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Nuclear News - 08/03/00
RANSAC Nuclear News, 03 August 2000

A.  Highly Enriched Uranium

    1. Rep. Strickland Submits Bill To Bring USEC Back To Government,Nuclear Weapons and Materials Monitor (7/31/00)
    2. International Trade Commission Review, USEC (7/26/00)
    3. USEC Earnings Released, USEC (7/26/00)
B. Plutonium Disposition
    1. UK Pledges $100m To Russian Plutonium Disposition Effort,Nuclear Weapons and Materials Monitor (7/31/00)
    2. Nuclear Waste To Be Flown, Not Shipped, Canadian BroadcastCompany (7/27/00)
C. Russian Nuclear Forces
    1. Putin May Name Civilian Defence Minister, Martin Nesirky,Reuters (8/1/00)
    2. Putin Dismisses Top Brass, Associated Press (7/31/00)
    3. Lower Status For Russia Rocket Force ``Unavoidable'',Martin Nesirky, Reuters (7/28/00)
    1. Putin Pledges Implementation Of START-2, BBC (8/3/00)

A. Highly Enriched Uranium (HEU)

Rep. Strickland Submits Bill To Bring USEC Back To Government
        Nuclear Weapons and MaterialsMonitor
        July 31, 2000
        (for personal use only)

Rep. Ted Strickland (D-Ohio) has introduced the Nuclear Fuel ReliabilityAct (H.R. 4883) to return USEC to the federal government through a two-phaseprocess. The legislation would establish a government-owned corporation,the United States Enrichment Enterprise (USEE), to be run by a “transitionmanager” until the USEE carries out the would be subject to Senate confirmation—andthe Secretary of Energy, in consultation with the secretaries of Stateand the Treasury, are to formulate a plan that would, among other things,

 -- Identify and provide means to assure the continued fulfillmentof the public interest purposes stated by Congress in the USEC PrivatizationAct and Energy Policy Act of 1992 in providing for the privatization ofUSEC;

 -- Recommend means to ensure that stockholders and creditors ofUSEC, Inc. will be entitled to just compensation, not to exceed a 20-percentpremium to the market value of USEC, Inc.’s stock, if it is traded on alisted exchange as of the date of enactment of the Act;

-- Propose legislation required for the refederalization of USEC, Inc.for submission to the Congress, the General Accounting Office, and thePresident;

-- Prepare a fair market valuation for acquisition, except that theamount of any bonuses, compensation, or severance in excess of one year’sannual base salary for officers and directors of USEC, Inc. shall be deductedto arrive at a net asset value or fair market value and shall not be includedas a liability to be assumed by USEE or the United States and any suchexcess liabilities shall be deducted from compensation due shareholdersof USEC, Inc. The lucrative compensation package of USEC president andchief executive officer William H. (“Nick”) Timbers has been a target ofcriticism in Congress and elsewhere

Focus on Russia Maintained

The plan specifies that the executive agency role for the U.S.-Russianhighly enriched uranium (HEU) purchase agreement also will transfer tothe USEE and that the enterprise will maintain the suspension agreement:Nothing herein shall authorize USEE to enter into any arrangement for theimplementation of the Russian HEU Agreement that would require the importationof non-HEU derived enrichment ser-vices, conversion services, or uraniumor otherwise render necessary an amendment to the Agreement Suspendingthe Anti-Dumping Investigation on Uranium from the Russian Federation orany other country.

Once the transition is complete, the enterprise is to be governed bya seven-member board of directors. The legislation stipulates that theboard include experts on Russia or nuclear nonproliferation; the uraniumenrichment industry; and technology development, chemistry, physics, orengineering.

The board also would have to include at least one resident of Kentuckyand Ohio, as well as a union representative.

Portsmouth Closure Triggered Bill

A primary impetus for the legislation was USEC’s announce-ment lastmonth that it plans to close its Portsmouth enrich-ment facility next summer(NW&M Monitor, Vol. 4 Nos. 15&16). To that end, the bill stipulates“USEE or a contractor to USEE shall offer non-management employees of USEC,Inc. employment to the extent that their jobs still exist, or they haverights to other employment under the terms of a collective bargaining agreement.”Another provision of the bill seeks to “ensure that the establishment andoperations of the Corporation…shall not result in any adverse effect onthe employment rights, wages, or benefits of employees at the gaseous diffusionplants that are operated, directly or under contract, in the performanceof the functions vested in the Corporation.”

