernsis bad policy, as the China space cooperation has shown. There are alsoU.S. sanctions against Russian nuclear institutes for trade with Iran.

NPT's response:  Bellona apparently does not realize thatfissile material has been owned and managed by private companies sincethe Atomic Energy Act was amended in 1954. Since NPT, Inc. will take titleto the spent fuel, it will then be owned by a U.S. company and become fuelof U.S origin, if it is not already so. The U.S. government will have toapprove of any subsequent arrangement (i.e., any movement or change inits chemical or physical state). The NPT, Inc. proposal provides greater,not less, security over the fuel.

Bellona's Position: Bellona does not object to privately owned utilities.The privatization of non-proliferation policy is, however, an issue ofconcern. As for increased security, see above.

Bellona claims:  NPT wants to add 6,000 tons of spent nuclearfuel to Russia's 14,000, and in return build a permanent repository andsafeguard 50 tons of weapons-grade plutonium.

NPT's response:  The current proposal is based on up to10,000 tonnes of spent fuel, and it proposes to allocate $1.5 billion towardimproving the physical security and accounting of fissile materials, butthe proposal no longer focuses exclusively on the 50 tonnes of excess plutonium.

Bellona's Position: We are unsure what difference the change in wordingfrom plutonium to fissile materials makes.

Bellona claims:  International agreements already coverweapons-grade plutonium. Therefore, this part represents more of a subsidyfor Western governments than an attempt to address a pressing problem.

NPT's response:  NPT, Inc. stepped in because the Westerngovernments were unwilling to provide adequate funding for fissile materialsecurity in Russia.

Bellona's Position: The wording in NPT's new paper from July 7, 1999,supports Bellona's assertion. It reads: "This [NPT support] means thata bilateral U.S.-Russia excess plutonium disposition project would notbe dependent entirely on U.S. taxpayer funds." Furthermore, most projectsWestern governments cancel are not cancelled lack of funding, but becauseof the already mentioned fickleness of the Russian side. Bellona deploresthat not more money is spent on nuclear safety, but the reason is generallynot stinginess, but unreliability with Russian partners. Why, for example,is there no temporary or permanent storage facility in northwest Russia,as Bellona has so long claimed? Because Russia cannot grant a license fora  dry-storage facility, nor can it offer tax exemptions and liabilityguarantees. Now that someone waves billions, all legal problems disappear.It strikes us as naive to believe that this change-of-heart is sincereand lasting. Helping Minatom to get over its financial problems will makeMinatom even more independent of Western governments, make it less opento Western political and financial pressures, and thus close negotiatingdoors between East and West.

Bellona claims:  The pressing problem is the existing Russiannuclear waste that is not covered by international agreements. NPT cannotsolve this project, in spite of the promise of money for a permanent storagesolution.

NPT's response:  In its revised proposal NPT, Inc. allocates$300 million to qualify a geologic repository in Russia and $1.5 billionfor its construction. In addition, $500 million is placed in escrow andwill be available to fund the disposal of the spent fuel if the repositoryis built and licensed. Surely, Bellona would not claim that an economicallystrapped Russia should not be permitted to use another countries fundsto construct a geologic repository in exchange for storing that countriesspent fuel in the same repository.

Bellona's Position: With or without NPT's scheme, Russia needs aspent fuel repository. A large percentage of nuclear fuel in Russia isnot reprocessable, and must be stored under any perceivable scenario. NPT'shope, however, of ending reprocessing altogether does not fit into Minatom'sMasterplan, which calls for continued reprocessing of domestic and importedspent fuel. It is likely that a repository, if ever built under NPT's project,will accept unreprocessable waste, or that a study concludes that no repositoryof the dimensions needed to accept all the fuel is possible in Russia,or a study made by Western experts Russia will reject. Based on publicpronouncements by Energy Minister Yevgeniy Adamov as well as Minatom'strack record, we believe it is impossible to assume that the NPT-envisionedstorage facility will indeed be built in Russia, as it would interferewith Minatom's long-term plans.

Bellona claims:  Permanent repositories suffer from politicalmore than from financial problems. First reactions show that Russians areno different than people anywhere else in the world. Since the United Statespromotes democracy, it should not ignore the will of the people. Thus,a storage study may not lead to any action, as the results of the studyare likely to be rejected by the populations that are asked to live withthe consequences.

NPT's response:  With the exception of the concluding sentence,NPT, Inc. agrees with these observations. NPT, Inc. is trying to do somethingpositive by funding development of a geologic repository for spent a fueland high-level waste in Russia. NPT, Inc. hopes Bellona will find a wayto support this endeavor and not find itself joining the NIMBY crowd.

