These should be banner days for USEC Inc., the Bethesda-based company that is the only American supplier of enriched uranium for commercial nuclear power plants.
The price of USEC's publicly traded stock has nearly doubled since December to close at $8.19 on Friday, recovering about half what it lost after the company was spun off from the government in 1998. Prices for the enriched uranium USEC sells have climbed nearly 20 percent in a year, according to UX Consulting Co. data. With support from the Bush administration, the outlook for the nuclear power industry has brightened.
Most important, says USEC, its long-term purchases of nuclear fuel reprocessed from Russian missiles -- a key part of USEC's revenue stream -- are on schedule, eliminating the equivalent of 4,500 Russian nuclear warheads so far while contributing $1.7 billion in U.S. currency to Russia.
"I wonder when we're going to start celebrating," USEC President William H. "Nick" Timbers said plaintively at a conference Thursday at the Carnegie Endowment for International Peace in the District.
Not yet, it appears.
USEC's handling of its dual missions -- commercial supplier of U.S. reactor fuel and strategic conduit for decommissioned Russian warheads -- is as controversial as ever.
And now there is a new player, the Bush administration.
USEC needs White House approval of a new version of the Russian deal that is widely considered to be vital to the company's financial survival.
If approved by U.S. and Russian governments, it would lower the price USEC pays Russia for the converted warhead material, at least initially.
Profit on the Russian transactions is needed to offset losses on sales of enriched fuels from USEC's plant in Paducah, Ky., according to outside analysts. USEC also proposes to buy some commercial Russian nuclear fuel.
But some of USEC's adversaries and critics hope to block the agreement with Russia.
USEC's financial gain would come at Russia's expense, threatening to undermine the Megatons to Megawatts warhead reduction program, critics say.
Those critics warn that if Russian officials approved the agreement and later became dissatisfied with prices, they might cut deliveries of the reprocessed fuel and threaten the U.S.-Russian agreement to reduce nuclear arms.
"It's highly dangerous from a national energy point of view and potentially disastrous for our nonproliferation agreement," Thomas Neff of MIT Center for International Studies said at Thursday's conference.
Timbers replied that the new pricing plan has been endorsed by USEC's Russian counterpart, and is also supported by senior Russian officials.
"We expect the pricing agreement to become final before 2002," Timbers said recently. "Getting the terms right is very important to the company and its future success."
Neff challenged Timbers on that point at Thursday's conference, citing his own recent conversations with senior Russian officials. "The price is not high enough," he said. "It is not defensible in their political system." USEC is trying to get the Bush administration to help force the Russians to accept the new pricing plan, Neff said.
"We disagree very, very strongly," Timbers replied.
A Bush administration spokesman said no decision had been made on the plan.
Ominously for USEC, one of its sharpest critics, former Harvard professor Richard Falkenrath, is on the Bush administration's National Security Council. He turned down a request for an interview.
Falkenrath has called the privatization of USEC "a dreadful error," arguing that USEC's commercial interests in profiting from the Russian agreement, and U.S. interest in reducing the Russian weapons stockpile as much as possible, were at odds.
Falkenrath has argued that the government should reacquire USEC and resume direction of the Megatons to Megawatts program.
The Bush administration might find that step more trouble than it's worth, said Bob Hoehn, head of the Russian American Nuclear Security Advisory Council. The privatization has "worked pretty well," he said. "It's brought a lot of money to the Russians.
"By and large, people in the National Security Council rank this among the best of the cooperative nuclear programs," Hoehn said. "I'd be shocked if they were preparing to cause the deal to fail. Whether USEC is the right entity to be implementing this deal is a question. At this point, I don't see any clear alternative." But the U.S. utility industry does.
Some of the largest U.S. energy companies, headed by Chicago-based Exelon Corp., would like to replace USEC as the federal government's commercial agent for the Russian program, or share that assignment with USEC. "If that were available, we'd be interested," an Exelon official said.
USEC hasn't shaken off critics in Congress and in labor unions who opposed the company's decision to close one of its two uranium enrichment processing plants last year, a step that USEC says will cut its operating costs substantially. Closing the plant in Portsmouth, Ohio, and abandoning a research project on a new enrichment process, reneged on promises that were part of the government's agreement with USEC when the company was spun off, those opponents charge.
Even some USEC shareholders are complaining, despite the stock's improvement.
Analysts say the higher share price is partly because of the preliminary success of trade complaints that USEC has lodged with U.S. agencies. The company contends that European competitors had been selling nuclear fuel in this country at unfairly low prices, violating trade laws. If USEC wins the final rounds in those cases late this year or early in 2002, the European producers would be socked with penalty duties that could sharply raise the prices they would have to charge on U.S. sales, or force them out of the American market altogether.
That would leave USEC's remaining processing plant and the Russians as the sole suppliers for American nuclear plants, a prospect that upsets influential domestic energy companies and some leading nuclear nonproliferation experts.
The other, more important, reason for USEC's improved stock price is investors' hopes that the company may be taken over, said David M. Schanzer, an analyst with Janney Montgomery Scott in Philadelphia. In spinning off USEC, the government restricted the ability of one investor gaining too much control of USEC's stock. But that restriction comes off in a month.
Anticipating that change, USEC's board recently approved anti-takeover provisions that nettled several institutional investors who took part in a recent company conference call.
One investor asked whether the change was a tactic "to entrench management and let shareholders dangle."
No, Timbers said. The anti-takeover measures are customary tactics, designed to preserve USEC's bargaining power and block coercive moves by a would-be buyer, he said.
The anti-takeover provisions haven't prompted investors to sell USEC shares, however. "The serious players won't be deterred by this," Schanzer said.