USEC Slams Bill as “Illogical, Wasteful”

USEC spokesperson Elizabeth Stuckle dismissed Strickland’s approachas “unnecessary, wasteful, illogical, and miss[ing] the point.” She arguedthat instead of trying to hold on to current Portsmouth jobs, he shouldbe seeking funds for jobs to clean up the site as part of its transitionto shutdown. She charged that the Strickland bill “seeks to turn back theclock to Cold-War full-employment levels to produce a product for whichthere is decreasing demand.” Stuckle argued also that the reason USEC wasprivatized in the first place was that the United States was losing marketshare in the enrichment business. Congress therefore wanted the operationto be run more efficiently, she said, and, in that way, to ensure a domesticsupply of uranium. If the com-pany is forced to continue to operate atone-quarter of its capacity, it eventually will have to fold completely,she warned—and then no USEC employees will have jobs. Stuckle commented,“It’s unfortunate [the Portsmouth] plant has to be closed, but it’s a necessarybusiness decision to assure a successful business and [that] there existsa long-term domestic supply of uranium enrichment.”

Sen. Murkowski Also Objects to Nationalization

Without specifically mentioning Strickland’s bill, Sen. Frank Murkowski(R-Alaska), the chairman of the Energy and Natural Resources Committee,made an argument similar to Stuckle’s in a July 26 statement on the Senatefloor: It has been suggested that the solution is to national-ize USEC—tohave the government buy it back. I have no sympathy for such a proposal.While I am sympathetic to those who will be affected by the closure ofPortsmouth, I do not believe that a return to the past is the remedy thatwill provide for a competitive domestic uranium enrichment capability inthe future…. [C]ontradictory restraints imposed on the Corporation detractfrom its ability to com-pete. In retrospect, perhaps Congress and the Administrationshould not have placed so many bur- dens on USEC as it faced private sectordynamics and demands…. Challenges remain in the implementation of the RussianHEU Agreement and the long-term viability of the domestic uranium enrich-mententerprise. These have proven to be complex, and at times conflicting tasks,but I believe that the National interest more than justifies our continuedefforts to see these programs through to a success-ful conclusion. As partof these efforts we should encourage the Clinton Administration to approvethe market-based pricing amendment to the Russian HEU Agreement. Now isalso the time to secure a future for the workers in Portsmouth who faceplant closure.

Elsewhere in his speech, Murkowski criticized the Energy Departmentfor single-handedly blocking the pricing agree-ment (NW&M Monitor,Vol. 4 No. 13).

Trade Commission Supports Usec On Antidumping Agreement

The U.S. International Trade Commission (ITC) has ruled that terminationof an antidumping suspension agreement that limits imports of low-pricedRussian uranium into the United States would significantly harm the U.S.uranium industry. In a 5-0 vote on July 26, the ITC declared that liftingthe 1992 Russian suspension agreement would likely lead to material injuryto USEC and the rest of the U.S. uranium industry.

A USEC statement praised the decision and linked it to another recentfavorable ruling, a June 28 Commerce Department decision holding that dumpingof uranium, including enriched uranium, would be likely if the suspensionagreement were terminated.
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International Trade Commission Review
        July 26, 2000
        (for personal use only)

The International Trade Commission (ITC), concluding its 'sunset review',ruled in favour that the existing suspension agreement on imports of Russianuranium should continue, as removing the restrictions would probably leadto the continuation or recurrence of material injury to the US uraniumindustry. As a result, the 1992 suspension agreement on imports of Russianuranium will continue. However, the ITC also ruled that sanctions on uraniumimports from Uzbekistan and Ukraine should be lifted. Therefore, the existingsuspension agreement on imports of Uzbek uranium will be terminated andthe existing antidumping order on imports of Ukrainian uranium will berevoked.
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USEC Earnings Released
        July 26, 2000
        (for personal use only)

USEC reported earnings of US$109.1 million, before special charges andan inventory valuation adjustment, for the year ended 30 June 2000, comparedwith US$120.6 million in the previous year. Special charges in fiscal 2000included US$126.5 million (US$79.3 million after tax) related to the decisionto close the Portsmouth uranium enrichment plant. Revenue in fiscal 2000totalled US$1489.4 million, compared with US$1528.6 million in the previousyear. Sales of SWU dropped US$87.2 million, reflecting a 7% fall in theaverage SWU price. Sales of natural uranium totalled US$101.6 million infiscal 2000, compared with US$53.6 million the previous year.
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B. Plutonium Disposition

UK Pledges $100m To Russian Plutonium Disposition Effort
        Nuclear Weapons and MaterialsMonitor
        July 31, 2000
        (for personal use only)

