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Nuclear News - 6/14/2006
RANSAC Nuclear News, June 14, 2006
Compiled By: Roman Sehling


A.  Cooperative Threat Reduction
    1. US, Russia to set up new bilateral security group, Dmitry Kirsanov, ITAR-TASS (6/13/2006)
    2. Is this any way to secure a country?, Miriam Pemberton and Lawrence Korb, The Hill (6/13/2006)
B.  Biosecurity
    1. Lax laws, virus DNA and potential for terror , James Randerson, The Guardian (6/14/2006)
    2. Livermore Lab Seeks New Nuke; Battles Over Bio-Lab, KTVU.com (6/13/2006)
    3. The accidental terrorists; Too many biologists remain blind to the danger that they could be aiding the spread of bioterrorism, Peter Aldhous, New Scientist (6/10/2006)
C.  Nonproliferation Diplomacy
    1. Special Event in September: Assurances of Nuclear Supply and Non-Proliferation, IAEA (6/14/2006)
    2. Rethinking Nuclear Safeguards, Mohamed ElBaradei, Washington Post (6/14/2006)
    3. Kim Campbell Pays a Call For Nuclear Disarmament , Sarah McGregor, Embassy Magazine (6/14/2006)
    4. Former UN Weapons Inspector Calls for Fewer Nukes , Sabina Castelfranco, Voice of America (6/13/2006)
D.  Russia - Iran
    1. Mikhail Kamynin, the Spokesman of Russia's Ministry of Foreign Affairs, Answers a Question from RIA Novosti Regarding Comments by US Ambassador to the UN, John Bolton, Alleging Russian Leadership's Lack of Consensus over Iran's Nuclear Program , Ministry of Foreign Affairs of the Russian Federation (6/10/2006)
    2. Duma's Kosachev Says Russia, China Prevent Worst Developments Around Iran Nuclear Program , ITAR-TASS (6/9/2006)
E.  International Nuclear Fuel Centers
    1. Germany Supports Russian Initiative On Nuclear Services' Centers - Ambassador, Interfax (6/12/2006)
F.  Nuclear Forces
    1. Rival U.S. Labs in Arms Race to Build Safer Nuclear Bomb, Ralph Vartabedian, Los Angeles Times (6/13/2006)
    2. USA wants more information on Russia's tactical nuke weapons, Dmitry Kirsanov, ITAR-TASS (6/13/2006)
    3. Russia 'Does Not Wish' to Hold Talks With US on Tactical Nuclear Weapons , ITAR-TASS (6/13/2006)
    4. Russian Scientists Are Prepared To Renew Nuclear Umbrella, Aleksandr Yemelyanenkov, Rossiyskaya Gazeta (6/13/2006)
    5. Burning No Money in Vain, Dmitiri Litovkin, Izvestia (6/12/2006)
G.  Nuclear Industry
    1. Even Higher Uranium Prices Ahead This Summer, Miningsectorstocks.com (6/14/2006)
    2. Rosenergoatom, Sevmash sign contract to build floating NPP, RIA Novosti (6/14/2006)
    3. Sevmashpredpriyatie To Build Floating Power Unit For Low-Yield Nuclear Thermal Electric Power Station , Interfax-AVN (6/13/2006)
    4. Yekaterinburg Received a 'Uranium Tail.' Sverdlovsk Environment Activists Protest Imports of German Radioactive Waste Into the Region. Up to 900 Tonnes of Additional Radioactive Waste To appear in Our Country. The Urals Must not Become Europe's' Trash Dump, Vladimir Terletskiy, Nezavisimaya Gazeta (6/13/2006)
    5. Nuclear Reforms Nearing Completion , Yuriy Humber , St. Petersburg Times (Russia) (6/13/2006)
    6. Cracks start to show in a nuclear power monopoly, John Dizard, Financial Times (6/12/2006)
    7. Russian nuclear industry must recreate its technology base - expert , RIA Novosti (6/10/2006)
H.  Scientist Redirection
    1. Russian Nuclear Center Ready To Make Civil Plane-Protecting Systems, ITAR-TASS (6/9/2006)
I.  Chemical Weapons Destruction
    1. GOOD BYE, CHEMICAL WEAPONS, Anatoliy Gyschin, Defense and Security/Oblastnaya Gazeta (6/14/2006)
    2. Safe gas under the Baltic , Vasily Zubkov and Viktor Litovkin, RIA Novosti (6/13/2006)
J.  Border Security
    1. Dangers In Port Security, Robert Malone, Forbes.com (6/13/2006)
K.  Of Interest
    1. Paul Steps Down as Principal Deputy Administrator, National Nuclear Security Administration (6/12/2006)



A.  Cooperative Threat Reduction

1.
Is this any way to secure a country?
Miriam Pemberton and Lawrence Korb
The Hill
6/13/2006
(for personal use only)


This is what passes for a security debate in the halls of Congress these days. The House and Senate Armed Services committees are on track to hand the president the 460-odd-billion-dollar military budget he asked for, give or take a billion or two.

His political troubles are emboldening them to raise a few objections along the way. The House committee expressed “strong concerns about the escalating costs of military platforms” (planes, ships, tanks).

Such platforms would clearly include the V-22 Osprey helicopter, which, despite two decades and $18 billion already spent in development, is not yet operational. The Army no longer wants it. The Armed Services committees don’t seem to care; they noted their concerns and fully funded the program anyway.

Some members, mostly Democrats, have raised a few other objections, wondering, for example, why we are spending nearly 20 percent more than last year on missile defense, a so-far unproven effort to protect against the least-likely method for delivering weapons of mass destruction and 10 percent less on the cooperative threat-reduction program that secures weapons stockpiles in the former Soviet states so that they can’t be stolen and delivered. These objections are likewise noted, but then set aside. And there will be no debate on whether it makes sense to spend more on deploying these unproven missile defenses than on the entire Coast Guard, because that question falls outside these committees’ jurisdiction.

Outside Congress, the security debate is more interesting. It was recently shaken up considerably when leading neoconservative Francis Fukuyama declared that his movement’s problem lies mainly with its overly militarized approach to foreign policy.

“We need to demilitarize what we have been calling the global war on terrorism and shift to other types of policy instruments,” he wrote in The New York Times Magazine.

This abstract question of military versus nonmilitary policy instruments is now in fact concrete and urgent as the administration weighs a bombing campaign versus diplomacy to address Iran’s nuclear program. But in the committees deciding on funding for these instruments, the debate barely registers.

This year though, the Senate opened the door a crack on this debate. It voted to strip $1.9 billion from a $70 billion “emergency” war-funding bill and apply it to border control.

This of course can only be viewed as a drop in the bucket of the half-trillion-plus the United States spends annually on military operations, but it does provide a minor illustration of the way a more serious debate over security priorities could unfold.

Congress could consider the range of security tools we have — tools of offense (primarily the military), defense (primarily homeland security) and prevention (diplomacy, nonproliferation, foreign aid) — as a whole. This is hard to do because this spending is spread all over many departments and handled by many committees. A constructive first step would be to add a unified security spending plan to the budget documentation Congress now receives, bringing all these categories together in one place.

A unified security budget would allow the members to weigh the relative proportions of spending on, for example, securing our ports and building more Ospreys. Canceling the Osprey would allow us to double the amount we spend on port security.

Currently, the tools of offense — just in the regular defense budget, not counting the billions in additional money the government is spending on the war — absorb six times as much of our budget as all other security tools, including homeland security, combined. Add in the war spending and the imbalance becomes 8-1.

As we show in a new report, “A Unified Security Budget for the United States, FY 2007,” a shift of just $60 billion from the budget for unneeded programs like the Osprey could double the proportion of the budget devoted to security tools like nonproliferation, diplomacy and homeland security. Such a rebalanced security strategy would put new emphasis on cost-effective preventive medicine, reducing the need for expensive military cures.

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2.
US, Russia to set up new bilateral security group
Dmitry Kirsanov
ITAR-TASS
6/13/2006
(for personal use only)


Russian Deputy Foreign Minister Sergei Kislyak and U.S. Under Secretary of State for Arms Control and International Security Robert Joseph will meet in Moscow on Thursday to discuss the creation of a new bilateral inter-governmental strategic security group, a U.S. administration source told Itar-Tass on conditions of anonymity.

The group's mandate will include the entire spectrum of strategic issues, including non-proliferation, protection from proliferation, arms control and the future of the Strategic Arms Reduction Treaty (START-1), which expires in 2009, as well as Russian-U.S. relations in this context, a leading American expert said.

He confirmed that in addition to foreign policy experts and employees of other Russian and U.S. agencies will be included in the group after its contours take shape.

A George W. Bush administration official said that during Robert Joseph's visit to Moscow the sides were planning to sign a protocol on the legal commitments of the sides to the Russian-American agreement on disposition of excess weapons-grade plutonium and also an agreement on extending the Nunn-Lugar program.

The latest provides for rendering assistance to Russia in liquidating the stockpiles of weapons of mass destruction and missile delivery.

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B.  Biosecurity

1.
Lax laws, virus DNA and potential for terror
James Randerson
The Guardian
6/14/2006
(for personal use only)


The smallpox virus last wreaked havoc on the human population in 1977 before a World Health Organisation programme eradicated it from the planet. It now exists only in government laboratories in the US and Russia.

But ordering part of this long-dead pathogen's DNA proved easier than anyone dared imagine. All it took was an invented company name, a mobile phone number, a free email address and a house in north London to receive the order by post.

What the investigation makes clear is that anyone, without any attempt to prove they are part of a legitimate research organisation, can order DNA sequences from any potential pathogen without fear of extensive questioning. In our case, VH Bio Ltd did not realise it was supplying part of the smallpox genome, but many scientists argue that it is the responsibility of companies selling custom-made pieces of DNA to check their orders for potentially dangerous sequences.

Without modifications which meant the strand ordered by the Guardian could never form part of a functional gene, it would probably have fallen under the Anti-Terrorism, Crime and Security Act 2001. This lists so-called Schedule 5 pathogens and toxins including smallpox virus, ebola virus and the plague bacterium. These, along with any DNA "associated with the pathogenicity of the micro-organism" are illegal to keep or use without first notifying the authorities.

In November, New Scientist magazine surveyed 12 gene synthesis companies in North America and Europe. Only five said they always screened their orders for suspect sequences and three said they never did. These were all doing relatively large-scale synthesis, providing sequences a few hundred letters long, but there are many more companies like VH Bio Ltd which make so-called oligonucleotides, sequences around 100 letters or smaller.

Of three UK-based sequencing companies other than VH Bio Ltd canvassed by the Guardian, one did not screen customers or sequences, one carried out checks on customers only and a third checked customers and had carried out a pilot study on screening DNA orders but is not currently doing so. Screening shorter sequences is more difficult because a chance match to a suspect piece of DNA is more likely. "Because they are short, sequence screening can pick those up, but the false positive rate is high," said Robert Jones at Craic Computing in Seattle, which produces software to screen sequence orders against a database of DNA from nasty pathogens.

The Guardian's investigation has sparked calls for DNA synthesis companies to be better regulated.

Edward Hammond, a biological weapons expert with the Sunshine Project, an NGO that campaigns against the development of biological weapons, said: "The most worrisome thing ... is that [the field of synthetic biology] is going to enable people to create potentially very dangerous diseases that don't otherwise exist or to recreate ones that have been wiped off the face of the earth."

The emerging science of synthetic biology holds great potential for medicine and other fields. There are, for example, research projects to develop synthetic bacteria that seek and invade tumour cells and yeast cells that produce a malaria drug.

Eckard Wimmer at the State University of New York in Stony Brook said the 2002 experiment to make polio virus from scratch by stitching together short strands of DNA was fairly easy. "We did it as a wake-up call," he said. "It's surprising to me after all these discussions for at least four years, no more urgent recommendation has gone out to these companies saying that if you don't [carry out more rigorous checks] you may be in trouble," he said.