At the Carnegie conference, Timbers complained that USEC's role in reducing Russia's weapons stockpile had been ignored, while academics and the media focus on USEC's financial challenges.
"Why do we keep wringing our hands and trying to fix things that ain't broke? Let our shareholders worry about the [USEC's profit] margin," Timbers said. return to menu
2. Megatons to Megawatts Success: 4,500 Nuclear Warheads Eliminated--USEC CEO Lists Accomplishments at National Security Forum
USEC News Release
May 3, 2001
Bethesda, MD-The Megatons to Megawatts program has been a nonproliferation success, facilitating the elimination of the equivalent of more than 4,500 Russian nuclear warheads, USEC Inc. President and CEO William H. Timbers told a group of national security experts this morning.
Speaking at a meeting sponsored by the Carnegie Endowment for International Peace and the Monterey Institute of International Studies in Washington, D.C., Timbers enumerated the seven-year results of the $12 billion, 20-year U.S.-Russian program to convert 500 metric tons of Russian highly enriched uranium (HEU) into nuclear power plant fuel. USEC serves as the U.S. government's executive agent implementing the agreement.
"One hundred thirteen metric tons of weapons-derived HEU have been eliminated by conversion to low-enriched uranium fuel, purchased by USEC for use by its electric utility customers," Timbers said.
"I want to point out that the successful results achieved in the Megatons to Megawatts program have been due over the years to the efforts of many people and organizations: dedicated people in three Administrations, in Congress and in the Russian government; thought leaders in the national security community; leaders in the nuclear industry and the electric utilities that actually transform these potential megaton yields of bomb material into megawatts of electricity," he said.
Timbers added, "We are deeply proud of being a part of this nonproliferation program and equally proud of the results that are being achieved." return to menu
B. Nuclear Waste
1. TV Alleges Nuclear Waste Import Without Parliamentary Approval?
BBC Monitoring Russia
May 5, 2001
(for personal use only)
[Presenter] Russia's Atomic Energy Ministry may well be on course for a major row after containers with a mysterious highly radioactive cargo have been discovered at a St Petersburg railway station. There is every reason to believe that this is a radioactive waste shipment from abroad, experts have said. Our correspondents in St Petersburg investigate.
[Correspondent] Nobody knows when a decision on whether or not to allow the import of the world's nuclear waste to Russia will be taken. The date of the decisive debate in the State Duma, when the respective law will have its third reading, is a closely guarded secret: Those behind the legislation will make it known the day before the vote, to leave its opponents no chance of any action to scupper the bill.
By all appearances, however, while the deputies are deep in thought about it the ministry has swung into action. There is evidence to confirm it.
You can see how quickly the read-out of this obsolescent dosimeter changes. [Dosimeter held in hand on screen.] It goes all the way up to 700 microroentgens per hour - it can measure no dose higher than that - within one metre of these railway wagons. In fact, the intensity of radiation here is 100 times that.
[Natalya Avetisova, head of the radiation hygiene department in the mobile centre of the State Sanitary and Epidemiological Supervision Authority] Within one metre of the containers, it is six point seven milliroentgens per hour.
[Question, off camera] That is, seven thousand microroentgens per hour?
[Avetisova] Well, yes, seven - around seven thousand microroentgens per hour.
[Correspondent] Four containers, marked Radioactive III, were shunted into a siding half an hour before we came. Earlier, they had stood within metres of the railway crossing at Avtovo station, in one of St Petersburg's most densely populated areas.
[Railway worker] The radioactive wagons were here. These are the tracks. They were here.
[Correspondent] Avtovo station is a point of transit in the shipment of radioactive waste. Railwaymen say that, since January this year alone, 10 specialized trains, each with 20 to 40 wagons marked Radiation, have passed this way. All containers are unloaded at St Petersburg seaport and are then taken to Avtovo to await further shipment to their destination.
The station manager told us the Atomic Energy Ministry was in charge of these shipments. As someone who has given a written undertaking not to disclose any details of radioactive waste movement, he could say nothing.
[Question, off camera] How many trainloads such as this, wagons such as these have there been here?
[Mikhail Karamazov, Avtovo railway station manager] I cannot answer your question.
[Question, off camera] Nor can you say what their destination is, can you?
[Karamazov] No, I cannot do that, either.
[Question, off camera] Why not?
[Karamazov] Shipment numbers are a commercial secret. Their destination is a state secret.
[Correspondent] Any information about what is inside these containers is also secret, we were told by the transshipper's representative. Exactly what is inside is not even stated in the shipment documents. The only thing a member of the Izotop company's staff said was this:
[Yuriy Sokolov, representative of the Izotop enterprise] This is uranium.
[Question, off camera] Uranium?
[Correspondent] The Atomic Energy Ministry officials say a uranium concentrate that occurs naturally, that is, ordinary uranium ore is inside the containers, while its destination is the town of Elektrostal, near Moscow. More precisely, it is a factory which produces nuclear fuel.
However, the official version is disputed by independent experts. Arkadiy Aleksandrov has worked at the Nuclear Physics Institute for more than 25 years. His calculations show that a natural concentrate in protective containers would not have resulted in such a high level of radiation.
[Arkadiy Aleksandrov, specialist in dosimetry and ionizing radiation with the Nuclear Physics Applied Institute] Either the container did not meet the requirements for the transport of radioactive materials and there was virtually no protection except for the thickness of the container's walls, a centimetre of iron, or what was transported was something altogether different, in a normal airtight container with normal protection.
[Question, off camera] For example, what?
