Luxoft has a suggestion for American executives looking to do their IT work in India: Try Russia.
Hoping to tap the growing U.S. appetite for getting work done offshore, the Moscow-based information-technology outsourcing company opened its world marketing headquarters in Montvale, N.J., in February.
The tiny, three-person office is part of a modest but escalating effort by Russian businessmen to tout the former communist country's IT industry as a skilled backroom to the world's corporations, in much the same way Indian outsourcers have done.
Luxoft and its peers say they, too, can provide top-quality, cut-price programming -- but with Russian efficiency and a deep bench of highly educated programmers, among them rocket scientists and nuclear physicists left over from the Cold War.
The pitch has helped Luxoft lure such customers as Dell, Boeing, Microsoft, Deutsche Bank and IBM, for whom the outsourcer operates a design laboratory in Moscow.
"We call it value-driven outsourcing," said Lilia Tsalalikhin, a Luxoft vice president and former IBM director of marketing who heads Luxoft's Montvale office.
The five-year-old company -- with sales of about $25 million in 2004 -- has 1,200 employees worldwide, including 25 in the U.S.; it has offices in four Russian cities, London and Seattle.
A similar global strategy has drawn a roster of American firms to EPAM, a Princeton, N.J.-based offshoring company with Russian roots. It works on software design for Microsoft, SAP, Hyperion and BEA Systems, and runs IT operations for Colgate, Reuters and Halliburton.
Chief executive officer Arkadiy Dobkin, a Russian immigrant, founded EPAM in 1993 after he saw Indian companies doing work for U.S. customers and figured his former IT colleagues back home could do such work at a distance.
"From Day One, U.S. companies were the target customer," Dobkin said. His company also has 1,200 employees -- including 50 in the U.S. -- with offices in Moscow; Minsk, Belarus; and Budapest, Hungary. About half the company's 2004 revenue of $30 million came from the U.S. and Europe.
Analysts say Luxoft and EPAM named Russia's top two offshoring companies by the trade Web site Managing Offshore -- head a growing industry that boasts about 250 firms.
Sales of IT services for export from Russia have doubled annually in recent years, to about $450 million in 2004, said Eugene Kublanov, vice president of corporate development at NeoIT, a California-based global consultant.
That's tiny compared to India's nearly $20 billion industry, Kublanov said. But Russia is increasingly attractive to U.S. companies for a variety of reasons.
"A lot of companies said, 'We have 90 percent of our outsourcing in India; let's see how we can diversify,'" he said.
Russia's low wages are competitive. A typical programmer with experience earns from $8,000 to $14,000, depending on whether the location is high-priced Moscow or the far-cheaper provinces, according to a recent report by global consultant Gartner Inc.
That's a little more than the $7,000 to $11,000 an Indian might make, but well below the $55,000 or more paid to an American in a similar job.
There is no shortage of Russian programmers. A study released in June by the Russian IT services professional association, Russoft, reported that the country has 250,000 software engineers. It has more scientists per capita than Britain, France, Germany and India, the study concluded.
That's one reason why such U.S. companies as Motorola, Siemens, Sun Microsystems and Intel all have R&D centers in Russia, the report said.
The abundance of programmers, analysts say, is due in large part to Russia's history in the former Soviet Union. Fueled by the Cold War, they say, the Soviets created an extensive, high-quality education system that nurtured tens of thousands of mathematicians, scientists and engineers annually to design weapon systems and other military hardware.
In fact, Luxoft has a contract with the U.S. Department of Energy to retrain Russian nuclear physicists for employment in the IT industry, Tsalalikhin said. The program, launched in 2001, is designed to stop the scientists' weapons expertise from falling into the wrong hands.
Precisely the half of the agreed 500 tonnes of highly enriched weapon-grade uranium was blended down to low enriched uranium and shipped to the US power plants.
In February 1993, Moscow and Washington reached an agreement On the Use of Highly Enriched Uranium Extracted from Nuclear Weapons. As a follow-up of the agreement, the two countries signed the HEU-LEU (highly enriched uranium - low enriched uranium) contract in 1994, under which 500 tons of HEU were to be purchased by the US Enrichment Corp. (USEC) until 2013.
Recently 42 tonnes of low enriched uranium have been shipped from St Petersburg to Baltimore in the United States. Since the beginning of the program on May 31, 1995, the USA received 7350 tonnes of LEU down blended from 250 tonnes of HEU ï¿½ precisely the half of the total quantity stipulated by the Agreement, minatom.ru reports.
So, the HEU-LEU Program has reached the middle and is entering its final stage. Thanks to this program Russia has already earned $5.3 billion. The profit goes to the Russian State budget and on financing the Russian nuclear industry. In 2004, the earnings from the program amounted 10 percent of the total Russian budget non-tax revenues.
In 2004, only 16 percent of the received funding is spent on increasing safety at nuclear installations. The bulk of this HEU-LEU funding is spent on construction of new nuclear sites outside of Russia (41 percent). Only 7.8 percent goes to reforms within Russiaï¿½s nuclear industry. Another 29 percent of the proceeds are used for unspecified expenses (approximately $162 million dollars in 2004). In reality this funding channel not only helps Russia to build nuclear power plants and other nuclear sites in such countries as Iran, India and China, but also supports the Cold War era nuclear infrastructure that has remained basically unchanged since Soviet times, and could barely survive without this funding feeding tube.
2. Russia Sends Another Shipment of Low-Enriched Uranium to U.S.
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Russia has sent another shipment of low-enriched uranium (LEU), 42 metric tons, to the United States under the bilateral HEU (highly-enriched uranium)-LEU program, according to a report by Russia's Federal Agency for Nuclear Power (Rosatom).
Russia and the U.S. signed an agreement on the use of HEU extracted from nuclear weapons in February 1993. Under the agreement, Russia is expected to supply U.S. nuclear power plants with LEU processed from HEU by Rosatom enterprises.
Russia has delivered about 7,350 tons of LEU to the U.S. since its first shipment in 1995, that is, half of the total amount stipulated in the bilateral agreement.
To fulfill the obligations of the agreement, Russia will have to dismantle around 10,000 nuclear warheads.
The energy equivalent of the supplied uranium is 3 trillion kWh. About 750 billion cubic meters of natural gas or 650 million tons of oil must be burnt to generate that amount of energy.
Russia has already received over $5.3 billion for its uranium shipments and is using the revenue to bolster security at its nuclear power plants, and for defense conversion and environmental clean-up.
1. Nuclear Storage Site in Murmansk to be Commissioned Two Months Late
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The first stage of a storage facility in the Murmansk Region (European Russia's north) for reactor blocks from dismantled Russian nuclear submarines will be commissioned in November 2005, deputy head of the Federal Nuclear Power Agency Sergei Antipov said Tuesday.