At a synthetic biology conference in Berkeley, California, last month delegates discussed how to minimise misuse of the technology. Delegates are currently consulting on four "resolutions", which include an effort to develop improved and freely available software tools to screen DNA orders for potentially dangerous sequences and a pledge to "encourage individuals and organisations to avoid patronising companies that do not systematically check their DNA synthesis orders".

But synthetic biologists have defended their efforts to regulate the field. "If scientists are willing to get the ball rolling when few others are acting, then they should be encouraged," said George Church, a leading synthetic biologist at Harvard. He argued that voluntary regulation would would be quicker than legislation and would not preclude new laws.

FAQ Viruses

How big is the genome of a virus?

Virus genomes - the sum total of their DNA - range from around 3,000 DNA letters long to more than a million. The polio virus genome has 7,741 letters, influenza virus has 13,500 letters, ebola has 19,000 and smallpox has 185,000.

How easy is it to 'glue' strands of DNA together?

This is relatively simple and getting easier all the time. A basic university laboratory would have the capability.

Which viruses have been manufactured from scratch?

Eckard Wimmer at the State University of New York showed in 2002 that it was possible to make polio virus from scratch by making its genome from short lengths of DNA. He said he did this as a "wake up call" to warn that the World Health Organisation's polio eradication effort could be thwarted by terrorists. Other viruses that have subsequently been built from scratch include the 1918 influenza strain.

How do you recreate a virus?

Prof Wimmer's team used the DNA sequence of polio available on the web as a template for hundreds of short strands of DNA each around 70 letters long. The team assembled these in order to recreate the full genome sequence and used this as a template for a mirror image sequence in DNA's chemical cousin RNA - the genetic material used by polio virus. The team then added these RNA strands to human cells which took up the sequence and manufactured copies of the virus.

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2.
Livermore Lab Seeks New Nuke; Battles Over Bio-Lab
KTVU.com
6/13/2006
(for personal use only)


Officials at Lawrence Livermore Lab Tuesday began a court fight to become home to a bio-defense lab designed to test lethal agents including HIV, plague and anthrax while also seeking to win the right to design the nation's first new nuclear bomb in two decades.

The East Bay national laboratory is competing with the Los Alamos National Laboratory in New Mexico to design the new nuclear bomb.

Congress approved the bomb in 2005 as part of a defense spending bill. By law, the weapon would have about the same power as existing warheads. A winner will be chosen later this year.

Proponents of the project say the U.S. needs to replace its aging arsenal of about 6,000 bombs because it could become unreliable within 15 years. They say a new weapon would help the nation reduce its stockpile.

Critics say the project could trigger a new arms race with Russia and China and undermine arguments that countries such as Iran and North Korea must stop their nuclear programs.

Meanwhile, years of legal wrangling will culminate Tuesday when the 9th U.S. Circuit Court of Appeals hears arguments on whether the Department of Homeland Security should be permitted to open a bio-defense lab at Lawrence Livermore, about 50 miles east of San Francisco.

The new facility would test some of the deadliest toxins known to man, in simulations of terrorist attacks. Construction is complete, and the facility is set to open by August, said John Belluardo, spokesman for the Department of Energy's National Nuclear Security Administration.

Its actual mission is a matter of some dispute.

Opponents, citing government documents, said in court filings it would "aerosolize" the bioagents "in order to speed the efficiency by which they could kill and spread disease." And if the agents escaped into the air, it could be catastrophic, killing hundreds or thousands, they say.

"If these bioagents are released into the environment in significant quantities, they could cause massive human mortality within the densely populated San Francisco Bay Area," the opponents wrote in their court brief. That scenario was "never modeled nor considered" by the Bush administration in its safety assessments, the opponents say.

Spokesmen for the government and Lawrence Livermore don't dispute the lab would produce airborne pathogens. But they firmly deny that advancing biological weapons is the facility's aim, pointing out the United States signed the 1975 Biological and Toxin Weapons Convention, a treaty that banned the development, production and stockpiling of bioweapons.

And, they say, the Department of Energy's environmental assessment found no serious risk of an accident.

The facility "will significantly improve the nation's ability to detect and respond to the threat of terrorism using biological agents," the Department of Energy said in its court brief. A court order blocking it "would directly and adversely impact the national security," the administration said.

The facility would test the agents, which could also include hantavirus, influenza, hepatitis, Q fever, brucellis, herpes and salmonella, among others, on live animals.

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3.
The accidental terrorists; Too many biologists remain blind to the danger that they could be aiding the spread of bioterrorism
Peter Aldhous
New Scientist
6/10/2006
(for personal use only)


FOR anyone who doubts that well-intentioned research can sometimes have potentially deadly consequences, Ron Jackson has a cautionary tale. Working for the wildlife division of Australia's national research agency, he set out to make a contraceptive vaccine to control plagues of mice. What he ended up with was a deadly mousepox virus that resists vaccination - and a recipe for doing the same for smallpox.

This story, revealed by New Scientist more than five years ago (13 January 2001, p 4), caught everyone off guard. Then came the 9/11 terrorist attacks and the anthrax letters. Bioterrorism was propelled to the top of official worry lists in the US, and it was clear that legitimate research could produce pathogens much nastier than anthrax.

Despite these fears, it seems to me from my reporting on these issues that many biologists remain ignorant of the "dual-use" dilemma - that biological advances can provide a bioweapons cookbook. Researchers trying to improve human health by, for example, altering specific immune responses rarely consider that the same technologies could be converted into horrifying weapons.

Thankfully, Al-Qaida is not thought to have the expertise to create designer bioweapons. In a few years, however, such capabilities may well be within reach of a rogue state willing to invest large sums in clandestine research. This does not mean that all data that could be turned to destructive ends should be declared a military secret - although a small proportion might need to be classified. It does mean that biologists should pay more attention to the sinister potential of their work and avoid lines of enquiry that pose more dangers than they promise benefits.

Scientific societies should be raising awareness of these issues among their members, and the American Society for Microbiology (ASM) points the way. Its website hosts a wealth of resources on bioterrorism and biosecurity. Other societies are still lagging behind. The American Association of Immunologists has yet to adopt relevant policies, even though manipulation of the immune system is central to this debate. Jackson's deadly mousepox owed its pathogenicity to an unexpected effect of IL-4, an immune-signalling molecule. He engineered a strain of mousepox to produce proteins carried by mouse eggs, and reasoned that adding the gene for IL-4 would stimulate antibodies against these proteins, sterilising the mice. Instead, it shut down the cellular arm of the immune system, needed to fight viral infection.

Journals also have a role to play. Many now scrutinise the papers they receive to avoid publishing information that poses serious security concerns, though few papers merit censorship. Much more useful is the promotion of debate around dual-use research. This has happened in obvious cases such as the recreation of the virus that caused the 1918 flu pandemic, but other papers with bioweapons potential continue to appear without comment.

Take a paper on a new vector for gene therapy, published in February by Nature Biotechnology (vol 24, p 198). Researchers at the University of California, Berkeley, used "gene shuffling" technology, a form of accelerated evolution, to create harmless viruses that are able to evade "neutralising" antibodies. It is a valuable project, because these antibodies can wipe out viral vectors before they deliver their therapeutic genes. The danger is that the same approach could help deadly viruses slip under the immune system's radar. Lead researcher David Schaffer told me that he would never attempt anything similar with a human pathogen, but neither his paper, nor the commentary on the work published with it, mentioned the dual-use potential.

Even when researchers address the implications of their work for biowarfare, some of their ideas on tackling the problem are naive. At the heart of synthetic biology lies the ability to build large sequences of DNA, and even entire viruses, from scratch. It may be possible to obtain DNA to build a bioweapon from companies that synthesise genes to order (New Scientist , 12 November 2005, p 8). At the Synthetic Biology 2.0 meeting in Berkeley last month, researchers pledged to develop better methods of identifying suspect orders, yet in the online debate that preceded it one graduate student suggested placing "malicious orders" to test the effectiveness of companies' screening procedures. Although some sort of verification may be useful, posing as a terrorist would be seriously misguided, and depending on the sequences requested could breach US anti-terror law.

This incident points to perhaps the most urgent need: better education of graduate students. Few universities offer classes in biosecurity, and given the dearth of experts in the field, they have some excuse. But not for much longer: within the next month, the Federation of American Scientists will be releasing a biosecurity curriculum, complete with dual-use case studies, including an interview with Jackson. It should be a required option for anyone planning a career in biomedical research.

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C.  Nonproliferation Diplomacy

1.
Kim Campbell Pays a Call For Nuclear Disarmament
Sarah McGregor
Embassy Magazine
6/14/2006
(for personal use only)


North America's first and only female national leader heads delegation to Ottawa to save unraveling nuclear non-proliferation treaty.

Taking the lead in a constructive dialogue to bring a peaceful end to the escalating global nuclear build-up is a tactic that actually can work for middle power nations like Canada, says former Progressive Conservative prime minister Kim Campbell.

Speaking to Embassy following a one-on-one meeting with Prime Minister Stephen Harper in Ottawa this week, Ms. Campbell says the PM shares the deep concerns of major world powers about Iran developing dangerous technology in its nuclear enrichment program. But she stops short of saying that defusing a potential worldwide nuclear proliferation catastrophe--a subject close to Ms. Campbell's heart and the real purpose of her visit here--is a key foreign policy agenda item of the minority government. "What position the prime minister will take I do not know," says Ms. Campbell, bluntly.

She says Canadian diplomats, from their vantage point in foreign posts, are doing the job for him. "It's not just a question of whether the prime minister thinks we should do this. It's a standard part of our operating procedures, where our diplomats and foreign policy people in Ottawa reach out and build relationships. It's a matter of continuing what we do and having the resources to (be prepared) for the foreign minister and prime minister when they have to be called on."

The foreign service has upheld a long tradition of information gathering and analysis and that is crucial on simmering files such as rising nuclear weapon caches in places such as Iran, but also India, Israel, China and North Korea as well as the activities of major nuclear powers U.S. and Russia.

"Canadian governments try to create a relationship of trust that enable them to have candid conversations in the one-on-one meetings. Most Canadian governments learn that trying to make foreign policy in the headlines is not really constructive," she says.

Canada's reputation as an honest broker isn't just a nice way of saying the country is seen favorably but has little real influence to sway world powers on the hard decisions. On the contrary, Ms. Campbell says Canada has reliably staked out a solid middle ground on global matters, giving it latitude to bring both sides to the table. "You build a relationship of trust," she says.

Asked if it will spend that precious capital on nuclear disarmament, Ms. Campbell says there is no reason to believe the issue will drop off the political radar screen for Mr. Harper.

But to say the task ahead is daunting is no exaggeration. An independent commission led by Hans Blix, former UN weapons inspector, reported this month that the global storehouse of nuclear, biological and chemical weapons is "extraordinarily and alarmingly high."

Ms. Campbell, a politician-turned-diplomat-now global peace activist, was in Ottawa this week--joined by U.S. arms control negotiator Thomas Graham and former disarmament ambassador Douglas Roche--to stir up publicity about the Middle Powers Initiative, a non-governmental network working toward the elimination of nuclear weapons.

She conducted a string of media interviews, a press conference, met with Defence Minister Gordon O'Connor and Foreign Affairs Deputy Minister Peter Harder and 25 Parliamentarians from all parties, and testified before the Foreign Affairs House committee. The delegation was promoting a briefing paper on Canada's role to ensure signatory nations not retreat from the Nuclear Non-Proliferation Treaty (NPT) and to encourage outside nations to join up.

The NPT is a global accord that aims to stop the spread of nuclear weapons and commits nations to the verified destruction of stockpiles. Ms. Campbell says a core objective of the MPI is to revive the pact. "It is not passé. In fact, it's been very successful and kept the number of nuclear states very small," she says.