[Aleksandrov] In the case of uranium, it is most likely that it was uranium from a reactor to be reprocessed, rather than uranium that occurs naturally.
[Question, off camera] That is, spent nuclear fuel?
[Aleksandrov] Quite possibly.
[Correspondent] No checks were carried out. No containers were opened. No specialist equipment was used.
The Federal Monitoring Authority for Nuclear and Radiation Safety has confined itself to this reply: The shipment mentioned above went through all formal channels. This is a routine operation. [ The letter, however, mentions Germany's Internexco as the company which has shipped the nuclear materials to the St Petersburg port. It is one of six companies in Germany which work in the nuclear industry. [Excerpt from document on screen: On 7 April 2001, at St Petersburg sea port, four 20-foot containers with nuclear materials, sent by the Internexco company in Germany to the Mashinostroitelnyy Zavod open joint-stock company in the town of Elektrostal, in Moscow Region, were unloaded from a ship and loaded onto two railway platforms. The shipment was made under a contract (number given) between Mashinostroitelnyy Zavod and Internexco.]
Back on 12 January, the Greenpeace web site published details of a secret deal between Internexco, the Atomic Energy Ministry and Switzerland. It is, in effect, a detailed plan for the reprocessing of nuclear waste in Russia as put forward by [ex-Minister] Yevgeniy Adamov. [Greenpeace page on screen]
Consider Point 11 in the Protocol of Intent. The Atomic Energy Ministry would like to offer worldwide services and accept 10,000 tonnes of spent nuclear fuel from Switzerland, Germany, Spain, South Korea and possibly Japan. The value of the contract is 10bn US dollars. [Greenpeace page on screen]
The environmentalists' report has caused a furore in St Petersburg. Many today do not think Internexco's nuclear shipment and the reported secret deal are simply a coincidence. The city's MPs have drawn up a parliamentary question, to be answered by the Atomic Energy Ministry. They have grounds to fear that the Duma's consent for the import of radioactive waste to Russia is treated as a mere formality to legitimize the deals, worth billions of dollars, already done by the ministry. return to menu
C. Cooperative Threat Reduction
1. Russia Scientists Await Nuke Decision
May 5, 2001
(for personal use only)
MOSCOW (AP) - A thief or terrorist trying to get at the seven nuclear reactors at Moscow's Kurchatov Institute will have to break through a sophisticated, $3 million set of safeguards financed by American taxpayers.
The research center's security system is just one result of a 10-year-old U.S.-Russian program to reduce the threat of weapons of mass destruction. The joint effort has also brought much more dramatic achievements, including eliminating nuclear weapons stockpiles in the former Soviet republics of Kazakstan, Belarus and Ukraine, and deep cuts in Russia's own vast nuclear arsenal.
But some U.S. Congress members are questioning the cost and value of the Cooperative Threat Reduction Program. President Bush has ordered a review - and that's making Russian nuclear scientists nervous.
On a broader front, trust has been undermined over such issues as NATO expansion, Moscow's ties with Iraq and North Korea, and the Bush administration's missile defense plans. Also, some U.S. officials involved in the arms reduction program are being expelled from Russia as part of a wider, tit-for-tat spy scandal between Washington and Moscow.
"We've achieved very important results, which are visible not just on paper but in the physical (security) systems," said Nikolai Ponomaryov-Stepnoi, the vice president of the Kurchatov Institute, named for the father of the Soviet atomic bomb.
Over the past five years, the institute has won contracts to develop security systems for the Russian Navy, one of the institutions that Russian and U.S. officials had considered most vulnerable to theft and potential leaks of weapons-grade nuclear materials.
"The risk of proliferation of nuclear materials is lessening significantly," Ponomaryov-Stepnoi said.
The joint threat reduction program was launched in December 1991 in the final days of the Soviet Union with a law authored by U.S. Sens. Sam Nunn and Richard Lugar that sought to seize a rare opportunity to cut strategic weapons arsenals.
The program is aimed broadly at cutting Russia's nuclear arsenal, preventing the leakage of nuclear and biological weapons technology to terrorists or other countries, and destroying stockpiles of chemical weapons.
Those aims are being promoted through more than two dozen separate projects that have cost the United States some $4.7 billion so far.
"It's a very effective defense by other means: Spending relatively little money, you seriously decrease the military potential of your probable enemy or rival," said Ivan Safranchuk, the nuclear arms control project director at the independent PIR institute in Moscow.
According to the Pentagon program's director, Jim Reid, the United States has helped to junk 300 of Russia's intercontinental ballistic missiles, 2,000 nuclear warheads, 52 ICBM silos, 308 submarine launchers, 18 submarines and 42 bombers.
The program helped accelerate Russian disarmament and put Russia on track to meet the Dec. 5, 2001 deadline for arms cuts under the 1991 Start I treaty, which should bring each side down to 1,600 strategic missiles and bombers and 6,000 warheads.
Considering Russia's economic difficulties, "it would have taxed them significantly to try to use those funds to meet the treaty themselves," Reid said.
Other goals have been partially met. Sensored fences, the first step in comprehensive security systems, have been built around more than half of Russia's nuclear weapons storage places, Reid said. The rest haven't been secured, and the Soviet-era protection systems have broken down, leaving potentially serious security breaches.
Two of the highest-profile projects - to build a fissile materials storage plant in the town of Mayak and a pilot plant for destroying nerve agents stored at Shchuchiye -have been stalled by U.S.-Russian differences over how they should be run.
The spy scandal hardly helps. An analyst who has seen the list of 50 U.S. diplomats to be sent home by July said about a dozen are involved with the Pentagon's threat-reduction program. He spoke on condition of anonymity.