Okinawa Announcement Confounds Expectations

The United Kingdom has vaulted into a leading role in financing Russianplutonium disposition by committing 70 million pounds (about $106 million)to the program at this month’s meeting of the G-8 countries in Okinawa,Japan. According to a July 21 statement by the British government, PrimeMinister Tony Blair’s action, which he conveyed to fellow leaders at thesummit, “makes good an offer of help made by the Prime Minister to formerPresident Boris Yeltsin and was one of the items on the agenda for thePrime Minister’s meeting with President Putin” in Okinawa. The Britishcontribution covers a 10-year period, and was accompanied by a commitmentof 12 million pounds (about $18 million) over three years for the destructionof Russia’s chemical weapons stockpile.

The announcement came as something of a surprise, as most observershad expected little, if any, new money to be committed to the plutoniumdisposition program at the summit. Also surprising was the omission ofthe British decision from both the final G-8 communique and a White Housestatement on the summit. The United States has been pressing other countriesto supplement its $400 million commitment to the program, the total costof which is estimated to be at least $1.7 billion (NW&M Monitor, Vol.4 No. 14).

Finance Plan Envisioned

While making no mention of Blair’s commitment, the final communiquedid report, the co-operation among the G8 countries has yielded significantresults and our next steps should build on this co-operation and relatedinternational projects. Our goal for the next Summit is to develop an internationalfinancing plan for plutonium man-agement and disposition based on a detailedproject plan, and a multilateral framework to co-ordinate this co-operation.We will expand our co-operation to other interested countries in orderto gain the widest possible internat ional support, and will explore thepotential for both public and private funding.

That statement was widely expected. However, two U.S.-Russian agreementsthat Energy Department officials had said they hoped to have completedby the summit did not materialize: the plutonium disposition accord (NW&MMonitor, Vol. 4 No. 17) and the moratorium on reprocessing of civilianspent fuel (NW&M Monitor, Vol. 4 No. 13). On the latter accord, a DOEspokesperson told NW&M Monitor there was “no substantial progress.”The communique also included language on other nuclear arms-control andnonproliferation issues. Recalling the 2000 Nuclear Non-Proliferation TreatyReview Conference, the G-8 countries affirmed they are “determined to implementthe conclusions reached at this conference, including the early entry intoforce of the Comprehensive Nuclear-Test-Ban Treaty (CTBT) and the immediatecommencement, and the conclusion within five years, of negotiations forthe Fissile Material Cut-Off Treaty.”
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Nuclear Waste To Be Flown, Not Shipped
        Canadian Broadcast Company
        July 27, 2000
        (for personal use only)
Atomic Energy of Canada wants to fly some nuclear waste from Russiato Canada rather than send it by ship through the St. Lawrence seaway.

On Friday, it filed the proposal with Transport Canada. The plutoniumfrom old warheads will be burned in a Candu reactor in Ontario.

"There is no greater risk to global safety than the existence of theseweapons," Natural Resources Minister Ralph Goodale told a news conferenceon Friday.

"Until surplus weapons-grade plutonium is reduced to a form that cannoteasily be used in nuclear weapons, there is that real danger of theft orproliferation," he said.

The plan involves flying 528 grams of plutonium to either Canadian ForcesBase Bagotville in Quebec or to CFB Trenton in Ontario.
It will then be transferred by helicopter to Chalk River, Ontario.

Anyone who thinks that's a bad idea has until August 25 to file theirobjections. Some groups have already filed legal action in the case.

After that, Transport Canada will take a few weeks to assess publicreaction before deciding whether to allow the flights.

The U.S. and Russia signed a deal to destroy 34 tonnes of weapons-gradeplutonium. Canada agreed to burn some of the waste in a CANDU reactor tosee whether it can be used as fuel.
In January, the U.S. shipped a load of weapons-grade plutonium. Itwas trucked to Sault Ste. Marie, Ont. and then flown to Chalk River.

Critics were furious, partly because they had not been notified aheadof time. Since then, the U.S. has decided it can dispose of the waste itself.

If the plan goes ahead, the plutonium will travel in the form of a metalalloy - as a pellet. Once it arrives at the, Chalk River reactor, scientistswill start test-burning the fuel.
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C. Russian Nuclear Forces

Putin May Name Civilian Defence Minister
        Martin Nesirky
        August 1, 2000
        (for personal use only)
President Vladimir Putin may use a public row between his defence ministerand chief of General Staff as a pretext to ditch both and name a civilianto run Russia's Defence Ministry, military analysts said on Tuesday.

