Converted PDF file: Pages 1--40 from Global Nuclear Materials Management

Policy Recommendations

A Report of the CSIS Project on
Global Nuclear Materials Management

Project Chair Sam Nunn

Project Director Robert E. Ebel
Task Force Chairs Graham T. Allison
Roger L. Hagengruber
Roger Howsley
Atsuyuki Suzuki
John J. Taylor

Coordinating Committee Chair Matthew Bunn

January 2000 1
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About CSIS
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institution focusing on international public policy issues. Its research is nonpartisan and
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that leaders will confront in the next century. It achieves this mission in four ways: by generating
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©2000 by the Center for Strategic and International Studies.
All rights reserved.
Library of Congress Cataloging-in-Publication Data
Managing the nuclear materials threat : a report of the CSIS Nuclear Materials Management
Project / project chair, Sam Nunn ; project director, Robert E. Ebel.
p. cm. — (CSIS panel report)
Includes bibliographical references.
ISBN 0-89206-359-9
1. Nuclear fuels — Management. 2. Nuclear weapons — Materials — Management. 3.
Nuclear substances — Management. 4. Nuclear industry — Security measures. 5. Security,
International. 6. Nuclear nonproliferation. I. Nunn, Sam. II. Ebel, Robert E. III. CSIS
Nuclear Materials Management Project. IV. CSIS panel reports.

TK9400 .M351999
327.1'747 — dc21 99-088665

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E-mail: books@ csis. org
Web site: http:// www. csis. org/ 2
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vii
T
Chairman's Statement
he end of the cold war and the dissolution of the soviet union
brought many changes to the world, but none more important and hope-fully
more lasting than a reduction in the prospect of nuclear war between
the two nuclear superpowers. Yet the nuclear standoff that existed before the
breakup had also provided a degree of stability, in that a confrontation that could
lead to a nuclear clash between the United States and the Soviet Union presented
risks clearly unacceptable to both.
Today much of that stability has disappeared, replaced by new challenges of
how to avoid the spread of nuclear weapons material and how to keep nuclear
weapons out of the hands of terrorist groups and rogue nations. Again we must do
all that is possible to reduce these risks.
In our examination of global nuclear materials management that follows, we
have been guided by a vision of the world in which all nuclear materials are safe,
secure, and accounted for from cradle to grave, with sufficient transparency to
assure the world that this is indeed the case. If we are to reduce nuclear arms and
bring a halt to nuclear proliferation, effective controls over nuclear warheads and
the materials to make them are absolutely essential.
Of the many approaches examined in this report, two stand out in terms of
urgency. First, we need a new and comprehensive program embracing additional
purchases of highly enriched uranium and plutonium for the purpose of converting
these materials to nuclear fuel. Funds earned by Russia could be earmarked to play
a major role in helping reduce and stabilize its nuclear complex.
Second in terms of urgency, we must expand our cooperative efforts with Russia
to consolidate nuclear materials at fewer locations. These efforts are designed to
improve security, accounting, and consolidation and to keep nuclear materials
from falling into undesirable hands.
Time is of the essence. We must act, and act now. But the United States cannot
do it alone. Broad international cooperation in all aspects of global nuclear materi-als
management is essential. The consequences of failure are far too great and the
risks are too high to permit delay.

Sam Nunn
Chairman 3
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xiii
Executive Summary
New Leadership to Reduce the Nuclear Threat:
The Vision and the Immediate Priorities

Despite the end of the Cold War, nuclear weapons continue to pose the most devas-tating
security threat to Americans. Although the risk of a nuclear war destroying
civilization has virtually disappeared, the risk that a single nuclear weapon might be
used to destroy a major city has increased, particularly given the erosion of control
over nuclear material with the collapse of the Soviet Union. Nothing could be more
central to international security than ensuring that the essential ingredients of
nuclear weapons do not fall into the hands of terrorists or proliferant states. Effec-tive
controls over nuclear warheads and the nuclear materials needed to make them
are essential to the future of the entire global effort to reduce nuclear arms and stem
their spread. At the same time, ensuring protection of public health and the envi-ronment
in the management of all nuclear materials— from nuclear weapons to
nuclear wastes— remains a critical priority. Appropriate management of both safety
and security worldwide will be essential to maintaining nuclear fission as an
expandable option for supplying the world's greenhouse-constrained energy needs
in the twenty-first century.
The vision of global nuclear materials management is of a world in which all
nuclear materials are safe, secure, and accounted for, from cradle to grave, with suf-ficient
transparency to assure the world that this is the case. That is a daunting goal,
which must be approached step by step, within a well-defined strategic framework.
The Senior Policy Panel of this project has identified two key areas where the need
for action is particularly urgent:

The Eroding Controls in the Former Soviet Union
The combination of insecure, oversized nuclear stockpiles and an underfunded
nuclear complex in the former Soviet Union (FSU), managed with little or no inter-national
transparency, poses a severe threat to U. S. and international security. The
possibility that the essential ingredients of nuclear weapons could fall into the
hands of terrorists and proliferating states is all too real, and immediate actions are
needed to reduce this threat to the security of the United States and the world. The
recent Expanded Threat Reduction Initiative is only the beginning of what needs to
be done. We have developed a recommended action plan of urgently needed steps
in this area. 4
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xiv Managing the Nuclear Materials Threat
A Withering Foundation for U. S. Leadership
Judged by any of a broad range of criteria, the infrastructure of U. S. leadership in
nuclear technologies has greatly weakened over the last two decades. U. S. nuclear
research and development (R& D) is dwarfed by R& D under way in other nations,
the cadre of experienced personnel is dwindling, and nuclear engineering depart-ments
at U. S. universities are shrinking. The United States has virtually disengaged
from international discussions and cooperation on the future of the nuclear fuel
cycle. If the United States can no longer credibly claim a leadership role in nuclear
technology or is seen as having no interest in the future of nuclear energy, its ability
to lead in nonproliferation could be substantially undermined. Here, too, immedi-ate
action is needed to rebuild the R& D program, a cadre of experts, R& D facilities,
and materials infrastructure to help provide the foundation for global leadership.
Here, too, we have outlined series of steps for near-term action.
These are category 1 priorities for U. S. national security policy. As Senator
Joseph R. Biden Jr. (D-Del.) recently put it: "The war against these 'loose nukes' and
'brain drain' threats is as important as any war in our history… it is a war that the
United States dares not lose." Major programs are under way to address these
threats, and a small beginning is being made on rebuilding the U. S. nuclear tech-nology
infrastructure, but much more remains to be done. For the United States to
address these issues successfully will require a sea change in the level of sustained,
high-level leadership devoted to them— including the personal involvement of the
president and the vice president. The five task forces of this study, some of which
are described below, have outlined a rich menu of approaches that could quickly
and demonstrably reduce the risks we face and increase the potential for continued
U. S. leadership. The time for action is now. The costs and risks of failure to act are
far higher than the costs of timely action to prevent disaster.

Reducing the Risk of Nuclear Theft and
Laying a Basis for Irreversible Reductions

The Problem
Theft of just a few kilograms of plutonium or highly enriched uranium (HEU)—
the essential ingredients of nuclear weapons— could allow a rogue state or terrorist
group to acquire a nuclear capability, posing a severe threat to the international
community. This risk is a global problem requiring global solutions. Today, how-ever,
the problem is most acute in Russia, where the world's largest stockpile of
weapons-usable material resides— more than 1,000 tons of HEU and plutonium,
roughly half in weapons and the rest in a wide variety of forms distributed over
some 300 buildings at more than 50 sites. Moreover, none of this material, whether
civil or military, is under international safeguards.
The collapse of the Soviet Union and the ensuing economic and political tur-moil
in the former Soviet states dramatically weakened controls over nuclear
materials there. A nuclear security system built for a single state with a closed soci-ety
with closed borders and well-paid nuclear workers has splintered among 5
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Executive Summary xv
multiple states with open societies, open borders, and desperate, unpaid nuclear
workers. Nuclear guards reportedly go unpaid for months at a time and leave their
posts to forage for food; nuclear security systems go unmaintained or even unused
for lack of funds; electricity that provides the lifeblood of nuclear alarm and moni-toring
systems is shut off for nonpayment of bills; and in several documented cases,
kilogram quantities of weapons-usable nuclear material are stolen. In Russia, all
this is taking place in a nation with a collapsing economy, rampant organized
crime, and persistent corruption at many levels of government, where virtually
every commodity is for sale if the price is right. Even the Russian minister of atomic
energy has acknowledged that the reduction in Russia's ability to control nuclear
materials has been "immeasurable." The Central Intelligence Agency has gone fur-ther,
warning that the risk that potential bomb materials could fall into the hands of
terrorists or proliferant states is higher than ever before.
At the same time, Russia has not yet downsized its Cold War nuclear complex.
The complex is both oversized (which poses a risk to the United States because Rus-sia
could rapidly return to producing thousands of nuclear weapons a year, should
circumstances change) and underfunded (which poses risks because the despera-tion
of poorly paid workers creates incentives for sale of nuclear materials or
nuclear knowledge, particularly when the barriers to proliferation are also under-funded).
The Russian nuclear complex still includes 10 entire nuclear cities— cities
built only to produce nuclear weapons and their ingredients— fenced off from the
outside world and guarded by armed troops— but with a vastly reduced mission
and collapsing budgets. It is in both U. S. and Russian interest to shrink this huge
complex to a more appropriate and sustainable level, eliminating excess weapons
production capacity while providing alternative employment for the nuclear weap-ons
scientists and technicians who are no longer needed for stewardship of Russia's
stockpile.
Finally, Russia and the United States both still maintain very large stockpiles of
nuclear weapons and the plutonium and HEU needed to make them. Just one of the
Russian nuclear cities holds more plutonium and HEU than the arsenals of Britain,
France, and China combined. These vast stockpiles are managed with very little of
the transparency that would be needed to build confidence that they are safe and
secure or to provide the foundation for deep, transparent, and irreversible nuclear
arms reductions. (Transparency is also critical to ensuring that U. S. assistance is
spent appropriately, and a number of steps toward achieving that goal have been
successfully implemented.)

The Programs
The United States has put in place a broad range of programs costing hundreds of
millions of dollars annually to help the former Soviet states in addressing these
threats. These are briefly described in the report of Task Force I. Important efforts
are under way at the Department of Defense (where the original Nunn– Lugar
Cooperative Threat Reduction program resides), the Department of Energy
(DOE), the Department of State, the Customs Service, the Federal Bureau of Inves-tigation,
the Nuclear Regulatory Commission, and elsewhere. These programs
represent some of the most cost-effective investments in U. S. national security 6
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xvi Managing the Nuclear Materials Threat
found anywhere in the U. S. budget and deserve strong and continuing support.
Other nations have also contributed to the effort, although on a much smaller scale,
and need to do more. President Bill Clinton's proposal for an Expanded Threat
Reduction Initiative recognized the importance of these threats and called for addi-tional
funds in some areas. Unfortunately, however, with respect to addressing the
"loose nukes" threat, this proposal in essence only continues flat funding for pro-grams
that once had been planned to decline, rather than stepping up the level of
U. S. efforts or launching major new initiatives. As outlined in the task force reports
(particularly the report of Task Force I), enormous and urgent needs remain for
additional efforts to address this security problem facing the United States, Russia,
and the rest of the world.

The Partnership
Nuclear insecurity problems in the FSU can only be successfully addressed with a
true spirit of partnership with the former Soviet states and their experts. Attempts
to dictate specific Western approaches or impose solutions will inevitably fail in the
long run and will undermine the prospect for intensified cooperation. Ultimately, if
an expanded agenda of nuclear security cooperation is to be successful, experts
from the former Soviet states will have to play central roles in its design and
implementation.