The joint Russian-German construction management committee made the decision to commission the first stage, Antipov said. Originally, he added, commissioning was scheduled for September.
He said the site chosen for this facility had turned out to be more geographically complicated than planned, so the project had become more expensive and the timeframe for its implementation had been extended.
The Russian-German construction management committee was established following a 2003 agreement between the countries on creating a long-term storage site for reactor blocks in the Murmansk region.
Today it is the partnership's major project, at a cost of around 300 million euros. Antipov said the German government had provided guarantees on financing the construction of two stages of the storage site.
Germany allocated some 1 billion euros for this program, with 300 million to be spent on the construction of the two stages, and another 300 million on chemical weapons destruction.
1. Turkish Officials Bust Peddlers of Russia-Origin Uranium in Istanbul
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Two men were arrested in Istanbul while trying to sell uranium of Russian origin in a sting operation conducted by Turkish special police, Russian media reported Wednesday.
The menï¿½s names and nationalities were not released by Turkish authorities, but they where taken into custody while trying to hock a glass tube containing 173 grams of uranium-235 and uranium-238 for a price tag of $7m to Turkish law enforcement agents posing as potential buyers.
The detainees said they had smuggled the uranium from Russia, the mosnews.ru Web site reported Wednesday. Turkish authorities fear the substance was eventually headed for terrorist hands.
Authorities are concerned that incidents in recent years involving the seizure of uranium in Turkey are becoming more common. A spokesman for the Turkish security services said: ï¿½The only place where the uranium could eventually land is in the hands of terrorists,ï¿½ the Itar-Tass news agency reported.
A source at Rosatom, who declined to be named, said in a telephone interview with Bellona Web from Moscow that he was aware of the seizure and confirmed the material had ï¿½most likely come from Russia,ï¿½ but added he could not disclose from what facility the radioactive substance might have been taken. It was unclear whether Rosatom, in fact, knew.
Sources in the Turkish security forces noted that the uranium had the capacity to meet one-yearï¿½s worth of New York Cityï¿½s electricity requirement, Turkeyï¿½s Anatolia news agency reported.
After examining the substance, Turkish Atomic Energy Agency experts said it contained 17 percent of the uranium-235 isotope. The remaining 83 percent was the uranium-238 isotope which does not contribute directly to the fission process.
Under the nuclear Non-Proliferation Treaty (NPT)ï¿½of which Turkey is also a signatoryï¿½sale, purchase and transportation of any amount of uranium are subject to international restrictions.
What can one do with uranium-235?
Natural uranium consists largely of two isotopesï¿½uranium-235 and uranium-238. Energy production in most nuclear reactors is from the fission, or splitting of the uranium-235 atoms, a process which releases energy in the form of heat. It is also a necessary component in the production of nuclear bombs.
Uranium-235 is an especially radioactive isotope during the fission process and releases huge quantities of energy. Uranium-235 is achieved during the enrichment of uranium ore in centrifuges designed for the process. The quantity of uranium-235 in natural uranium is insignificant, and the uranium-238 isotope is unsuitable for making bombs.
Most nuclear reactors use low enriched uranium with a concentration of uranium-235 of less that five percent. The material seized in Turkey had a higher concentration of uranium-235, but was still not enough to consider it weapons grade material. In order to achieve uranium with a higher enrichment of uranium 235, which could make it weapons usable, is a highly technical and difficult to conceal process.
But low enriched uranium can still be used in radiological dispersal devices, or dirty bombs, consisting of standard explosives and radioactive material, which would spread contamination over a wide-spread area. Plutonium, kobalt-60, ceasium-137 and iridium-192 are also suitable to make a dirty bomb. In order to make a proper nuclear bomb, however, some 40 kilograms of enriched uranium would be required.
Nuclear thefts documented in Russia
Stanford University in California, which runs perhaps the most comprehensive data-base if nuclear theft from facilities in the former Soviet Union, has concluded that over the last ten years some 40 kilograms of uranium and plutonium have gone missing from facilities in Russia and the former republics.
Most of this material was recovered. American special authorities have documented a number of these thefts:
-1.5 kilograms of enriched uranium went missing from Russiaï¿½s Luch facility; -3 kilograms of enriched uranium disappeared from an institute in Moscow in 1993; -an unaccounted for amount of radioactive materials disappeared from a warehouse in Chelyabinsk, near the Mayak Chemical Combine.
The latest theft scandal to involve the theft of uranium and other radioactive materials happened at the Atomflot ice-breaker shipyard in 2003. In this case, Atomflotï¿½s Deputy Director Alexander Tyulyakov was arrested after allegedly trying to sell containers of uranium-235 and 238, radon-226 and lead-214.
2. Four Years After 9/11, Is An American Hiroshima Next?
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The next post September 11 terrorist attacks on America orchestrated by Al-Qaeda are likely to involve the use of nuclear weapons, claims the author of a new book about a future 9/11 plot. Unless the threat is taken far more seriously, nuclear terrorism in America may be inevitable, resulting in massive loss of life that will make 9/11 appear insignificant in comparison.
Sixty years after an American B-29 bomber dropped a uranium fission bomb on the Japanese city of Hiroshima, and 4 years after Al-Qaedaï¿½s September 11 terror attacks on New York Cityï¿½s World Trade Center and the Pentagon in Washington, America may be on the verge of experiencing a Hiroshima of its own. Those are the views of the author of a recently published novel, KING OF BOMBS, which is based on a future act of nuclear terrorism occurring on American soil. Sheldon Filger, who was a resident of New York City during the September 11 attacks on the World Trade Center, believes that the next 9/11 may very well be a nuclear detonation in a large American city.
ï¿½The overwhelming impression I formed of 9/11 is that its perpetrators, Al-Qaeda, have a hate-driven determination to murder Americans in massive numbers, with the only restraint on their lust to kill being the technical means of destruction that are available to them,ï¿½ Filger said. ï¿½If, God forbid, they were ever to acquire a nuclear weapon, I have no doubt that they will employ it, with the objective of creating a Hiroshima on American soil.ï¿½
KING OF BOMBS(www.kingofbombs.com) is a fictional account of a future 9/11 plot by Al-Qaeda involving a nuclear device of vast destructive power. The title of the book is the actual name of the most powerful nuclear weapon ever built, a relic of the Cold War built by the Soviet Union, with the destructive force of thousands of atomic bombs of the type that leveled the Japanese cities of Hiroshima and Nagasaki in the closing days of World War II. Experts who have examined the risks of nuclear terrorism have long speculated on the danger that Al-Qaeda and similar organizations could exploit the large amount of weapons grade nuclear material and many under-employed or out of work nuclear weapons experts left over from the former Soviet Union. Mr. Filgerï¿½s novel is based on such a scenario, in the process dramatizing the apocalyptic consequences posed by the threat of nuclear terrorism.