The other main focus of MPI is to remind global citizens that nuclear threats didn't disappear with the end of the Cold War. She says people must face up to the fact that the nuclear risk is getting worse not better. Renegade and failed states are collecting nuclear technologies, which non-state actors are pouncing on, she says.

Mr. Graham, the chair of Cypress Fund for Peace and Security in Washington, warns that the "threat is growing stronger and more serious." He says a global consensus to "strengthen the international regime" and rid the world of nuclear weapons is the best solution for the nuclear impasse. Otherwise, "it could be a situation more dangerous than anyone could conceive today," he says. Jonathan Granoff, President of the Global Security Institute and member of the MPI, says the tools to avert a nuclear crisis involve social justice, better communications and the insistence there is hope for peace.

Parliament Hill is a place Ms. Campbell, 59, knows well. She became Canada's first, and only, female prime minister for a little over four months in 1993. She served five years as a Conservative MP, some in Cabinet.

She served as Canada's Consul General to Los Angeles from 1996 to 2000. She currently is Secretary General of the Club of Madrid, a group of former heads of state committed to promoting democracy and good governance.

"I think what we have is a new government, a minority government, that is probably going to want to move cautiously to build relationships," she says. "Do I expect dramatic things to come (quickly)? I think, no. I would like to see the prime minister build relationships first."

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2.
Rethinking Nuclear Safeguards
Mohamed ElBaradei
Washington Post
6/14/2006
(for personal use only)


In regard to nuclear proliferation and arms control, the fundamental problem is clear: Either we begin finding creative, outside-the-box solutions or the international nuclear safeguards regime will become obsolete.

For this reason, I have been calling for new approaches in a number of areas. First, a recommitment to disarmament -- a move away from national security strategies that rely on nuclear weapons, which serve as a constant stimulus for other nations to acquire them. Second, tightened controls on the proliferation-sensitive parts of the nuclear fuel cycle. By bringing multinational control to any operation that enriches uranium or separates plutonium, we can lower the risk of these materials being diverted to weapons. A parallel step would be to create a mechanism to ensure a reliable supply of reactor fuel to bona fide users, including a fuel bank under control of the International Atomic Energy Agency.

The third area has been more problematic: how to deal creatively with the three countries that remain outside the nuclear Non-Proliferation Treaty (NPT): Pakistan and India, both holders of nuclear arsenals, and Israel, which maintains an official policy of ambiguity but is believed to be nuclear-weapons-capable. However fervently we might wish it, none of these three is likely to give up its nuclear weapons or the nuclear weapons option outside of a global or regional arms control framework. Our traditional strategy -- of treating such states as outsiders -- is no longer a realistic method of bringing these last few countries into the fold.

Which brings us to a current controversy -- the recent agreement between President Bush and Prime Minister Manmohan Singh regarding the exchange of nuclear technology between the United States and India.

Some insist that the deal will primarily enable India to divert more uranium to produce more weapons -- that it rewards India for having developed nuclear weapons and legitimizes its status as a nuclear weapons state. By contrast, some in India argue that it will bring the downfall of India's nuclear weapons program, because of new restrictions on moving equipment and expertise between civilian and military facilities.

Clearly, this is a complex issue on which intelligent people can disagree. Ultimately, perhaps, it comes down to a balance of judgment. But to this array of opinions, I would offer the following:

First, under the NPT, there is no such thing as a "legitimate" or "illegitimate" nuclear weapons state. The fact that five states are recognized in the treaty as holders of nuclear weapons was regarded as a matter of transition; the treaty does not in any sense confer permanent status on those states as weapons holders. Moreover, the U.S.-India deal is neutral on this point -- it does not add to or detract from India's nuclear weapons program, nor does it confer any "status," legal or otherwise, on India as a possessor of nuclear weapons. India has never joined the NPT; it has therefore not violated any legal commitment, and it has never encouraged nuclear weapons proliferation.

Also, it is important to consider the implications of denying this exchange of peaceful nuclear technology. As a country with one-sixth of the world's population, India has an enormous appetite for energy -- and the fastest-growing civilian nuclear energy program in the world. With this anticipated growth, it is important that India have access to the safest and most advanced technology.

India clearly enjoys close cooperation with the United States and many other countries in a number of areas of technology and security. It is treated as a valued partner, a trusted contributor to international peace and security. It is difficult to understand the logic that would continue to carve out civil nuclear energy as the single area for noncooperation.

Under the agreement, India commits to following the guidelines of the Nuclear Suppliers Group, an organization of states that regulates access to nuclear material and technology. India would bring its civilian nuclear facilities under international safeguards. India has voiced its support for the conclusion of a Fissile Material Cut-Off Treaty. The strong support of both India and the United States -- as well as all other nuclear weapons states -- is sorely needed to make this treaty a reality.

The U.S.-India agreement is a creative break with the past that, handled properly, will be a first step forward for both India and the international community. India will get safe and modern technology to help lift more than 500 million people from poverty, and it will be part of the international effort to combat nuclear terrorism and rid our world of nuclear weapons.

As we face the future, other strategies must be found to enlist Pakistan and Israel as partners in nuclear arms control and nonproliferation. Whatever form those solutions take, they will need to address not only nuclear weapons but also the much broader range of security concerns facing each country. No one ever said controlling nuclear weapons was going to be easy. It will take courage and tenacity in large doses, a great deal more outside-of-the-box thinking, and a sense of realism. And it will be worth the effort.

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3.
Special Event in September: Assurances of Nuclear Supply and Non-Proliferation
IAEA
6/14/2006
(for personal use only)


A new framework to strengthen controls over access to sensitive nuclear technology -- uranium enrichment and plutonium separation -- will be the focus of a special event 19-20 September 2006, attended by Ministers, other high level dignitaries and experts at the IAEA's General Conference in Vienna.

With sensitive nuclear technology in "too many hands", the Special Event will examine options to bring facilities capable of producing weapon-usable nuclear material under multinational control. "With some 35-49 countries 'in the know', the margin of security under the current non-proliferation regime has become too slim for comfort," IAEA Director General Mohamed ElBaradei has said.

Held over two days, the Special Event will outline a new framework to facilitate peaceful uses of nuclear energy, while limiting the further spread of nuclear weapon related technologies. High-level delegations from the Agency's 140 Member States are expected to attend.

"It is time to limit the processing of weapons-usable material (separated plutonium and high-enriched uranium) in civilian nuclear programmes, as well as the production of new material through reprocessing and enrichment, by agreeing to restrict these operations exclusively to facilities under multinational control," Dr ElBaradei said.

"These limitations would need to be accompanied by proper rules of transparency and, above all, by an assurance that legitimate users could get their supplies."

A nuclear 'fuel bank' – where the IAEA administers a nuclear fuel reserve -- is among proposals to be discussed during the Special Event. It would enable the Agency to act as a guarantor for the supply of fissile material to civilian nuclear users.

"The importance of this step is that, by providing reliable access to fuel at competitive market prices, we remove the incentive or justification for countries to develop indigenous fuel cycle capabilities. In so doing, we could go a long way towards addressing current concerns about the dissemination of sensitive fuel cycle technologies," Dr ElBaradei said.

Both the US and Russia have announced their willingness to make nuclear material available for a fuel bank, under such a scheme. An IAEA administered fuel bank was a key proposal made by an Expert Group in 2005, tasked with finding options to improves controls over fuel enrichment, reprocessing, spent fuel repositories and spent fuel storage.

The Special Event is being held instead of the Scientific Forum at the Agency's upcoming General Conference. The programme includes sessions on:

Frameworks for Nuclear Energy Security
Frameworks for Assurances of Supply: Institutional Perspectives
Frameworks for Assurances of Supply: Technological and Legal Arrangements
Conclusions, Findings & Future Directions.

See announcements under Story Resources for full details.


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4.
Former UN Weapons Inspector Calls for Fewer Nukes
Sabina Castelfranco
Voice of America
6/13/2006
(for personal use only)


Former chief U.N. weapons inspector Hans Blix is urging the United States and Russia to take the lead in reducing nuclear weapons. Blix is in Rome to present to Pope Benedict XVI a report on weapons of mass destruction.

Hans Blix arrived in Rome to present a report titled Weapons of Terror to Pope Benedict and Italian President Giorgio Napolitano.

Prepared by a 14-member independent international commission that is chaired by Blix, the report offers proposals on how the world could be freed of nuclear, biological and chemical weapons.

Addressing reporters, Blix said global efforts to achieve arms limitation and disarmament have stagnated. He added that an estimated 27-thousand nuclear warheads exist in the world today.

"Many of them are on hair-trigger alert, that is to say, they can go off like that, by mistake, by misunderstanding," he said.

The commission is also calling for a ban on the production of enriched uranium and plutonium for weapons purposes. While a treaty has been proposed to do this, Blix said verification of the treaty would be of utmost importance.

The United States, Russia, China and EU nations Britain, France and Germany have been leading the push to get Iran to halt its uranium enrichment program, that could be used to build nuclear weapons. Blix praised the offer of civil nuclear cooperation made by the major powers to Tehran to resolve the situation.

Blix also spoke of his concern about the militarization of space. He said the Outer Space Treaty, signed in 1967, prohibits any stationing of weapons of mass destruction in space, but does not talk of other weapons.

He said about $20 billion is being spent every year to prepare for conflicts in space, how countries can defend their satellites and attack others.

"It is sort of funny that we sit here on earth and we try to increase our communications and at the same time we are preparing for a war in space," he added. "If there were to be one, or even if there were to be an accident by some weapons station out there going off, you would have debris and debris in space would be absolutely catastrophic."

Many countries, Blix added, have military satellites and spy satellites in space. He said the United States is one country that is far ahead of others and again should take the initiative to end this situation.

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D.  Russia - Iran

1.
Mikhail Kamynin, the Spokesman of Russia's Ministry of Foreign Affairs, Answers a Question from RIA Novosti Regarding Comments by US Ambassador to the UN, John Bolton, Alleging Russian Leadership's Lack of Consensus over Iran's Nuclear Program
Ministry of Foreign Affairs of the Russian Federation
6/10/2006
(for personal use only)


Question: What can you say in relation to the comments by US ambassador to the UN, John Bolton, alleging a lack of consensus among the Russian leaders over the Iranian nuclear program?
Answer: We note with satisfaction the balanced and responsible announcements in recent days from US official representatives in support of re-starting the talks on Iran's nuclear program in the new format, which Washington recently expressed its willingness to join. Russia is actively involved in international efforts to unblock the problem by diplomatic methods on the basis of a common position on the inadmissibility of nuclear weapons in Iranian possession while at the same time acknowledging the right of the country to develop peaceful nuclear energy.

Against this backdrop, the "revelation" made by Bolton on the alleged lack of consensus within the Russian leadership over the Iranian nuclear program and even on a "debate in the Kremlin" between those fearing a nuclear weapons proliferation threat and hence needing support from the US and, as can be understood from the US diplomat's arguments, those who do not fear or do not perceive any such threat, is very unexpected.

We have hitherto presumed that the reverse is true - those in Washington who support finding a politico-diplomatic solution, among whom we would hope John Bolton counts himself, need international backing, including Russian support. The most important thing now is collective work directed at a negotiated settlement of the Iranian nuclear issue.

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2.
Duma's Kosachev Says Russia, China Prevent Worst Developments Around Iran Nuclear Program
ITAR-TASS
6/9/2006
(for personal use only)


Russia and China have prevented the worst developments around the Iranian
nuclear program, Chairman of the State Duma International Affairs Committee
Konstantin Kosachyov told Itar-Tass on Friday.

He has met with Chairman of the Standing Committee of the National People's
Congress Wu Bangguo and First Deputy Foreign Minister Dai Bingguo in Beijing.

"We closely discussed the topic of Iran and stated that the interaction between
Russia and China prevented international blunders incited by the United
States," he said.