Scientists at the Kurchatov Institute said they were already feeling the effects, with American partners introducing new financing procedures that could set back some projects.
"I don't know who's pulling the strings, but we already feel that the work is facing difficulties," Ponomaryov-Stepnoi said morosely. "It seems they feel they have to introduce a tougher line."
The harshest U.S. critics question whether the program should be continued at all, especially in light of Russia's increasing cooperation with such potential nuclear proliferators as Iran.
In general, U.S. aid programs to Russia face increasing American criticism for inefficiency and vulnerability to corruption, and Russians complain that much of the money ended up in U.S. contractors' pockets.
In the arms reduction field, the Russian security service may feel the U.S. monitors are getting too intrusive.
The program gives the monitors "unique access," said Alexander Pikayev, an arms control expert at the Moscow office of the Carnegie Endowment. "If political relations deteriorate, Russia will be less interested in transparency."
Gennady Khromov, a Russian negotiator, said the Americans demanded only plutonium from weapons be stored at Mayak. "But to prove that, we're being asked to strip naked and show everything we have," he said.
Reid rejected the criticism, saying there were demonstrated ways of providing those guarantees without revealing Russian secrets.
The National Security Council is supposed to wind up its review of the program in mid-May, according to Reid. return to menu
2. Senator Richard G. Lugar Speech
Eisenhower Leadership Award Presentation
April 26, 2001
Thank you Judy.
I am honored to share with Sam Nunn, my good friend and talented partner, the 2001 Eisenhower Leadership Prize given by The Eisenhower World Affairs Institute and Gettysburg College. I thank you for your support of the Nunn-Lugar Cooperative Threat Reduction program and the generous boost you have given our efforts through this prize.
I want to share with you this evening a few thoughts on the "condition" of our relations with the country that has been at the heart of our cooperative threat reduction efforts - namely, the Russian Federation. Recent exchanges with Russian colleagues on the state of the Russian American relationship quickly take the form of competing hyperboles as to how low relations have sunk.
But low points in Russian-American relations are nothing new. Over the last ten years, the pendulum has swung from euphoric highs to artificially-adjusted lows, with the tenor of the relationship modulated by both sides in accordance with domestic and external needs. The current lows, however, coincide with the assumption of power by new leadership in both capitals, each seeking a new and more appropriate characterization of the ideal relationship with the other.
As the United States seeks an appropriate Russia policy, we must resist the temptation to simply continue the status quo or to shift to a more limited, constrained conception of Russia as a bundle of security problems. Instead, I would recommend an agenda for the renewal of the Russian-American relationship. Our chief policy objective should be the consolidation of a cooperative, productive relationship based on common security interests. The threats associated with the proliferation of weapons of mass destruction should be our primary focus. We must recognize and state explicitly that there is still a large set of common interests that we and the Russians have in the world. These are interests that neither of us can defend or advance as effectively alone as we can together.
Herein lies the continuing utility of the Nunn-Lugar Cooperative Threat Reduction program. Not only has the Nunn-Lugar program made important contributions to our security but it has also provided a diplomatic basis for relationships with Russia. Through the ups and downs of the bilateral relationship, there has been one constant: the Nunn-Lugar program. Even during moments of greatest tension, when talks were broken off and trips were cancelled, Nunn-Lugar continued its important work. In many ways, the program has represented the cornerstone and, at times, almost the totality, of the U.S.-Russian relationship. It has given expression to an area of cooperation where only competition might have existed, were it not for our common goal of dismantling the weapons of the Cold War.
The new Bush Administration is in the midst of a comprehensive review of U.S. policy towards Russia and our cooperative nonproliferation strategy. I applaud this initiative. In my view, there are no programs as critical to U.S. security as those aimed at containing and dismantling the nuclear, chemical, and biological warfare infrastructure of the former Soviet Union. The Administration must ensure that these efforts are managed effectively and funded properly. We must continue to place a priority on redressing the instability of the former Soviet arsenal by continuing and expanding joint approaches to eliminating weapons of mass destruction in Russia and in other countries all over the world.
But the Nunn-Lugar program is a tool, a means to an end. It is not foreign aid; it is not charity; and it is not a "carrot" to be withdrawn if Russian behavior is not "correct." Nunn-Lugar has prospered when U.S. policy towards Russia has been guided by a firm hand and a logical policy prescription. Nunn-Lugar cannot take the place of effective and coherent policy; in fact, it cannot operate without effective policy guidance.
Despite the success of the Nunn-Lugar programs, the threat to U.S. national security from proliferation remains. The Bush administration should use its nonproliferation review to develop a comprehensive plan that sets goals for securing the Russian arsenal and prescribes a step-by-step time-frame for achieving those goals.
Ultimately, the choice is stark. We can either spend resources today to eliminate the threat at its source, or we will be forced to spend much more tomorrow to defend ourselves from weapons and technology after they have proliferated.
We have a window of opportunity to reduce the threat of former Soviet weapons of mass destruction. Historically, no great power has ever possessed such an opportunity to work with a former adversary in removing the threat that confronts both of them. Statesmanship and patience will be required over many years.
I have been strengthened and sustained during the past ten years by my wife, Charlene, and sons Mark, John, and David who are present to share this honor with me. Ken Myers helped me, and Dick Combs helped Sam, draft and implement the legislation. We have been supported for years by Senators Pete Domenici, John Warner, Carl Levin, Joe Biden, Pat Roberts, Ted Stevens and Chuck Hagel. We have been guided through Russia, Ukraine, Belarus, and Kazakstan by Colonel Jim Reid, Susan Cook, Roland LaJoie, Laura Holgate, Ash Carter, General Tom Kenning, and Bill Perry.