Commenting on the reasons why he wrote a novel about a future Al-Qaeda terrorist attack on America involving weapons of mass destruction, Sheldon Filger spoke about the imminent threat of nuclear terrorism being inflicted upon America. ï¿½As someone who lived through the horror of September 11, 2001, I like so many others who were in New York City on that fateful day have been waiting ever since for the other shoe to drop. Unfortunately, there is a disconnect, especially within the government, that has led to a dangerous complacency towards the acute danger confronting us. I hope my book might help shake things up, and stimulate public discourse on what I believe is the number one threat to human civilization, before it is too late.ï¿½
Filger mentioned that weapons grade nuclear materials are located throughout the world, frequently under poor security. A U.S. government program aimed at safeguarding such materials located in Russia will not be completed for another thirteen years, based on the current slow pace of implementation. ï¿½It takes only thirty-five pounds of highly enriched uranium, or as little as nine pounds of plutonium, to manufacture a simple but effective nuclear weapon, that could kill upwards of one million people in large urban areas within the United States. For the American government to treat this threat as being of such low priority that it can be dealt with on a time scale measured in decades, is to invite inevitable catastrophe. Unless our behavior towards the threat of nuclear terrorism is radically altered, it is only a matter of time before we all witness the next 9/11 attack in the form of a mushroom cloud,ï¿½ Filger warned.
The recent series of terrorist attacks have shown that the terrorist threat has not diminished and victory over this evil is not within our grasp.
Worse still, the terrorists are using increasingly aggressive and treacherous tactics. Their goal is to claim as many civilian lives and do as much moral and psychological damage as possible in a bid to sow fear and panic in society.
Although we do not want to believe it, common sense says that terrorists will try to gain access to the world's most destructive instruments - weapons of mass destruction (WMD). Politicians, the military, diplomats, scientists and the law enforcement agencies and intelligence services know this. Like the general public, they all agree that terrorists and other criminals must be stopped from gaining access to WMD or their components (for example, components for creating a dirty bomb). This danger must not become a sword of Damocles hanging over mankind. We must preclude the use of WMD as means of blackmailing the international community or individual countries.
This calls for erecting an insurmountable barrier to prevent terrorists accessing WMD, which should rest on effective legislation and cooperation between all members of the broad counter-terrorism coalition.
It is evident that nuclear terrorism presents the biggest threat to security. Russia has always advocated comprehensive measures to strengthen the non-proliferation regime and efforts against nuclear terrorism. Important steps have recently been taken toward this goal. In 2004, the UN Security Council adopted Resolution 1540 designed to prevent "non-state actors" from acquiring WMD or their components. Russia was one of the initiators of the resolution.
Moscow also suggested that an International Convention for the Suppression of Acts of Nuclear Terrorism be drafted. The issues involved are so serious that negotiations over the draft convention lasted nearly eight years. An Ad Hoc Committee of the UN General Assembly completed work on the draft in April 2005. Russia is advocating early enforcement of the convention and has appealed to all states to sign it without delay.
This convention aims to improve the legal framework for the effective suppression and prevention of acts of nuclear terrorism and for relief work in the event of an attack. It aims to ensure the protection of civilian and military nuclear projects against terrorism and to preclude terrorist attacks using improvised nuclear devices. The convention stipulates that persons who commit acts of nuclear terrorism will be brought to justice on the basis of the "extradite or try" principle.
It is the first international anti-terrorist convention that is intended as a pro-active instrument to prevent terrorist attacks using nuclear materials or other radioactive substances. It is the first universal agreement aimed at preventing massively destructive terrorist attacks, and it increases scope for counter-terrorism cooperation within the framework of the UN, including an early harmonization of the draft Comprehensive Convention Against International Terrorism. To date, 13 counter-terrorism conventions have been adopted.
The world wants a better global nuclear safety regime. One of the cornerstones of the regime is the Convention on the Physical Protection of Nuclear Material, which was adopted in 1979. In order that states can realize their inalienable right to develop and use nuclear energy for civilian purposes, in accordance with the Non-Proliferation Treaty and the Charter of the International Atomic Energy Agency (IAEA), there must be an effective mechanism to deter the unlawful possession and use of nuclear material for criminal purposes. This is the objective of this particular convention.
A diplomatic conference was held in July this year to approve amendments to the Nuclear Materials Convention, which were designed to enhance the physical protection of nuclear material during storage, use and transportation within a state and to protect nuclear devices against subversive acts. Russia played an active role in the conference, during which considerable progress was made toward improved nuclear safety. It was primarily thanks to a Chinese suggestion aimed at removing ambiguity from the key issue of the inadmissibility of the use of force against nuclear facilities that the participants agreed to the amendments.
The international community is determined to prevent acts of nuclear terrorism. This is evident from the involvement of not only the UN and its specialized agencies (IAEA) but also other organizations, including the Organization for Security and Cooperation in Europe (OSCE), in efforts to tackle the problem.
In early July the main regular decision-making body of the OSCE, the Permanent Council, adopted Decision No. 683 Countering the Threat of Radioactive Sources, which was initiated and drafted by Russia and the United States. It obliges the 55 OSCE member states to make a political commitment to comply with the IAEA Code of Conduct on the Safety and Security of Radioactive Sources and the Guidance on the Import and Export of Radioactive Sources supplementary to it.
Thanks to the OSCE decision, the IAEA Code of Conduct will be extended to all of the organization's member states and, hopefully, this will reduce the potential threat of terrorists gaining access to radioactive sources. The decision also highlights constructive counter-terrorism cooperation between Russia and the U.S.
Cooperation by members of the counter-terrorism coalition on the basis of the above conventions and other agreements will help prevent terrorist access to nuclear weapons and materials. Cooperation in this field has become a reality, as evidenced by the international Proliferation Security Initiative (PSI) set up two years ago. Russia joined this initiative last year.
The international community, including the U.S. and Russia, have joined forces to reduce the risk of weapons of mass destruction falling into the hands of terrorists, illegal arms dealers or other persons acting in violation of non-proliferation regimes. Over 60 countries have announced their support for the PSI, and the more members it has, the more effective it will be. The number of member states is growing, and 16 training exercises have been held under the Initiative in the past two years. The PSI promotes compliance with the letter and spirit of UN Security Council Resolution 1540, which calls on all states to unite to prevent the illicit trafficking of WMD.