"We are confident that the excessive pressure on Iran would have repeated the
North Korean situation. Iran would have stopped cooperation with the IAEA and,
possibly, would have quitted the nuclear non-proliferation regime. In that case
the international community would have lost the last chance to have the
slightest idea of what is going on in Iran. On the other hand, China and Russia
are not interested in Iran's turning into a nuclear state, and thus we are
close to the position of other parties at the negotiations," Kosachyov said.

The Russian delegation also discussed North Korea, Iraq and the Mideast with
Chinese officials. "Russia and China have close positions on all the issues,"
Kosachyov said.

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E.  International Nuclear Fuel Centers

1.
Germany Supports Russian Initiative On Nuclear Services' Centers - Ambassador
Interfax
6/12/2006
(for personal use only)


Germany has welcomed the Russian initiative of establishing international centers
to offer nuclear cycle services.

"The federal government welcomes the idea of thinking of safeguards concerning
nuclear fuel because it is suitable for promoting the non- proliferation
nuclear materials. Therefore the federal government welcomes the initiative of
President (Vladimir) Putin with which he came up at the beginning of the year,"
German ambassador to Russia Walter Jurgen Schmidt said in an interview with
Interfax.

He said that the federal government sees no need for getting actively involved
in the process. "Together with other partners, including the Russian Federation
Germany submitted a concept to IAEA Secretary General at the beginning of June
on expanding the debate on nuclear fuel safeguards," he said.

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F.  Nuclear Forces

1.
Rival U.S. Labs in Arms Race to Build Safer Nuclear Bomb
Ralph Vartabedian
Los Angeles Times
6/13/2006
(for personal use only)


The new warhead could help reduce the nation's stockpile, but some fear global repercussions.

In the Cold War arms race, scientists rushed to build thousands of warheads to counter the Soviet Union. Today, those scientists are racing once again, but this time to rebuild an aging nuclear stockpile.

Scientists at Los Alamos National Laboratory in New Mexico are locked in an intense competition with rivals at Lawrence Livermore National Laboratory in the Bay Area to design the nation's first new nuclear bomb in two decades.

The two labs have fiercely competed in the bomb trade with technologies as disparate as Microsoft's and Apple's.

The new weapon, under development for about a year, is designed to ensure long-term reliability of the nation's inventory of bombs. Program backers say that with greater confidence in the quality of its weapons, the nation could draw down its stockpile, estimated at about 6,000 warheads.

Scientists also intend for the new weapons to be less vulnerable to accidental detonation and to be so secure that any stolen or lost weapon would be unusable.

By law, the new weapons would pack the same explosive power as existing warheads and be suitable only for the same kinds of military targets as those of the weapons they replace. Unlike past proposals for new atomic weapons, the project has captured bipartisan support in Congress.

But some veterans of nuclear arms development are strongly opposed, contending that building new weapons could trigger another arms race with Russia and China, as well as undermine arguments to stop nuclear developments in Iran, North Korea and elsewhere.

And, the critics say, It would eventually increase pressure to resume underground nuclear testing, which the U.S. halted 14 years ago.

Inside the labs, however, emotions and enthusiasm for the new designs are running high.

"I have had people working nights and weekends," said Joseph Martz, head of the Los Alamos design team. "I have to tell them to go home. I can't keep them out of the office. This is a chance to exercise skills that we have not had a chance to use for 20 years."

A thousand miles away at Livermore, Bruce Goodwin, associate director for nuclear weapons, described a similar picture: The lab is running supercomputer simulations around the clock, and teams of scientific experts working on all phases of the project "are extremely excited."

The program to build the new bomb, known as the "reliable replacement warhead," was approved by Congress in 2005 as part of a defense spending bill. The design work is being supervised by the National Nuclear Security Administration, which is part of the Energy Department.

The laboratories submitted detailed design proposals in March that ran more than 1,000 pages each to the Nuclear Weapons Council, the secretive federal panel that oversees the nation's nuclear weapons. A winner will be declared this year.

If the program is implemented, it would require an expensive remobilization of the nation's nuclear weapons complex, creating a capacity to turn out bombs at the rate of three or more a week.

Proponents of the project foresee a time when nuclear deterrence will increasingly rest on the nation's capacity to build new bombs, rather than on maintaining a massive stockpile.

The proposal comes as Russia and the United States have agreed to further reduce nuclear stockpiles. The Moscow Treaty signed in 2002 by President Bush and Russian President Vladimir V. Putin calls for each country to cut inventories to between 1,700 and 2,200 warheads by 2012.

Without the reliable replacement warhead, U.S. scientists say the nation will end up with old and potentially unreliable bombs within the next 15 years, allowing adversaries to challenge U.S. supremacy and erode the nation's so-called strategic deterrent.

The new bomb "is one way of ensuring that our capability is second to none," said Paul Hommert, a physicist who heads X Division, the Los Alamos unit that built the first atomic bomb during World War II. "Not only today, but in 2025."

But critics say the program could plant the seeds of a new arms race.

The existing stockpile will be safe and reliable for decades to come, according to defense experts and nuclear scientists who have long supported strategic weapons. They say that rather than making the nation safer, the program will squander resources, broadcast the message that arms control is dead and even undermine the reliability of U.S. weapons.

The new bomb would have to be built and deployed without testing. The U.S. last conducted an underground test in Nevada in 1992 and has since imposed a moratorium on new testing.

But without a single test, doubts about the new bomb's reliability would eventually grow, said Sidney Drell, former director of Stanford University's Linear Accelerator Center and a longtime advisor to the Energy Department.

"If anybody thinks we are going to be designing new warheads and not doing testing, I don't know what they are smoking," Drell said. "I don't know of a general, an admiral, a president or anybody in responsibility who would take an untested new weapon that is different from the ones in our stockpile and rely on it without resuming testing."

If the U.S. breaks the moratorium on testing, then Russia, China, India and Pakistan, if not Britain and France, probably would conduct tests as well, said Philip Coyle, former assistant secretary of Defense and former deputy director of Livermore. Those countries would gain more information from testing than would the U.S., which has invested heavily in scientific research as an alternative to testing.

Physicist Richard Garwin, who helped design the first hydrogen bomb in the early 1950s and remains a leading authority on nuclear weapons, opposes the new bomb and is worried it would lead to new testing. "We don't need it," he said. "No science will be able to keep these political doubts away."

Linton F. Brooks, chief of the National Nuclear Security Administration, disagrees, saying warheads based on modern technology and advanced electronics would be more reliable.

"We are more likely to face a problem if we stick with the existing stockpile," Brooks said. "It is easy to overstate the degree to which the current stockpile [has been] tested."

The stockpile includes thousands of weapons held in reserve in case a defect is discovered. Each year, some of those weapons are disassembled for inspection. The U.S. could significantly reduce the reserve if it had greater confidence in the reliability of its warheads, Brooks said.

That confidence involves not only whether a weapon will explode, but whether it will do so with the intended force. In every U.S. nuclear weapon, a primary blast must be strong enough to trigger a secondary thermonuclear reaction. If the first stage falls short, the weapon has half the power.

The driving force for developing the new weapon has come from the scientific community and members of Congress. Although the Defense Department did not initiate the program, it has won wide support within the military as well as the Bush administration.

Democrats who are closely involved in nuclear weapons issues, including Reps. Ellen O. Tauscher of Alamo, John M. Spratt Jr. of South Carolina and Ike Skelton of Missouri, have also given the program support, according to their spokesmen.

The support of Tauscher and the other lawmakers is conditional on a reduction in the total number of U.S. nuclear weapons and an absence of testing — precisely the policy set up by Rep. David L. Hobson (R-Ohio), who spearheaded the program in Congress.

In the past, a wide range of proposals for new bombs fizzled politically, including the neutron bomb, the bunker-busting "mini-nuke" and the "robust nuclear Earth penetrator." Each represented weapons envisioned for specific military missions, triggering fears that they might be used preemptively rather than to deter an attack.

The reliable replacement warhead has dodged such opposition, largely because it is not intended for a new military mission.

Still, the U.S. maintains a goal of staying ahead of any other nuclear power that could pose a challenge, according to S. Steve Henry, a Pentagon advisor on nuclear weapons to Defense Secretary Donald H. Rumsfeld. "It is hard to say what kind of a threat we will face in the future," Henry said.

To assuage fears that scientists and military leaders have a hidden agenda to build new classes of bombs, Congress has directed that the new warhead be limited to the same explosive yield as the existing bomb and usable only for the same kinds of targets.

The first design would replace the W76, the warhead used on the submarine-launched Trident missile. The W76 was introduced in 1979 and has maximum explosive power estimated at 400 kilotons of TNT — roughly 27 times more powerful than the bomb dropped on Hiroshima.

Production would require approval by Congress and construction of new manufacturing facilities — all of which would be at least several years off.

Meanwhile, the Los Alamos and Livermore labs are revving up their culture of one-upmanship.

During the Cold War, the scientists adhered to a motto that the Soviet Union was the rival, but the competing lab was "the enemy." Still, it is a scholarly competition with few fighting words.

"I feel we have a great design for the country," said Martz, 41, the Los Alamos program manager who began working at the lab as an 18-year-old college undergraduate. "Ours is better without a doubt."

But Livermore's Goodwin, 55, counters: "We have chosen a particularly effective design. I believe we have done the better job."

Brooks, the federal nuclear weapons chief, gives no hint about whose bomb he favors, saying only that both "are very good designs, very responsive to what we are trying to do."

Though neither lab has developed a new weapon since the late 1980s, they have received billions of dollars in investments by the federal government for office buildings and massive physics machines.

Since the end of the Cold War, the labs' top priority has been to maintain existing weapons. The labs predict that the plutonium components in existing weapons have a life of 45 to 60 years, meaning that in the next 15 years some will begin to deteriorate and replacements will be needed.

Christopher Paine, a program critic and nuclear weapons specialist at the Natural Resources Defense Council, contends the labs have everything to gain from these kinds of assessments — generating funds for a new program even though older weapons remain in perfect condition.

But the labs say their actions are subject to oversight by government agencies and independent boards. "We take the integrity of our job pretty seriously," said Hommert, the Los Alamos division chief.

Though the labs say they don't yet have a cost estimate, they believe the reliable replacement warhead will save money over time. They aren't providing any details.

On average, the U.S. has spent an estimated $6 million per warhead since World War II, said Stephen I. Schwartz, author of "Atomic Audit," a history of strategic weapons costs. Based on that, replacing all of the nation's 6,000 nuclear weapons could cost $36 billion.

So far, a fraction of the ultimate cost of the program has been spent; Congress approved $25 million this fiscal year.

A portion of the cost involves engineering designed to make the bombs more secure. In charge of that is Sandia National Laboratories, which has vowed to ensure that terrorists cannot use a stolen or lost weapon.

"We are setting the goal of absolute control — that you always know where the weapon is and what state it is in and that you have absolute control over its state," said Joan B. Woodard, executive vice president at Sandia. "People will say you can break the bank achieving that goal, but it is the right goal to set."

Los Alamos sits atop a 7,000-foot-high mesa, a half-hour drive from Santa Fe, occupying 43 square miles of pine forests. Livermore has dozens of buildings jammed into a single square mile on the outer edge of the Bay Area, amid rolling hills.

The idea of having two labs compete to design nuclear weapons dates to the 1950s, when federal officials concluded that such a system would promote innovation and also allow the labs to monitor each other's science in an area crucial to national security. The labs are federally funded and operate under contract with the National Nuclear Security Administration.

Each has about 20 physicists, chemists, metallurgists and engineers on its reliable replacement warhead team, backed by a few hundred other experts working part time on the weapon. Among them are younger scientists learning the art and craft of nuclear bomb design from Cold War veterans.

Over the last decade, the labs have invested several billion dollars in computing, creating a succession of the world's fastest supercomputers and other innovations. Livermore has taken the lead in that field. Its "purple" computer, with a footprint the size of a tennis court, does mathematical models of nuclear detonations. It uses enough megawatts of electricity to supply about 4,000 homes with power.