I look forward to continuing our important work to ensure that a decade from now, we have met this most urgent threat and secured a more peaceful future. As former Senate Majority Leader Howard Baker recently testified before a hearing I chaired of the Senate Foreign Relations Committee: "No cause is more important to the security of our country. The only thing we can't do is nothing -- and if we don't do it no one will."
I am grateful for the strong support provided for these endeavors by the Eisenhower Institute. Along with Sam Nunn, I thank you for the honor you have accorded us with the awarding of the 2001 Eisenhower Leadership Prize. When the United States toyed with the idea of turning inward after World War II, Dwight David Eisenhower helped to lead the country and his party into a new era of internationalism.
That same sense of enthusiasm and support, this time evidenced through the Institute that bears his name, gives Sam and me additional confidence that we are on the right side of history, along with all of you who share the practical and constructive idealism embodied in the Nunn-Lugar program.
1. Bush Called `Inconsistent' On Missile Defense, Nonproliferation
May 7, 2001
(for personal use only)
President Bush's proposed missile defense system is "inconsistent" with his plans to cut $100 million from DOE nuclear nonproliferation programs in FY-02, Rep. Chet Edwards charged last week. Edwards, D-Texas, was reacting to Bush's plan - announced Tuesday - to build a national defense system estimated to cost as much as $200 billion dollars.
At a hearing of the House Appropriations subcommittee on energy and water Wednesday, Edwards asked Energy Secretary Spencer Abraham to explain the apparent contradiction between Bush's remarks and the proposed cuts in nonproliferation.
"This is like a family putting a $20,000 burglar alarm on the front door" and leaving the living room window open, he said. "It seems insane to me to try to save $100 million that might prevent some rogue nation from getting a hold of nuclear materials and spend $100 billion on a missile defense system that might work ten years from now." The administration proposed $773.7 million for nonproliferation programs next year.
Edwards said he had been told the cuts were imposed by the Office of Management and Budget over DOE's objections and urged Abraham to reassure him that that was the case. "I would feel more confident if you said you didn't request this, that OMB did," he said.
Abraham declined to lay responsibility for the cuts at OMB's feet, but said the nonproliferation budget would be reconsidered once a National Security Council review of the government's defense programs was completed.
He also said the cuts may be justified because "some of the programs have been criticized as ineffectual and hard to quantify." return to menu
2. Bush Threatens To Slash Spending On Nuclear Safety Aid To Russia
US Budget Cut Brings Fears Of Trafficking And A Scientific Brain Drain
The Guardian (UK)
7 May 2001
(for personal use only)
The Bush administration is planning to slash spending on nuclear safety projects in Russia, raising fears that slacker controls on the porous Russian nuclear industry could bring an upsurge in the trafficking of radioactive materials.
Throughout the 1990s the US spent billions of dollars on various programmes in Russia aimed at securing nuclear stockpiles against theft, decommissioning weapons-grade uranium and plutonium or converting it for civilian use, and retraining and paying Russian nuclear scientists in order to discourage them from taking their expertise elsewhere.
The policy has been widely seen as one of the few relatively successful aid programmes to Russia and the Clinton administration had signaled a 50% increase in funds this year for the projects run mainly by the Pentagon and the US Department of Energy.
But White House budget plans from the Bush team have scrapped the proposed increases and instead cut the $800m (£571m) allocated to the energy department by around $100m or more than 12%.
"It seems that some projects will need to be scrapped," said Igor Kudrik, a Russian expert on his country's nuclear industry at the Bellona environmental watchdog in Norway.
The Republicans came to office in Washington fiercely critical of what they viewed as the Clinton government's failed economic and aid policies towards Russia. The proposed nuclear safety cuts are the first concrete evidence of reduced spending on Russia, though US and Russian experts predict the cuts will encounter strong resistance in Congress.
"There are prominent people in Washington, including Republicans, who want to restore and expand the spending, arguing that the nuclear problem is a threat to the US and not a favour to Russia," said Sergei Rogov, Moscow's top expert on the US.
Indeed, a recent US government sponsored report recommended that up to $30bn be spent on containing the Russian proliferation risk over the next decade.
Instead, under the Bush plans, experts say, key programmes could be eliminated, hastening a Russian brain drain and making it more tempting for Russian nuclear physicists to ply their trade in countries Washington views as rogue states.
A billion-dollar scheme to decommission 68 tonnes of weapons-grade plutonium, agreed by Presidents Clinton and Vladimir Putin in Moscow last year, is likely to be halted by the Bush administration, said Mr. Kudrik.
A separate project promoting the development of hi-tech enterprises and retraining Russian nuclear scientists to work in them could also go. More than 2,000 Russian nuclear scientists are employed in such schemes. Employment is on offer from such US bugbears as Iraq, Iran, and North Korea.
In the eight years since the US energy department inaugurated its nuclear containment projects in the former Soviet Union, new security systems have been installed at 113 sites.
But this is a gargantuan work in progress, securing a mere fraction of weapons-grade material regarded as risky across Russia.
Apart from planning to cut the nuclear safety funding, the US is also threatening to suspend most other aid to Russia if it concludes that Russian sales of nuclear technology for power plants in Iran are helping the country build a nuclear bomb. Last week the US state department put Iran at the top of its league table of countries sponsoring terrorism.
"American officials are convinced both that Iran plans to use that reactor to develop nuclear weapons, and that Iran's possession of nuclear weapons threatens US national security and that of its vital allies," Celeste Wallander of the US Council on Foreign Relations wrote in an analysis last month of the Bush administration's policies on Russia.