Russian Foreign Minister Sergei Lavrov and U.S. Secretary of State Condoleezza Rice wrote in a joint article "Russia and the U.S. Against Nuclear Terrorism" that their countries had seen what dreadful atrocities terrorists could commit and that they must ensure that terrorists and their supporters would never gain access to WMD.
The International Convention for the Suppression of Acts of Nuclear Terrorism will be opened for signing on the first day of the UN Millennium + 5 Summit, which will begin in New York on September 14. Russia will be among the first to sign it.
1. Former Russian Nuclear Minister Says U.S. Charges Politically Motivated
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A former Russian nuclear minister in Swiss custody pending a U.S. extradition request has accused the American authorities of fabricating a criminal case against him to avenge his push for nuclear contracts with Iran, India and China, Associated Press reported.
Yevgeny Adamov intended to improve Russiaï¿½s nuclear safety, said in a letter published by Izvestia daily that the U.S. criminal charges against him were intended to convey a hidden political message: ï¿½You guys ... donï¿½t forget whoï¿½s the boss in the world.ï¿½
Adamov, who served as Russiaï¿½s nuclear minister in 1998-2001, was arrested on May 2 while visiting his daughter in Bern. He has since been indicted by a U.S. federal grand jury in Pittsburgh on charges of conspiracy to transfer stolen money and securities, conspiracy to defraud the U.S., money laundering and tax evasion.
Adamov has denied the charges. He said the U.S. grudge against him dated back to 1998, when he visited China, India and Iran to speed up efforts to build Russian nuclear power plants in these countries.
Shortly afterwards the U.S. Vice President Albert Gore visited Moscow and tried vainly to persuade him to drop the nuclear contract with Iran in a conversation that lasted nearly two hours, Adamov said in the letter.
ï¿½By 1998, the Americans got accustomed to the fact that people in Russia must listen to them and they donï¿½t have to listen to anyone here,ï¿½ Adamov said.
He claimed that a later Russian probe against alleged financial abuse in the nuclear ministry had been encouraged by the Americans.
U.S. prosecutors say he diverted up to $9 million from U.S. Energy Department funds intended to improve Russian nuclear security, and want him extradited to the U.S.
Russian authorities, concerned that he could divulge nuclear secrets if extradited to the U.S., have demanded he be sent to Russia.
Switzerland now must decide whether to extradite Adamov to the U.S. or Russia, or to reject both extradition requests.
1. Russian Official: Iran's Right To Use Nuclear Agency Must Be Recognized
Islamic Republic News Agency
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A high ranking Kremlin official emphasized here Wednesday, "Iran's right to take advantage of nuclear power for peaceful purposes must be internationally recognized." Speaking to his country's official Itar-Tass news agency, the Russian official who spoke on condition of anonymity added, "Russia believes it is appropriate for the international community to recognize Iran's right to continue its nuclear programs, since that would solve the current crisis and save unnecessary problems." He meanwhile reiterated, "Russia is opposed to proliferation of nuclear weapons in the world, particularly in the Middle East and the Near East regions, that are quite crisis-prone."
The Kremlin official reiterated, "Russia pursues its nuclear cooperation with Iran based on the above mentioned guidelines." He said, "We believe it is necessary to seek a logical solution to the problem in which the Iranian nation's legal right to take advantage of nuclear energy would be recognized, in accordance with all internationally approved protocols and regulations."
Meanwhile, the Russian Federation's Ministry of Foreign Affairs, too, issued a communique here Wednesday, announcing Moscow opposition to resorting to force in order to solve the ongoing crisis regarding Iran's peaceful nuclear programs.
Also senior Iranian officials warned the European Union Wednesday to stop pressuring the Islamic republic to limit its nuclear activities and setting conditions for future negotiations.
"After restarting the activities at Isfahan, we stress that we should have the continuation of negotiations without any preconditions," said Manouchehr Mottaki, nominated as Iran's new foreign minister by President Mahmoud Ahmadinejad.
Iran's resuming of its uranium ore conversion at a facility near Isfahan due to EU3's obvious violations of its commitments towards Iran, and their delayed presentation of an insulting, unacceptable proposal on behalf of the EU has led to strong verbal Western reactions and Iran's rightful defiance.
The step ended a nine-month freeze agreed during talks with Britain, France and Germany -- who have been trying to convince Iran to abandon atomic energy technology that could also provide it with the capability to build a bomb.
But Mottaki told the student news agency ISNA that "Iran's transparent, logical and legal handling (should) convince the European side to join negotiations."
A similar warning was made by the deputy head of Iran's Atomic Energy Organization, Mohammad Saidi.
"The rougher and faster these countries make the game, the more decisive we become to operate the rest of our nuclear facilities," he told ISNA.
But Iran has so far maintained its suspension of uranium enrichment at its Natanz facility.
The International Atomic Energy Agency has called on Iran to halt all nuclear fuel cycle work and the UN watchdog is to report September 3 on Tehran's compliance with international safeguards.
Iran has refused to backtrack, despite the risk of being referred to the UN Security Council.
"Legally the IAEA is not in a position to talk about a violation," Saidi said, calling on the Europeans to deal with Iran's nuclear issue "logically and not to jeopardize and agitate the region."
"Despite the possibility of another resolution in the September session of the (IAEA) board of governors to call on Iran for re-suspension of the Isfahan installations, we will definitely not accept such a call," he said.
Russia meanwhile cautioned the United States against considering the use of force to contain Iran's nuclear programs, saying this would be "dangerous" and unleash "serious consequences."
"We consider that it would be counter-productive and dangerous to use force, the serious consequences of which would be barely predictable," the Russian foreign ministry said in a statement clearly aimed at US President George W. Bush's recent assertion that force is an option.
The statement urged that the crisis over Iran's insistence on producing its own nuclear fuel be resolved "exclusively through expert consultations and diplomatic negotiations." The Russian position echoes a call by German Chancellor Gerhard Schroeder over the weekend for military force to be ruled out as an option in Iran, saying it was "extremely dangerous."
On Friday, Bush refused to rule out military action, saying: "All options are on the table." Russia is building a nuclear power station in Iran and is to supply the plant's nuclear fuel, but says it does want Iran to develop any military capability.
3. Russia Against Use of Force in Iranian Nuke Dispute
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Russia opposes using force to stop Iranï¿½s nuclear program, Reuters reported Wednesday quoting the Russian Foreign Ministry.
ï¿½We favor further dialogue and consider the use of force in Iran counter-productive and dangerous, something which can have grave and hardly predictable consequences,ï¿½ a statement posted on the ministryï¿½s official web site said.
