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Nuclear News - 5/26/2006
RANSAC Nuclear News, May 26, 2006
Compiled By: Roman Sehling

A.  Russia - Iran
    1. KIRIENKO AND RICE: RAPPROCHEMENT, Olga Pavlikova, What the Papers Say (5/25/2006)
    3. U.S. Suggests Russia Sell Iran along with Uranium, Dmitry Sidorov, Kommersant (5/25/2006)
    4. Iran Surprise, Vasiliy Sergeyev, (5/24/2006)
    5. Lavrov Supports Kuwait in Plans To Promote 'Moderate Islam', Darya Yuryeva, Rossiyskaya Gazeta (5/24/2006)
    6. Moscow May Agree to Punishment for Iran. Kiriyenko in the United States Seeks a Package of Incentives for Moscow, Ivan Groshkov, Nezavisimaya Gazeta (5/23/2006)
B.  Nuclear Security
    1. House doubles 'Global Threat' funding, Bill Cahir, Gloucester County Times (5/26/2006)
    2. NNSA Marks 2-Year Anniversary of Global Program to Reduce Nuclear Threats, National Nuclear Security Administration (5/24/2006)
    3. Detailed list of GTRI's accomplishments from 2004 to 2006, National Nuclear Security Administration (5/24/2006)
C.  Nuclear Forces
    1. Ivanov's Five-Year Plans: Defense Minister Initiates Deputies Into Military Organizational Development, Yuriy Gavrilov, Rossiyskaya Gazeta (5/25/2006)
D.  Nuclear Industry
    1. Nuke utilities clamor for more enriched Russian uranium, Jim Snyder, The Hill (5/25/2006)
    2. RUSAL Funds Atomic Energy, Kommersant (5/25/2006)
    3. Russia to pump much more money into uranium mining, says nuclear chief, RIA Novosti (5/24/2006)
    4. Russian Nuclear Supplies On US Market Should Be Open, Competitive -- Official , ITAR-TASS (5/23/2006)
    5. Kiriyenko: Lack of Russia-US peace nuke agt rudiment of Cold War, ITAR-TASS (5/22/2006)

A.  Russia - Iran

Yelena Suponina
What the Papers Say
(for personal use only)

An interview with Iranian Deputy Foreign Minister Mahdi Mustafai; Iranian Deputy Foreign Minister: "All our activities are consistent with the Nuclear Weapons Non-Proliferation Treaty and its provisions. Iran has great respect for the NNPT and doesn't intend to withdraw from it. The NNPT is beneficial for all of the international community."

Representatives of the five permanent members of the UN Security Council (Russia, United States, China, Britain, and France), plus Germany, have met in London again to discuss the problem posed by the Iranian nuclear program. A new deal with Tehran was discussed: a light-water reactor and nuclear fuel, in return for Iran abandoning uranium enrichment. But Tehran would not curtail its uranium enrichment program.

Here is an interview with Iranian Deputy Foreign Minister Mahdi Mustafai, who is currently in Doha, the capital of Qatar, attending the Fifth International Conference "Dialogue on Cooperation in Asia." The Russian delegation at the forum is headed by Foreign Minister Sergei Lavrov.

Question: Why won't Iran suspend its nuclear programs? The international community's offers are becoming more and more enticing.

Mahdi Mustafai: As a signatory to the Nuclear Weapons Non-Proliferation Treaty (NNPT), Iran knows that what it has been doing is entirely legitimate. Iran cooperates with the IAEA, which controls and monitors all these activities. Since all this is for peaceful purposes, why should we stop it? The terms of the NNPT permit us to enrich uranium. Why are attempts being made to encroach on our rights?

Question: But IAEA inspectors have not examined some research facilities (Lavizan and others) as they should be examined, right?

Mahdi Mustafai: The IAEA gave us a number of questions to answer. We provided the required answers to some of the questions. We are studying the others, to provide answers to them too.

Question: Perhaps Iran would be better off withdrawing from the NNPT entirely? Like North Korea withdrew from it three years ago.

Mahdi Mustafai: All our activities are consistent with the NNPT and its provisions. Iran has great respect for the NNPT and doesn't intend to withdraw from it. The NNPT is beneficial for all of the international community.

Question: What about the Moscow's idea of a joint venture enriching uranium for Iran on the territory of Russia? Doesn't Iran intend to consider that any further?

Mahdi Mustafai: It is being considered. However, we have never received the nuts-and-bolts details of the proposal. We will accept any offer as long as the rights - all rights - of the Iranian people are observed. For example, if Russia proposes cooperating in the process of nuclear fuel production on equal terms, we would accept it gladly. On whose territory this production is organized doesn't matter. Full-fledged participation does. The same principle applies to our cooperation with all other countries.

Question: Have US leaders responded to the letter President Mahmoud Ahmadinejad sent to President George W. Bush?

Mahdi Mustafai: No, they haven't. We know, however, that the American people and other people liked it.