The Constraints
The policy problem is to identify a set of actions that would make a major contribu-tion
to reducing these threats while, at the same time, being capable of gaining
political support in the United States and in the former Soviet states, particularly
Russia. Each of Task Forces I– IV describes different aspects of the difficult con-straints
that limit the prospects for expanding particular U. S.-Russian cooperative
nuclear security efforts. Sour U. S.-Russian political relations in the aftermath of the
air campaign against Yugoslavia may constrain what can be done in some areas—
but this political reality also highlights the importance of new efforts to reinvigorate
genuine cooperation in areas that serve both U. S. and Russian interests. Problems
from widespread corruption to Russian efforts to tax U. S. assistance make it critical
to put high priority on ensuring that U. S. taxpayer dollars are spent appropriately.
Secrecy concerns— some legitimate, some overdrawn— limit access to information
and facilities, restraining cooperation. (Despite the necessity of improving security
for U. S. secrets in the wake of recent revelations of Chinese espionage, it is critical
not to impose constraints that would limit cooperation between U. S. lab personnel
and their international counterparts. Cooperation, such as ensuring that bomb
material does not fall into the wrong hands, is critical to U. S. security objectives.)
Commercial approaches to converting the Russian nuclear and defense infrastruc-ture
are hobbled by a combination of the problems besetting the Russian economy
as a whole (including particularly daunting tax and legal obstacles to successful
investment and business operation), the problems that have limited the success of
defense conversion even in thriving market economies, and problems unique to
Russia's nuclear complex, particularly secrecy and limits on access to the nuclear 7
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Executive Summary xvii
cities. It is clear that government investment will be needed to help overcome these
obstacles and leverage private sector funds.

The Necessary Next Steps
Despite these obstacles, the panel is convinced that the time is right for major new
U. S. and international initiatives to reduce these critical threats to U. S. and interna-tional
security. It is simply unacceptable to continue a situation in which lack of
sufficient funding and senior leadership attention on the U. S. side are among the
major factors preventing faster and more effective actions to reduce these serious
security threats. The time has come to outline what it would take to reduce these
threats as fast as it is realistically practicable to do so. Such a new program of fissile
material threat reduction should focus on efforts to buy, consolidate, secure, moni-tor,
and reduce weapons-usable nuclear material stockpiles; shrink the Russian
nuclear complex; and ensure sustainable security for the future.

Buy. Buying Russian HEU— which, when blended to low-enriched uranium,
is both proliferation resistant and commercially valuable— is the closest thing yet
devised to a "silver bullet" for addressing the huge, complex, and multifaceted
problems of nuclear security in the FSU. The U. S.-Russian HEU purchase agree-ment
(covering 500 tons of HEU from dismantled weapons over 20 years) is
converting thousands of bombs' worth of weapons material to peaceful reactor fuel,
providing a financial incentive for warhead dismantlement, giving the United States
unprecedented transparency at several major Russian military nuclear facilities,
and providing hundreds of millions of dollars a year to stabilize the desperate Rus-sian
nuclear complex, all primarily on a commercial basis, at minimal cost to the
U. S. taxpayer. The panel commends those who worked successfully to achieve the
recent government-to-government and commercial agreements to get this deal
back on track. The U. S. government must place very high priority on ensuring that
this deal continues to move forward in the future— an issue that is likely to arise
again soon, as the current contract for purchases of the enrichment component
comes up for renegotiation.
In addition to preserving the achievements of the past, however, the time has
come to buy more HEU, and faster, in three ways (each is described in the report of
Task Force I):

n Offer to buy substantial additional quantities of HEU, with a portion of the
proceeds designated in the contract to go to an auditable fund to pay for nuclear
security in Russia— ensuring that nuclear guards and workers are paid, and
security systems operated, maintained, and improved. As an initial step, this
might involve an additional 50 tons, at a cost of roughly $1 billion, paid with
government money, to be held off the market as a uranium reserve, as is being
done with much of DOE's uranium stockpile now (so as not to disturb the com-mercial
arrangements for the original deal).

n Seek to buy not only HEU from dismantled warheads, but the small, vulnerable
HEU stockpiles located at small research facilities that can no longer afford to
guard it— while providing assistance to close these facilities or help the research 8
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xviii Managing the Nuclear Materials Threat
facilities pursue research that does not require HEU. Because the amounts are
small (only a few tons in total), the cost would be small as well.

n Offer to provide the needed capital investment and financial incentives to make
it possible for Russia to blend all its excess HEU to non-weapons-usable form
within the next few years— perhaps blending it first to an intermediate level
such as 19 percent U-235 before later final blending and purification for sale.
Rapid blend-down could address the urgent security risks while the material is
released into the commercial market at the previously agreed pace.

Consolidate. New U. S.-Russian cooperative efforts to consolidate material
at fewer locations should be accelerated and expanded. Consolidation is a critical
priority, allowing greater security at the remaining locations to be achieved at lower
long-term cost (although significant initial investment is likely to be required to
make consolidation happen). One approach that ought to be considered is provid-ing
financial incentives for depositing the majority of Russia's plutonium and HEU
in one or more internationally monitored storage facilities (possibly with a similar
facility being established in the United States for reciprocity). Facilities that already
exist or are under construction (particularly the Mayak storage facility being built
for fissile materials from dismantled weapons) could be used for such a program.

Secure. No matter how much material is purchased or transformed into non-weapons-
usable forms and how much the remainder is consolidated, a substantial
number of facilities in the FSU with nuclear weapons, plutonium, and HEU will
remain. It is critical to ensure that all of these stockpiles are secure and accounted
for as rapidly as practicable. The current cooperative effort to improve material
protection, control, and accounting (MPC& A) for weapons-usable nuclear mate-rial
in the FSU is making good progress and deserves strong support (although a
variety of issues continue to arise that constrain cooperation), as do the much
smaller efforts of several other countries, the International Atomic Energy Agency
(IAEA), and the European Union. Nevertheless, the panel is convinced that sub-stantially
more funding and more leadership resources are required to improve
security and accounting for this material as rapidly as it would be practicable to do
so, while simultaneously moving quickly on consolidation and on putting in place
a truly sustainable security system for the future. DOE should develop and propose
a program designed to reduce the urgent proliferation threats posed by insecure
nuclear material as quickly as realistically possible, and Congress should give that
program its support.

Monitor. As described in detail in the report of Task Force IV, increased
transparency in the management of nuclear warheads and materials— with contin-ued
protection of legitimate nuclear secrets— is critical to a variety of objectives,
from building confidence that warhead and fissile material stockpiles are being
safely and securely managed to providing the foundation for deep reductions in
stockpile size. Transparency is also critical to ensure that U. S. and international
assistance is being appropriately spent. Unfortunately, a range of factors are likely to
make progress on the possible transparency initiatives outlined in the reports of
Task Force IV and Task Force I extraordinarily difficult to achieve in the near term. 9
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Executive Summary xix
These factors include strained U. S.-Russian political relations, a reinvigorated Rus-sian
security service, the distractions of upcoming elections in both countries, and
a renewed U. S. focus on protecting nuclear secrets that is eclipsing the potential
security benefits of nuclear openness.
This proposed effort should by no means be abandoned, however, despite the
recognition that transparency in nuclear weapons has limitations. The United
States should, first, take steps to make transparency progress in Russia's own inter-est,
through offering strategic and financial incentives. Second, it will probably be
necessary to begin with small steps, to rebuild the foundation for trust over time.
For example, while the panel judges it quite unlikely that a complete warhead trans-parency
regime could be prepared in time to be part of a Strategic Arms Reduction
Talks (START) III treaty before the current U. S. and Russian presidents leave office,
some initial exchanges and demonstrations of technologies and procedures might
well be possible in that time frame if coupled with a broader package of incentives.

Reduce. The vast stockpiles of plutonium and HEU built up over decades of
Cold War are far larger than needed in the post– Cold War era and must be
reduced— converted to forms much less usable in nuclear weapons. These huge
stockpiles will pose serious security risks as long as they remain in readily weapons-usable
form. The former Russian minister of atomic energy, Viktor Mikhailov, once
said, "Real disarmament is possible only if the accumulated huge stocks of weap-ons-
grade uranium and plutonium are destroyed." As arms reductions proceed,
these stockpiles should be reduced in parallel to roughly equivalent levels in the
United States and Russia. These levels should be suitable to support whatever
agreed warhead levels remain but not large enough to permit a rapid return to Cold
War levels of armament.
As noted earlier, the HEU stockpile can readily be reduced by blending with
other forms of uranium and sold on the commercial market. Excess plutonium
poses far more difficult obstacles, and it will inevitably be many years before all the
excess plutonium has been transformed into forms that are no longer directly
usable in nuclear weapons. Nevertheless, the panel concurs with numerous previ-ous
reports on this issue— including the March 1998 CSIS panel report, Disposing
of Weapons-Grade Plutonium— that reducing excess plutonium stockpiles as rap-idly
as practicable is a high priority. Plutonium disposition is in the unusual
position of being a long-term issue requiring urgent action— in part because the
U. S. Congress has made clear that it will not support requests for funding the con-struction
of plutonium disposition facilities in the United States in the absence of
substantial progress toward a clear commitment that Russian plutonium stockpiles
will be reduced in parallel. While considerable progress is being made in U. S.-Rus-sian
discussions regarding such commitments, the fundamental issue of who will
pay the more than $1 billion cost of disposition of the Russian plutonium remains
unsolved. The United States, at the initiative of Senator Pete V. Domenici
(R-N. Mex.), made a substantial step toward resolving this problem by appropriat-ing
$200 million for a first installment in fiscal year (FY) 1999.
In the panel's judgment, the time has come for the United States to either com-mit
to pay the full cost itself or reach agreement with other leading nuclear
countries on an equitable financing scheme that will allow the program to move 10
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xx Managing the Nuclear Materials Threat
forward rapidly. Compared with the national security risk, the required funds are
insignificant. First priority should be placed on ensuring that the material is
securely stored and accounted for, converted to unclassified forms, and placed
under bilateral and/ or international monitoring.

Shrink. More must be done to shrink the enormous Russian nuclear complex
to a sustainable size suitable for its post– Cold War missions and provide appropri-ate
civilian work for the facilities, scientists, and workers who are no longer needed.
The United States and the international community can help with dismantling or
converting facilities once used for nuclear weapons missions and providing support
for a variety of targeted efforts to create new jobs for excess workers. Russia itself, of
course, must shoulder the burden of financing the maintenance of a smaller, safe,
and secure weapons complex to provide stewardship for the reduced nuclear weap-ons
stockpile Russia will surely retain. Task Force III outlines the obstacles to
success in building a sustainable commercial future for these facilities but also pro-vides
a number of valuable suggestions for steps that could be taken. A substantial
increase in investment, from both the United States and other leading industrial-ized
countries, is likely to be necessary if these root causes of the nuclear insecurity
problems in the FSU are to be successfully addressed.