The West fears that the ultimate goal of oil-rich Iranï¿½s project to develop its own nuclear power sector is to develop atomic weapons.
Iran angered the European Union and the United States by resuming work at a uranium conversion plant earlier this month, rejecting an EU incentives package offered in return for giving up its nuclear program.
Russia, which has constructed a nuclear power plant for Iran and is hoping for more such contracts, has criticized Tehran for restarting the uranium conversion. But it has been traditionally opposed to applying blanket pressure against Tehran.
ï¿½We consider that problems concerning Iranï¿½s nuclear activities should be solved through political and diplomatic means, on the basis of international law and Tehranï¿½s close cooperation with International Atomic Energy Agency,ï¿½ the Russian statement said.
4. Will UN Security Council Discuss Iran's Nuclear Program?
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The new International Atomic Energy Agency (IAEA) resolution on Iran seems to be another step toward submission of the Iranian nuclear dossier to the UN Security Council. But Moscow hopes this will not happen.
The latest IAEA resolution says that if Tehran does not stop uranium conversion (for enrichment) by September 3, the Agency might submit the conflict for the consideration of the UN Security Council, which has the right to impose economic sanctions.
Washington is frantically searching for new proof that Iran is using its nuclear energy program as a cover for creating a nuclear bomb. Alireza Jafarzadeh, an Iranian dissident whose Washington-based think tank Strategic Policy Consulting carries out work for the U.S. administration, recently made a fresh accusation to this effect.
Jafarzadeh claims that Iran has covertly manufactured about 4,000 centrifuges capable of producing weapons grade uranium. But IAEA inspectors would have detected such a large number of high-speed machines. This claim is intended to play up the danger allegedly posed by Iran's nuclear program at a critical moment in the talks.
This has made it easier for American President George Bush to try once again to intimidate Iran not only by threatening to submit the Iranian nuclear dossier to the UN Security Council but also by raising the specter of direct military intervention similar to the operation in Iraq. "All options are on the table," Bush said in an interview broadcast on Saturday. "The use of force is the last option for any president and you know, we've used force in the recent past to secure our country."
But it seems as though Washington is not fully aware of the various ways in which Iran could respond. A spokesman from the Iranian Foreign Ministry said that Iran had considerably more options than the United States.
These are not mere words. Iran has oil, which it began exporting 98 years ago. Its forecast revenues from oil exports this year are $43 billion (?35 billion), a record high. Iran pumps 4 million barrels a day and is the second largest producer in the Organization of Petroleum Exporting Countries (OPEC) after Saudi Arabia. Many oil market analysts agree that Tehran might use oil as a weapon against the West, primarily against the U.S., if possible debates over the Iranian nuclear program in the UN Security Council reach a crisis point. Experts say this could push oil prices up to $100 per barrel.
In any case, the tactic of applying unceremonious pressure on Iran, by threatening military action, will hardly encourage Tehran to be more flexible. Moreover, advocates of a strong anti-Western policy joined the new Iranian administration last Sunday.
Iranian President Mahmoud Ahmadinejad has submitted his proposed new cabinet for the approval of parliament. He has given key posts to like-minded conservative politicians. For example, the post of foreign minister has gone to Manoushehr Mottaki, a lawyer known for his harsh criticism of Iran's talks with the European Trio - France, Germany and Britain.
Parliament has not yet approved the cabinet, but Iran's stance has become noticeably harsher. "The Isfahan question is no longer open to discussion," said Mohammad Saeedi, vice president of the Iranian Atomic Energy Organization. "Work at the Isfahan facility will not be suspended again for the sake of strengthening trust." Saeedi was referring to the moratorium on nuclear projects that Iran introduced last year to create a better atmosphere for talks with the Europeans.
Moscow is disappointed by Tehran's unilateral actions. "Iran could have continued the moratorium without damaging its nuclear energy program," said Mikhail Kamynin, a Russian Foreign Ministry spokesman. He said that the only power unit at the Bushehr nuclear power plant was "fully stocked with fuel from Russia."
Nevertheless, the problems in the negotiations between Iran and the European Trio do not yet mean that the Iranian dossier will be submitted to the UN Security Council. Saeedi does not rule out further talks with the Europeans. To all appearances, the U.S. and its Western allies are also not yet inclined to take the conflict to the Security Council, where China might veto a resolution on Iran, which would be a slap in the face to its authors.
What would Russia do in this crisis situation? "There is a very, very long way to go" [before such an extremely undesirable turn of events], said Alexander Pikayev, a deputy chairman of the Committee for Global Security of the Russian Academy of Sciences. He said that the IAEA Board of Governors would not take this dangerous step after September 3. Even if for some unexpected reason this did in fact happen, the majority of states would never support such a harsh resolution. "Many developing countries support Iran," Pikayev said. "In their opinion, Iran is honoring its commitments under the Non-Proliferation Treaty and, accordingly, there can be no talk of imposing sanctions against Iran."
Russia sees no reason to try to find a solution to the Iranian nuclear problem by looking beyond the remit of the IAEA. However, it would like not only the Europeans and Americans but also Iran to show some flexibility during negotiations.
1. Chinese, Russian Militaries to Hold First Joint Drills
The Washington Post
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Russia and China will hold their first ever joint military exercises this week as the once wary neighbors demonstrate their willingness to cooperate in the face of the U.S. military presence in Central Asia.
The two countries will also do a little business on the side as Russia shops its hardware, including nuclear-capable strategic bombers, to its military-industrial complex's best customer, Russian and Chinese defense analysts said.
The simulated land, sea and air operations are scheduled for Thursday in the Russian Far East, near the city of Vladivostok, before moving on to the Chinese coastal province of Shandong and the Yellow Sea. The two countries have held exercises before with other Central Asian republics, but this week's maneuvers are the first bilateral exercises, defense analysts said.
"The Chinese want to use Russia in a complicated game with the U.S. and Taiwan," said Alexander Golts, a military analyst and journalist in Moscow. "China is expanding its military presence in the region. For Russia, this is mostly about selling weapons."
Billed Peace Mission 2005, the exercise involves about 10,000 troops simulating a mission to aid a third state where law and order has broken down because of terrorist violence.
"The joint exercises will help strengthen the capability of the two armed forces in jointly striking international terrorism, extremism and separatism," China's official New China News Agency said.
The use of that last word, separatism, has unsettled some in Taiwan, who fear that China would try to draw on Russia's support in the event of a confrontation with the island.
Russia, however has resisted being drawn into any standoff with Taiwan -- even a simulated one. According to Russian reports, the Defense Ministry here rejected Chinese proposals to hold the exercises closer to Taiwan.