Question: Do the Iranians still regard the United States as the Great Satan?

Mahdi Mustafai: Yes, judging by its behavior in international affairs.

Original source: Vremya Novostei, May 25, 2006, p. 5

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Olga Pavlikova
What the Papers Say
(for personal use only)

A mutually acceptable resolution formula; RosAtom chief Sergei Kirienko and US Secretary of State Condoleezza Rice met yesterday and thrashed out the final text of the future resolution on Iran. Russian analysts suspect that a recent missile test in Iran gave Russia and the United States an extra incentive to reach agreement.

Western newspapers are already applauding what they describe as a "breakthrough," as proclaimed by Sergei Kirienko, head of the Federal Nuclear Energy Agency (RosAtom), after his meeting with US Secretary of State Condoleezza Rice. Foreign analysts are interpreting Kirienko's reference to "a mutually acceptable resolution formula" as Moscow's promise to stop objecting to references in the text of the UN Security Council resolution to the UN Charter article authorizing sanctions against nonproliferation regime violators.

Kirienko said at a press conference that the resolution drawn up in London would include two important details. "Firstly, a demand to Iran on the matter of control and nonproliferation. Secondly, the demand that Iran doesn't use nuclear fuel elsewhere," Kirienko said. He added that any country's right to nuclear energy production might be recognized and honored as long as the country in question demonstrated "absence of dual-use technology."

Russian analysts suspect that the two countries reached the compromise due to Tehran's latest actions, which the rest of the international community perceives as threatening. The matter concerns a recent missile test in Iran, reported by Israeli secret services. According to the Israelis, Iran tested SSMs with a range of 1,500 kilometers. (Such a missile would reach Israel, Iraq, and most American military installations in the region.)

The test launch caused a stir around the world. Igor Sergeev, former defense minister, said: "Russia is even less likely than the United States to want a nuclear-armed Iran, because even the missiles Iran already has can reach the territory of Russia."

When informed of the Russian-American agreements, Iranian leaders addressed the White House directly. Unlike President Mahmoud Ahmadinejad's previous message, which only contained accusations, this message from Tehran was an invitation to a direct dialogue.

Yevgeny Satanovsky, director of the Middle East Institute at the Russian Academy of Sciences, also attributes Tehran's latest initiative to the meeting of representatives of six countries (the European Trio plus Russia, United States, and China) in London. "Whenever tension becomes unbearable, Ahmadinejad backs off somewhat to abate the tension, confuse the international community, and buy some more time," Satanovsky said.

As for the conference in London, it was dedicated to the search for ways of persuading Iran to resume cooperation with the IAEA. "We do not want a conflict. We are trying to... convey to Iran the opinion of the international community and particularly the IAEA," said Margaret Bekkett of the British Foreign Office. Russian analysts suspect that only the G8, at its forthcoming summit, can make a clear and coherent decision with regard to Iran.

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U.S. Suggests Russia Sell Iran along with Uranium
Dmitry Sidorov
(for personal use only)

The five permanent members of the UN Security Council and Germany resumed negotiations over Iran yesterday in London. U.S. President George W. Bush urged that a diplomatic solution be found the day before. The president's dove-like statement coincided with the visit to Washington by head of the Russian Atomic Energy Agency head Sergey Kirienko. Kommersant has learned that an attractive offer has been made to Kirienko to increase atomic cooperation in exchange for more understanding of the American approach to the Iranian problem. Kommersant's Washington correspondent Dmitry Siderov has the details.

At the conclusion of his visit on Tuesday, the day before negotiations began in London, Kirienko gave a press conference at the Russian embassy in Washington and made an intriguing statement. Summing up his meetings with high officials of the Bush administration, who included presidential security advisor Steven Hadley, Secretary of State Condoleezza Rice, Undersecretary of State for weapons nonproliferation Robert Joseph and Secretary of Commerce Carlos Gutierrez, Kirienko expressed hope that a ´┐Żdecisive breakthrough´┐Ż would be made at the London talks. Kirienko did not elaborate on the ´┐Żbreakthrough proposal´┐Ż to be made to Tehran. He also said that Russia and the United States had made progress toward signing a bilateral agreement on atomic cooperation. Analysts note that such an agreement would clear the way for multimillion-dollar trade in nuclear materials and technology that is attractive for both sides.

Officially, Kirienko was in Washington to discuss U.S. import duties on Russian uranium, and not Iran but, as sources in the Russian delegation noted, the two issues are closely related. Kirienko told the Kommersant correspondent on Monday that he intended to touch on the issue of Iran at the State Department and in his talks with Hadley. His visit clearly shows the relationship between Iran and Russian-American nuclear cooperation.