But in the bout of tension between the Bush and Putin governments, says Mr. Rogov, the Russians are pushing ahead with the Iranian contracts because they have concluded that there will be no reward from the West for good behaviour.
"We're damned if we do, and damned if we don't," he added. return to menu
3. Russian Activists Speak Out
May 8, 2001
(for personal use only)
Political changes in the United States and Russia could push the former enemies into another Cold War, some Russian activists said Monday.
"Now, you have a military eagle for president, and we have a military eagle for president," Natalie Mironova, of the Movement for Nuclear Safety, told about 20 people gathered for a public meeting in Aiken.
"Two military eagles sing one song," she continued in reference to U.S. President Bush and Russian President Vladimir Putin.
Four activists visited Aiken and Augusta to raise awareness of problems facing Russia's nuclear program.
Local chapters of the Sierra Club, Amnesty International, Georgians for Clean Energy and the Blue Ridge Environmental Defense League played host to the group.
At Monday's meeting, the activists warned that talk of reduced U.S. aid for Russian nonproliferation programs, and the Bush administration's push for a system to defend the United States from nuclear missiles, had swayed some Russian political opinion away from disarmament efforts.
A nonproliferation plan to use mixed-oxide, or MOX, fuel in nuclear reactors would place only more stress on Russia's already troubled nuclear industry, the activists said.
The MOX plan, intended to reduce stockpiles of plutonium and agreed on by both countries, would use plutonium in fuel for nuclear-power plants. The U.S. plan calls for a $1 billion plant to be built at Savannah River Site to produce MOX fuel.
MOX supporters have stated that it is the best way to prevent plutonium from being used in weapons, but some activists have criticized the proposal as expensive and risky.
"If it happens, both countries will lose control of plutonium," said Vitaly Khizhnyak, deputy director of Russia's Krasnoyarsk Citizen Center of Nuclear Non-Proliferation, during Monday's meeting in Aiken. "It will be a danger for nonproliferation of nuclear weapons."
The activists also spoke out against a Russian plan to import, store and recycle spent nuclear-reactor fuel from nations such as Japan and Switzerland. The storage site would be located in a region already devastated by radioactive releases from previous nuclear work, they said.
"The Russian political elite needs money for survival," Ms. Mironova said. "They are ready to sell their nation for their own survival." return to menu
E. Budget: DOE U.S.-Russian Nuclear Security Programs
1. Oral Statement of Kenneth E. Baker,
Acting Deputy Administrator for
Defense Nuclear Nonproliferation
Before the Senate Energy and Water Development Subcommittee
April 26, 2001
Good afternoon, Mr. Chairman. It is always a pleasure to testify to this outstanding committee. I want to thank you and members of this committee for your support for our threat reduction efforts over the years and also ask for your help once again in making this world a safer place.
As General Gordon mentioned, the end of the Cold War in the early nineties did not translate into a more secure world for us. In fact, more direct threats to American national security exist today deriving from the Soviet Union's past production of enormous quantities of nuclear materials and weapons and the rise of threats from rogue nations or terrorist organizations with interests contrary to ours.
Within NNSA, the Office of Defense Nuclear Nonproliferation is responsible for the nonproliferation mission. We support the U.S. national, bilateral, and multilateral efforts to reduce the threat posed by the proliferation of weapons of mass destruction (WMD) through programs that Detect the proliferation of weapons of mass destruction; Prevent the spread of WMD material, technology and expertise, and Reverse the proliferation of nuclear weapons capabilities. The threefold threat of unsecured material, widely available technology and underemployed Russian expertise following the breakup of the Soviet Union makes these issues of paramount importance and urgency.
As the Baker-Cutler report concluded, our cooperative programs with Russia represent some of the most crucial dollars spent to protect U.S. national security. The possibility that weapons of mass destruction or the material to create them could fall into the hands of terrorists or nations of concern poses the greatest unmet threat to American citizens at home and abroad. The collapse of the Soviet Union caused the security system of "gates, guns and guards" that protected the material used to create these weapons of mass destruction to fall into disrepair. It is more effective to try to control and secure the material at the source than to locate it once it has left Russian territory, possibly to land on American shores; that's like looking for a needle in a haystack! NN's joint programs work to help the Russians secure their material and weapons and to develop alternate peaceful employment for the thousands of former weapons scientists and engineers who might otherwise seek employment in a nation of concern in order to put food on the table for their families.
FY 2002 BUDGET REQUEST
The FY 2002 budget request for the Office of Defense Nuclear Nonproliferation is $773.7 million. This is a decrease of $101 million as compared to the 2001 budget, but this does not represent a lessening of the NNSA's nonproliferation team's commitment to meet the ever-growing challenges we face in the international nonproliferation or threat reduction arena. We remain focused on our mission, which is essential for the security of this nation, but the pace and scope of our efforts will be reduced at these funding levels. We will continue to implement these programs to the best of our ability. I want to take a few minutes to run through our main programs and the implications of the budget for FY 2002.
MATERIALS PROTECTION, CONTROL AND ACCOUNTING
The MPC&A program secures nuclear material at its source, consolidates material into fewer buildings and is now working with the Russians to sustain these security improvements for years to come. By the end of the decade, we estimate that our security upgrades will be complete on all of the warhead storage locations for which the Russian Navy has requested our assistance as well as the 603 metric tons of weapons-useable nuclear material located outside of weapons at 53 Russian sites. This is enough material for approximately 41,000 nuclear devices. In FY2002, we hope to take advantage of our recent agreement on access and expand our activities at Mayak and Tomsk, which combined have more than 300 metric tons of weapons-useable material. Additionally, we plan to increase our highly successful cooperation with the Russian Navy as well as our innovative Material Consolidation and Conversion program.