"China tries to put the Taiwan question into every issue, but for Russia that was never the purpose of the exercises," said Dmitry Kormilitsyn, an analyst at Chinacom, a Moscow think tank that studies China and Russian-Chinese relations. "In Central Asia, on the other hand, Russian and Chinese interests are very close: maintaining the status quo and pushing back against the very active U.S. presence."
The two countries have invited observers from the Central Asian republics of Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan, which together with Russia and China form the Shanghai Cooperation Organization.
That group recently called on the United States to set a timetable to withdraw its forces from bases in Kyrgyzstan and Uzbekistan, which are used to support military operations in Afghanistan. The Uzbek authorities later gave U.S. forces 180 days to pull out, after the United States criticized the Uzbek government for suppressing demonstrators in the city of Andijan in May, leaving hundreds dead, according to human rights groups.
"The reason that China can have a joint military exercise with Russia is that mutual understanding between the two countries has reached a certain level, and this gives out a signal to neighboring countries," Ni Lexiong, a military expert who teaches at Shanghai Normal University, said in an interview with the China Times newspaper. "I believe the implied message of Peace Mission 2005 is very obvious: We are facing the same threat."
The week will begin with a news conference and a planning exercise in Vladivostok. Russian airborne troops and marines will then seize a beachhead on China's Shandong peninsula in advance of an inland offensive coordinated with the Chinese military, Vladimir Moltenskoi, a Russian army deputy commander, said in an interview with Russian television.
Toward the end of the exercise, the Russians will deploy strategic, long-range bombers, capable of carrying nuclear weapons, which will fire cruise missiles at targets on the surface of the sea.
"You wonder, if this is a peacekeeping operation, what the strategic bombers are doing there," said Golts, the military analyst.
Moltenskoi said the strategic aircraft, as part of the simulation, would "prevent the vessels of any other countries from approaching the area of the peacekeeping operation."
But Zhao Zongjiu, who teaches at the People's Liberation Army's Nanjing Politics Institute, said in a published comment: "My own understanding is that Russia wants to achieve more military trade with China by engaging in the joint military exercises, in addition to its purpose of promoting military cooperation with China."
In particular, Russia is trying to interest the Chinese in nuclear submarines and strategic bombers, which, Golts said, could be deployed against the U.S. fleet in the Pacific. Golts said Russia was eager to lock in new contracts quickly, to hedge against the European Union lifting an arms embargo it imposed on China after the 1989 crackdown on protesters in Tiananmen Square.
The U.S. Defense Department has warned the European Union that lifting the embargo would bring "serious and numerous" consequences.
Brig. Gen. Carter Ham, deputy director for operations for the U.S. Joint Chiefs of Staff, told reporters at the Pentagon recently that the U.S. Pacific Command planned to monitor the exercises.
"Clearly, there's interest in anything that affects security in the Pacific region," he said.
The construction of a training centre for the Indian military in Sosnovy Bor, 70 kilometers west of St. Petersburg, confirms Russiaï¿½s intentions to lease nuclear submarines to India, said Green World Chairman Oleg Bodrov.
The international centre will open in September in the town that also hosts the Leningrad Nuclear Power Plant, and will train some 300 Indian naval officers.
Sosnovy Bor is home to the Russian Training Centre for Officers of the Russian Navy which houses working nuclear reactors of the type found on nuclear submarines. These reactors are used to test nuclear fuel and other technologies applicable to nuclear submarine reactors. A building recently went up along side the training centre, where Indian specialists will apparently be schooled.
According to Green World, the building went up in record time following the visit of Russian President Vladimir Putin to India last December.
What is the new building?
A spokesman for the Sosnovy Bor administration confirmed to Bellona Web that the international training centre had been built, but had no specific information about the programme of study or the number of officers who will study there.
According to the spokesman, the new building will not house any special equipment or installationsï¿½such as nuclear reactorsï¿½but is only a wing for classrooms and has no relation to the nuclear industry.
Bodrov, who earlier worked at the Alexandrov Scientific and Technical Research institute (NITI in its Russian abbreviation) where tests of new submarines prototypes are carried out, clarified how such a center would be built. ï¿½As far as I can judge from my own experience at [NITI] the centre would hold simulatorsï¿½computers that imitate submarines.ï¿½
Nuclear Submarines for rent?
Bodrov said that the training of Indian submariners in Sosnovy Bor was a testament to the notion that Russia has not given up on its plans of leasing nuclear submarines. Representatives of the Russian Ministry of Foreign affairs and the Ministry of Defense said they were not ready to comment on the potential nuclear submarine leasing.
Nonetheless, Indiaï¿½s defense minister, Pranab Mukharjee, said that negotiations about obtaining a Russian nuclear submarine were underway. At the same time, Mukharjee said that, as yet, the sides were not bound by ï¿½any obligations relative to the acquisition by the Indian side of an Akula class submarine.ï¿½ Mukharjee said the conclusion of any deals hinged on ï¿½various international obligations and agreements.ï¿½
Representatives of various Russian ministries have also spoken many times of similar intentions. Russian Navy Chief Admiral Vladimir Kuroyedov announced in early 2002 his readiness to lease two nuclear submarines to India. It was planned that the first sub would to India in 2004. But the Indian side did not follow up with any official commentary to Kuroyedovï¿½s words.
Discussion of this contract was again taken up in the press toward the beginning of last year, but is was denies by Russian Defense Minister Sergei Ivanov.
Now, according to Green World, ï¿½Leasing India two third generation multi-purpose submarines with the option to buy them, as many media reports indicated in late 2004, is apparently becoming a reality.ï¿½
Bodrov commented further, asking ï¿½otherwise, why train some 300 Indian submariners in Russia? That constitutes 4 Akula crews.ï¿½
Russian has experience in leasing nuclear subs to India. In January 1988, India leased three Soviet-era Skat classï¿½known as Charlie class in NATO designationï¿½multi-purpose submarines, equipped with eight nuclear missile installations. After the term of the lease ran out, the subs were returned to Russia and decommissioned.
ï¿½If India is sending its submariners to us to learn how to operate their submarines, then that likely means a number of nuclear sub leasing agreements exist,ï¿½ said Alexander Nikitin, who heads Bellonaï¿½s St. Petersburg office, the Environmental Rightï¿½s Centre.
ï¿½Moreover, such a scheme was already worked out in 1988ï¿½then the theoretical preparation of the crews took place in Vladivostok, and the practical training in the submarines themselves with Russian sailors aboard.ï¿½
Bodrov thinks that this time, the matter concerns the building of two Akula class submarines, which is taking place at the Amur Shipbuilding yard. Current published figures indicate that the two Akulasï¿½one 70 to 85 percent complete and the other 40 to 60 percent completeï¿½will cost India some $400m. The leasing costs would amount to some $25m a year.