Under an agreement that remains in force until 2013, Russia can export only 500 tons of uranium duty-free to the U.S. at a fixed price and through the intermediary American company USEC. All supplies above that limit are subject to a 116-percent duty, which makes uranium exports to the U.S. unprofitable. Kommersant has learned that Kirienko tried to drum up support from the heads of 20 large American companies that are interested in doing business with Russia directly and without duties. ´┐ŻI lobbied those firms in hopes that they would apply pressure on the administration,´┐Ż he told Kommersant.

If Kirienko's efforts are unfruitful, the Russian Atomic Energy Agency intends to go to court against the U.S. government to have the antidumping duties removed. Kirienko said that the agency has hired American lawyers, one of whom was present at Kirienko's negotiations with Gutierrez. A Kommersant source close to the Commerce Department says that American officials asked the Russians not to go to court. In a compromise, the Americans agreed in principle to lift the duty and the Atomic Energy Agency agreed to retain the agreement on the delivery of 500 tons of uranium per year through 2013. Kirienko told Kommersant that negotiation on lifting the duty may continue for another one to three years.

The big breakthrough in bilateral nuclear cooperation may be the signing of a so-called Section 123 Agreement. That is the document described in that section of the U.S. law on atomic energy that is necessary of full-scale cooperation with another country. Russia's nuclear cooperation has prevented and continues to prevent the signing of such an agreement. The Americans made it clear during talks with Kirienko that negotiations on the signing of a Section 123 Agreement are still possible. Sources say Bush and Russian President Vladimir Putin may announce the beginning of those negotiations at the G8 summit in St. Petersburg.

Former Undersecretary of State for weapons nonproliferation and current senior adviser at the Center for Strategic and International Studies Robert Einhorn told Kommersant that Section 123 Agreement talks would take no less than a year, which means that Washington will have the option of freezing the talks if the two sides are unable to reach an agreement on Iran.

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Iran Surprise
Vasiliy Sergeyev
(for personal use only)

Russia and the United States coordinated their positions on the Iran crisis on the eve of today's talks by the "sextet of intermediaries" in London. Sergey Kiriyenko, head of the Federal Atomic Energy Agency (Rosatom), announced a certain breakthrough after a meeting with Condoleezza Rice in Washington.

The news of the development in the discussion of the Iran crisis arrived from the United States late on Tuesday (23 May) evening. Rosatom head Sergey Kiriyenko, who is currently in Washington, indicated clearly that Russia and the United States had finally managed to coordinate their positions on Iran, in particular on the version of the Iran resolution that the United States, Russia, China, and the EU-3 are preparing to discuss in London on Wednesday. At a news conference following talks with Secretary of State Condoleezza Rice, Kiriyenko announced that the draft London resolution that is in preparation will contain two aspects: "The first will concern Iran's respect for a control and nonproliferation regime; the second will prohibit Iran's dual use of nuclear fuel (in other words, the use of nuclear fuel for military purposes is prohibited)." The Rosatom head added that any country's potential right to possess nuclear energy can only be recognized if the country demonstrates "absence of dual use."

The Rosatom head stated earlier that the central topic discussed with the US leadership was Russian-US cooperation in the sphere of averting the threat of nuclear terrorism and nonproliferation of weapons of mass destruction. Sergey Kiriyenko said in this connection that on Wednesday (as published) he had meetings at the US State Department, including with its head, Condoleezza Rice, and US national security aide Stephen Hadley. According to the Rosatom head, at present "the United States' and Russia's fundamental approaches to resolving the Iran issue are the same."

In this connection, the US media are suggesting the possibility that Russia and the United States have finally devised a mutually acceptable scheme for relations with Iran. Moreover, observers believe, Russia will probably withdraw its objections regarding the draft Iran resolution's mention of Chapter VII of the UN Charter, which authorizes an embargo and military action against a country in breach of the nonproliferation regime.

Today Kiriyenko essentially confirmed the US media's predictions. "Of course, we could not bypass this topic (Iran --), although I am not a negotiator. Any country in the world has the right to develop nuclear energy. But the world community must have rights and guarantees regarding the nonproliferation of weapons of mass destruction, and particularly of dangerous, nuclear weapons," Kiriyenko said. The Russian functionary was not being disingenuous when he said that he is not an official "negotiator" on Iran. The Iranian issue did indeed crop up "in passing," so to speak, during his visit to Washington, in connection with discussion of the main issue -- Russian-US energy cooperation. The Rosatom head said in this connection that he was satisfied with his talks with US Commerce Secretary Carlos Gutierrez. "I am very satisfied with the talks we had today at the Department of Commerce and with the meeting with Secretary Carlos Gutierrez. In response to our stance on free access and to US companies' desire to be able to freely obtain Russian goods and services, the US commerce secretary said that free trade is a core value of the United States, and that the Commerce Department also does everything to support such an approach," Kiriyenko said. He noted that during the talks with Carlos Gutierrez there was "a very constructive exchange of opinions." In particular, the sides reached an agreement on a system of systematic work, establishing for certain that the opening of the US market to Russian uranium is not a political issue.