Sustain. U. S. and international financial assistance for nuclear security in the
FSU will not, and should not, last forever. Ultimately, the former Soviet states will
bear the full burden of ensuring safety and security for all their nuclear materials
themselves. U. S. and international efforts to work with the former Soviet states to
build these states' own capacity to provide sustainable security over the long run
must be radically increased. In particular, given the grave continuing economic dif-ficulties
in many of these states, intensive efforts are needed to identify new revenue
streams that could support nuclear security activities, both immediately and after
international assistance ends— from MPC& A to disposition of excess plutonium.
One possibility, addressed in detail in the report of Task Force II, is to use revenue
from the establishment of an international facility for storage or disposal of spent
nuclear fuel, in Russia or elsewhere. Task Force II clearly outlines the substantial
obstacles still facing such proposals— but also describes some of the incentives for
moving forward with such an effort. It suggests that the United States should be
prepared to outline the criteria such concepts would have to meet to win U. S. sup-port
(which will be essential for such facilities to receive any of the large fraction of
the world's spent fuel over which the United States has consent rights). In addition
to offering the potential for substantial revenue to support nonproliferation and
cleanup in the FSU, an international storage or disposal facility would offer sub-stantial
additional benefits as well, including offering a proliferation-resistant way
to manage growing global inventories for spent fuel.

The Role of the Private Sector
Commercial industry— particularly the nuclear industry— has an essential part to
play in addressing many of these issues, bringing expertise, experience, and entre-preneurial
energy to the table. But as Task Force III points out, the private sector
cannot do the job alone: the obstacles and risks to commercial success in many of 11
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Executive Summary xxi
these areas are too great, and the avenues for potential profit too few. Government
funding will be necessary to fund some of these efforts in their entirety, and others
in part. Government funding should be targeted to areas that must remain in gov-ernment
control and those areas where government support can overcome
obstacles and manage risk, thus leveraging far larger flows of private capital. The
private sector has a particularly critical role to play in the effort to provide alterna-tive
jobs for Russia's excess nuclear workers and facilities and in the management of
the vast excess HEU and plutonium stockpiles in the United States and Russia.

The Role of Other Leading States and Organizations in the
International Community

Nuclear insecurity is not just a U. S. and Russian problem. It affects the entire inter-national
community. To date, the United States has done much more to provide
funding to reduce these nuclear security threats than have other major industrial-ized
nations. The panel believes that the time has come for leading developed states
in Europe and Asia to increase substantially their contributions in these areas.
Japan's recent announcement of a new $200 million contribution to submarine
decommissioning and plutonium disposition is a welcome first step in this direc-tion.
At the same time, it would be tragic if the possibility of larger contributions
from other countries were used in the United States as an argument against provid-ing
U. S. funding for these extraordinarily cost-effective investments in U. S. national
security.

The Need for Leadership
Reducing the nuclear threat before catastrophe strikes will require energetic and
visionary leadership, pulling together a broad range of critically important initia-tives
into an integrated effort. A sea change in the level of sustained leadership from
the highest levels of the U. S. government— including the president and the vice
president— is needed. The panel recommends designating a senior, full-time point
person for this task, with direct access to the president, as was recently done for
reviewing U. S. policy toward North Korea. Preventing nuclear material from falling
into the hands of states like North Korea or Iraq is certainly no less critical to U. S.
security; indeed, the entire global effort to prevent the spread of nuclear weapons
depends on it.

Beyond the Former Soviet Union: A World of Issues
As the name implies, the vision of global nuclear materials management is not lim-ited
to the states of the former Soviet Union. Although this report has focused
primarily on the urgent needs for improved nuclear materials management in those
states, there are key issues of nuclear materials management the world over that
affect the safety and security of the international community, and whose misman-agement
could undermine the future prospects for nuclear energy as an important
potential contributor to the world's energy needs in the twenty-first century. These 12
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xxii Managing the Nuclear Materials Threat
key issues include management of spent nuclear fuel from nuclear reactors, safe dis-posal
of high-level wastes, efforts to ensure and improve the effectiveness of
international safeguards, and steps to reduce the security risks posed by plutonium
and HEU in the rest of the world outside the FSU (symbolized by concern during
the 1999 air campaign in the Balkans over the fate of the weapons-usable HEU
located at a research reactor in Yugoslavia). Greatly increased international cooper-ation—
ideally with a reinvigorated foundation for U. S. leadership— will be needed
to address these problems. Space does not allow a full exploration of these issues,
but the panel believes that several key action items related to the global manage-ment
of nuclear material should be highlighted:

n The IAEA plays an absolutely central role in safeguarding nuclear material and
working with states to improve its management worldwide. The IAEA's work-load
has increased dramatically in recent years and will increase further in the
future if efforts such as the negotiation of a fissile cutoff treaty and IAEA verifi-cation
of nuclear material rendered excess by disarmament bear fruit. Having
been limited to a zero-real-growth budget since the mid-1980s, the IAEA
urgently needs additional funding, and the United States and other major
nuclear powers should redouble their efforts to provide it.

n Spent fuel storage facilities around the world are filling up; there is a compelling
need for new leadership to help establish additional spent fuel storage facilities
and increase the pace of progress toward establishment of permanent reposito-ries.
These could include both national facilities and regional or international
facilities designed to serve the needs of multiple states. Resolution of the long-running
conflict between the U. S. government and U. S. nuclear utilities over
responsibility and approaches for spent fuel management is essential to help
repair the seriously damaged U. S. credibility on this issue.

n As the President's Committee of Advisors on Science and Technology has
recently recommended, the United States should undertake a new international
cooperative initiative to promote safe and proliferation-resistant spent fuel
interim storage in both national and international facilities. The United States
should be prepared to help make the case for interim storage of spent nuclear
fuel as a safe and cost-effective near-term approach to spent fuel management,
as well as provide technology and funding in some limited cases. The United
States must also move forward expeditiously on completing the scientific stud-ies
and reaching a presidential decision on the suitability of the Yucca Mountain
site for a permanent repository.

n As described in the report of Task Force III, increased nuclear transparency is
needed not just between the United States and Russia but for the international
community as a whole. In particular, if nuclear energy is to rebuild the level of
government, utility, and public support that would be required for it to grow
substantially in the twenty-first century, there will be a central need to provide
sufficient transparency to assure the public that its concerns are being effec-tively
addressed, and that nuclear materials and the nuclear enterprises are
being safely and securely managed. 13
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Executive Summary xxiii
n New steps are needed to ensure that plutonium and HEU worldwide, not just in
the FSU, are secure and accounted for. Expanded international cooperation is
called for to ensure that states are meeting international standards that effec-tively
secure and account for all plutonium and HEU worldwide.

Rebuilding the Foundation for
U. S. Technological and Nonproliferation Leadership

U. S. leadership on nonproliferation and safety issues (particularly as they relate to
both the government infrastructure and civilian nuclear energy) is fundamentally
linked to the strength of its technical foundation, to the perception of the commit-ment
of the U. S. government to maintaining a nuclear power option for the future,
and to the policy positions taken by the United States. Unfortunately, at the cusp of
the twenty-first century and of a new nuclear era, with critical nuclear security
issues around the globe crying out to be addressed, the United States has allowed
the essential technical foundations of its leadership in nuclear nonproliferation and
safety to atrophy and has greatly decreased its participation in international coop-eration
on nuclear energy and its fuel cycle.
Although the United States still has the largest number of operating nuclear
reactors in the world, and reactors with advanced U. S. designs are being built and
operated in Asia, no new nuclear reactor has been ordered in the United States for
decades. U. S. government-sponsored R& D on civilian nuclear energy fell to zero in
FY 1998 and is still at a historic low. The first generation of nuclear technologists is
past retirement age; the number of students in U. S. nuclear engineering programs is
plummeting, and 70 percent of those who do receive nuclear engineering graduate
degrees in the United States are foreign. The United States is doing very little to help
develop improved safety, proliferation resistance, waste management, and econom-ics
for the nuclear power of the future; and it has lost the lead in many areas of
nuclear technology, notably test facility capability, nuclear plant fabrication and
construction, and certain aspects of the nuclear fuel cycle. The U. S. nuclear indus-try
has been left alone to compete in a rate-deregulated market, without any credit
for the atmospheric emissions its energy generation helps to avoid. With the end of
the Cold War, DOE's infrastructure for managing nuclear materials has shrunk,
narrowing the options for dealing with the Cold War's nuclear residues. Although
current efforts to rebuild the U. S. R& D effort and technical base should be com-mended,
they represent far less than what is required. The effective U. S. withdrawal
from international discussions and R& D on long-term approaches to the fuel cycle
in recent years has been particularly damaging to U. S. nonproliferation leadership.
The United States must plan for an international future that will have fewer
nuclear weapons but more nuclear waste and more excess defense materials and
that may see larger and more widespread use of nuclear energy. Halfway through
the first nuclear century, we are at a time of enormous challenges, opportunities,
and transition. How the United States responds will determine how it is perceived
by other countries. The time has come for a clear statement from the highest levels
of the U. S. government that the United States believes it is important to maintain 14
14 Page 15 16
xxiv Managing the Nuclear Materials Threat
the nuclear option as a potentially critical contributor to meeting the world's
energy needs, which will be constrained in the twenty-first century by potential
controls on emissions of both traditional pollutants and greenhouse gases. At the
same time, immediate actions are needed to rebuild the technical underpinning of
U. S. nonproliferation and safety leadership. First is expanding the U. S. nuclear
R& D program, so that the United States is involved in and understands the technol-ogies
whose safety and nonproliferation impacts it is attempting to influence, and
so that it can be at the cutting edge in developing the safe and proliferation-resistant
technologies of the future. Second is rebuilding the cadre of nuclear
experts who understand these technologies and experts in proliferation and safe-guards
who can help control such technologies. Third is providing the facilities
required for these experts to carry out an effective R& D program and for safe and
proliferation-resistant management of U. S. nuclear materials; such facilities are
critical for maintaining a viable nuclear industry. Specific recommendations are:

n Funding for nuclear R& D should be substantially increased and focused on the
critical safety, nonproliferation, waste management, and cost issues that have
constrained nuclear power's growth to date;

n Within that R& D portfolio, specific steps should be taken to reinvigorate the
nation's nuclear engineering departments and attract new students to the field
(including a new generation of proliferation and safeguards experts), and to
rebuild the infrastructure of facilities needed for such R& D;

n Steps should ensure that the United States retains the infrastructure needed for
an effective R& D program and for effective management of its nuclear
materials;

n A new initiative should be undertaken for international cooperation in such
R& D, as recently proposed by the President's Committee of Advisors on Science
and Technology, in recognition of the potentially important world role nuclear
power could have in addressing global warming;

n The United States should reengage in international discussions and R& D on
safe and proliferation-resistant approaches to the fuel cycle. Finding ways to
better utilize limited nuclear resources and ensure adequate fuel supplies for the
long term would range from conceptual studies of more proliferation-resistant
recycling systems to explorations of whether recovery of uranium from uncon-ventional
resources such as seawater may be viable;

n Operators of nuclear facilities should place the highest priority on the safe oper-ations
of their plants and should work to reduce incidents that could
undermine public trust in nuclear power;

n Further steps should be taken toward a more risk-informed, performance-based
nuclear safety regulatory process, and wasteful overlaps in regulatory
jurisdictions should be eliminated;

n Regulators should redouble their efforts to ensure that license renewals and
reviews of changes in ownership of nuclear plants are handled expeditiously; 15
15 Page 16 17
Executive Summary xxv
n Final agreements should be reached on responsibility, financing, and
approaches for storage of commercial spent fuel, pending availability of a per-manent
repository. Efforts to resolve the safety issues and address public
concerns so as to allow a permanent repository to open should also be
redoubled;

n Appropriate public policy recognition should be given to nuclear power's ability
to generate electricity with zero emissions of carbon dioxide, sulfur and nitro-gen
oxides, and particulates. Consideration should be given to allocating
tradable emission permits equally among all generators of electricity— fossil,
nuclear, and renewable— on the basis of power output, and thus giving nuclear
and renewable energy sources credit for the emissions they avoid.