News broke on Monday that Putin had sacked six generals allied to DefenceMinister Igor Sergeyev, apparently strengthening the hand of his rival,General Anatoly Kvashnin.

The mercurial Kvashnin could still succeed in his barely concealed ambitionto become minister. But the analysts said Putin was considering a civilianfor the job -- a key appointment in a vast country still packed with nuclearweapons but without the cash to fund its armed forces properly.

``I think it is likely Putin will dismiss both of them,'' Vladimir Kosarev,editor of the independent AVN military news agency, told Reuters.

He said many names were being put forward, including Deputy Prime MinisterIlya Klebanov, a Putin ally who looks after the defence industry, and ex-SecurityCouncil chief Andrei Kokoshin, who served as a civilian deputy defenceminister in the 1990s.

The Security Council, a Kremlin advisory body now more powerful underPutin, is expected to meet next week, possibly on August 11, to considermilitary reforms at the heart of the row.

It is also likely to consider the pair's future.

``By that time, I believe Putin will be ready with his decision on themilitary leadership,'' said Kosarev, a reservist major-general. ``It'snot clear whether he will actually appoint and dismiss then but it is entirelypossible.''

Klebanov said the row showed that top military officials had no businessgoing public on matters requiring complex decisions.

``There is no justification for making a public display before the mediaof such issues like reforming the armed forces before serious politicaland professional decisions have been taken,'' he told RTR state televisionon Tuesday evening.

``What has happened exposes the weakness of senior officers in the defenceministry who realised their position was untenable and believed that makingthis issue public would get them some sort of cheap support.''


Andrei Fyodorov, a director at the Council on Foreign and Defence Policythink-tank, said he saw two scenarios for the naming of post-Soviet Russia'sfirst civilian defence minister.

``One is that it happens right after the Security Council meeting,''he said. ``The other is that it happens in September as part of an overallchange in the government.''

Vadim Solovyov, managing editor of the military weekly newspaper NezavisimoyeVoyennoye Obozreniye, said if Putin did decide on a civilian it would bea revolutionary departure.

``There is also the possibility of the traditional way, as it alwayswas, in other words the minister is appointed from the ranks of servinggenerals,'' he told Reuters.

But he noted Putin appeared eager to distance himself from the powerplaybetween Kvashnin and Sergeyev over the future status of the nuclear missileforces Sergeyev once commanded.

``Neither the minister nor the chief of general staff is a member ofhis team,'' said Solovyov, referring to the entourage Putin has assembled-- including allies from his KGB days and time in his hometown of St Petersburg.

``They are not his people. Putin is trying to build his own team,''he said. ``So one of his team should head such a powerful sector as thearmed forces. The question is who it will be.''

Other possible names include Security Council Secretary Sergei Ivanovand two of his deputies, Alexei Moskovsky and Mikhail Fradkov.

Forecasts in Russia are a risky business. Few would have put money ayear ago on Putin replacing Boris Yeltsin as president.

So it would be unwise to write off Kvashnin or Sergeyev, not least withthe Chechen war grinding on. On the other hand, to sack one and not theother could upset the balance of forces in the military and give Putinan extra headache.

Some analysts suggest the Kremlin may have initiated talk of a civilianappointment to clip the wings of the two antagonists.

With few hard facts, much has been made of Kvashnin's appearance withPutin on Sunday at Navy Day in the Baltic enclave of Kaliningrad on Sunday.Sergeyev was absent.

But a Kremlin source said Sergeyev was scheduled to attend another militaryceremony with Putin in Pskov, near the Estonian border, on Wednesday. Kvashninwas not expected to be there.

``I know what you are alluding to but his presence is simply not necessary,''the source said.

Asked how the military might react to a civilian minister, Kosarev saidthe generals had no history of disobeying orders.

``Our generals report to a reservist lieutenant-colonel as commander-in-chiefnow,'' he said, referring to Putin's KGB rank.
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Putin Dismisses Top Brass
        Associated Press
        July 31, 2000
        (for personal use only)
Russian President Vladimir Putin has dismissed six generals from theirpositions in the Defense Ministry, a Kremlin spokeswoman has said.

A defense analyst said the generals controlled logistics and procurementand were several steps removed from top command positions, but may havebeen ousted in connection with a feud between top commanders.

One of those dismissed, General Anatoly Sitnov, had recently criticizedthe government for spending too little on new weaponry and predicted thatRussia's conventional forces would fall behind other armies within 10 years,the RTR television station reported.

Two of the generals had passed pension age while four others, includingSitnov, the ministry's acting head of armanents, were promised new jobsin the Defense Ministry, the Kremlin source said.