The accuracy of the US media's predictions will become clear in the next few hours at the meeting of the "six intermediaries" in London. According to some reports, the meeting will include discussion of the EU's recent proposal to provide Iran with a light-water nuclear reactor in exchange for its abandonment of uranium enrichment work. This initiative, it will be remembered, recently was firmly rejected by Tehran. President Mahmud Ahmadinezhad said that he does not need Western handouts in the form of "candies." A few days later the Iranian leader's statement was moderated somewhat by Iranian Foreign Minister Manouchehr Mottaki. He expressed hope that the EU's proposals to Tehran for resolving the Iranian nuclear problem would take account of the interests of both sides. Meanwhile, Russian Foreign Minister Sergey Lavrov said on the eve of today's meeting in London that "Moscow expects that Tehran will respond constructively to the negotiating proposals and will cooperate fully with the IAEA."

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Lavrov Supports Kuwait in Plans To Promote 'Moderate Islam'
Darya Yuryeva
Rossiyskaya Gazeta
(for personal use only)

It so happened that, literally on the eve of Russian Foreign Ministry head Sergey Lavrov's visit to Kuwait the amir of that state, Shaykh Sabah al-Ahmad al-Jabir al Sabah, decided to dissolve parliament and scheduled new elections.

However, this circumstance did not prevent Russia's foreign minister from holding talks with his Kuwaiti colleague, Shaykh Muhammad Sabah al-Salim al-Sabah.

The sides agreed a timetable for settling the former USSR's $1.1-billion debt to Kuwait. Lavrov said that the understanding opens up new opportunities for growing commercial and economic cooperation in areas of interest to Russian companies.

As far as international problems were concerned, the central topic of the Russian and Kuwaiti Foreign Ministry chiefs' talks was the crisis surrounding the Iranian nuclear program. Here the sides once again reaffirmed their adherence to a political-diplomatic solution to the problem. It must be said that adhering to that position does not come easily to Kuwait. According to a source's information, serious pressure is being imposed on the country's leadership by the United States, which wants to add to the number of countries supporting the forcible method of resolving the conflict.

The ministers also discussed such topics as a Near East settlement and the situation surrounding Iraq. Particular attention was paid to the issue of fighting terrorism. In that respect Lavrov supported the Kuwaiti authorities' initiative to promote "moderate Islam."

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Moscow May Agree to Punishment for Iran. Kiriyenko in the United States Seeks a Package of Incentives for Moscow
Ivan Groshkov
Nezavisimaya Gazeta
(for personal use only)

The latest attempt to organize a dialogue with Iran is on the verge of collapse. Teheran is warning that it will continue its nuclear activity under any circumstances. The Iranian authorities have rejected in advance the incentives that the EU-3 (Britain, France, and Germany) intend to propose to the Islamic Republic in exchange for the abandonment of enriched uranium. Europe was even prepared to provide the Iranians with security guarantees, but this does not suit Washington. "This is not for discussion," US Secretary of State Condoleezza Rice said last Sunday.

It is against this backdrop that Rosatom head Sergey Kiriyenko is conducting negotiations with high-ranking representatives of the US Administration. Officially his visit is devoted to developing bilateral cooperation in the field of peaceful nuclear energy, but, according to our informed sources, the subject of Iran will also be touched upon.

It is possible that the Rosatom head will try to reach agreement on a package of incentives for Moscow in exchange for amenability in resolving the Iran issue.

A Russian diplomat close to the negotiations told Nezavisimaya Gazeta that in the course of the meeting of the Sextet (the United States, the Russian Federation, China, Britain, France, and Germany) scheduled to be held in London tomorrow there will be a discussion not only of the EU-3 package but also of a draft new UN Security Council resolution, which will again incorporate a reference to Chapter VII of the UN Charter, which makes provision both for the introduction of sanctions and for the use of force. The source did not rule out the possibility that Russia could promise not to obstruct the adoption of such a document.

Kiriyenko actually arrived in America last Thursday, but the most important part of his program relates to today. During the weekend he had talks with leaders of the US nuclear sector. Yesterday he met with US Energy Secretary Samuel Bodman and with Nils Diaz, head of the US Nuclear Regulatory Commission. Today he has meetings planned with Stephen Hadley, the US President's national security adviser, and US Undersecretary of State Robert Joseph. "It is also possible that Secretary of State Condoleezza Rice personally will meet with Kiriyenko," Carnegie Moscow Center Director Rose Gottemoeller, an expert in the field of non-proliferation, told Nezavisimaya Gazeta.

One of Kiriyenko's main objectives is to achieve the lifting of the restrictions on the delivery of Russian nuclear sector materials and services to the United States. Uranium imports are currently subject to a tariff equivalent to 112% of the delivery price. Imports are tariff-free only within the framework of the intergovernmental LEU-HEU agreement, under which low-enriched uranium (LEU) for power plants is extracted after the processing of highly-enriched (HEU) weapons-grade uranium. Under LEU-HEU the Russian Federation receives $400-800 million a year irrespective of the market price of uranium, which has tripled in the last 2.5 years. The agreement, which was signed in 1993, expires only in 2013.