ARMS CONTROL AND NONPROLIFERATION
In the Arms Control and Nonproliferation arena, we work to prevent and reverse the proliferation of weapons of mass destruction materials, technology and expertise. We support the President's nonproliferation and international security policies, goals and objectives, as well as those activities mandated by statute.
I would like to turn first to the IPP program - the Initiatives for Proliferation Prevention -- a major success story with immediate nonproliferation impact. IPP commercialization has now taken off. Eight IPP projects are now commercially successful, providing 300 long-term private-sector jobs in Russia and more than $17 million in annual sales revenues. There are another 20 IPP projects poised for commercialization over the next year. IPP projects are successful due to U.S. private sector involvement from the start and the requirement for businesses to match NNSA funding. On average, U.S. industry contributes almost $3.00 for each $2.00 provided by the U.S. taxpayer. This year we have also started to see infusions of substantial venture capital. Two USIC member companies have attracted over $40 million in private sector investment, as a result of technologies developed through IPP projects. We know that the long-term solution to the proliferation problem of unemployed Soviet weapon scientists lies with the private sector and commercial self-sustainability and is the basis for our exit strategy. We have generated substantial momentum in the U.S. industry community, with roughly 30 million private sector dollars in new IPP projects ready for implementation.
The Nuclear Cities Initiative (NCI) is a unique "brain drain" program. It assists Russia in reducing the overall size of its nuclear weapons production complex. Mr. Chairman, as you know, some have criticized this program for not moving fast enough. However, it is important to recall that this program is still young, and requires an initial start-up period to lay the foundation for the program, as was the case with the IPP program. As you suggested several months ago, this program is in something of a Catch-22. Without tangible accomplishments, funding is threatened, but without sufficient funding to give this program a chance, it becomes difficult to achieve tangible accomplishments. We are working closely with the Russians, in order to facilitate transition from weapons research to commercial projects and to develop joint plans for accelerated downsizing of the Russian nuclear complex if money is provided. Additionally, we want to help the Russians develop local infrastructure to support economic diversification and job creation. At the FY02 funding level request, NCI will scale back to focus on our current commitments to one site only, and that is Sarov.
In FY2002, we hope to expand our Second Line of Defense program with the Russian Customs Service. This program helps detect and prevent nuclear proliferation or terrorism through the installation of radiation detection equipment at strategic transit and border sites in Russia. Thus far with a small amount of money, this program has been quite successful. Equipment has been installed at the international airports in Moscow and St Petersburg and at a port on the Caspian Sea. Ninety Customs officers have been trained and training manuals were distributed to 30,000 frontline officers. These radiation detectors have monitored roughly 120,000 vehicles, 11,000 railroad cars, and more than 750,000 pedestrians. Building on these successes, we plan to expand to half a dozen other critical transit points.
The Office of Defense Nuclear Nonproliferation is also involved in important nonproliferation projects outside of that country. For example, we have achieved a major success in securing three tons of weapons-grade plutonium - enough to manufacture hundreds of nuclear weapons. Under the current FY 2002 budget, we will continue analytical support and technical expertise for arms control and nonproliferation agreements and for regional security initiatives. Additionally, we are maintaining our support to the IAEA's efforts to safeguard spent fuel in North Korea. We also continue our export control functions, which include reviewing over 6,000 export license applications per year, and provide support to the United Nations sanctions regime against Iraq. We support multilateral export control cooperation through our participation in the Zangger Committee and the Nuclear Suppliers Group. We are also actively working with officials in the former Soviet export control community to strengthen export control mechanisms and license screening procedures. We have a growing cooperative effort with the Cooperative Monitoring Center at Sandia in various regional security initiatives, including cooperative monitoring in the Middle East (e.g., seismology, radionuclide transport), South Asia and East Asia, and analysis of various regional issues.
FISSILE MATERIALS DISPOSITION
Our Fissile Materials Disposition program is responsible for disposing of inventories of surplus, U.S. weapons-usable plutonium and highly enriched uranium in order to reduce the significant costs associated with long-term storage of these materials in the United State. We are leveraging our domestic program to obtain reciprocal disposition of surplus Russian plutonium. FY2002 funding will be used to complete the design of the MOX Fuel Fabrication Facility. We will continue the design of the Pit Disassembly and Conversion Facility at a reduced rate. Due to budgetary constraints, we suspended the design of the Plutonium Immobilization Plant. These changes are necessary to reduce the future year peak funding requirements that would have been required under previous plans for building three facilities simultaneously at the Savannah River Site. Despite these schedule changes, we will still be able to meet the commitments called for in the recently signed Plutonium Management and Disposition Agreement with Russia as well as support the continued consolidation, cleanup, and shut down of DOE sites where surplus plutonium is stored.
HIGHLY ENRICHED URANIUM TRANSPARENCY
Our work with Russia to convert highly enriched uranium from the Russian military stockpile into a non-weapon-usable form is progressing well. The 1993 U.S.-Russia HEU Purchase Agreement remains one of the most impressive nonproliferation achievements of the last decade. NN's transparency program is designed to provide increased confidence that HEU from dismantled Russian nuclear weapons is downblended to low enriched uranium (LEU) in Russia and made into power reactor fuel. By the end of 2000, more than 111 metric tons of uranium -- enough material to make roughly 4,400 nuclear devices -- had been removed from the Russian military program. Our goal for 2001 is to convert another 30 metric tons. The FY 2002 budget will impact NN's blend-down monitoring activities and improvements to increase our confidence in the source of the HEU will be slowed.