Bellona's Position: We are astounded about being accused of supportingthe "not-in-my-backyard" attitude. It was Bellona that actively opposeda Norwegian government proposal that would simply have shipped the wastefrom the Russian-Norwegian border to Siberia. Bellona supports sound solutions,even if that means keeping nuclear waste close to home. In that vein, weurge the wealthy nations of Japan, Taiwan and South Korea to face the musicand deal with the nuclear waste they have created rather than dumping iton someone else (the NIMBY way).

Bellona claims:  While the waste is brought into Russiaat the beginning of the 40-year contract period, the studies for permanentsolutions are undertaken at the tail end.

NPT's response:  This is not true under the current proposal,which includes (a) $300 million, available at the project start date, allocatedto qualifying a geologic repository in Russia; (b) a minimum of $1.5 billionallocated for repository construction, of which $150 million will be availableat the project start date and $135 million per year over the following10 years; and an additional $500 million plus accrued interest availableat the end of 40 years or when the repository is licensed whichever comessooner. There are additional funds in other accounts that can be spenton repository construction and licensing if needed. Clearly, built intothe current proposal, there is a strong incentive for Minatom to completethe repository sooner rather than later, and funding is unlikely to bea critical path item in this regard.

Bellona's Position: Bellona's Position Paper is based on the draftpublished in May, and we are gladly evaluating changes made by NPT. Aswas pointed out before, we do not believe that Minatom will abandon itsMasterplan in favor of the NPT proposal, but will begin changing the agreementonce too much money has been committed to stop the project. Therefore,the present arrangements do not change our predictions as to the outcomeof the NPT project.

Bellona claims:  A multi-billion dollar project spanninghalf a century is almost bound to incur cost overruns and unexpected outflowseverywhere in the world, and especially so in Russia, where corruptionis unfortunately rampant.

NPT's response:  Apparently, given the current level ofcorruption in Russia, Bellona at this time is opposed to any significantforeign assistance to Russia to improve environmental quality, safeguardfissile material, build a spent fuel repository, find alternative employmentopportunities for workers in the closed cities, aid the plight of the pensionersor help orphans. To the contrary there are commercial enterprises and foreignassistance programs that have not been corrupted. NPT, Inc. believes itcan utilize fund management procedures to minimize corruption. Bellonafails to acknowledge here that the NPT, Inc. proposal includes the MinatomDevelopment Trust, a U.S. trust, and NPT, Inc. will utilize an internationalbank that operates in Russia, to control and audit the flow of funds.

Bellona's Position: NPT seems to assume that all the other internationalentities that saw agreements changed on them in mid-project were pure amateurs.Certainly, one can reduce the amount of problems through better management.But the basic problem is that Minatom has NO INTENTION to end reprocessing.No management system will change that fact. We favor support for Russia,but under the time-honored principle of "First, do no harm." The more severethe potential harm, the more important is the observation of this principle.

Bellona claims:  The parts of the project funded at thetail end will be the ones shortchanged in case money is lost on the way.Russia will thus end up with more waste and no or an underfunded solutionstudy. Any acceptable nuclear waste management project must be based ona long-term process emphasizing a proper system of checks and controlsthroughout an overseeable implementation period. Solutions are worked outfirst and only when they exist, are scientifically proven and widely accepted,actual work is begun. An incremental process of project implementationcould begin, with small amounts of money disbursed as the project movesalong. Of course, under such a business plan the leasing of storage spacewould become superfluous, as the nuclear waste could be dealt with permanentlyfrom the outset.

NPT's response:  Bellona does not understand the cash flowconsiderations related to current NPT, Inc. proposal. Moreover, the NPT,Inc. proposal stands a better chance of success than the approach suggestedabove by Bellona.

Bellona's Position: Bellona does understand from long experiencethe problems of doing business in Russia, and so do a large number of U.S.government officials and business executives. As to the chances of variousproposals, this paper does not discuss any proposal other than the NPT's.Under scrutiny here is the wisdom of accepting certain risks for a certainpay-off, not the likelihood of acceptance alone.

Bellona claims:  NPT maintains the title over the nuclearwaste throughout the 40-year lease period. This leaves open the problemof where the materials will go after the lease expires. NPT offers theoptions of either Russia accepting ownership of the materials in returnfor a certain amount of money that is kept in the bank to accumulate interestthroughout the lease period, or taking it back and finding another storageoffer from another country. Thus, what looks like an option for Russiaat the end of the lease period turns into a de facto infinite responsibility,with no additional funding available for safe keeping."