A Call to Action
The world simply cannot afford delay in addressing the urgent security hazards
posed by nuclear insecurity in the FSU. There is little remaining margin for contin-ued
decay of the U. S. nuclear infrastructure if the United States is to be technically
credible in nonproliferation leadership in the twenty-first century. The opportuni-ties
are there; an investment of a few billion dollars, properly applied, could
dramatically reduce the risks the world now faces. The fundamental requirement is
leadership. The time to act is now— before a catastrophe occurs. 16
16 Page 17 18
xxvi Managing the Nuclear Materials Threat 17
17 Page 18 19
3
c h a p t e r 1
Funding Nuclear Security

Task Force I
With more resources, what could be done to secure nuclear warheads
and fissile materials?

Today insecure and oversized nuclear weapons and materials stockpiles in the
former Soviet Union (FSU), managed with little international transparency, cou-pled
with an oversized and underfunded nuclear complex there, pose severe threats
to international security. Nothing could be more central to U. S., Russian, and world
security than ensuring that the essential ingredients of nuclear weapons do not fall
into the wrong hands. Moreover, measures to control nuclear warheads themselves
and the fissile materials needed to make them are also essential to achieving deep,
transparent, and irreversible nuclear arms reductions. Although secure manage-ment
of nuclear material is a global issue requiring global solutions, the issues are
currently most acute in the FSU, where the world's largest stockpiles of weapons-usable
material reside and where post– Cold War political and economic upheavals
have severely undermined previous security arrangements.
These are category one priorities for U. S. national security policy. As Senator
Joseph R. Biden Jr. (D-Del.) has recently put it: "The war against these 'loose nukes'
and 'brain drain' threats is as important as any war in our history… it is a war that
the United States dares not lose." 1 To address these issues, the U. S. government has
put in place a broad range of programs costing hundreds of millions of dollars a
year that are doing excellent work and deserve strong support (see appendix A of
this chapter, "Current Programs," page17). 2 Yet the level of investment being
devoted to these security hazards is tiny in comparison with what the United States
has been accustomed to spend, and continues to spend, to provide defenses against
military threats to its national security. (See appendix B of this chapter, "Sizing the
Problem," on page19, for a discussion of problems posed by Russia's nuclear
infrastructure.)

1. Senator Joseph R. Biden Jr., "Maintaining the Proliferation Fight in the Former Soviet
Union," Arms Control Today (March 1999).
2. Note that the focus of this chapter is on the management of nuclear weapons and weapons-usable
materials, and therefore a wide range of other worthy cooperative threat reduction efforts are
not addressed— from dismantling missiles to destroying chemical weapons, from improving export
controls to reemploying biological warfare experts. 18
18 Page 19 20
4 Managing the Global Nuclear Materials Threat
The job of this task force was to examine whether there were opportunities to
reduce these security risks more rapidly and effectively if more money were spent—
while maintaining a central focus on ensuring that the money is spent appropri-ately
for its intended purposes. The short answer is yes.
The task force believes that although there are many nonmonetary obstacles to
U. S.-Russian nuclear security cooperation (see appendix C of this chapter, "Obsta-cles
to Nuclear Security Cooperation," page21), there are additional steps that
could be taken to reduce these risks if additional resources were applied to the task
by the U. S. government and other governments. Indeed, in addition to the direct
security benefits, a significantly expanded program of nuclear security cooperation
could play an important role in improving U. S.-Russian relations in the security
sphere. The measures called for in the Expanded Threat Reduction Initiative the
Clinton administration has proposed are only the beginning of what needs to be
done; indeed, for programs to improve controls over nuclear materials, the Clinton
administration initiative calls only for continued flat funding (such funding had
previously been scheduled to decline) not major new funding or initiatives. All of
the suggestions outlined below are in addition to the programs called for in the
Expanded Threat Reduction Initiative.
The specific suggestions in this task force report were prepared largely by Amer-icans.
Nonetheless, if one lesson comes through loud and clear from the experience
of programs in these areas, it is that success can only be achieved in true partnership
with Russian experts, with their perspectives taken fully into account. Ultimately, if
an expanded agenda of nuclear security cooperation is to be successful, Russian
experts will have to play central roles in its design and implementation.
The United States has two basic objectives in its cooperative programs related to
the control of nuclear warheads and fissile material: to reduce the risk of nuclear
proliferation; and to achieve deep, transparent, and irreversible nuclear arms
reductions. The myriad cooperative warhead and fissile material programs
designed to pursue these goals can be divided into five basic categories, enumerated
below with a description of the basic objectives for each of the five:

n Preventing theft and smuggling: Ensure that all weapons-usable nuclear
material is secure and accounted for and provide a second line of defense with
measures to interdict smuggling of stolen nuclear material;

n Stabilizing nuclear custodians: Provide sustainable civilian jobs for excess
nuclear workers, shrink the Russian nuclear weapons complex, and ensure that
workers and guards who continue to have access to weapons-related informa-tion
and materials are trained, paid, housed, and the like;

n Monitoring stockpiles and reductions: Build, through a step-by-step
approach, a transparency regime that can provide confidence that warhead and
fissile materials stockpiles are being reduced to low, agreed levels and are secure
and accounted for;

n Ending production of fissile material: Verifiably end production of
highly enriched uranium (HEU) and separated plutonium for weapons; 19
19 Page 20 21
Funding Nuclear Security 5
n Reducing stockpiles: Transform excess HEU and plutonium into forms that
are no longer usable in nuclear weapons, leaving only enough in military stocks
to support low agreed warhead levels and naval programs.

What follows below is a listing of steps to address each of these five objectives
that could be enabled by additional resources. These are divided into three broad
categories: modest steps (initiatives with price tags in the range of millions to a few
tens of millions), significant strides (initiatives in the range of a few hundreds of
millions over several years), and great leaps (initiatives that would cost billions of
dollars, coming close to matching the level of resources to the importance of these
threats to U. S. and international security).
In addition, in appendix D of this chapter, the task force describes several con-cepts
that have been proposed that could provide additional revenue streams to
address these proliferation threats in the FSU (see appendix D of this chapter,
"Generating New Revenue for Nuclear Security," page23). Both the suggested initi-atives
and the cost estimates associated with them are intended to be illustrative,
not definitive, and this list of possibilities is by no means complete.
Not every member of the task force agrees with every detail; but the task force is
in agreement that despite the recent downturn in U. S.-Russian relations and the
myriad other obstacles facing such cooperation, a wide range of possibilities exists
for further action to address the post– Cold War security risks posed by the nuclear
stockpiles and the nuclear complex in the FSU that could be enabled through ener-getic
leadership and the application of additional financial resources.
Essentially all of the recommended steps could be taken within the context of
existing cooperative programs, ranging from the Nunn– Lugar Cooperative Threat
Reduction program at the Department of Defense (DOD) to efforts such as pluto-nium
disposition and material protection, control, and accounting at the
Department of Energy (DOE). The task force has not indicated which department
or program should pay for each of the recommended steps, preferring to allow the
allocation of responsibilities within the administration to continue to evolve— as
long as an appropriate level of urgency and overall strategic planning is brought to
the task (an issue we describe at the end of this report). Table 1.1 outlines our sug-gested
agenda for action under the three categories: modest steps, significant
strides, and great leaps.

Modest Steps
Preventing Theft and Smuggling
Expand mpc& a. Increased funding for the cooperative material protection,
control, and accounting (MPC& A) program (beyond the $140 million allocated in
FY 1999 and the $145 million requested for FY 2000) would make it possible to
allocate significant funding to consolidating vulnerable nuclear material stockpiles
at fewer locations (as the Russian Ministry of Atomic Energy [MINATOM] has now
agreed to do) and to measures improving the sustainability of security and account-ing
upgrades, without reducing the pace of installing security and accounting 20
20 Page 21 22
6 Managing the Global Nuclear Materials Threat
upgrades and providing training that was achieved in FY 1998 and FY 1999. Mea-sures
to build sustainability and promote the growth of a modern safeguards
culture are particularly critical to ensure that U. S. assistance actually results in last-ing
security and accounting improvements and that security and accounting
equipment provided with U. S. assistance is actually operated, maintained, and
improved over time. Additional assistance for material accountability is also criti-cal,
placing first priority on those measures that can be accomplished quickly,
including identifying, tagging, and sealing all the items containing weapons-usable

Table 1.1Agenda for Action
Modest Steps
Expand the cooperative material protection, control, and accounting (MPC& A)
program

Purchase small, vulnerable HEU stockpiles
Expand assistance for interdicting nuclear smuggling
Target a portion of economic assistance to Russia to the nuclear cities
Finance data exchanges on nuclear material stockpiles
Finance international monitoring of excess fissile material
Confirm nonproduction of HEU
Examine feasibility and cost of rapid HEU blend-down
Significant Strides
Expand MPC& A to a level not constrained by funding
Expand nuclear-cities initiative to support a broad range of sustainable employment
Provide financial assistance for transparent warhead dismantlement
Finance verification of a fissile cutoff in Russia
Finance rapid blend-down of excess HEU
Finance construction of necessary facilities for plutonium disposition
Great Leaps
Provide incentives to consolidate HEU/ plutonium in internationally guarded
facilities

Establish a comprehensive program to downsize the Russian nuclear complex and
provide alternative employment

Propose and finance wide-ranging reciprocal warhead-and materials-monitoring
regime

Purchase additional quantities of excess HEU
Purchase Russian excess plutonium 21
21 Page 22 23
Funding Nuclear Security 7
material. New attention to types of material that have previously been neglected—
such as HEU spent fuels for naval and breeder reactors, which also pose prolifera-tion
risks— is also needed.
This would require added funding of approximately $20 million–$ 165 million
per year.

Purchase small, vulnerable heu stockpiles. There are many small
nuclear research facilities in the FSU that have significant quantities of HEU but no
longer have the financial resources to protect the HEU appropriately or to conduct
the research that once required the HEU. In addition to a number of facilities in
Russia, these include facilities in Latvia, Belarus, Ukraine, Kazakhstan, and Uzbeki-stan,
with quantities ranging from a few kilograms to tens or hundreds of kilograms
of HEU. Proliferation risks could be rapidly reduced by purchasing these small, vul-nerable
stocks of HEU from these facilities and then blending them to low-enriched
uranium (LEU) in Russia, either at the facilities performing blending for the larger
HEU purchase or at other facilities that have such capabilities, such as the Luch Pro-duction
Association at Podolsk. To facilitate rapid agreement on giving up such
HEU stockpiles, assistance should also be provided for alternative research—
including converting nuclear facilities that will still operate to use LEU rather than
HEU.
This would require added funding of approximately $50 million.

Expand assistance for interdicting nuclear smuggling. The
United States has provided assistance to install nuclear material detection equip-ment
at three important transit points in Russia— Sheremetyovo airport in
Moscow and two points on the Caspian Sea. Russia has requested equipment for 22
other key transit points. Providing this equipment and the necessary associated
training would probably cost less than $20 million. More broadly, a strategic plan
for interdicting nuclear smuggling efforts needs to be put in place, with appropriate
funding, defining what groups in which countries should be provided what capa-bilities
by when.
This would require added funding of approximately $20 million per year.