Meanwhile, Los Alamos is developing better ways to cast molten plutonium into hollow spheres, a key part of nuclear bombs, according to Deniece Korzekwa, a casting expert at the lab's manufacturing center.

Each laboratory's culture and body of technology is very different from the other's. Each has developed its own recipes for plastic explosives used to start an atomic chain reaction.

Even in promoting their designs, each lab has taken a different approach.

At Los Alamos, scientists took defense officials inside a "virtual reality cave," where they could walk around and look inside images of the proposed bomb. At Livermore, scientists took a less glitzy approach, building physical models that visiting officials could hold in their hands.

The advanced tools are giving nuclear weapons managers insights into the science of nuclear weapons they never had before.

Last year, the nation's top nuclear weapons managers packed a high-security auditorium at Los Alamos, elbow-to-elbow, and donned 3-D glasses to watch a classified simulation of the new hydrogen bomb.

On a movie-theater-sized screen, powered by a supercomputer, the audience was taken inside the bomb. As it detonated, they were engulfed in the blast.


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2.
Russia 'Does Not Wish' to Hold Talks With US on Tactical Nuclear Weapons
ITAR-TASS
6/13/2006
(for personal use only)


The Russian military establishment does not wish to discuss with the United
States any problems linked with the future of tactical nuclear weapons.

"This type of weapons is not restricted by any international treaties and
agreements, and Russia does not wish to hold talks on them either with the
United States or with any other foreign nations," a high-ranking representative
of the Russian Defence Ministry told Itar-Tass on Tuesday. "We are not planning
to attack anybody with tactical nuclear weapons, but we have every legal right
to defend ourselves and to take all the necessary measures to guarantee our
security. This is an inalienable right of the Russian Federation as a sovereign
state," he added.

The Russian general had commented in this way on the statement by an anonymous
official of the American Administration, who had expressed Washington's desire
to get more information on Russia's tactical nuclear weapons and on the
doctrine of its application.

The official of the Russian Defence Ministry doubted the veracity of the
Washington expert's claim that the U.S. arsenal of tactical nuclear weapons was
cut by 90-95 per cent in recent years as compared to the "cold war" level. "I
doubt very much that such a sharp reduction was really made. If the United
States were to adduce concrete figures on the number of tactical nuclear
warheads it had in the past and the number it has today, there would be
something to speak of but, otherwise, this is nothing but sheer propaganda,"
the official of the Russian Defence Ministry stated. "Russia had announced back
in the nineties that it had cut by 50 per cent its stockpile of tactical
nuclear weapons," he recalled. "The Americans are refusing to disclose any
concrete information on their tactical nuclear arsenal and why should they
expect us to do it? These are futile expectations," he added.


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3.
Russian Scientists Are Prepared To Renew Nuclear Umbrella
Aleksandr Yemelyanenkov
Rossiyskaya Gazeta
6/13/2006
(for personal use only)


Interview with Radiy Ilkayev, director of Russian Federal Nuclear Center of All-Russia Scientific Research Institute of Experimental Physics:

Friends, colleagues, and rivals are gathering today in Sarov, the leading Russian nuclear weapons center, from all over the world to pay tribute to the services of this well-known collective, which is marking its 60th anniversary.

The previous day Russian Academy of Sciences Academician Radiy Ilkayev, director of the Russian Federal Nuclear Center of the All-Russia Scientific Research Institute of Experimental Physics, granted an interview to.

(Yemelyanenkov) Russia's nuclear arsenal will be fully updated before 2015 in accordance with the state arms program: The RSM-12, RS-18, and RS-20 strategic missile systems will be replaced by the silo-based and mobile versions of the Topol-M, while submarine forces will get the solid-fuel Bulava. But at the same Russia has signed the Nuclear Test Ban Treaty. How, under these conditions, are the reliability and safety of nuclear charges to be maintained? What role does the range on Novaya Zemlya play?

(Ilkayev) A number of factors are important for ensuring the effectiveness, reliability, and safety of the nuclear arsenal under conditions when the aforementioned treaty applies. These include highly qualified cadres, the modern level of the computer and experimental base, and, of course, the high level of quality of the nuclear charges and munitions created by us. Only such a combination enables us to give constructive replies to questions connected with the maintenance and development of the nuclear arsenal.

On Novaya Zemlya, where Russia's Central Range is located, we conduct nonnuclear explosive experiments which conform with the spirit and letter of the treaty. This enables us to study specific questions connected with the behavior of individual components of nuclear weapons and to maintain the range itself in working condition.

(Yemelyanenkov) At the international conference "The Role of Nuclear Weapons in the 21st Century," which was organized in Snezhinsk a year ago, you set forth the consolidated opinion of your scientific collective. Which of the theses and assessments aired there strike you as the most topical today?

(Ilkayev) I will point to three circumstances. The first is the exceptionally important role of nuclear weapons for ensuring Russia's global and regional security, mindful of the limited potential of the traditional army and of military hardware with regard to the country's colossal areas and its borders. The second is the use in the nuclear weapons complex of outstanding scientific achievements and unique technologies which we must preserve and develop. The third is the consistent fulfillment of our country's treaty obligations in the nuclear arms sphere.

(Yemelyanenkov) You met recently with Russian Federation Defense Minister Sergey Ivanov. What topics were discussed?

(Ilkayev) Naturally, attention was centered on questions connected with strengthening the nuclear weapons complex of the Rosatom (Federal Atomic Energy Agency). We always respond promptly to the needs of the Armed Forces. At the same time we also need support: It is necessary to update the computer, experimental, and production base in good time and strengthen the cadre potential. This requires adequate funding both for resolving current tasks and for stimulating and realizing new ideas. We hope for the constructive resolution of the problems set by life itself.

(Yemelyanenkov) Which of your foreign colleagues responded to the invitation to come to Sarov this year? In which directions is the Russian Federal Nuclear Center and the All-Russia Scientific Research Institute of Experimental Physics developing international cooperation?

(Ilkayev) Many of our foreign colleagues visited us. We maintain scientific and technical cooperation with a whole series of major foreign centers, including US national nuclear laboratories and the nuclear centers of France, Britain, and China. In the nineties this cooperation enabled us to resolve important technical talks elating to the nonproliferation of nuclear weapons technologies including the creation and production of secure containers and technical protection and storage facilities.

At the same time cooperation developed in several avenues of fundamental and applied science, including, for instance, the creation of superstrong magnetic fields and the study of the behavior of various substances in them.

(Yemelyanenkov) Sarov is now often mentioned in connection with its "pre-nuclear" history and more and more tourists are rushing here. In what circumstances and when could your city become accessible for Russian citizens to visit freely?

(Ilkayev) As you realize, this is a difficult question. But we are doing a lot to combine the security of the nuclear center with the broadest and freest possible activity in the city. In particular, large-scale festivities linked to dates of note in the Russian Orthodox church are regularly held in our city. We treat with understanding the importance of such events, which help resurrect traditional Russian values.

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4.
USA wants more information on Russia's tactical nuke weapons
Dmitry Kirsanov
ITAR-TASS
6/13/2006
(for personal use only)


The United States would like to get more information on Russia's tactical nuclear weapons and on the doctrine of its application, an official of the U.S. Administration told Itar-Tass on condition of anonymity.

From his point of view, the two countries need greater transparency as regards nuclear weapons. The expert also stated that the U.S. arsenal of tactical nuclear weapons was cut by 90-95 per cent in recent years as compared to that of the ``cold war'' period.

U.S. Under-Secretary of State Robert Joseph told a specialised bulletin, published by the American Arms Control Association, that Russia was moving towards still greater reliance on tactical nuclear weapons. There is an obvious disbalance between the United States and Russia in this domain, the American diplomat presumes.

In turn, the Russian government had lately expressed over and over again its concern about the American plans to develop low-power nuclear shells and to arm intercontinental ballistic missiles with conventional warheads. ``This may top the nuclear weapons application threshold, may affect the Nuclear Weapons Non-Proliferation Treaty,'' Russian Foreign Minister Sergei Lavrov told the State Duma on June 7.

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5.
Burning No Money in Vain
Dmitiri Litovkin
Izvestia
6/12/2006
(for personal use only)


Improving the quality of ordered arms and hardware will become one of the key tasks for a new federal targeted program for technical retooling and development of the defense industry. Deputy Prime and Defense Minister Sergey Ivanov told Vladimir Putin about this program at a conference with cabinet members on Monday (5 June). The program was also discussed at a meeting by the Military Industrial Commission late last week.

The Military Industrial Commission examined two documents intended to change profoundly the situation in the defense production sphere: a draft state program of armaments for 2007-15 and a federal targeted program for technical retooling and development of the defense industry for the same period. Both documents should be handled "in tandem."

"Unlike in the previous period, the problem of funding purchases for the Armed Forces is not on the agenda," the Defense Ministry chief says. "What matters most is what this money will be spent on. We must not let money be burnt in vain. We should not go for quantity, we are interested in quality only."

Experts have already called the new armaments program unprecedented. The state is ready to invest 4.9 trillion rubles (R) in it. Therefore, Sergey Ivanov believes that "there must be no gap between the state armaments program and the federal targeted program for the development of the defense industry complex." For the earmarked money the Army is planning to purchase only the arms and military hardware that it actually needs rather than whatever can be supplied by the industry at present. The hardware must have adequate quality, too.

Last year, for example, more than R2 billion was spent on the retooling of defense enterprises. According to data from the Economic Development Ministry, the wear and tear of production facilities in the Russian military industrial complex stands at 80 percent. Result: not just the falling quality of military products but an increase in their final price (the manufacturer simply includes all of his expenses in the end price). A simple example: The head Project 955 Borey-class nuclear submarine cost several years ago several times less than the same submarine whose construction has been launched at the Severodvinsk Shipyard this year. The new Topol-M strategic missile has tripled in price over the past two years.

Sergey Ivanov says that while priority was given to research and development in the current armaments program, the new program will shift emphasis onto procurement of modern weapons and military hardware. Notably, the Army will buy whole complexes of arms and military hardware instead of individual samples. Thus, emphasis has been placed in the program for the first time ever on real comprehensive provision of subunits and units of the Russian Army.

"Can one say that the retooling plans are being carried out?" Vladimir Putin asked at the conference.

"Slowly but they are. We want the implementation to be faster but this is what the state armaments program is for," Sergey Ivanov replied.

"It is a good result, too," Putin summed up.

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G.  Nuclear Industry

1.
Even Higher Uranium Prices Ahead This Summer
Miningsectorstocks.com
6/14/2006
(for personal use only)


Will we see a dramatic spike in uranium prices this summer? Some industry insiders have forecast spikes that could send uranium soaring to between $55 and $100/pound. Most were not expecting this to occur during 2006. However, there are several reasons we believe something could crack wide open in the uranium market over the next 100 days.

RUSSIA

Let's take the Russian situation. U.S. utilities have been somewhat lackadaisical about uranium pricing because they've been getting Russian uranium on the cheap. Russia's Rosatom head Sergei Kiriyenko has reportedly told U.S. utilities there will be no HEU-2 deal. Whether this is a ploy to extract a better deal for Russia, or Russia's announcement it will feed other nuclear-ambitious countries with its uranium is not known.

U.S. utilities are now lobbying the U.S. Commerce Department to end the restrictions on importing enriched Russian uranium. They like the pricing, and are now arguing that higher uranium prices are jeopardizing the nuclear renaissance in the United States.

Because of rising uranium prices, 85 percent of the utilities, which operate nuclear facilities, have formed AHUG (Ad Hoc Utility Group) to terminate the import restriction. If AHUG accomplished its goal, the loser would be USEC, which is now arguing on America's "overdependence" of nuclear fuel. USEC depends upon the Russian uranium to fund its future enrichment facility program. In a way, this amounts to corporate welfare. USEC is arguing against unlimited Russian uranium.