The construction of both submarines, on shore infrastructure for them and training of the crews could run Russia, according to experts, some $2 billion.
It is worth bearing in mind that the Akula class sub is a Project 971 nuclear strike submarineï¿½one of the fastest-moving submarines in the Russian fleet. Their crews consist of 73 sailor. The subs carry OK-650 type reactors. The subs are outfitted with four 650 millimeter torpedo tubes and as many 533 millimeter tubes. Akulas are armed with winged Granit torpedoes carrying nuclear warheads, under water missiles and missile torpedoes of the ï¿½Shkval,ï¿½ ï¿½Vodopad,ï¿½ and ï¿½Veterï¿½ types.
Russia-Indian military co-operation
It is noteworthy that Russia already has experience selling diesel submarines and other weapons to India. Between 1968 and 1971, India purchased eight submarines of project number I-641 and I-641K, eight Project 159AE battle cruisers, eight Project Project 205E missile cruisers and several other assistance vessels.
During 1983 to 1991, India completed its navy with the purchase from the then-USSR of three Project 61ME destroyers, three projects 1234E corvettes, six Project 1258E mine-sweepers, and eight Project 877EKM (NATO Kilo class) submarines.
Then, on January 20th, 2004, India purchased from Russia in one of the biggest contracts to date the Admiral Gorshkov aircraft carrier, built in 1978. The Russian firm Rosoboroneksport took upon itself the modernisation of the ship and equipping it with state of the at weapons systems and deck-borne aviation, such as MiG 29Ks, and Ka-27 and Ka-31 anti-submarine helicopters.
At present the foundation of the Indian Navy is nine diesel Kilo submarines from Russiaï¿½s Rubin graving yard in St. Petersburg and several ships analogous to the West German JKL 209/1500 type.
In the opinion of ecologists, the coming submarine lease deal poses a serious threat to international security, stimulating, as it does, the Indian-Pakistani nuclear arms race.
ï¿½Arming of third world countries is a very dangerous business that can lead to military escalation in the east,ï¿½ said Vladimir Chuprov, coordinator of energy programmes at Greenpeace Russia.
Chuprov said that selling weapons to India was a ï¿½regurgitation of the Cold War.ï¿½
ï¿½Kremlin bureaucrats still live on the fundamentals of the last century, considering the basic task of the state to be wide-scale preparation for war, arming India, North Korea and other countries.ï¿½
Chuprov continued saying that a submarine can contain up to 10 kilograms of plutonium in its spent nuclear fuel. ï¿½And even though nuclear scientists are usually specify that this is not weapons quality plutonium, energy plutonium still explodes,ï¿½ he said.
India is one of four influential countries that are not signatories to the Non-Proliferation Treaty.
A new installationï¿½a new target for terrorists
According to Green Worldï¿½s Bodrov, the current deal not only sharpens the situation in Southeast Asia, but implies another danger: Placing the training centre in Sosnovy Bor puts the city on the radar of terrorists.
At the Leningrad Nuclear Power Plant alone there are four reactors of the Chernobyl-type RMBK 1000, several naval reactors at NITI, temporary storage for highly radioactive waste from the nuclear power plant, and enough highly toxic waste to constitute dozens of Chernobyls. The Northwest Russian regional facility of RADON for the outdoor storage of medium and high level nuclear waste also operates in Sosnovy Bor as does the Ekomet-S firm, a smelting plant for radioactive metals.
ï¿½The appearance in Sosnovy Bor of an international Russian-Indian centre for nuclear cooperation in the military sphere could create a nuclear and radiological dangerous installation on the Russia Baltic into a target for international terrorism,ï¿½ said Bodrov.
1. Russia's Ups and Downs in the Korean Nuclear Negotiations
Eurasia Daily Monitor
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The most recent session of the six-power talks over North Korean nuclearization finally got down to serious negotiations. Russian Deputy Foreign Minister Alexander Alexeyev, head of Russia's delegation, confirmed afterward that the draft statement of principles is 95% complete. What remains, he said are several outstanding questions or fresh "impulses from the capitals." The three-week recess prior to resumption of the talks on August 29 suggests that delegations, especially North Korea's, have received proposals that they need to bring back to their governments in order to obtain fresh instructions.
Sources close to the Russian delegation claim that, at this stage, North Korea does not have a nuclear arsenal, i.e. any nuclear munitions that are properly stored and ready for use. North Korea, according to these same sources, claims it is a nuclear power because it has produced a detonator to activate its nuclear charges. But those weapons and detonator have apparently not yet been combined to produce a usable weapon. This source also warns that, unless the parties provide safety guarantees to Pyongyang or make unacceptable demands upon it, then North Korea will develop a truly functional nuclear arsenal.
Given the balance of commentary coming from members of the Russian government and various experts in and around Moscow, Russia appears to believe that Washington is making excessive demands upon North Korea and therefore should make the most concessions. Moscow is advocating a stage-by-stage denuclearization of North Korea and the provision of security guarantees to all six parties. Providing such guarantees would formalize Russia's position as both a guarantor and recipient of regional security assurances and thereby recognize its upgraded regional standing.
Kim Jong-Il warmed to Russia's position, telling Konstantin Pulikovsky, Russian President Vladimir Putin's Envoy to the Far Eastern Federal District, that he would be willing to consider reviving the 1994 nuclear pact with America only if Washington ceases to threaten North Korea over its nuclearization, and he might even reconsider joining the Nonproliferation Treaty. While this comment received considerable media attention, it actually is a replay of former statements from Pyongyang.
Russia's position reflects its abiding goals concerning the Korean peninsula. First of all, Russia's main objective is to ensure that its presence and leverage over the entire Korean peninsula and both Korean states is enhanced. Thus from Moscow's standpoint, these talks are about ensuring and legitimizing Russia as a major security guarantor of Northeast Asia. Second, it seeks to maximize its leverage over both Koreas through its ability to provide energy to both states. Moscow also hopes to use its geographic location to create a link between the Trans-Siberian and a proposed Trans-Korea railway to facilitate economic development that would further tie the two Korean states to it.
Unfortunately, this railroad project has apparently become a casualty of the talks. North Korea has stopped negotiations on construction because Washington toughened its policy towards Pyongyang. This odd pretext might suggest that North Korea is unhappy with Russia's support for North Korea's denuclearization, but this cannot be assumed, as North Korea's ambassador to Moscow is known to highly value the DPRK's relations with Russia. Nevertheless losing the railroad deal is a major economic and political setback to Russia's overall Asian policies.