She said all six held their positions on an acting basis and had offeredtheir resignations when Putin was inaugurated in May.

Russia's military leadership is currently split over whether the countryshould concentrate its limited resources on nuclear weapons or conventionalforces.

"Their dismissal can be seen as an indication of the tensions and disagreementssimmering (in the Defense Ministry)," said Pavel Felgenhauer, an independentdefense analyst in Moscow.

Also dismissed Monday was the chief of the Defense Ministry's pressservice, Major General Anatoly Shatalov; the head of the rocket and artillerydirectorate, General Nikolai Karaulov; and chief of the military's foreigneconomic relations Lt. General Alexander Zobnin.

The chief of biological, chemical and radiation defense, Colonel GeneralStanislav Petrov and anti-aircraft forces Colonel General Boris Dukhovhad both reached retirement age.
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Lower Status For Russia Rocket Force ``Unavoidable''
        Martin Nesirky
        July 28, 2000
        (for personal use only)

A senior general said on Friday a reduction in the status of Russia'snuclear forces was unavoidable under proposed military reforms but thatdid not necessarily mean their deterrent role was about to be eroded.

Colonel-General Valery Manilov, first deputy chief of General Staff,told foreign correspondents the Kremlin's Security Council would meet inearly August to discuss plans for the next phase of defence reforms firststarted in 1997.

``This is not a simple question but it did not crop up just yesterdayand there is no doubt it'll be solved,'' Manilov said.

Russian media have made much of an unusually public rift between DefenceMinister Igor Sergeyev and Chief of General Staff Anatoly Kvashnin overthe proposals, which cover all the armed forces but include important changesfor the Strategic Rocket Forces.

Sergeyev, who ran missile units during the then-Soviet Union's nuclearsuperpower days, favours holding on to the Strategic Rocket Forces as afourth branch of the armed forces alongside the army, navy and air force.

Last month, Kvashnin proposed cutting the size of the rocket forcesand placing them under air force command. He wants more of the scarce militaryfunding to go on conventional forces.

Manilov denied there was a rift between Kvashnin and Sergeyev, notingthe proposals had been drawn up by a special Defence Ministry commissionand not just the General Staff. He said Kvashnin's comments had been froma jointly prepared text rather his own personal proposals.


But Manilov said: ``It is unavoidable, logical and objectively the casethat...the Strategic Rocket Forces must become part of one of the new branchesof the armed forces under a three-prong structure.''

He said this did not necessarily mean the missile forces would be reducedin size but that there would be a reallocation of funds towards conventionalforces and air- and sea-based nuclear missiles and away from ground-basedmissiles.

``This is not about the liquidation of the rocket forces,'' Manilovsaid. ``It is a logical development under which all forces, means and resourceshave to be consolidated in the three branches.''

There were similar tensions in the military when Russia merged its airdefence forces with the air force under the first wave of reforms.

But these strains are more serious as they have brought into the openlong-rumoured differences between Sergeyev, who is over retirement age,and the younger, ambitious Kvashnin.

Manilov noted the three-branch structure was spelled out in Russia'ssecurity concept and military doctrine, which President Vladimir Putinhas approved.

The Security Council, which advises Putin and has become even more influentialsince he took over from Boris Yeltsin on New Year's Eve, is expected toexamine the military proposals and choose the most appropriate optionsin various areas, including nuclear missiles.

The military budget was about $4.5 billion, a fraction of the U.S. defencebudget, he said, adding the government had yet to fulfil a pledge to give3.5 percent of gross domestic product to the military because of the country'seconomic problems.

As in earlier comments to Interfax news agency on Friday, Manilov tooka swipe at NATO's own strategic doctrine, yet said there was scope forcooperation with the alliance.

On U.S. plans for a possible national missile defence system againstrogue rocket attacks, Manilov repeated Russia's view it could spark a newarms race. He also said unspecified ``terrible'' types of weapons couldbe developed in retaliation.
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Putin Pledges Implementation Of START-2
        August 3, 2000
        (for personal use only)

The Russian President, Vladimir Putin, has confirmed that his governmentintends to fully implement the START-2 treaty.

Mr. Putin's comments were part of a message sent to an internationalconference of the Pugwash movement of scientists.

START-2 , or Strategic Arms Reduction Treaty, was signed by Russia andthe United States in 1993, but the lower house of the Russian parliament,the Duma, only ratified it last April.

The treaty provides for a mutual reduction in the number of nuclearwarheads to no more than three-and-a-half thousand on each side by theyear 2007.
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