U.S. utilities are now being fed about 50 percent of their nuclear fuel from decommissioned Russian warheads. Russia is more than a tad upset because the deal they made does not reflect the current spot or long-term price of uranium. So mething will likely occur at the G8 Summit in St. Petersburg, Russia on July 14-17. Russia will chair this summit for the first time.

Expect fireworks. On the official G8 website, Russian President Putin announced, "Russia, as the presiding country, regards it as its duty to give a fresh impetus to efforts to find solutions to key international problems in energy, education and healthcare." It should be noted that Russia is now the world's second largest oil exporter behind Saudi Arabia. Russia is also hoping to reach a deal in joining the World Trade Organization before the summit opens.

We believe Russia may exacerbate the current tight supply situation in the uranium markets and cause prices to rise after the summit. On June 9th, Russia's news service Novosti reported the country would start constructing two nuclear power units per year inside Russia beginning in 2007. Kiriyenko also announced Russia would ramp up to four or five nuclear reactors for 2009-2010. President Putin plans to build an international full-service nuclear fuel center in Russia to provide enriched uranium for the growing number of countries wanting nuclear energy programs. It would be hardly likely Russia would provide additional uranium to U.S. utilities in that context.

TRADE TECH LLC

What about going into Russia's G8 Summit? It appears uranium trading through June could continue to show a very tight supply situation, where sellers continue to set pricing. A recent posting on the Trade Tech LLC website announced the following:

A number of buyers concluded transactions during May, which significantly reduced outstanding demand. The impasse between buyers and sellers ended this past month, with buyers apparently reconciling their expectations with recent price increases and current offers. Sellers moved increasingly toward market-related pricing terms for spot delivery, and buyers showed a renewed willingness to accept these offers. Exceptionally strong long-term demand continues to exert upward pressure on the spot uranium price as each pound held by sellers is considered more valuable with every new buyer that enters the market. At least one, and possibly two, uranium auctions are expected in June. Buyers are expected to compete aggressively for this material and TradeTech expects uranium prices to continue their upward climb in June.

Aggressively competing for tight uranium supplies lends credence to a possible rise through the $50/pound level before the G8 Summit ends.

[...]

NUCLEAR EXPANSION: A WORLDWIDE PHENOMENON

Yuri Sokolov , Department Head of Nuclear Energy for the United Nation's International Atomic Energy Agency (IAEA), told reporters this past week, "There is plenty of uranium assuming the industry keeps moving ahead with exploration and new mines." Sokolov is confident the "identified resources" of 4.7 million metric tons can be mined for less than $60/pound. That's about 26 percent higher than the current spot price. There was also a warning buried in his speech. He cautioned the major risk to uranium supplies would come from possible delays in moving from discovery to production. Industry insiders understand it can take between 12 and 20 years after a discovery to reach the production stage. U.S. utilities may get more aggressive to secure supplies as this year and next pass by. Their supply deficit for 2008 through 2012 requires a near miracle to match demand requirements.

Sokolov also set targets in the IAEA's annual Red Book. Depending upon how quickly the nuclear industry expands, more uranium will be required. By 2025, if global nuclear capacity increases to 22 percent, utilities will need 80,000 metric tons per year. An increase to 43 percent would require 100,000 metric tons annually. The Red Book forecast new mines, over the next five years, would add about 30,000 metric tons to the supply inventories. This new capacity would fill the current uranium supply shortage, unless of course the industry is hit with delays. More new mines would also need to come online to keep pace with the heralded nuclear renaissance. Only the most cynical industry insiders would disagree the uranium mining sector desperately needs a dramatic surge in production between 2010 and 2020 to match the explosive growth ahead for this sector.

SUMMARY

Nuclear energy "hot talk" should also get a boost in August and September, after the North American release of James Lovelock's Revenge of Gaia (Basic Books). The 86-year old scientist has led the charge among the world's environmentalists to get the greens to go nuclear . The international media has sought out Dr. Lovelock's opinions. Figure we'll see the same boost in "pro nuclear" media appearances going into the autumn. As the author appears on numerous talk shows, the polls should swing more heavily into building more nuclear plants. That could add further pressure on utilities to quickly secure inventory.

Russia's desire for a uranium/nuclear monopoly, hurricanes, tight supplies through the summer and the likelihood of yet another energy crisis before Labor Day could spell a significant boost in spot uranium pricing. It would not surprise us should spot uranium trade closer to $60/pound over the next 100 days. Any "shock event" could spike the spot uranium price above that level, and possibly make a run for $100/pound uranium.

Such a level would be unsustainable, of course, but it would be an eye-opener and attract renewed interest in the domestic uranium mining sector. The key domestic contenders for adding new mining capacity in the United States appear to be Strathmore Minerals (TSX: STM; Other OTC: STHJF), Uranium Resources (OTC BB: URRE), Energy Metals (TSX: EMC), UR-Energy (TSX: URE.TO), and Uranerz Energy (OTC BB: URNZ). There are others, but we have not followed their developments as closely.

Should the Russians absolutely confirm there will be no HEU-2 deal, U.S. utilities will be driven to closely investigate working relationships with domestic uranium development companies for reliable nuclear fuel supplies. Itochu has established a relationship with Uranium Resources (UOTC BB: URRE), and we expect more of these joint ventures to materialize. As for market capitalizations versus pounds-in-the-ground, during the last uranium bull market (in the 1970s), utility companies were buying uranium companies for about $5-6/pound of uranium. Some of our favorite companies, which host historically reliable and NI 43-101 compliant uranium resources over 100 million pounds, would be severely undervalued under a parallel scenario.

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2.
Rosenergoatom, Sevmash sign contract to build floating NPP
RIA Novosti
6/14/2006
(for personal use only)



State-owned nuclear power generating monopoly Rosenergoatom and Sevmash shipyard have signed a contract to build the world's first floating nuclear power plant, the Russian nuclear agency said Wednesday.

Sergei Kiriyenko, the head of the Federal Agency for Nuclear Power, said at a conference on floating NPPs in the northern city of Severodvinsk that Russia possessed "unique experience ... on using small- and medium-power NPP reactors."

The NPP will mainly provide power supplies for Sevmash, which won a tender in May to build a floating reactor for a low-power thermal and electric power plant that will sell one fifth of its energy to the energy-hungry Asia-Pacific region.

Sergei Obozov of Rosenergoatom said Tuesday the project would cost 9.1 billion rubles ($337 million) and would be commissioned in October 2010.

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3.
Nuclear Reforms Nearing Completion
Yuriy Humber
St. Petersburg Times (Russia)
6/13/2006
(for personal use only)


President Vladimir Putin said Friday that the country’s nuclear energy reforms were “close to completion,” signaling that the Kremlin would soon put forward long-awaited legislation to modernize the industry into a market-driven corporation.

The move could open the atomic sector to private investments as a way to fund the ambitious program to build 40 nuclear reactors inside the country and 60 abroad by 2030.

“The government has been given the task of preparing the program to support both the nuclear arms complex and the nuclear energy industry,” said Putin, who was chairing a meeting of top atomic industry officials for the first time.

“This work is close to completion, and at present it is important to make sure it is carried out efficiently,” Putin said, according to a record of the meeting on the Federal Atomic Energy Agency’s web site.

Agency chief Sergei Kiriyenko has said about $60 billion would be needed to build the 40 domestic reactors. Since his appointment last December, Kiriyenko has sought to transform the nuclear energy sector into a vertically integrated corporation, with all of its enterprises and institutes incorporated.

“Today in the world there is a consolidation of efforts” in the nuclear sector, Kiriyenko told Friday’s meeting. “Therefore we need new management systems that allow us not only to compete but to win.”

The nuclear program is aimed at boosting Russia’s reliance on nuclear power from 16 percent of the country’s electricity supply to 25 percent by 2030. “Unless new nuclear reactors are built, nuclear energy’s share will fall to 1 percent or 2 percent of the overall energy balance,” Putin said Friday, reiterating past statements.

From this year, Russia will look to build two reactors annually, speeding up to three reactors per year from 2009 and four per year by 2015.

Part of the program’s success relies on the nuclear sector having secure contracts and possibly control over atomic machine-building plants and reviving industrial construction enterprises. Kiriyenko said Friday that there was progress in both areas, as well as on safety and anti-terrorism measures.

In the last two months, the state has brought several machine-building assets, including Yekaterinburg-based United Heavy Machinery, or OMZ, under state control.

Analysts said they saw Putin’s words as a confirmation that the sector’s restructuring would not be dragged out for years, as has happened with state electricity monopoly Unified Energy Systems.

“The message is clear that Putin wants to see the sector restructuring plan completed and approved by the State Duma, perhaps before the Group of Eight summit next month,” said Erik DePoy, a strategist with Alfa Bank.

“From an investment standpoint, we will be looking for details on the new business model for [fuel monopoly] TVEL,” which has been tipped as the possible basis for a holding company to manage nuclear power sector assets, DePoy said.

The meeting was also attended by the country’s nuclear military officials, including Defense Minister Sergei Ivanov and military top brass. Putin said that atomic industry reforms would be vital to maintain Russia’s military nuclear strength.

“The solidity of the nuclear shield, the condition of the nuclear weapons complex is an important part of Russia’s status as a world power,” Putin said.

The country’s civilian and military nuclear energy industries come under the control of different state officials, although many of Russia’s nuclear facilities fulfill orders for both.

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4.
Sevmashpredpriyatie To Build Floating Power Unit For Low-Yield Nuclear Thermal Electric Power Station
Interfax-AVN
6/13/2006
(for personal use only)


Head of the Russian Federal Atomic Energy Agency Sergei Kirienko and Sevmashpredpriyatie Director General Vladimir Pastukhov will sign a contract on building and testing a floating power unit for a low-yield nuclear thermal electric power station in Severodvinsk on Wednesday, a Sevmashpredpriyatie spokesman told Interfax-Military News Agency.

"It will be a package of five contracts, envisioning building the floating power unit proper, and ground-based engineering infrastructure, i.e. the power station, on the premises of Sevmashpredpiryatie," he said.

In May the Russian Federal Atomic Energy Agency summed up the results of the tender for building the floating power unit, which had seen participation of Sevamashpredpriyatie and the Baltiysky Zavod shipyard.

Sevmashpredpriyatie won the tender.

The project was initially developed within the framework of the special federal program "Power-Efficient Economy". It successfully underwent all official tests, including the state environmental expertise. It has earlier received the license of the Russian Technology Supervisory Agency to deploy the power station in Severdvinsk.

The first power station is designed to provide Sevmashpredpriyatie with electric power and heat. "It is a priority, given the constant growth of prices on energy resources and their share in the company's output . The state expertise admitted the project was efficient," he said.

According to experts, the project will payback within eight years. Similar units are expected to be employed in the Extreme North and the Russian Far East, where it is difficult to deliver ordinary fuel to.

The floating power unit will be fitted with two KLT-40S reactors. It will have a electric power of 80 MW, and a thermal output of 140 gigacalories. In addition to that, it will be capable of desalinating up to 250,000 cubic meters of seawater on an annual basis.

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5.
Yekaterinburg Received a 'Uranium Tail.' Sverdlovsk Environment Activists Protest Imports of German Radioactive Waste Into the Region. Up to 900 Tonnes of Additional Radioactive Waste To appear in Our Country. The Urals Must not Become Europe's' Trash Dump
Vladimir Terletskiy
Nezavisimaya Gazeta
6/13/2006
(for personal use only)


Activists of the Ekozashchita (Ecodefense) group picketed last Thursday (8 June) the German Consulate General in Yekaterinburg. They protested imports into the Urals of depleted hexafluoride from a German plant in Gronau, which goes through a process of enrichment in Novouralsk.

Young participants in the action held slogans reading "The Urals Is Not a Trash Dump of Europe," ostentatiously lay down in the puddle, and strolled wearing chemical protection suits and gas masks. Yabloko activists, who also joined the picket, brought a more "extremist" poster: "We Do Not Need Foreign Sh..."