Meanwhile the working life of the main nuclear power plants in Russia runs out in 2015-2025, and replacement capacity is needed. According to Rosatom's plans, from 2010 at least two nuclear power units a year need to be commissioned in the Russian Federation, and this requires money.

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B.  Nuclear Security

House doubles 'Global Threat' funding
Bill Cahir
Gloucester County Times
(for personal use only)

House lawmakers have approved an amendment by U.S. Rep. Robert Andrews to spend an added $27.8 million on a program aimed at preventing spent nuclear fuel rods from aging fission plants from being used to make nuclear bombs.

The House on Wednesday approved Andrews's amendment, 227-195, directing the U.S. Energy Department to more than double funding for an existing program called the Global Threat Reduction Initiative.

Andrews and U.S. Rep. Jim Leach, R-Iowa, sponsored the plan. It would divert the $27.8 million from the Energy Department's growing administrative budget to the nuclear threat-reduction program.

Up to 64 reactors in the former Soviet Union and around the world use highly-enriched uranium, which is suitable for making nuclear bombs, to operate their fission reactors, Andrews stated.

Under the existing threat-reduction program, which was funded at $24 million in 2006, the federal government finances the conversion of foreign plants to lower-enriched uranium.

Low-enriched uranium, made up no more than one-fifth of the radioactive isotope Uranium-235, is not an ideal fuel for nuclear weapons.

"What is needed is increased priority to this program," Leach said in floor debate Wednesday. "If Congress can lead, we would, as President Eisenhower once suggested in another context, be dedicating some of our country's strength 'to serve the needs rather than the fears of mankind."'

Andrews said he was surprised to pick up 39 votes from House Republicans for his amendment, which passed over the objections of the GOP leadership.

"If you read the 9-11 commission report, they say this is one of the things we should do urgently," Andrews said.

The Haddon Heights Democrat estimated that 10 reactors, rather than five, could be converted from highly-enriched to low-enriched uranium next year should the Andrews-Leach proposal become law.

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Detailed list of GTRI's accomplishments from 2004 to 2006
National Nuclear Security Administration
(for personal use only)

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NNSA Marks 2-Year Anniversary of Global Program to Reduce Nuclear Threats
National Nuclear Security Administration
(for personal use only)

GTRI has secured more than 400 radiological sites around the world and removed enough material for eight nuclear weapons

WASHINGTON, D.C. - In the past two years, a key nuclear nonproliferation program of the Department of Energy's National Nuclear Security Administration (NNSA) has removed more than eight nuclear weapons worth of highly enriched uranium, and secured more than 400 radiological sites around the world containing over 6 million curies - enough for approximately 6,000 "dirty bombs."

NNSA marks the two-year anniversary of the Global Threat Reduction Initiative, or GTRI, on Friday. This program works with partners around the world to reduce the threat posed by high-risk, vulnerable nuclear and radiological materials, which could be used by terrorists to make a nuclear weapon or dirty bomb.

"The Global Threat Reduction Initiative is an important part of the President's 2006 National Security Strategy to protect Americans," Linton F. Brooks, the head of NNSA, said. "In just two years, GTRI has worked with our international allies to significantly step up international efforts to secure vulnerable nuclear and radiological materials. The Bratislava agreement between Presidents Bush and Putin has accelerated our efforts to keep dangerous materials out of the hands of terrorists."

GTRI is part of NNSA's multi-layered strategy to decrease the risk of nuclear terrorism. It is focused on identifying, securing, removing and/or disposing of high-risk, vulnerable nuclear and radiological materials - as quickly and expeditiously as possible - that pose a potential threat to the United States and the international community.

Highlights of GTRI's progress during the past two years include:

Removing over 200 kilograms of highly enriched uranium from facilities worldwide that could have been used to make an improvised nuclear device;

Recovering and securing more than 2,700 excess and unwanted radiological sources located within the United States;

Converting three research reactors from the use of highly enriched uranium, which can be used in a nuclear weapon, to the use of low enriched uranium; and

Installing and upgrading physical security at more than 400 sites around the world where vulnerable radiological sources are stored.

Established by Congress in 2000, NNSA is a semi-autonomous agency within the U.S. Department of Energy responsible for enhancing national security through the military application of nuclear science. NNSA maintains and enhances the safety, security, reliability and performance of the U.S. nuclear weapons stockpile without nuclear testing; works to reduce global danger from weapons of mass destruction; provides the U.S. Navy with safe and effective nuclear propulsion; and responds to nuclear and radiological emergencies in the U.S. and abroad.

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C.  Nuclear Forces

Ivanov's Five-Year Plans: Defense Minister Initiates Deputies Into Military Organizational Development
Yuriy Gavrilov
Rossiyskaya Gazeta
(for personal use only)

Yesterday (24 May) Vice Premier Sergey Ivanov shared with the State Duma deputies his plans for Russia's military organizational development over the next five years.