NPT's response:  This is a series of half-truths based ona proposal that has since been amended to take into consideration the principalconcern identified here. First, NPT doesn't offer Russia options. The optionchosen is at NPT's sole discretion. Second, there are now three options:(a) renew the lease; (b) dispose of the spent fuel in a geologic repositoryto be built in Russia; and (c) move the spent fuel out of Russia. Fivehundred million dollars plus accrued interest will be available to implementthe selected option. In addition, under the revised proposal, NPT, Inc.has allocated $300 million to qualify a geologic repository and $1.5 billionfor its construction. Additional funds can be directed toward repositorydevelopment if the need arises.

Bellona's Position: Indeed, we misread the proposal as to post-leasearrangements, giving more credit than is due. We thought Russia was atleast given a theoretical option after the lease to ask NPT to remove thewaste. We stand corrected and upgrade our predictions that Russia willbe stuck with the nuclear waste from 99% to 100%. Based on our predictionsfor the chances of a geologic repository, we reiterate our concern thatthe waste will end up being reprocessed. Minatom has acknowledged thatthere is no market for reprocessed fuel now, but would love to store spentfuel for three decades and reprocess it then. This would explain why Minatomis not concerned with the lack of  options at the end of the lease.If the market is bad, Minatom takes the money from NPT and stores the waste.If it is good, it reprocessed and sells the fuel.

In contrast to the claim of Russia not having options, accordingtop the agreement Minatom seems to have options as to whether it wantsto take title to the fuel after the 40 years. See below at last BellonaPosition for details.

Bellona claims:  The NPT proposal guarantees to bring Westerntechnology, supervision and money to bear to improve this situation. Thesituation returns to the pre-lease conditions, however, after the initialfunding dries up.

NPT's response:  Incorrect, there will be $500 million plusaccrued earnings to manage the fuel beyond the initial 40 year lease period.

Bellona's Position: Minatom announced it exports a total of $1.8billion annually, tendency upwards. The loss of $500 million (plus interestminus inflation) will not stop Minatom from supplying its power plant customerwith reprocessed fuel, stored until markets improve courtesy Japan, Taiwan,South Korea, others.

Bellona claims:  It seems Minatom has already made up itsmind with regards to the fuel's future. First, accept several billion forstorage, then reprocess and sell the fuel. Minatom already publicly saysthat adding a reprocessing option would make the deal more profitable.

NPT's response:  Minatom and Adamov have a better understandingof what is possible under the proposed contract than does Bellona. If Minatomsigns the proposed agreement, Minatom cannot reprocess the spent fuel evenafter the 40 years. Moreover, under the proposed agreement Minatom cannot enter into new commercial arrangements to reprocess its own fuel duringthis period. If Bellona is truly concerned about reprocessing in Russia,Bellona should support the NPT, Inc. proposal which has been designed towean Russia away from reprocessing.

Bellona's Position: See above, particularly with regards to how Minatommanaged to alter agreements with CTR, a deep-pocketed nuclear project partner.We agree, however, that Nuclear Energy Minister Yevgeniy Adamov has a goodunderstanding on how to get what he wants from all-too-eager internationalpartners.

Bellona claims:  NPT is in no position to influence Russiaafter the contract period. In the likely case that no other country wantsto accept the waste, Russia is in a dominant negotiating position to dowhatever the Minatom leadership at that time pleases. Thus, the NPT projectwill most likely lead to the reprocessing and export of the nuclear fuel,and the only immediate advantage over doing so outright is a delay of 40years.

NPT's response:  Not so, Russia's contractual obligationregarding the no reprocessing condition will extend beyond the lease period.Moreover, the U.S. government will have consent rights over the fuel.

Bellona's Position: See above concerning contractual obligations.

NPT's response:  Bellona appears to be trying to scare peopleinto believing that there is a significant risk that the spent fuel willeventually be reprocessed, which is not the case. Bellona also ignoresthe fact that a major objective of the NPT proposal is to wean Minatomaway from existing and new reprocessing activities by allocating $2 billionto support alternative employment opportunities at the closed cities.

Bellona's Position: No need to scare people, Minatom's history speaksfor itself. With regards to $2 billion to wean Minatom away from reprocessing,Minatom earns $1.8 billion a year from its exports, and reprocessed fuelplays an important role in its growth plans. NPT's belief that it couldget Russia out of reprocessing is similar to an attempt to buy all Americanhog farms, which are presently in a crisis, retrain the farmers and hopepork will disappear from America's stores. Furthermore, NPT acknowledgesthat existing contractual reprocessing obligations have to be fulfilledby Minatom. Reprocessing will thus continue as an industry, people willcontinue to be employed in it, and an industrial lobby will push for itsexpansion.