According to Olga Podosenova, coordinator of the Ekozashchita group, "apart from the risk of nuclear deliveries, there is also a moral aspect: Nobody should export their radioactive problems abroad."

According to data obtained by the environmentalists, the enrichment process upgrades about 10 percent of the imported waste to the level of natural uranium and is transported back to Germany. The rest remains in Russia to be buried for free. If the company Urenco, which owns the plant in Gronau, buried the waste on its own, its products would become five times as expensive. Therefore, the environmentalists believe, Russia was allowed into this business on condition of keeping the "uranium residue" on its territory. Ekozashchita estimates that up to 900 tonnes of additional radioactive waste will appear in our country.

Meanwhile, Sergey Shcheklein, head of the Urals Polytechnic Institute's department of nuclear power engineering, assured that the cargo imported into Russia cannot be called waste because waste is a substance that was exposed to irradiation. Meanwhile, the Germans ship to us the tailings that they cannot enrich more deeply: During the processing, the ore radioactivity decreases, not increases. Thus, the scientist believes, the radioactivity of the German tailings is lower than that of ash tailings at the Reftinsk GRES (state regional electric power station) because coal burned in furnaces is accompanied by thorium in nature.

The Urals scientists find it hard to estimate the transportation risks. In the words of Ilya Yarmoshenko, laboratory head of the Promekologiya Institute of the Russian Science Academy's Urals Division, the transportation process is dangerous but not more so than transportation of chlorine or any other chemical substance: "If a train keels over, let us say, on the central street of a town, that will create big problems. If, however, it happens in a forest, it will be possible to localize the accident consequences quite painlessly." No radioactive contamination, in Yarmoshenko's opinion, will follow. In addition, Rosatom's (Federal Atomic Energy Agency) strict transportation requirements have thus far prevented grave consequences of hazardous cargo transportation.

Vice Consul Max Mueller honored the Yekaterinburg picketers with his presence. The latter handed over to him an appeal for German authorities to stop the radioactive waste exports. The Russian declaration was supported by an alliance of German antinuclear organizations, which blocked the train at a station in one small town several days ago. Max Mueller promised to pass the appeal to the German Embassy in Russia for verification of facts presented in the environmentalists' petition. On his own behalf, the vice consul added that the transportation of radioactive cargo was never a secret to anyone and that relevant agencies had certainly examined this issue.

Olga Podosenova announced the picket's goal achieved and promised to continue such actions.

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6.
Cracks start to show in a nuclear power monopoly
John Dizard
Financial Times
6/12/2006
(for personal use only)


The United States Enrichment Corporation, which for now has a national monopoly on the enrichment of uranium for nuclear power reactors, is at risk of turning into the Impoverishment Corporation for its shareholders.

USEC is the trust fund baby of the American nuclear industry. It was born in 1998, inheriting leases on the ageing and power-hungry plants that the government had built to separate out the radioactive fraction of uranium that can be used for nuclear reactors or weapons.

It also inherited contracts with the utility industry, a stockpile of uranium, and the economic benefits of an agreement with Russia that allowed the company to sell diluted Russian bomb material. Off the balance sheet, it inherited political influence, partly completed designs for new equipment, and the conviction on the part of the government that the country needed what Europeans would call a “national champion” in uranium separation.

In the tradition of overindulged rich children, it has proceeded to squander this patrimony like a playboy at St Tropez. However, Darwin’s laws may well catch up with USEC, which, to maintain its position, is effectively betting the entire company on a set of defence contractors’ ability to deliver a complex, little-tested technology on a tight schedule and within budget. The odds could be better.

“The utilities hate USEC. The Russians hate USEC. The DOE [Department of Energy] hates USEC,” says a west coast investor. Much of the investing public, however, has rather liked USEC. It has a market capitalisation of just about $1bn, based on a price/earnings ratio of 17. This is based on the notion of a headline in USEC’s annual report – “Pure Play in Nuclear Power = USEC”.

To begin with, the uranium stockpile that, effectively, constituted one of its trust funds is nearly gone. “They’re down to seeds and stems there,” as that west coast investor puts it. So some of those earnings are really a monetisation of inventory.

The economics of the legacy gaseous diffusion plants, about as energy efficient as a 1970 Cadillac limousine, were further hit by the Hurricane Katrina-related increases in electricity costs, along with a long-anticipated 50 per cent increase in base electricity costs that hit this year.

Finally, and, perhaps, most ominously, the Russians who supply about half the “separative work units” that comprise USEC’s enrichment service are increasingly annoyed that USEC refuses to adjust its purchase price to reflect current market prices for SWUs.

While the company will not reveal the terms for the Russian contract, one of its bond dealers estimates USEC pays the Russians about $90 per SWU, while the world market price is between $120 and $125 per SWU. That, apparently, represents better than $100m in extra profit for USEC. “Its margins are about 2 per cent on [the production from the gaseous diffusion plant] and 20 per cent on the Russian contract,” says another analyst.

Last month, Sergei Kiriyenko, the former Russian prime minister who is head of Rosatom, the federal nuclear energy agency, went to Washington to see about ending USEC’s effective monopoly on sales of Russian low enriched uranium. The alternative to sales through USEC is assuming the burden of a 112 per cent tariff, which is in place to prevent the “dumping”, or, to consumers of power, low cost sale, of uranium. According to Russians, Mr Kiriyenko was given a lecture on the sanctity of contracts; USEC’s Russian contract to be the executive agent runs until 2013.

The Russian suspension agreement that underpins the economics of the Russian contract was struck in 1992 between the Russian Federation and the US government. Russia can terminate that agreement on 60 days’ notice. When Russia made the agreement, it was broke and demoralised. Now, it has a substantial current account surplus and foreign exchange reserves, the desire to export nuclear reactors with attached fuel contracts, and a prospective uranium shortage.

“They [the Russians] have not expressed to us a desire to renegotiate the contract,” says John Welch, the president and chief executive of USEC. “They would certainly like to have more access [to the US market] and sell directly to the utilities. [But] the industrial base of the country is going through a transition, investing billions of dollars, and now is not the time to open the market.”

But one Russian diplomat with responsibility for the nuclear fuel trade says: “We want to change the conditions of the suspension agreement and open the gates more widely for the export of Russian uranium. The US utilities very much support the Russian attitude.” While Russia wants to keep a political deal with the US on uranium, “we want to change the conditions of the contract [so as to be] closer to the real conditions of the nuclear market.”

Keeping the profitable Russian contract in place is key to the financing of USEC’s American centrifuge plant, which the company estimates will cost $1.7bn, excluding capitalised interest. Wisely, the company’s disclosures say: “We will continue to refine total cost estimates . . . ”

The main contractors for the plant are Boeing, ATK (the munitions maker), Honeywell, and Fluor.

A nuclear engineer for the electric utilities says: “We in the industry need the production from the plant. We want them to be successful.” He and his colleagues are concerned, however, that: “The bigger the centrifuge, the harder it is to build. This is a really big one.

“If it was my money, I wouldn’t give it to them unless I knew it had been working for a couple of years at least . . . if you had 1,000 [centrifuges] operating for three or four years, then you would have the operating data you would need to be comfortable.”

Again, the industry people want USEC to succeed. But, as the engineer says, “I don’t see why the stock is trading where it is today.” And USEC needs to make another successful stock offering this year, both to meet the terms imposed by its lenders, and to start the financing of the new plant.

I wouldn’t buy it. The $150m or so of outstanding bonds are a better value. They pay about 7 per cent, and are only 30-month paper.

USEC won’t be allowed to collapse but let them bet the company with someone else’s money.

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7.
Russian nuclear industry must recreate its technology base - expert
RIA Novosti
6/10/2006
(for personal use only)


Excerpt from report by Russian news agency RIA Novosti:

We must recreate the necessary technological base for a long-term development of the Russian nuclear energy sector, Director-General of the Central Research Institute of Management, Economics and Information of Russia's Rosatom (Federal Agency for Atomic Energy) Petr Schedrovitskiy has told RIA-Novosti.

He said the federal targeted-development programme for developing the nuclear energy sector is being finalized by ministries and other agencies.

"The programme provides for the construction of two nuclear power units a year in Russia from 2012. It needs to be finalized. For instance, it must determine construction sites for nuclear power stations. The location of sites, for its part, depends on the general plan of spreading energy facilities throughout Russia until 2020," Schedrovitskiy said.

He noted that "a whole range of important features and technologies in the machine-building and the construction components of the nuclear industry have been lost".

"First of all, we must recreate the necessary technological base in order to start construction on this scale (two nuclear power units a year), in parallel with increasing Russian presence on the international market. If we succeed, at the next stage we will be able to speak about increasing the yearly pace of the construction of nuclear energy facilities in Russia," the Rosatom representative stressed.

At a government meeting on 7 June, Industry and Energy Minister Viktor Khristenko said that, as part of the federal targeted-development programme, there are plans to allocate R337bn for the development of the nuclear energy sector until 2010.

He said the figure was approximate and would be adjusted along with work on federal targeted-development programme. (passage omitted)

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H.  Scientist Redirection

1.
Russian Nuclear Center Ready To Make Civil Plane-Protecting Systems
ITAR-TASS
6/9/2006
(for personal use only)


Scientists of Sarov's Federal Nuclear Centre are ready to begin the
manufacture of systems for protection of civil planes against possible
terrorist attacks.

"The board laser devices developed in laboratories of the nuclear centre and
the Research Institute of Experimental Physics are able to cripple homing
systems of ground-based missiles targeted at an airliner," the centre's
director Rady Ilkayev told ITAR-TASS on Friday.

"Our device can a bit 'hurt the brain' of a missile like Stinger, and it will
simply deviate from course, and the plane will be saved," the scientist said.

He said "such systems are especially important at present when attempts of
international terrorists to bring alarm and split in society have activated".

Foreign scientists are working very intensively on such systems, Ilkayev went
on to say.

"As far as I know, such developments are being carried out in one-two
industrially developed countries. If such system is made abroad sooner, it will
be immediately put on the market."

"Then it will be declared that not a single civil plane unequipped by such
device will be allowed into the air space of these countries. And then we shall
have to buy abroad what had been made in Russia well, with good quality and
much earlier," Ilkayev said.

"If such order comes, we are ready to begin the manufacture as early as in
2007," he said.

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I.  Chemical Weapons Destruction

1.
GOOD BYE, CHEMICAL WEAPONS
Anatoliy Gyschin
Defense and Security/Oblastnaya Gazeta
6/14/2006
(for personal use only)


INTERVIEW WITH HEAD OF KURGANSKY INFORMATION ANALYSIS CENTER ON THE PROBLEMS OF DESTRUCTION OF CHEMICAL WEAPONS IVAN MANILO:

According to the International convention, which was signed by 165 countries, Russia promised to liquidate arsenals of chemical agents by the 29th of April 2007.

According to the International convention, which was signed by 165 countries, our country promised to liquidate arsenals of chemical agents by the 29th of April, 2007. Though, it overestimated its possibilities, having assumed such responsibilities. In connection with this, it addressed the International community to extend the term of the agreement. Russia was given a chance. Now, the deadline when Russia has to liquidate chemical weapons is the 29th of April. Some specialists think that this term may appear to be rather strained and even unreal, as not much is done up to the present moment. Such a declaration was made by Head of Kurgansky information-analysis center on the problems of destruction of chemical weapons, candidate of engineering science, honored inventor of the Russian Federation I.I. Manilo during the international scientific-research conference concerning the questions of people's security, which took place in Yekaterinburg.

As is known, the largest in the country stores of chemical agents are not far from Central Ural. The first one is in town Schychje in Kurganskaya oblast, the other one is in town Kambarka, which is in neighboring Udmurtiya. That's why the citizens of Sverdlovskaya oblast are not indifferent concerning the fact of the destruction of potentially lethal chemical weapons.

Ivan Manilo: In Kambarka the process of their destruction has already started. A month ago, the utilization plant was introduced into service. Though, so far it's operation not at full capacity, but it is expected that in the near future it will operate at full capacity.