It was not all about building housing for officers, although the minister did also touch upon this issue during the government hour. He talked about the Armed Forces development strategy through 2010. Such issues directly affect the country's security, so hearings are generally conducted in closed session. No exception was made for the vice premier, and the special status of the meeting was underscored by some of its external features. For example, the vice premier entered the chamber not though the central doors, as usually happens, but through the back door.

Sergey Ivanov's visit to the State Duma had been forecast. Before the military budget for the new financial year is debated, the defense minister always explains to the deputies the logic of his department's future expenditure. Furthermore, the program for re-arming the Army through 2010 is funded in five-year periods, and the legislators are entitled to know how and on what the military are planning to spend the next tranche. The program for re-arming through 2015 is also approaching, with the first debate on it planned for 2 June.

Experts maintain that both documents are balanced in terms of priorities, objectives, and money. First and foremost, funds are being assigned to purchasing modern arms and equipment for the strategic nuclear forces; for intelligence, command and control, and communications subunits; and for permanent readiness units. Sergey Ivanov stressed particularly that arms deliveries to the Army have finally become serial -- being simultaneously made to battalions, divisions, and squadrons. The Defense Ministry is also firmly pursuing a policy of balancing expenditure on "maintenance" and "development" of the Armed Forces. The current ration is 60:40, but ideally it should be 50:50. The military intend to achieve economic parity by 2010-2011.

On the eve of Sergey Ivanov's State Duma speech there were rumors that the defense minister was going to present deputies with a fundamentally new scheme for structuring the Armed Forces. People were even talking about a timeframe of 2010 for global restructuring of the Army and probable schemes for its reorganization. In particular, there was talk of the idea of replacing military districts with regional commands, and the nuclear triad (the Strategic Missile Troops, long-distance aviation, and Navy strategic submarines) with strategic nuclear forces united into a single strike force.

The vice premier is in no hurry to take revolutionary steps, although he has stressed repeatedly that the proposed changes do have a certain logic. For the time being, an operational-mobilization experiment has been conducted in the strategic area only. Last year a fundamentally new scheme for collaboration by ground forces, aviation, and Navy was tried out in Northwest Russia. It turned out pretty well. However, the Defense Ministry leadership considers it premature to apply the scheme to the entire Russian Army. In general, it seems that for the first time in many decades the structure of the Armed Forces is not being adapted according to the Army's numerical strength but is being determined on the basis of the state's defense objectives and economic capabilities. Not only the partial professionalization of the Armed Forces, but also their systematic re-arming and the gradual cuts to military units fit in excellently with such a scheme.

"By 2011 it is planned to cut only 34,000 servicemen," Sergey Ivanov said yesterday. "I say 'only' because in the past five years over 200,000 have been cut."

The minister promised that the cuts would not affect combat units but the military-bureaucratic apparatus. Roughly 300 generals and admirals will have to give up their leadership posts. The general principle of the cuts is well known: There should be no more than one general per 1,000 servicemen.

By 2010 Russia will have 1.1 million servicemen. By 2016 it is planned to achieve an Army of 1 million and to stop there: Forces any smaller than that would not be able to defend the country. And there is no doubt that Russia still has its ill-wishers. This is how Chief of General Staff Yuriy Baluyevskiy commented yesterday on the possibility of US missile defense forces being deployed in East Europe:

"The countries where forces of the third forward missile defense area may be deployed are being named openly in the press. They are Poland and Romania. They are very close to us, so all the talk about the need to strike ICBMs launched from what the United States regards as problem states, such as Iran, merely suggests poor knowledge of geography. There is no doubt that the forward missile defense area is needed in order to even out Russia's strategic potential.

"What might our response be? It has already been given in the president's Address: We have already found adequate, but asymmetrical solutions. Current and future missile defense not only can be overcome today but will be overcome tomorrow and in the foreseeable future by Russian ICBMs and their warheads."

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D.  Nuclear Industry

Nuke utilities clamor for more enriched Russian uranium
Jim Snyder
The Hill
(for personal use only)

Nuclear utilities are lobbying the Commerce Department to end its restrictions on the importation of enriched uranium from Russia, but are doing so at a time when U.S.-Russian relations may be at a post-Soviet low point.

Lobbyists for the utilities say restricted access to Russian uranium has increased market prices. That jeopardizes the ´┐Żnuclear renaissance´┐Ż in this country, where no new nuclear plants have been ordered for more than two decades.

Utilities that operate 85 percent of the nuclear plants in the United States have formed the Ad Hoc Utility Group, or AHUG, to lobby against the import restriction.

The restriction, which is effectively a ban on commercially produced Russian enriched uranium, has been in place since 1992. The Commerce Department determined then that Russia had been dumping enriched uranium, selling it at below production costs.