Stabilizing Nuclear Custodians
Target a portion of economic assistance to russia to the nuclear
cities. The United States continues to provide assistance to investment and eco-nomic
reform in Russia because strengthening the Russian economy serves long-term
U. S. interests. Such investments serve U. S. interests even more directly in cities
where economic desperation could lead to the sale of nuclear knowledge or mate-rial.
A portion of the economic reform assistance provided to Russia, from a broad
range of U. S. programs, could be targeted to the nuclear cities, as is being done for
other cities in the Regional Investment Initiative. This would complement but not
replace the DOE's Nuclear Cities Initiative program, which should have a role in
coordinating such efforts.
This would require added funding of approximately $30 million per year. 22
22 Page 23 24
8 Managing the Global Nuclear Materials Threat
Monitoring Stockpiles and Reductions
Finance data exchanges on nuclear material stockpiles. Achiev-ing
a better understanding of the actual quantities, forms, and locations of fissile
material in each country is fundamental to cooperative efforts to secure, monitor,
and reduce these dangerous stockpiles (see the report of Task Force IV). The United
States has openly published data on its plutonium stockpile and plutonium produc-tion
and will soon publish similar data concerning its HEU stockpile. Providing the
financing necessary for Russia to do the work of pulling together similar data, in
return for sharing the data with the United States— starting with plutonium and, if
that was successful, moving on to HEU— could offer a rapid means to accomplish
part of the stockpile data exchanges agreed to by Presidents Bill Clinton and Boris
Yeltsin in 1994 on a contracting basis, without requiring high-level formal
negotiations.
This would require added funding of approximately $20 million.

Finance international monitoring of excess fissile material. The
United States, Russia, and the International Atomic Energy Agency (IAEA) are pur-suing
a trilateral initiative designed to make possible international monitoring of
U. S. and Russian excess fissile material without compromising proliferation-sensi-tive
information. This initiative could play an important role in long-term controls
over weapons-usable nuclear material and, by demonstrating to the world U. S. and
Russian intentions that this material will never be returned to weapons, can help
build political support for the nuclear nonproliferation regime. One key question is
who will pay the costs to Russia and the IAEA of monitoring in Russia. (To date, the
United States has been paying both its own costs and the IAEA's costs of monitoring
the small amount of excess material that is under IAEA verification so far in the
United States.) Agreeing to pay these costs could enable a significant nonprolifera-tion
and disarmament initiative to go forward, at a very modest cost.
This would require added funding of approximately $5 million per year.

Ending Production of Fissile Material
Confirm nonproduction of heu. In addition to fully funding the current
effort to convert Russia's production reactors so that they no longer produce weap-ons
plutonium, the United States could pursue agreement with Russia to establish
reciprocal transparency measures at U. S. and Russian enrichment facilities to con-firm
that neither country is producing HEU. These measures could provide a test
bed for approaches to verifying a fissile cutoff treaty.
This would require added funding of approximately $10 million per year.

Reducing Stockpiles of Excess Material
Examine feasibility and cost of rapid heu blend-down. Given the
large size of the stockpiles of excess plutonium and HEU in Russia and the United
States, most steps to address the risks they pose would cost more than the few mil-lions
or tens of millions included in the modest-steps category. One step that could
be taken, however, is a detailed study outlining what would be needed to blend all of 23
23 Page 24 25
Funding Nuclear Security 9
the excess Russian and U. S. HEU to non-weapons-usable levels within a few years,
resolving rapidly the key nonproliferation and disarmament issues this material
poses, even while it continues to be released onto the commercial market at a much
lower pace. Blending to an intermediate level of perhaps 19 percent and postponing
some of the purification until after that intermediate blending had been accom-plished
might allow more rapid completion of this initial blend-down. Significant
capital investments in additional or modified blending capacity might well be
required, as well as operational costs of implementing the rapid blend-down, which
could be identified in such a study. Opportunities for using blended down HEU as
collateral for loans or prepayments should also be considered in such a study.
This would require added funding of approximately $2 million.

Significant Strides
Preventing Theft and Smuggling
Expand mpc& a to a level not constrained by funding. There is a
fundamental question that the U. S. government has not yet addressed in detail:
what would it cost to create a situation in which lack of funds was not a significant
constraint on the pace at which security and accounting for nuclear material in
Russia could be improved? Achieving the most rapid and long-lasting practicable
reductions in the proliferation threat posed by insecure nuclear material in the FSU
would require providing adequate funding to (a) rapidly consolidate material in the
smallest practicable number of buildings and sites; (b) provide both facility-level
and national-level security and accounting system improvements as quickly as
practicable; and (c) provide resources and incentives to sustain effective security
over time (including ensuring that security and accounting upgrades are actually
used and maintained).
The latter goal involves changing ways of thinking and patterns of organiza-tional
behavior, which is a challenge that involves much more than money. Efforts
in that direction would range from paying for initial operations and maintenance
of installed security and accounting systems, to strengthening regulators' ability to
enforce security and accounting standards, to supporting broad MPC& A training
and institutional reform programs, to providing assistance for regular and realistic
performance testing of installed systems (and for fixing problems identified in such
testing), to preferentially directing U. S. contracts to facilities with excellent security
and accounting. Planning and activities for FY 1999 demonstrate that at least $150
million a year can be effectively spent on upgrades and training (the second of these
tasks), and analyses within the MPC& A program and at the national laboratories
suggest that fully effective programs in each of the other areas might require $50
million per year or more. Hence, $250 million per year for perhaps five years repre-sents
a minimum level for such a funding-unconstrained program; further creative
thinking may identify opportunities that would require still larger levels of funding.
This would require added funding of approximately $100 million–$ 250 million
per year. 24
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10 Managing the Global Nuclear Materials Threat
Stabilizing Nuclear Custodians
Expand the nuclear cities initiative to support a broad range of
sustainable employment. In thinking about the problem of providing alterna-tive
employment for excess Russian nuclear weapon experts, it is important to keep
several distinctions in mind. There is a distinction between purely commercial
employment (which may be difficult to achieve quickly, given Russia's economic
crisis and the unique barriers to business development in the closed nuclear cities)
and civilian employment (which could include, for example, nonweapons R& D
sponsored by the Russian and U. S. governments and that may be easier to arrange
in the near term). Another is the distinction between alternative employment for
people who are leaving the weapons complex (where foreign assistance can play a
substantial role) and sustaining those who will continue to maintain Russia's
nuclear stockpile (which will remain Russia's responsibility). Yet another distinc-tion
is between the large number of employees in Russia's nuclear complex who
play supporting roles and do not in themselves pose proliferation threats and the
smaller number who have direct access to weapons-usable nuclear material or pro-liferation-
sensitive information.
A comprehensive approach to providing alternative employment for excess
nuclear weapons workers in Russia's nuclear cities would include, at a minimum,
three elements. The first is a broad range of measures to support private-sector
employment growth, ranging from business development centers to tax incentives
for employment of excess nuclear weapons workers, including both establishment
of new businesses in these cities and employment of nuclear-city experts as "knowl-edge
workers" by foreign businesses. The second is support for employment of
nuclear-city experts on nonproliferation and arms control analysis and technology
development, thus providing employment well-matched to their nuclear skills
while serving other U. S. arms control and proliferation interests as well. The third
part of a comprehensive approach is support for employment of nuclear-city
experts on tasks related to nuclear cleanup, energy, and the environment.
The second and third of these areas could be supported in a win– win approach
by contracting a fraction of the hundreds of millions of dollars DOE spends each
year on R& D in these areas to experts from the nuclear cities— thus getting the
DOE's work done for less while providing interesting and relevant R& D employ-ment
to excess experts in the nuclear cities. In particular, work to develop safer,
cheaper, and more proliferation-resistant approaches to nuclear energy and the fuel
cycle— as MINATOM has proposed— would make use of the specific nuclear exper-tise
of nuclear-city experts. In a report to Congress in early 1999, DOE estimated
that the level of funding needed to create sustainable jobs for all the nuclear weap-ons
and materials workers MINATOM expects to be displaced over the next several
years would cost approximately $550 million over 5 years. 3 Yet, under the Expanded
Threat Reduction Initiative, DOE envisions spending less than one-third that

3. A Report to the Congress on the Nuclear Cities Initiative, U. S. Department of Energy;
reprinted with a range of other related documents and a summary of program status in The Nuclear
Cities Initiative: Status and Issues (Washington, D. C.: Russian-American Nuclear Security Advi-sory
Council, January 1999). 25
25 Page 26 27
Funding Nuclear Security 11
amount. Expanding this program enough to provide the needed employment could
substantially reduce proliferation threats from unemployed nuclear weapons
workers.
Not all of this money need necessarily go through DOE's Nuclear Cities Initia-tive
program itself; it may well turn out that certain parts of the program can be
carried out more effectively by institutions ranging from the International Science
and Technology Centers (ISTC) to the European Bank for Reconstruction and
Development (EBRD). At the same time, the United States should insist that Russia
itself make substantial contributions to the effort to convert these cities to other
tasks and place high priority on ensuring that remaining nuclear workers are paid.
The distinction between providing alternative employment for workers no
longer needed for nuclear weapons work and relieving the desperation of those
who still have access to nuclear materials and information will have to be carefully
managed. A fundamental part of this effort would be the physical dismantlement or
conversion of facilities for assembly of weapons and weapons components that are
no longer needed.
This would require added funding of approximately $70 million–$ 100 million
per year.

Monitoring Stockpiles and Reductions
Provide financial assistance for transparent warhead
dismantlement. As described in the report of Task Force IV, increased transpar-ency
in the management of nuclear warhead and fissile material stockpiles (while
maintaining protection for legitimate nuclear secrets) will be fundamental to
achieving deep reductions in nuclear arms as well as cooperation to secure nuclear
stockpiles— and hence to reducing the nuclear threat to the United States. Unfortu-nately,
Russian secrecy concerns have largely blocked transparency progress in
recent years, and increased concern over protecting nuclear secrets in the United
States in the wake of the revelations of Chinese espionage is likely to make increased
transparency a hard sell in the United States as well.
To date, the United States has not offered Russia any significant incentives—
strategic, financial, or otherwise— to agree to accept wide-ranging transparency for
warhead and fissile material stockpiles. The original Nunn– Lugar legislation
offered the possibility of providing assistance for the actual dismantlement of
nuclear warheads— which has not yet been done— if and only if there was transpar-ency
to confirm this dismantlement was taking place. Although Russia has never
asked for financial assistance for warhead dismantlement (presumably in part to
avoid being drawn into a dismantlement transparency discussion), Russian officials
have repeatedly complained about the high cost to Russia of this dismantlement
and have recently indicated that dismantlement rates have greatly declined, in part
because of this high cost.
Under the Expanded Threat Reduction Initiative, the United States plans to
offer some support for warhead dismantlement within a few years. The United
States could offer to provide financial assistance for warhead dismantlement (e. g.,
$90 million per year for a dismantlement rate of 3,000 per year, or roughly $30,000
per warhead) in return for Russian agreement to a transparency package that would 26
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12 Managing the Global Nuclear Materials Threat
also be implemented reciprocally at the Pantex facility in the United States. If avail-ability
of adequate storage space for fissile material from so many dismantled
weapons is a problem, additional assistance could be provided for more secure stor-age
space— possibly making use of existing areas in guarded Russian nuclear
facilities.
Both sides would insist that such transparency be implemented in a manner
that did not unduly compromise warhead design information or sensitive data
related to stewardship of the remaining nuclear weapons stockpiles. Such an offer of
assistance for transparent dismantlement would have a better chance of being
accepted as part of a nuclear reductions package that addressed some Russian con-cerns
(such as concerns over the U. S. upload "hedge" stockpile) perhaps in return
for Russia addressing some U. S. concerns (such as the Russian tactical nuclear
stockpile).
This would require added funding of approximately $90 million per year.