Question: And how are the things going on in Schychjevo?

Ivan Manilo: In Schychjevo the destruction of chemical weapons will not start soon. But development work is already taking place. There is some project documentation to build the industrial zone and disposal site (the designer of the project is Volgograd Institute "Giprosintez").

(...)

Question: During the conference concerning security problems, you declared that Russia is unlikely to adhere to the terms of the agreement and to be on time to destroy its stores even by 2012...

Ivan Manilo: Well, there are such doubts. And this is first of all, because of the fact that the works which deal with destruction of chemical agents in our country have not been created yet. But we have no time. Since the day of signing the convention, since April of 1997, only about 1000 tons of chemical agents has been destroyed. Even if in a year we put into service everything at full capacity, as it was planned, including the resources in Schychjevo, still, six years would not be enough for us. (...)

Question: In Schychjevo there are a lot of people who are afraid of the works which are being created. They are worried about their health and ecological consequences. (...) It is considered that launching a new plant will do great harm to the genofond of people.

Ivan Manilo: (...) In my opinion, this fear is not justified. Judging from the documents, the works in Schychjevo will meet modern standards. The most dangerous operations will be carried out by machines, not by people. (...) At the present moment the documents "Groundings of investment into building of the object which will deal with chemical destruction in Schychjevo" passed state expertise. According to it, the influence of the object on the environment will be within the permitted limits. Of course, no one says that this is all safe. That's why it is paid much more than in other fields of industry. And people will have more benefits. By the way, according to the project, Schychjevo will be newly built. (...) Schychjevo will become one of the most beautiful and modern towns in Kurganskaya oblast.

Original source: Oblastnaya Gazeta (Yekaterinburg), 27 May, 2006, p.4


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2.
Safe gas under the Baltic
Vasily Zubkov and Viktor Litovkin
RIA Novosti
6/13/2006
(for personal use only)


In the seventh month since the launch of the North European Gas Pipeline, a joint project of Russian Gazprom and German BASF and E.ON AG, its operator is still in the center of heightened debate over the pipeline's alleged environmental hazard.

One of the major concerns is linked to Baltic dump sites of WWII chemical weapons on the pipeline's way.

Countries which are likely to lose transit fees when the pipeline carrying Siberian natural gas directly to Western consumers comes on stream are - no surprise - most vocal environmentalists. At the same time, western European powers like France, Germany, the Netherlands and others who face impending energy shortfalls are as much concerned about maintaining their lifestyles as about keeping control of thousands of tons of Nazi war chemicals and chemical munitions, dumped in the immediate proximity.

True, balancing between the benefit from the pipeline and the risk from what may emerge from the seabed as it runs along is a difficult and pressing problem. Shortly after the WWII, the Potsdam Conference (Allied Control Council Directive #28, December 1, 1947) ruled that each of the four victorious nations - the U.S.S.R., the U.S., the U.K., and France - was responsible for the disposal of a fair share of Nazi combat agents and munitions. The Soviet Union got 70,500 tons, the U.S. - 104,500, Britain - 126,700, and France - 9,500.

Everyone disposed of the unsavoury windfalls in their own and secretive ways. Some claim the U.S. and U.K. sank barges with all their 231,000 tons near the German seaport of Kiel and in the straight of Skagerrak between Jutland and the Scandinavian Peninsula. France has left no record of its actions.

In the Soviet Union, the war chemicals were burnt, exploded on remote test sites, and recycled for civilian use. Up to 60% of all Nazi chemicals, however, were also sunk in the Baltic: 32,000 tons of bombs, projectiles, and canisters were thrown into the sea 65 miles to the southwest of Liepaja (Latvia) and to the east of the Danish island of Bornholm. The stockpile included 455,000 munitions armed with mustard and other blister gases; 10,500 adamsite dischargers, and scores of barrels of the deadly German Zyklon-B.

Mustard gas, the most lethal and powerful combat agent, made the bulk of the German stock and of the later Soviet chemical weapons, 300,000 tons of which were dumped, together with 189 tons of prussiate, in the Baltic between 1947 and 1978.

The problem is real. Nine nations and 85 million people living near the Baltic are well aware of that, and of course building anything under the sea without presenting a way to fend off the possible environmental catastrophe would be insane. However, this is just what the North European Gas Pipeline operators are doing, and quite successfully at that.

Sergei Serdyukov, Gazprom's deputy chief of gas transportation and storage operations, told RIA Novosti the Russian gas giant had perused the precise chemical dump maps inherited from East Germany, and said the pipeline drafting had involved close cooperation with the environmental watchdogs of all affected countries.

The route, Serdyukov said, was selected so as to avoid high-risk areas - which are well known and included in all sea maps - well before the pipeline project won political support. Near Bornholm, Gazprom's sonar survey found a two-km wide shelf which is very convenient for the pipe, just 200 m deep, and runs far enough from the dump sites. "We have surveyed every centimeter of the bottom where the pipeline is going to run and selected a 170-m corridor, broad enough to lay two pipes," Serdyukov said.

"Almost all WWII chemical munitions already pose an environmental danger. Most of the metal and rubber canisters are nearly etched through by salty water. The heavy mustard gas jelly concentrates at the bottom, and is dragged elsewhere by deepwater streams.

"Such nomad jelly clouds are going to be fairly dangerous when Gazprom drills test construction wells there. You cannot possibly predict how drilling machines will operate in such environment. It is comforting, though, that part of the stockpile has died out, and all the munitions had been dumped without fuses."

Professor Natalia Kalinina, Russia's leading chemical weapons experts, corroborates that the jelly layer resulting from decades of underwater storage protects the sea from the impact of combat agents, though who knows what will emerge if this layer is disturbed by construction.

"Don't go asking for trouble," she warns.

The trouble may emerge without a pipeline as well, because the Danish straights of Kattegat and Skagerrak are a major marine thoroughfare in the Baltic, a gateway to the Atlantic for 2,000 vessels per day. Moreover, the trouble is not alone: the WWII has left many unexploded torpedoes, mines, and other munitions. Serdyukov says there are places where you cannot see the bottom under piles of old ammunition. Construction parties mainly clear them out but in some more dangerous cases have to apply to adjacent governments for explosive ordnance disposal.

Curiously, another problem is fishermen and - yes - fish. Anything unusual on the seabed attracts both, which is a problem Gazprom did not encounter during the construction of the Russian-Turkish Blue Stream gas pipeline under the Black Sea, where the life layer is limited to several hundred meters. Nonetheless, Serdyukov said, Gazprom is going to capitalize on the experience of that fast and successful enterprise.

The Baltic pipeline will be laid under unprecedented environmental safety standards: the steel pipe (Off Shore Standard DNV-05-F-101 Submarine Pipeline Systems/Gl/Rules Subsea Pipelines and Risers) shielded by three layers of bitumen and enamel will be put into a concrete cover which will provide mechanical protection, while compensating for natural buoyancy.

Environmental safety as well as economic viability of the North European Gas Pipeline will be additionally verified by international auditor Veritas Group. The Russian and German partners are united in their awareness of the environmental challenges and in their commitment to overcoming them and delivering safe and reliable gas supplies to consumers across Western Europe.

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J.  Border Security

1.
Dangers In Port Security
Robert Malone
Forbes.com
6/13/2006
(for personal use only)


The idea of inspecting every shipping container entering every port is at the core of the dream of total antiterrorist security here and abroad. And it is a dream. It shares more with the Land of Oz than the real world as it exists.

There are alternatives and they are alternatives people will have to get used to sooner or later, according to Stephen E. Flynn, who serves as the Jeane F. Kirkpatrick Senior Fellow in National Security at the Council on Foreign Relations in New York. Flynn just presented his views at a presentation organized by the Hong Kong Association.

Flynn frames his outlook within the context of the metastasizing threat of terrorist activity in ports and other high-profile targets such as the U.S. electric grid. But the ubiquitous shipping container that costs only $1,800 to send from China to the U.S. commanded his attention.

"This box, that is having its 50th anniversary, has caused a transportation revolution. It is like a Lego block, and there are 200 million of them moving around the globe in any one year," says Flynn.

The container, according to Flynn, did not catch on right away as there were all kinds of logistic mismatches between ship, crane, truck and rail to be figured out. Eventually, these issues were resolved. So today, containers are at the core of international trade.

Unfortunately, the supply chains of the world have not seen security as an economic advantage. Instead, security has been seen as a cost--and a complicated cost at that. Still, the vulnerability is there, and some way must be found to cope with the risks intelligently.

Flynn is most worried about the vulnerability of the individual container. He made his case by tracing a container shipped from Asian points to the West Coast of North America (Vancouver) and then onward to Chicago where what was assumed to be an innocent shipment of shoes turns out to be a dirty bomb. At each point in the trip, Flynn explains the vulnerability of the container, while being trucked locally, and then its repeated vulnerability at each intermodal transfer. In Chicago, "they pop the container open by breaking the seal and boom," he concludes.

He asks, at what point was the container compromised? Can we find the needle in the haystack? Do we shut down for security 29 ports as was done for ten days across the West Coast several years ago, in that case due to a labor dispute with dock workers?

Flynn suggests that the intelligent course of action is to secure the entire system as much as possible. The private sector is doing that or is ready to do that now without further pilot studies, says Flynn. He also suggests that we depend upon the resiliency of the intermodal transportation system. As he says, "Let the intermodal system continue to run even if there is a punch!"

The alternative is to close down the entire system with possible catastrophic effects on nationwide or worldwide economic structures. If terrorists believe that a punch or two can knock out the system, then they have the economy by the throat. This means to Flynn "that we must reduce the attractiveness of terror in specific target areas."

If the terrorist sees, according to Flynn, that his punch does not knock out the system, he may well leave the transport system alone and aim for other targets. He used as evidence the familiar London suicide bombers incident as a case where intelligent reaction to terror kept the systems going. Flynn is convinced that there are ways for our ports to be made more secure using proven techniques available at an affordable price. That means going from 1% container surveillance up to 99% (not 100% please) within a reasonable time frame. Is the U.S. government listening? Not according to Flynn's assessment.

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K.  Of Interest

1.
Paul Steps Down as Principal Deputy Administrator
National Nuclear Security Administration
6/12/2006
(for personal use only)


Linton F. Brooks, head of the National Nuclear Security Administration (NNSA), announced today that Jerry Paul will resign from his position as principal deputy administrator effective early August 2006, to return to private life.

Paul was nominated by President Bush on February 3, 2004, and confirmed by the Senate in July 2004. As deputy administrator, Paul served as NNSA's chief operating officer with the primary responsibilities of overseeing NNSA's headquarters organizations, and providing leadership and direction for NNSA's site office activities.

Paul also stepped in to serve as the acting deputy administrator defense nuclear nonproliferation when the position became vacant in July 2005. In this capacity, Paul oversaw all of NNSA's nuclear nonproliferation programs with the principal responsibility of preventing the spread of nuclear materials, technology and expertise.

"As a lawyer, a nuclear engineer, a leader, a man of vision and, above all, a patriot, Jerry has been of immense value to his country, to NNSA, to DOE, and to me personally. His leadership has made NNSA a more coherent and more effective agency. For over a year, while doing two full time jobs, he brought strong management to our nonproliferation efforts. He has been a strong partner in everything that I have done. I will sorely miss Jerry, as a friend and colleague," said Brooks.

Paul said, "It has been an honor to serve this President and this agency. NNSA is a tremendous organization on the cutting edge of securing our nation and its nuclear assets, and protecting the American people from the threat of nuclear proliferation. The time has come for me to return to private life; however, I will miss NNSA and the people that work here. I have had the pleasure and honor of working with some very professional and dedicated Americans. As I depart, I am confident that NNSA and the safety of our country is in good hands."

Prior to his tenure as deputy administrator, Paul was a nuclear engineer, an attorney, and represented Florida's 71st district in the Florida House of Representatives.

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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