The Russian Suspension Agreement is the subject of an International Trade Commission hearing scheduled for today.

The only domestic enrichment service provider, United States Enrichment Corp. (USEC), has argued that the restriction is critical to its future viability, especially as it constructs a more efficient but technically challenging enrichment facility.

´┐ŻUnlimited Russian imports will destabilize the existing U.S. market and undermine deployment of domestic sources of enriched uranium,´┐Ż said Elizabeth Stucklee, a USEC spokeswoman.

Jim Tramuto, a lobbyist at PG&E, which has lobbied against the agreement, said Commerce was right to impose the import ban in 1992.

´┐ŻBut those market conditions have changed,´┐Ż Tramuto said. ´┐ŻThe idea Russians would be dumping is just not accurate.´┐Ż

Tramuto called access to enriched uranium produced outside the United States ´┐Ża very big issue´┐Ż for nuclear utilities in AHUG.

In a separate case, nuclear utilities have also lobbied against Commerce-imposed countervailing duties on enriched uranium produced by Urenco, which is based in Germany, and Areva, which is based in France.

Commerce found these companies to be dumping in the U.S. market as well. Recent court cases have favored the utility position.

The twin cases have propelled uranium prices upward, Tramuto said. Higher prices could make it less likely that investors go forward with a series of new plants that are planned, he said.

Stucklee acknowledged that prices are higher but said U.S. utilities are not paying more than worldwide market prices. Prices were lower because of unfair market practices of USEC´┐Żs competitors, Stucklee said.

No new nuclear plant has been ordered for over two decades, but with energy costs rising across the board, from gas to electricity, the industry hopes to build ´┐Żnext generation´┐Ż plants within the next decade.

There are 103 nuclear plants operating in the United States. Utilities have initial plans to develop 12 more. More than 400 nuclear plants are in operation worldwide, with dozens more planned.

The fight over fuel costs also comes as utilities embark on a lobbying campaign to build support for their industry as a partial solution to fears of global warming. Nuclear utilities do not emit carbon dioxide, which is a key greenhouse gas.

So far the fight over the price of enriched uranium has been limited to Commerce and not Capitol Hill. But utilities were able to convince House Energy and Commerce Committee Chairman Joe Barton, a Texas Republican, to weigh in on their side.

Barton wrote the department last year suggesting that additional enriched uranium from Russia be allowed into U.S. market and that Commerce impose a quota as a protection against future market abuses. Barton said an amount of Russian produced enriched uranium equal to 10 percent of domestic uranium market should be allowed in.

´┐ŻThus, the necessary supply for U.S. nuclear utility companies would be assured,´┐Ż Barton wrote. In a separate letter, Barton criticized Commerce for imposing duties on European uranium-enrichment companies.

Stucklee, of USEC, noted that a significant amount of enriched uranium comes from Russia, even with the terms of the suspension agreement.

The uranium allowed in comes from the highly enriched variety used in nuclear warheads. To encourage Russia to dismantle is nuclear arsenal, the United States, through USEC, is buying highly enriched uranium converted to fuel in nuclear plants.

This type of fuel provides nearly 50 percent of the total nuclear fuel needs of America´┐Żs nuclear utilities.

But prices paid by USEC for this uranium have risen as well under the terms of a renegotiated contract. Stucklee said the price USEC pays is based on a formula that matches the price with market rates, which have risen in recent years on higher demand.

Opening the market further, Stucklee said, could result in the United States´┐Ż ´┐Żoverdependence´┐Ż on Russia for uranium fuel.

Lobbyists working with AHUG expect Russian officials to bring up the suspension agreement during the G-8 Summit in Russia in July.

Russian nuclear officials met with Commerce officials this week and apparently urged them to end the suspension agreement.

A complication, though, is the seemingly deteriorating relationship between the United States and Russia. In a recent visit to neighboring Lithuania, Vice President Cheney scolded Russia for curbing civil liberties and using its vast energy resources to bully neighbors formerly under Soviet control.

That prompted Russian President Vladimir Putin to compare the United States with a hungry wolf that listens to no one.

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RUSAL Funds Atomic Energy
(for personal use only)

RUSAL has sent a draft financing plan for a new atomic power station to the Russian Atomic Energy Agency suggesting paying 30 percent of the station´┐Żs cost for the future power energy supply. The power generated at atomic power stations is the cheapest for smelters. The Russian Atomic Energy Agency, however, still declines to discuss this scheme.

RUSAL has suggested funding 30 percent of the construction of a new atomic power station and securing the remaining 70 percent in bank loans, a source in the Russian government said. In return, RUSAL asks to consider this share as the payment for future energy supplies. The company also informed of its plans to double the aluminum output to the annual 5 million metric tons and provide at least one half of it with the power of its own production.