Ending Production of Fissile Material
Finance verification of a fissile cutoff in russia. If successful, the
fissile cutoff agreement now being discussed at the conference on disarmament in
Geneva would be a significant accomplishment, ending forever mankind's produc-tion
of fissile materials for weapons. It would require, at a minimum, IAEA
verification at all reprocessing and enrichment plants to confirm that they are not
producing material for weapons. Verification at older reprocessing plants never
designed for safeguards, where inspectors cannot gain access to large, remotely han-dled
areas of the interior of the plant because of the intense radioactivity, is likely to
be particularly problematic. The costs of verification in Russia, both to the IAEA for
its inspections and to Russia to prepare for and host these inspections, are likely to
be significant. Russian inability or unwillingness to pay these costs is likely to inter-fere
substantially with successful negotiation of such an agreement (and, indeed,
may be part of the motivation for current Russian proposals that would exempt
enough material from verification to render such an agreement virtually
meaningless).
The United States could offer to finance the costs of this verification— directly
or, for example, by contributing to an IAEA fund that would finance these costs.
The cost would likely be in the range of a few tens of millions of dollars per year,
perhaps with somewhat larger start-up investments. Such an offer would be a sen-sible
investment in security, significantly increasing the chances of success in
negotiating a fissile cutoff and laying the basis for improved accounting and control
of weapons-usable material at Russian reprocessing and enrichment facilities, that
will play a fundamental long-term role in both ensuring adequate security and
being part of a broad regime for verifying deep reductions in fissile material stock-piles.
It would also make sense to begin immediately to carry out small-scale
cooperative experiments at U. S. and Russian reprocessing plants to demonstrate
technologies and procedures for verifying a cutoff at older reprocessing plants.
This would require added funding of approximately $30 million per year. 27
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Funding Nuclear Security 13
Reducing Stockpiles of Excess Material
Finance rapid blend-down of excess heu. The current 30-ton-per-year
pace of blending in the U. S.-Russian HEU purchase agreement is determined by the
rate at which the commercial market can absorb the material, not the rate that
would best serve U. S. security interests. From a security perspective, it would be
desirable to blend all excess HEU to non-weapons-usable form immediately. As
noted above, such rapid blending— perhaps to an intermediate level of 19 percent,
leaving the final blending to 4 percent and chemical purification to be done at the
current market-driven pace— would require some up-front capital investment in
blending facilities. There would be operations costs as well, and some additional
financial incentives might be required to gain Russian agreement to carry out this
operation. The material would continue to be released on the market at a pace con-sistent
with commitments made to uranium industry firms as part of the existing
HEU purchase agreement. All told, the cost of achieving the blend-down of all
excess Russian HEU within, say, five years might come to something in the range of
half a billion dollars— a small price for the large security benefit of accomplishing
this objective.
This would require added funding of approximately $100 million per year.

Finance construction of necessary facilities for plutonium
disposition. The task force concurs with numerous previous reports— including
the 1997 special CSIS panel report on this issue— that reducing excess plutonium
stockpiles as rapidly as practicable is a high priority. Plutonium disposition is in the
unusual position of being a long-term issue requiring urgent action— in part
because the U. S. Congress has made clear that it will not support planned requests
for funding for construction of plutonium disposition facilities in the United States
in the absence of substantial progress toward a clear commitment that Russian plu-tonium
stockpiles will be reduced in parallel. Although considerable progress is
being made in U. S.-Russian discussions regarding such commitments, the funda-mental
issue of who will pay the more than $1 billion cost of disposition of the
Russian plutonium— including the cost of needed plutonium fuel fabrication facil-ities
and reactor modifications for using plutonium fuel— remains open. This
amount is small in comparison with the potential threats to international security
posed by this excess plutonium; and if an agreed plan can be worked out that would
make it possible to eliminate this excess plutonium stockpile on a reasonable time-table,
it would make sense to fund this investment over a period of, perhaps, five
years.
The first priority should be to ensure that all the excess plutonium is secure,
placed under monitoring, and converted to unclassified forms as rapidly as practi-cable,
pending longer-term disposition. The U. S. Department of Defense is already
negotiating with Russia to arrange support for the conversion of plutonium weap-ons
components to unclassified metal forms, and the DOE is planning to provide
support for converting those metal forms to oxides that would be suitable input for
the various longer-term disposition options.
This would require added funding of approximately $200 million per year. 28
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14 Managing the Global Nuclear Materials Threat
Great Leaps
Preventing Theft and Smuggling
Provide incentives to consolidate heu and plutonium in
internationally guarded facilities. International confidence in the secu-rity
of nuclear material in the FSU (or anywhere else for that matter) would be
greatly increased if the material were in a storage facility with international guards
and monitors instead of solely national ones. One possibility would be to establish
one or more internationally guarded storage facilities in Russia and create a fund
that would pay Russia a substantial sum— for example, $10,000 per kilogram,
roughly half the price for buying blended HEU in the U. S.-Russian HEU purchase
agreement— to deposit fissile material at this facility. The actual physical facility
would presumably be the Mayak storage facility now under construction with U. S.
assistance, possibly with the construction of additional modules to accommodate
all the material that might be involved in such an initiative.
The advantage of offering the incentive for storing material in the facility, com-pared
with simply building the Mayak storage facility and leaving it at that, would
be the agreement to have an international guard force and international control
over the facility. Parallel facilities with similar international guard arrangements
could be established in the United States for reciprocity (likely to be essential if
there is to be any hope of Russian agreement to such an approach) and, ultimately,
in other countries with large fissile material stockpiles as well.
In an extreme case, if Russia deposited 700 tons of HEU and 100 tons of pluto-nium
in such a facility, the cost of the financial incentive would be $8 billion.
Alternatively, the direct payment for deposit could be limited to plutonium (reduc-ing
the cost of the incentive in the previous case to only $1 billion), with the storage
facility serving as a way station for HEU being stored there prior to blending for
sale. There would be continuing annual costs in the range of tens of millions for the
international guarding and monitoring of the site or sites. There would inevitably
still be other facilities where plutonium or HEU was present, but this approach
would potentially offer the opportunity to provide high-confidence security and
transparency for a large fraction of the FSU fissile material stockpile within a few
years.
This would require added funding of approximately $1 billion for excess pluto-nium,
increasing up to an additional $7 billion (approximately) if the same
incentive was offered for all excess HEU.

Stabilizing Nuclear Custodians
Establish a comprehensive program to downsize the russian
nuclear complex and provide alternative employment. A truly com-prehensive
program would involve agreeing on a strategic plan for downsizing the
Russian nuclear complex— both the closed cities of the weapons complex and the
widely scattered civilian facilities— to a size that was sustainable and appropriate
for the post– Cold War world, physical dismantlement or conversion of the facilities
no longer needed under such a plan, and provision of sustainable employment 29
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Funding Nuclear Security 15
opportunities to workers who might otherwise be tempted to sell their nuclear
knowledge or nuclear materials to which they have access. For such a plan to be
successful, it would have to be developed jointly with senior Russian nuclear offi-cials,
who would have to take the lead in its implementation. The cost of such a
comprehensive approach has not yet been estimated but would likely be signifi-cantly
higher than the $550 million estimated by the DOE for a nuclear-cities-only
downsizing and economic stabilization program.
This would require added funding of approximately $1 billion–$ 5 billion.

Monitoring Stockpiles and Reductions
Propose and finance a wide-ranging reciprocal warhead-and
materials-monitoring regime. Over the long term, U. S., Russian, and inter-national
security would be well served by building step by step toward a
comprehensive transparency regime for warheads and fissile materials. Such a
regime would ultimately include the presence of monitors or electronic remote
monitoring systems for all fissile material, providing real-time transparency for the
entire stockpile (see the report of Task Force IV) as well as real-time confirmation
that material had not been removed without authorization. Agreement on such a
regime is difficult to imagine in today's political atmosphere between the United
States and Russia but might become possible in the longer term, after other cooper-ative
steps had proved successful. Transparency measures that would contribute to
such a regime can be put in place step by step, with each step offering some benefit
while posing modest risk. Although the full cost of such a comprehensive regime
has not been assessed in detail, it is likely to be significant, particularly if both the
United States and Russia retained nuclear complexes similar in scale to today's.
This would require added funding of approximately $100 million–$ 500 million
per year.

Ending Production of Fissile Material
None of the measures that appear necessary to address the goal of ending produc-tion
of fissile material would be likely to require funding in the range of billions of
dollars.

Reducing Stockpiles of Excess Material
Purchase additional quantities of excess heu. Russia has far more
HEU that will ultimately be excess to its military needs than the 500 tons the United
States has agreed to purchase in the U. S.-Russian HEU purchase agreement. The
United States or other countries could offer to buy additional stockpiles of excess
HEU, with government funds, to be held off the market as a strategic uranium
stockpile (rather than flooding the market immediately with still more material
from excess HEU available for direct market sales). As a first step, the United States
or another government could offer to buy an additional 100 tons of HEU— either
blended, if that can be done quickly, or shipped as HEU for blending in the United
States, if that would be faster and Russia would be willing. If that seemed to work
well, an additional 100 tons could be purchased. 30
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16 Managing the Global Nuclear Materials Threat
Ultimately, it would make sense to buy every bit of excess HEU Russia was will-ing
to make available. At the prices the United States and Russia originally
negotiated for the HEU purchase agreement ($ 12 billion for 500 tons), another 100
tons would cost $2.4 billion. (It would be worth significantly less in unblended
form because a significant fraction of the purchase price is actually the value of the
blendstock.) It might be possible to specify in the contract that some portion of the
proceeds be used for nuclear security activities (see discussion in appendix D of this
chapter, "Generating New Revenue for Nuclear Security," page23).
This would require added funding of approximately $2.4 billion–$ 12 billion.

Purchase russian excess plutonium. On today's commercial nuclear
fuel market, plutonium has no value because making fuel even from free plutonium
is more expensive than buying equivalent uranium fuel on the open market. But
Russia considers its excess plutonium a major national asset produced with thou-sands
of work-years of socialist labor— and from the point of view of investing in
security, it makes every bit as much sense to invest in securing plutonium as it does
to invest in securing HEU. If the idea of a financial incentive to deposit the pluto-nium
in an internationally guarded facility does not pan out, simply offering to buy
Russia's excess plutonium outright should be seriously considered. Even if pluto-nium
is overgenerously valued at the same price as the equivalent fissile quantity of
HEU, buying the entire 50-ton stockpile of plutonium Russia has so far indicated is
excess to its military needs would cost $1.2 billion, while buying the 100-ton stock-pile
that might become excess as additional reductions are agreed to would cost
$2.4 billion.
The political difficulties (in both Russia and the United States) of actually ship-ping
the material to the United States after the purchase might make it simpler to
keep the material in Russia and place it in a storage facility with a guard force on the
U. S. payroll pending its eventual disposition— which could be by any method the
new owner of the material determined was most desirable. The new owner of the
material would presumably also have to pay for its storage and disposition— unless
the international community could be convinced to chip in— which could add up
to several billion dollars over the long run.
This would require added funding of approximately $1.2 billion–$ 5 billion.

Leadership and Synergies
A wide range of cooperative activities is already under way to secure, monitor, and
reduce nuclear stockpiles in the FSU and the United States. A long menu of addi-tional
possibilities is available if additional resources are provided.
To make all of these efforts work as a package; to coordinate, prioritize, and
integrate them into a strategic plan; and to negotiate them with Russia while over-coming
the many obstacles to expanded cooperation would require a dramatic
increase in sustained leadership from the highest levels of the U. S. government. In
particular, it will require designating a full-time point person for this task, as was
recently done for overseeing implementation of the Agreed Framework with North
Korea. Preventing nuclear material from falling into the hands of states like North 31
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Funding Nuclear Security 17
Korea or Iraq is certainly no less critical to U. S. security; indeed, the entire global
effort to prevent the spread of nuclear weapons depends on it. The cost of taking
action now to address this threat is tiny in comparison with the cost and risk of
failing to act and finding that the essential ingredients of nuclear weapons find their
way into the hands of terrorists or proliferant states.