Pulikovsky recently voiced Moscow's disappointment with the overall state of its economic ties with North Korea, even as he reiterated the need for a negotiated settlement to the nuclear question. In Pyongyang Pulikovsky stated that the development of bilateral trade and economic cooperation between Russia and the DPRK "leaves much to be desired" and noted that this trade rate grows more slowly than does that of the EU and China with North Korea. Moscow apparently is tracking the North Korean market closely.
While Russia certainly wants North Korea's nuclear weapons program to be stopped, it is also clear that Moscow is nowhere as alarmed by this prospective nuclearization of the Korean peninsula as are Japan and the United States. Proliferation in Northeast Asia, though it is to be deplored, is not an immediate threat to Russia's security, just as Iranian proliferation, though equally deplorable, does not represent a threat to Moscow. Therefore Russia has had little interest in supporting Washington's demands for complete, verifiable, and irreversible denuclearization. Moreover, to the extent that North Korea' status is assured and Russia can use its relations with the DPRK to leverage its relations with the entire region of Northeast Asia, its overall standing grows.
At the same time, a deal would mean that Washington's and Japan's ability to pressure or even threaten Moscow in the future with unilateral action would diminish as well, since the regional security equation would then be incorporated into the six-power structure where opportunities for unilateral action would be constrained. The same consideration would then apply as well to China, which might be a source of future threats. Washington acceded to Russia's participation -- as did China -- because Pyongyang wanted it, which is testimony to the success of Russia's policies toward Pyongyang and the latter's desire for closer ties with Russia. But can it really be said that Russia and China truly share America's perspective that North Korean proliferation represents an urgent threat to Northeast Asia and not just to its neighbors? Based on recent history, the answer to that question is rather doubtful.
Russian President Vladimir Putin watched as a submarine fired an SS-N-23 strategic missile yesterday in the Barents Sea, Deutsche Presse-Agentur reported (see GSN, Aug. 11).
The missile was launched from the submerged vessel and successfully hit a target nearly 5,000 miles away in the Kura test range on the Kamchatka Peninsula, according to Russian military officials (Deutsch Presse-Agentur, Aug. 17).
2. Russiaï¿½s Putin Warns Against Lowering Nuclear Threshold
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Russian President Vladimir Putin has warned against lowering the threshold for using nuclear weapons and said that he saw such trends as dangerous, Russian news agencies reported on Wednesday.
ï¿½Lowering the threshold for using nuclear weapons is a dangerous trend taking shape in the minds of some politicians and soldiers. It could increase the temptation to use nuclear weapons,ï¿½ the president told a news conference. ï¿½If it happens, it will be possible to make further steps toward using more powerful nuclear weapons, which creates the threat of a nuclear conflict breaking out,ï¿½ Putin said.
Earlier on Wednesday president Putin oversaw the launch at sea of a ballistic missile after being flown to the site of a major military training by a strategic bomber jet laden with cruise missiles.
Russian Strategic Missile Commander Col. Gen. Nikolai Solovtsov said yesterday that the serviceï¿½s rail-based missile launchers have all been permanently removed from operation (see GSN, Aug. 4).
The last launcher was removed from service Aug. 12. The missiles mounted on the launchers are being destroyed at a storage base in the Perm region, while the launchers are being taken apart at a repair facility in Bryansk.
ï¿½It is impossible to extend the service life of any type of weapon eternally. That is why, no matter how sorry we are, we have to say goodbye to the rail-based missile launchers,ï¿½ Solovtsov told Russiaï¿½s Interfax-Military News Agency.
ï¿½It is unacceptable to keep missile systems that have outlived their usefulness in the inventory,ï¿½ he said. ï¿½One must never fool around with nuclear weapons, otherwise there will be a lot of trouble.ï¿½
ï¿½Another reason is the rail-based missile systems were designed and mass-produced in Ukraine. The enterprises that were involved in their development and production now no longer exist,ï¿½ Solovtsov added.
The missile launchers will be replaced through ï¿½the commissioning of the new Topol M missile systems, both mobile and silo-based ones,ï¿½ according to Solovtsov (BBC Monitoring/Interfax Military News Agency, Aug. 15).
1. Rosenergoatom Against Privatizing Nuclear Power Industry
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There is no need to privatize Russia's nuclear power industry, Stanislav Antipov, who heads Rosenergoatom, Russia's electric and thermal energy generating concern, told the daily newspaper Vedomosti Thursday.
Antipov, the general director of the holding, which comprises all 10 nuclear power plants in Russia, is preparing the company for corporatization.
Antipov said that when Rosenergoatom acquires a legal status more adapted to market economy, it would be able to borrow the tens of billions of rubles necessary to replace Russia's aging nuclear reactors.
"Without corporatization, the nuclear power industry will not be able to work efficiently in market economy conditions," he said, adding that large investments were necessary to build new power units instead of old ones.
"On average, Russian nuclear power units 60% worn-out," he said, adding that this is fraught with a serious energy crisis since the plants bear the brunt of the country's power grid.
Antipov said Rosenergoatom's corporatization would resolve the "deadlock" situation and help the industry get big banking loans for upgrading. Banks always demand a pledge or state guarantees, but a state enterprise is not allowed to pawn its property and government guarantees are not easy to receive.
Optimistic assessments have corporatization starting next year, Antipov said.
The new company's stock will be owned by the state, but part of its property could be given as a pledge to creditors.
"Of course, we are not talking about nuclear fuel or other radioactive materials that by law can be owned exclusively by the state," Antipov said.
1. Mikhail Kamynin, Spokesman , Answers a Question Regarding Situation Around Iranian Nuclear Program
Ministry of Foreign Affairs of the Russian Federation
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Question: Has the Russian Foreign Ministry taken notice of the reports that have appeared in the mass media about a possible use of force to resolve the Iranian nuclear problem?
Answer: We believe issues arising in connection with Iran's nuclear activities should be tackled by politico-diplomatic methods, on the basis of the rules of international law, within the framework of close cooperation by Teheran with the IAEA. The resolution of the Agency's Board of Governors, recently adopted by consensus, contains a call to Iran to get back to the regime of a voluntary moratorium on sensitive nuclear work and simultaneously reaffirms the sovereign right of states to develop and utilize nuclear energy for peaceful purposes.
We perceive a resolution to problems associated with the Iranian nuclear program solely in the field of expert consultations and diplomatic negotiations, without whipping up propaganda and political confrontationism, advocate continued dialogue, and regard as counterproductive and dangerous the use of force against Iran, of which hardly anyone can predict the grave consequences.
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