Bellona claims:  The NPT proposal to store spent nuclearfuel from various countries in Russia for a period of 40 years is inconsistentwith U.S. national security goals of increasing to a maximum extent theaccountability of fissile materials worldwide. Therefore, the U.S. governmentshould not permit a transfer of U.S.-origin fuel.

NPT's response:  NPT, Inc. reaches the opposite conclusionbased on an better understanding of its proposal.

Bellona's Position: "We are right because we know better" is notan argument.

Bellona claims:  The project is not in Russia's best interestover a longer period. Local populations are opposed, based on Minatom'spast performance record with Russian nuclear waste.

NPT's response:  Opposition by local groups to Minatom activitiesis fully understandable. These groups should continue to oppose Minatom'sdraft legislation currently before the Duma. But we have an opportunityto change the way Minatom does business in the future. Bellona's positionpaper so distorts the facts and issues surrounding the NPT, Inc. proposalthat Bellona is in effect giving support to those in Minatom who advocatereprocessing and the status quo.

Bellona's Position: Why would NPT put the onus of changing Minatom'snuclear waste import bill on the rather powerless Russian NGOs, when NPTclaims to have so much power to force Minatom to do the right thing overthe next 40 years? This would be a great time for NPT to prove its abilityto control the Russian partner. If NPT cannot do it now, any assurancesto assure compliance later are hollow, as power shifts dramatically towardsMinatom once money has flown to Russia and the Western utilities will demandthat their waste be removed speedily.

Bellona claims:  Bellona has been in the front line of thosewho advocate that Russia's spent fuel problem must be addressed with thehelp of the international community. These projects, however, must be undertakenwith clear long-term national security, not near-term commercial considerationsin mind.

NPT's response:  NRDC welcomes Bellona to the front line.Lets begin by getting behind a program to provide Minatom with economicallyviable alternatives to nuclear fuel reprocessing, construct a geologicrepository for nuclear waste, improve the security of fissile materials,cleanup the environment, improve the conditions of pensioners and orphansin Russia; and let's find a viable means for disposing of the spent fuelin countries that represent a potential proliferation risk or whose geologyis unsuitable for a spent fuel repository.

Bellona's Position: We are ready for constructive discussions. Basedon our experiences we have shared with the readers of this discussion paper,NPT's proposal is not a suitable starting point. We also believe that amateurishattempts to do good have a tendency to fail. We claim expertise in environmentalissues. For help to orphans one should contact Save the Children or otherprofessionals with the necessary expertise.

Bellona claims:  Rather than burdening Russia with theresponsibilityfor 6,000 tons of additional waste, whose storage will be paid for 40 years,but not for the thousands of years thereafter, the international communityshould look into possibilities to assure permanent safe storage of theexisting waste in Russia. If studies for such a project led to the conclusionthat an internationally funded permanent repository is best suited to acceptwaste from several countries, this could be discussed.

NPT's response:  Rather than await the success of Bellona'sefforts in this regard, NPT, Inc. intends to pursue an alternative approachthat it believes will have a far greater chance of success.

At the end off the position paper, there is a one page summary entitled,"The Non-Proliferation Trust Project Summary." This summary is out of dateparticularly with regard to the proposed allocation of the revenues. Italso includes Bellona's own mis-characterization of the project status,such as, "But NPT does not yet know what to do with the fuel after thelease expires;" and outright false statements such as, "If Russia exercisesthis option, it will be able to take title to the materials and do withthem as it pleases, including reprocessing it."

Bellona Responds:  As for Bellona's "mischaracterization," itstems from a conversation with an NPT attorney in June of 1999. With regardsto the second statement, we believe, as explained at length above, thatthe fuel will end up reprocessed. As to claims made that Russia will neverbe able to take title, and the fuel will forever be NPT or U.S. governmentproperty, NPT contradicts itself. In a July 7, 1999 paper, faxed to BellonaUSA on August 18, 1999, NPT remarks that Minatom will get a storage fundworth $500 million if "Minatom takes permanent title, possession, custody,and responsibility for the spent fuel… ."

I look forward to meeting with your Board to explain the merits of theNPT, Inc. proposal, answer their questions, and improve our mutual understandingof the issues and where our views differ.

Thomas B. Cochran
Director, Nuclear Program
Wade Greene Chair for Nuclear Policy
Natural Resources Defense Council

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