Appendixes
A. Current Programs
Dozens of cooperative programs with the states of the FSU (particularly Russia),
costing hundreds of millions of dollars per year, are already under way to address
the security risks that are the focus of this task force report. These programs repre-sent
a critical investment in U. S. national security and deserve strong support.
Many of these efforts are making tremendous progress— but wide gaps still remain
between what has been accomplished and what needs to be done to address the
threat. Although an excellent start has been made in many areas, most of the work
remains to be done.
The MPC& A program— designed to improve security and accounting for all
weapons-usable material in the FSU— is now engaged at virtually every site in the
FSU where such material is known to exist, with a budget in the range of $140 mil-lion
a year. Security for tens of tons of material at more than a dozen sites has been
demonstrably improved, but there are dozens of sites with hundreds of tons of
material remaining. The issue of how to ensure that security that is sustainable for
the long term can be achieved remains a fundamental question. A substantial pro-gram
is under way to cooperate in improving security and accounting for nuclear
warheads as well, during both transport and storage, but here, too, most of the
needed upgrades remain to be accomplished. With U. S. assistance under DOD's
Cooperative Threat Reduction program, known as the Nunn– Lugar program, a
modern, secure facility for storing plutonium and HEU from dismantled weapons
is under construction at the Russian facility known as Mayak and should be open
by 2002. Transparency measures are not yet agreed, and more storage capacity
would be needed to store all the excess material from Russian dismantled nuclear
weapons. (A new umbrella agreement extending the Nunn– Lugar program years
into the future was signed in mid-June 1999, providing an excellent basis for con-tinued
progress in many of these programs.)
Several U. S. and international programs provide funding for alternative
employment for nuclear weapons scientists and engineers. The International Sci-ence
and Technology Centers are employing some 24,000 former experts on
weapons of mass destruction at least part-time on short-term research grants. The
DOE's Initiatives for Proliferation Prevention program provides similar grants for 32
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18 Managing the Global Nuclear Materials Threat
projects that seek to match Russian technologists to U. S. laboratories and U. S.
industry, but its success in commercializing technologies has been very modest to
date. The new Nuclear Cities Initiative is intended to provide a broad approach to
developing alternative employment in the nuclear cities, but it faces daunting chal-lenges
and the funding provided to date is modest. The largest flows of money to
the desperate Russian nuclear complex from U. S. programs do not come from any
of these efforts but come instead from the U. S.-Russian HEU purchase agreement
(described below), which will earn Russia more than $500 million per year.
To build transparency in the management of nuclear weapons and materials,
the United States and Russia have agreed in principle to a wide variety of exchanges
of data and reciprocal monitoring, but few of these have been implemented—
largely because of Russian concerns over providing sensitive information and access
to sensitive facilities. The only warhead or fissile material transparency measures
currently being implemented on a large scale are those for the HEU purchase agree-ment,
designed to build confidence that the LEU the United States is purchasing
comes from HEU from dismantled weapons and that the United States uses the
purchased material only for peaceful purposes. Promising laboratory-to-laboratory
work is under way, however, to develop joint approaches to confirming warhead
dismantlement and monitoring warhead stockpiles while protecting sensitive infor-mation
in the hope of providing confirmation and monitoring tools that will be
available to negotiators when formal negotiations begin.
A substantial U. S.-Russian effort is under way to convert the cores of the
remaining Russian plutonium production reactors— which continue to operate
and produce plutonium because they also produce essential heat and power for
nearby communities— to a new fuel that will not require reprocessing and will pro-duce
far smaller quantities of poorer-quality plutonium. If all the relevant safety,
security, and licensing issues can be resolved in time, these reactors are to be con-verted
during 2000– 2002, ending Russia's production of separated, weapons-grade
plutonium.
Separate programs are under way to reduce stockpiles of excess HEU and of
excess plutonium. HEU is to be blended with other uranium to produce LEU for
sale on commercial nuclear fuel markets. In the U. S.-Russian HEU purchase agree-ment,
the United States is buying 500 tons of Russian HEU from dismantled
weapons— blended to LEU over 20 years— for a price originally set in the range of
$12 billion and then reselling the material on the commercial nuclear fuel market.
This is a remarkable initiative that provides a financial incentive for warhead dis-mantlement,
destroys enough weapons material for many thousands of nuclear
weapons, and creates a large revenue stream for the desperate Russian nuclear com-plex,
all at little net cost to U. S. taxpayers. Russia will ultimately have far more than
500 tons of HEU that is no longer needed for its military programs, however.
Unfortunately, problems that arose from the privatization of the main U. S.
implementer of this agreement— the U. S. Enrichment Corporation— placed this
major national security initiative at the mercy of the commercial marketplace;
therefore, it did become necessary to provide a one-time government subsidy of
$325 million in FY 1999 to keep the deal moving forward. That subsidy led to a new
agreement that reinvigorated implementation of the agreement. 33
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Funding Nuclear Security 19
The task force strongly urges the U. S. government to place very high priority on
ensuring that this deal continues to move forward in the future— an issue that is
likely to arise again soon, as the current contract for purchases of the enrichment
component comes up for renegotiation. At the same time, the United States is
beginning to blend down 174 tons of its own HEU, which it has declared excess.
For plutonium, the situation is more complicated. Unlike HEU, plutonium is a
liability in the current nuclear fuel market because handling plutonium is so expen-sive
that fuel made from plutonium is more expensive than uranium fuel bought on
the open market, even if the plutonium itself is free. Moreover, nearly all isotopes of
plutonium are weapons usable, so the proliferation risks posed by plutonium can-not
be easily removed by blending as they can with uranium. The U. S. government
has decided to take two approaches in parallel for reducing its own excess pluto-nium
stockpiles, paying the extra price to use some of the material as fuel in nuclear
reactors and immobilizing the remainder with nuclear wastes. Both approaches
result in the plutonium being embedded in massive, highly radioactive waste forms
that would be difficult to steal and from which it would be difficult and costly to
recover the plutonium, and both approaches represent only modest additions to the
stockpiles of nuclear waste that must be disposed of in any case.
Russia has rejected the immobilization option, preferring to use its excess plu-tonium
as reactor fuel. Russia has no funds available to support the expense of
disposition of excess plutonium, and the number of safe, modern reactors available
in Russia may not be enough to burn the excess plutonium at a reasonable rate.
U. S.-Russian negotiations on a plutonium disposition agreement are under way,
but questions of how disposition will be financed and what reactors would be used
still remain open.
In January 1999, President Clinton announced a new Expanded Threat Reduc-tion
Initiative designed to expand efforts to work cooperatively with Russia on
reducing these and other dangerous leftovers of the Cold War. In the case of pro-grams
related to warhead and fissile material controls, the initiative called primarily
for continuing funding for programs that had once been expected to be nearly
complete by now— because increasing cooperation has revealed major new areas of
work that needs to be done— rather than making major increases from previously
appropriated levels. For example, for MPC& A— the program most directly related
to safeguarding weapons-usable nuclear material— Congress appropriated $152
million in FY 1999 and, after internal DOE reallocations, the program actually
received $140 million; the request for FY 2000 under the new initiative is $145 mil-lion.
Thus, while the Expanded Threat Reduction Initiative is a worthy effort
deserving support, it alone will not address the gap between the scale of the current
effort and the scale of the U. S. security interests involved.

B. Sizing the Problem
While the problems posed by Russia's nuclear infrastructure are enormous, they are
not infinite. A few back-of-the-envelope calculations provide useful bounds for
thinking about the magnitude of the problem. 34
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20 Managing the Global Nuclear Materials Threat
n Costs of safeguards and security. The weapons-usable nuclear materials
in the FSU are believed to exist in more than 300 buildings at nearly 60 sites.
If there was no progress at all in consolidating this material at fewer sites, and
it cost $10 million, on average, to upgrade security and accounting for each of
these buildings, the total cost of these upgrades would be in the range of
$3 billion. The costs of guard forces and operations, maintenance, testing,
and improvement of these security and accounting systems would probably
run to hundreds of millions of dollars per year. These are large numbers—
demonstrating the need for consolidation to reduce costs— but not outlandish
ones. Russia, for example, receives more than $500 million each year from
income on the HEU deal alone. The United States spends more than $700 mil-lion
a year on the broad spectrum of safeguards and security activities (not just
guarding fissile material) in the DOE complex.

n Costs for paying nuclear weapons complex employees. Russia's vast
nuclear weapons complex still includes 10 entire closed cities— cities built
entirely for the purpose of designing and producing nuclear weapons and their
ingredients— that remain fenced off from the outside world and surrounded by
armed troops. There are a total of approximately 125,000 employees of the
nuclear facilities in these 10 closed cities. Currently, on average, they are report-edly
paid less than $100 per month. The total payroll for the nuclear facilities of
the closed cities is therefore in the range of $150 million a year— again, far less
than what Russia takes in each year from the HEU deal alone (although not all
of those funds go to MINATOM).

The average age of these workers is now between 50 and 60, and, with the
precipitous decline of male life expectancy in Russia, this workforce is likely to
decline fairly rapidly through attrition alone in the years to come. The total cost
for paying for all of the Russian nuclear weapons complex workers to retire on
full salary for the rest of their lives would probably be in the range of $2–$ 4
billion. Of course, some of these workers could be paid to work on decommis-sioning
and cleaning up the sites where they used to work on producing
weapons and materials rather than be paid to retire. Such a combination of
buyouts to encourage early retirement and engaging workers in cleanup is,
in effect, the approach that has been taken in shrinking the nuclear weapons
complex in the United States— but Russia has not had the funds to pursue a
similar strategy.