INTERNATIONAL NUCLEAR SAFETY AND COOPERATION
Reducing safety risks at the 66 operating Soviet-designed nuclear power reactors in nine countries is another priority. We plan to complete safety upgrades for these reactors no later than 2005. There are three reactors in Russia that are to be shut-down in 2006 as part of DOD's program to eliminate production of weapons-grade plutonium. They are the oldest operating reactors in Russia and have not received any safety upgrades to date under foreign cooperation. Safety upgrades at these production reactors are our highest priority. However, the scope of activities will be limited as a result of our budget.
RESEARCH AND DEVELOPMENT
Our Nonproliferation R&D Program is a one of a kind program that enhances U.S. national security through needs-driven R&D with an emphasis on developing technologies to detect nuclear, chemical and biological proliferation and to monitor for nuclear explosions. The Proliferation Detection and Deterrence program will develop the required technologies to detect nuclear proliferation. Our unchallenged lead responsibility for nuclear nonproliferation technology derives from the expertise and knowledge base resident in our national laboratories and nuclear weapons complex. This program provides a technology template for the detection of weapons of mass destruction activities.
Our experts are building robust deterrence capabilities that include technical means to detect, lost or stolen nuclear devices or fissile materials. Our forensic capability to identify the origin of fissile material associated with a nuclear threat is second to none. In FY 2002, we will continue to develop innovative technologies needed to improve the detection of the early stages of a proliferant nation's nuclear weapons program and the tracking of foreign special nuclear materials.
The Nuclear Explosion Monitoring Program is designed to provide the United States with the technical capability to detect nuclear explosions. We are working to develop and deploy sensors that allow the United States detect, locate and identify nuclear explosions. In FY 2002, the Nuclear Explosion Monitoring program will continue to develop enabling technology, operational hardware and software, and expertise to detect, locate, identify, characterize, and attribute nuclear detonations through both ground-based and satellite-based systems.
The goal of the Chemical and Biological National Security Program is to develop, demonstrate, and deliver technologies and systems that will lead to major improvements in the U.S. capability to prepare for and respond to chemical or biological attacks against civilian populations. NN is the primary agency developing non-medical technical solutions for this challenge. Our experts are involved in a broad interagency program to develop sensors that could detect the terrorist use of a biological agent at a large outdoor event, such as the Superbowl or the Olympics.
Mr. Chairman, I can tell you without a doubt that the people of NN and the national labs are unsung heroes. They have spent days, weeks, months in places where accommodations were the worst I have ever seen, with no hot water for showers and windows that don't close in the middle of winter. However, they continue to do the work. Why? Because they know that this opportunity to make American citizens safer will not last forever. The window is still open. The time is now to work harder. The Russian Federation is undergoing a time of change right now, and we are hopeful that this will provide new and improved opportunities for us. The fruit of our work will be experienced by current and future generations.
I think you all will agree that as a nation, we face no greater challenge than preventing weapons or weapons useable materials from falling into the hands of those who might use them against U.S. or our allies. We live in a more dangerous world now than we did during the Cold War. The threat to our safety and international security is more diffuse, which makes it harder to defend against. I think that the review being conducted at the present time by the White House is a useful and timely exercise. I am confident that this review will show that NN's programs are making a solid contribution to the national security of the United States. Thank you. return to menu
1. ANNOUNCEMENT: Workshop on Russian Nuclear Security - Priorities and Alternatives
The Institute of Nuclear Materials Management (INMM)
Nonproliferation and Arms Control (NAC) Division
May 16, 2001
The Institute of Nuclear Materials Management (INMM), Nonproliferation and Arms Control (NAC) Division is conducting a workshop on Russian Nuclear Security - Priorities and Alternatives on Wednesday, May 16, 2001, to be held at the Willard Inter-Continental Hotel, Washington, D.C. This meeting is a follow-on meeting to the workshop that was held in Washington, D.C., in April 2000, titled "Russian Nuclear Security -- Programs and Prospects", sponsored by INMM/Carnegie Endowment.
The agenda follows:
8:00 AM Registration and Social
Setting the stage Chair: Steve Mladineo, Pacific Northwest National Laboratory 8:30 AM Introduction and Objectives - Steve Mladineo
8:45 - 9:15 AM Overview of the Secretary of Energy Advisory Board report on Nonproliferation - Lloyd Cutler
9:30 - 10:00 AM Keynote: Representative Ellen Tauscher (D) California (invited)
10:00 - 10:15AM Break
Alternative Models Panel: 10:15-11:45AM Chair: Larry Satkowiak, BWXT Y-12
European Nuclear Cities Initiative and University Consortium - Ken Luongo, Director, Russian American Nuclear Security Advisory Council
Nonproliferation Trust - Joseph Egan (invited)
Debt for nonproliferation - Jim Fuller, Pacific Northwest National Laboratory
12:00 - 1:30 PM Luncheon Keynote Speaker: Senator Pete Domenici (R), New Mexico
Implementation Ideas Panel One: 1:30 - 3:00 PM Chair: Jim Lemley, Brookhaven National Laboratory
Matthew Bunn, Harvard University
Steven Black, National Nuclear Security Administration (invited)
3:00-3:15 PM Break
Implementation Ideas Panel Two: 3:15- 4:45 PM Material Consolidation and Conversion -- John Gerrard, National Nuclear Security Administration
Col Bob Dickey, Deputy Director, CTR , Defense Threat Reduction Agency
Methodology on Tracking Fissile Materials --Leonard Spector , Monterey Institute of International Studies