Late last year, the head of the Russian Atomic Energy Agency Sergey Kirienko promised to map out an investment plan to build 40 atomic power-generating units worth $60 billion by 2030. SUAL is also reputed to be in talks with he atomic officials. The atomic power is the cheapest for the industry, apart from hydro power.

The Russian Atomic Energy Agency declined to comment the negotiations with aluminum companies. Sources in the agency explain off the record that a governmental decree should be enacted to endorse the construction of the station and approve of the placement of power-generation facilities before any long-term bilateral agreements are signed.

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Russia to pump much more money into uranium mining, says nuclear chief
RIA Novosti
(for personal use only)

Russia considers it essential to increase extraction of uranium, the head of Rosatom (Russian Federal Agency for Atomic Energy), Sergey Kiriyenko, who is paying a working visit to the USA, has told a news conference in Washington.

"We consider it necessary to increase the extraction of uranium. We have already agreed on a tenfold increase in funding for additional prospecting and development of uranium reserves," he said.

The Rosatom chief noted that Russia "is definitely not threatened by a uranium famine" in the near future.

"But the stocks are not enough. Let there be more," he added.

(In another report at 2301 gmt, RIA-Novosti quoted Kiriyenko as adding: "Our stocks of uranium are fairly sizable. As far as our internal needs are concerned, there is enough for many decades. For our internal needs there is enough for more than 50 years.")

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Russian Nuclear Supplies On US Market Should Be Open, Competitive -- Official
(for personal use only)

The need to conclude "a full-fledged agreement on cooperation in the peaceful
use of atomic energy is a very important issue" that head of the Federal Atomic
Energy Agency Sergei Kiriyenko raised for his US partners during the Washington
talks. He has made a statement for Russian journalists on Monday.

According to Kiriyenko, "open, comprehensible and transparent rules should
be created in nuclear engineering as those that exist in all other economic
relations." "We do not demand any privileges for ourselves, but we will not
allow any restrictions against ourselves," he emphasized. "The supplies of
Russian goods and services in nuclear engineering to the US market should be
open and competitive, and we are ready to compete on equal terms with all other
countries," Kiriyenko pointed out.

"The signing of an agreement on the peaceful cooperation in atomic energy is
interesting for both countries - Russia needs it not less than the United
States, the US needs it not less than Russia," the Russian atomic industry
chief remarked. Meanwhile, he urged not to confuse the issue of this agreement
with other issues of bilateral relations and "make it an independent task."
"This task can be solved" only this way, he indicated.

Kiriyenko added that Russia and the US are doing much for nuclear
cooperation, but "at least the legal basis" is needed for its large-scale
development." "Everybody who professionally engaged in nuclear cooperation
understands it," he noted. However, "along with the professional understanding
of cooperation several political issues should be solved. This needs will and
time. We have the will for this and will work," he added.

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Kiriyenko: Lack of Russia-US peace nuke agt rudiment of Cold War
(for personal use only)

The lack of a full-fledged agreement between Russia and the United States on peaceful uses of atomic power is a rudiment of the Cold War, head of the Russian Federal Atomic Energy Agency (Rosatom) Sergei Kiriyenko said here on Sunday. He arrived in New York in order to hold talks with the leadership of US energy companies and participate in the annual forum of the Russian and US business elite held by RAND Corporation.

On Monday and Tuesday Kiriyenko will meet in Washington US administration officials and American lawmakers. According to the Rosatom head, the main goal of the meetings is to ´┐Żcreate normal conditions for the two countries´┐Ż cooperation in the atomic power industry sphere,´┐Ż which envisages lifting all discriminatory restrictions on the supply of materials and services of Russia´┐Żs nuclear power branch.

Answering an Itar-Tass question if the currently observed cooling in the two countries´┐Ż bilateral relations affects cooperation in this sphere the Rosatom head said, ´┐ŻIt would be extremely unwise to link the project of the nuclear power industry development that is of interest for both sides with any sensitive issues of present relations.´┐Ż

´┐ŻSpecificity of the atomic power industry is its long-term existence,´┐Ż Kiriyenko stressed. ´┐ŻIn five years we will forget about all these discussions, all this political fuss that causes emotional outbursts today and projects in the sphere of safe development of the nuclear power industry that we are now creating will be implemented,´┐Ż the Rosatom head noted.

Kiriyenko pointed out that meetings in New York with the heads of some 20 energy companies servicing over 50 percent of US consumers convinced him that they are actively interested in open access of Russian nuclear cycle products and services to the American market. ´┐ŻCooperation between Russia and the United States in the development of the atomic power industry is not a subject for bargaining,´┐Ż Kiriyenko stated.

´┐ŻBargaining begins when one side needs something more than the other. After talks with the heads of American energy companies I have become strongly convinced once again that both sides are equally interested and therefore bargaining is out of place here,´┐Ż the Rosatom head indicated. The stance displayed by the American companies is of crucial importance, said Kiriyenko stressing that it will give him the ´┐Żarguments and stance for holding talks in Washington with US state agencies.´┐Ż

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