n Commercial value of russia's total stockpiles of fissile material. By
unclassified estimates, Russia is believed to have roughly 1,050 tons of HEU and
160 tons of separated plutonium— in round numbers, approximately 1,200
tons of fissile material. At the price—$ 12 billion for 500 tons— originally nego-tiated
for the HEU purchase agreement, the value of the entire stockpile,
including all the material in all of Russia's nuclear weapons, would be in the
range of $29 billion— less than the costs of many of the new weapon systems
currently planned by the U. S. Department of Defense. 35
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Funding Nuclear Security 21
C. Obstacles to Nuclear Security Cooperation
There are enormous obstacles to genuine cooperation in sensitive nuclear security
areas between former adversaries like the United States and Russia, which remain
deeply suspicious of each other's motives. The souring of U. S.-Russian political
relations during 1998 and 1999, accelerated by the North Atlantic Treaty Organiza-tion's
bombing of Yugoslavia, has made cooperation even more difficult and the
hurdles to be overcome if major new steps are to succeed even higher. The experi-ence
of the past several years makes clear that nuclear security cooperation can
succeed only if it is approached as a genuine partnership, with experts from both
sides contributing their work and ideas to solve common problems together—
rather than as an effort by one side to impose solutions on the other.
The most fundamental obstacle to cooperation is that the United States and
Russia continue to have many conflicting interests— although they have profound
common interests in preventing the proliferation of nuclear weapons and achieving
permanent nuclear arms reductions. Russia would like to maintain a cutting-edge
nuclear arsenal comparable with that of the United States, and the United States has
no interest in helping Russia do that. Both countries' intelligence services would
like to find out as much as possible about the other country's nuclear secrets, and
both countries are deeply suspicious of the other's intentions in that regard. The
United States has an interest in achieving specific nonproliferation and arms reduc-tion
goals as quickly and cost-effectively as possible. Russia, while not opposed to
that objective, also has an interest in providing as much employment for excess
nuclear workers as possible for as long as possible. The United States has an interest
in seeing the assistance it provides also support U. S. contractors and laboratories.
Russia has an interest in seeing as much of that money as possible go to Russian
entities. Substantial segments of the political establishments in both countries—
including a large fraction of both countries' legislatures— remain deeply suspicious
of the other and skeptical of the whole idea of nuclear security cooperation (which
creates a constant danger that problems that arise will be blown out of proportion
and spin out of control). Given these differences of interest, disagreements about
specific approaches to cooperation are inevitable and need to be resolved patiently
with good-faith negotiation and discussion.
Secrecy and limited access to facilities are serious obstacles faced by essentially
all cooperative nuclear security programs with Russia. Enormous progress has been
made in breaking down barriers, particularly compared with the early 1990s when
Russia would not allow cooperation on security upgrades at any site, even civilian
ones, with separated plutonium or HEU. Today cooperation is under way at almost
every such site. Enormous barriers still remain, and, as political relations have dete-riorated,
the Russian security services have become more active in restricting
access, even to facilities where access had been granted before. At the same time, the
United States has frequently been reluctant to offer comparable access to its own
facilities, and this, too, has slowed progress. The recent furor over Chinese spying
and laboratory security in the United States will only make this problem worse; if
approved, some of the draconian restrictions on the U. S. laboratories' foreign inter- 36
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22 Managing the Global Nuclear Materials Threat
actions that have been proposed could effectively destroy any prospect for effective
cooperation to address these security threats.
Competing priorities, bureaucratic disorganization, frequent changes of gov-ernment
personnel, and lack of sustained attention to these issues by the highest
levels of government have been serious problems on both sides. It is difficult to do
business with a Russian government facing a thousand priorities it considers more
urgent, whose prime minister changes every few months, whose ministries often do
not communicate, whose nuclear facilities increasingly may not abide by deals cut
in Moscow, and whose senior leadership takes only occasional interest in resolving
critical issues related to these nuclear security cooperation programs. Russian
experts have much the same complaints about dealing with the U. S. government.
Another major issue is the difficulty of ensuring that U. S. taxpayers' dollars are
being spent as they should be— an issue with several parts. First, there is the wide-spread
corruption in Russia, which makes it essential to structure assistance
programs so that the funds cannot simply be raked off into foreign bank accounts.
(Contrary to popular impressions, U. S. programs in these areas virtually never sim-ply
fork over large quantities of cash in return for a promise that it will be spent in
particular ways; rather, funds go to procure particular equipment needed for a job,
or contracts are made for specific, demonstrable deliverables, such as building a
fence in a particular spot.)
Second, Russia has a dysfunctional payments system in which, for example,
money deposited at a particular bank for use by a joint project at a nearby institute
may be seized by the bank to cover the institute's bad debts, or may be seized by tax
police to cover the institute's back taxes, or may be used by a desperate institute
director to pay salaries of other employees (in the hopes that it can be paid back if
the institute's promised government funding ever comes).
Third, there is the problem of ensuring that equipment provided for a particu-lar
purpose is in fact used for that purpose and does not go unused (because there
is no money to operate and maintain it) or get diverted to other purposes (which
the recipients may consider higher priority). Fourth, there is the nettlesome— and
growing— problem of Russian efforts to impose a variety of taxes, tariffs, and duties
on U. S. assistance, in effect directing a portion of the assistance away from the
agreed projects and into the general coffers of the Russian government instead.
Although the specific situation of each nuclear security program is unique, all of
them have faced these problems, and even when they have found successful solu-tions,
the fact is that an enormous amount of time, energy, creativity, and political
capital has had to be spent on procedures to ensure accountability rather than on
getting the cooperative work done.
Cultural differences and poor negotiating tactics on both sides have, on occa-sion,
also led to obstacles and disputes, which in some cases have delayed progress
by months or years. What may appear from a U. S. perspective to be the minimum
necessary audit and examination approach to ensure that U. S.-financed equipment
is used appropriately may appear from a Russian perspective as unwarranted intru-sion
and possibly an intelligence mission. A policy change seen on the U. S. side as
tightening up lax spending practices of the past may be seen on the Russian side as
abrogating the spirit of partnership by ignoring Russian suggestions for how funds 37
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Funding Nuclear Security 23
should be spent. Failure to include experts who can seriously address the technical
aspects of these issues on negotiating teams can often present a problem, as can
failure to take Russian experts' views fully into account.
Given this list— which is by no means comprehensive— of obstacles to coopera-tion,
success in nuclear security cooperation is never guaranteed, and the obstacles
to initiating major new efforts are substantial. The fundamental ingredients of suc-cess
are sustained and energetic leadership; a genuine commitment to working in
partnership; a step-by-step approach designed to build trust as progress is made;
patience, persistence, and creativity in overcoming obstacles; and consistent follow-through
on commitments. With those ingredients, and with a willingness to apply
additional financial resources, there are opportunities for dramatic new progress in
dealing with the nonproliferation and arms reduction challenges both countries
face and perhaps even contributions to improving the overall political atmosphere
between Russia and the United States.

D. Generating New Revenue for Nuclear Security
Essentially all of the funding for nuclear security in the FSU has come from govern-ment
budgets— either the governments of the former Soviet states or foreign
governments providing assistance. This is likely to continue to be the dominant
source of funding for these activities in the future as well. But there may be oppor-tunities
to provide additional sources of revenue that would help improve security
in the near term and help the former Soviet states maintain security as foreign assis-tance
phases down over the longer term. At the same time, it is essential to continue
to emphasize the importance of Russia itself contributing to these programs—
providing support in kind (labor, use of facilities, HEU, plutonium) where on-budget
funding is not available.

n Spent fuel storage. A variety of approaches have been proposed in which
Russia would establish an international storage facility for spent nuclear fuel
from a variety of countries and some portion of the profit would be set aside for
nonproliferation and disarmament purposes, ranging from secure storage and
monitoring of nuclear material to disposition of excess plutonium. (This differs
substantially from MINATOM's proposed approach, in which the profit would
be set aside to build and operate a large reprocessing plant.) One of these
schemes has reached the point of detailed discussions of actual contracts and
could potentially provide hundreds of millions of dollars per year for nonprolif-eration
activities. The income from spent fuel storage should be sufficient to
ensure that the storage would be safe and effectively safeguarded. (See the
report of Task Force II).

n Additional heu sales. As suggested in the text, the United States should seek
to buy additional quantities of excess Russian HEU, above and beyond the 500
tons it is currently purchasing. As part of such an additional purchase, the
United States should seek to require in the contract that a substantial fraction of
the proceeds be spent on specified nuclear security purposes— ensuring nuclear 38
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24 Managing the Global Nuclear Materials Threat
guards and workers are paid, operating and maintaining security and account-ing
systems, and the like. (If the idea is presented carefully, MINATOM may be
favorably disposed to agree to such a requirement because it would help MIN-ATOM
ensure that the funds stay within MINATOM rather than go to the rest
of the Russian government.) Although confirming that the funds were spent as
agreed would be an issue, there are past precedents of U. S.-Russian agreements
with similar requirements. If Russia agreed to spend half the proceeds from the
purchase of an additional 100 tons of HEU on nuclear security, this would make
available more than $1 billion for these purposes.

n A debt-for-security swap. Russia is heavily burdened with foreign debt.
Some restructuring of that debt is likely to be essential to economic recovery. In
many less developed countries, foreign governments or organizations have
negotiated debt-for-nature or debt-for-environment swaps, in which either a
specified area of land is set aside as protected area or a certain quantity of
money is set aside in a fund for environmental purposes in return for forgive-ness
of a certain quantity of debt.

Some of these have already been successful in the former Communist states.
For example, in 1991 the 17 creditor nations of the Club of Paris agreed to for-give
10 percent of Poland's debt if Poland instead set aside an agreed amount of
money (less than the amount of debt forgiven) for environmental protection.
Poland established an independent foundation, the Ecofund, to administer the
funds, so that the amount of money in fact being spent could be easily verified.

A similar approach could be taken for nuclear security, with a certain por-tion
of Russian debt being forgiven in return for Russia agreeing to set aside
funds for nuclear security in a similar independent fund. If Western govern-ments
are willing to forgive a substantial quantity of Russian debt, this could
potentially provide a large enough revenue stream to support the hundreds of
millions of dollars per year that it will ultimately cost Russia to ensure high lev-els
of security and account for all of its nuclear weapons and fissile material.

n Discount from an international repository. A variety of groups are
working to establish international storage sites or permanent geologic reposito-ries,
which would accept spent fuel from a variety of countries on a commercial
basis. In at least one case (the group, known as Pangea, seeking to establish an
international geologic repository in Australia), there has been a suggestion that
in order to strengthen the nonproliferation and disarmament case for building
such a repository and thereby further its chances of political approval, the Aus-tralian
group would be willing to provide a substantial discount for disposal of
spent fuel that originated as HEU or plutonium from weapons— with the idea
that this discount, rather than going primarily toward a lower price for the util-ities
using this fuel, would largely go into a fund that could be used to finance
nonproliferation and disarmament needs in the FSU. With a discount of $500
per kilogram of spent fuel, at the current U. S.-Russian HEU purchase agree-ment
rate of 30 tons of HEU per year, more than $250 million per year might be
available from such a discount; if the pace of the HEU deal could be increased to 39
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Funding Nuclear Security 25
50 tons of HEU per year, as much as $450 million per year might be available.
This would be sufficient, for example, to pay for construction of facilities for
disposition of excess weapons plutonium within a few years.

n Encouraging minatom exports within proliferation constraints.
Much of the revenue of MINATOM now comes from exports of nuclear mate-rial,
services, and technology, with MINATOM officials estimating that their
total exports now amount to more than $2 billion per year. (The division of this
revenue between MINATOM and the Russian central government is not well
understood.) MINATOM is carrying out a variety of nuclear reactor exports
opposed by the United States on proliferation or safety grounds (including
reactors to Iran, India, and Cuba, among others), largely because of its need for
export income. MINATOM's exports to less proliferation-sensitive markets are
constrained by trade restrictions on Russia's low-cost uranium and enrichment
exports imposed in the United States, Europe, and some other major nuclear
markets and, in the case of reactors, by the widespread desire for Western
nuclear reactor technology, rather than Russian technology, among those coun-tries
with access to it.

Western countries could take a number of steps to reduce these export hur-dles
in return for specific commitments from MINATOM to apply particular
fractions of the resulting revenue to identified nuclear security endeavors: eas-ing
trade restrictions on their uranium and enrichment markets; encouraging
an expansion of Russian fuel fabrication service exports; and, ultimately, joint
design of a new generation of reactors (such as the current Russian-Japanese-French-
U. S. cooperation to develop a new high-temperature gas-cooled reac-tor).
All of these would be sensitive because every piece of market share Russia
gains would presumably be lost by a Western supplier. The dream of joint
design of a new generation of reactors that could be exported to countries all
over the world— often described at MINATOM headquarters— is not likely to
come to fruition. The markets for new nuclear reactors are likely to remain lim-ited;
full development and demonstration of such new systems in Russia are
likely to be more expensive than governments will be willing to support in the
near term; and the continuing controversies over proliferation-sensitive Rus-sian
exports are likely to limit the possibilities of cooperation as long as those
exports continue. 40

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