Victor Mizin

RUSSIA’S MISSILE INDUSTRY AND U.S. NONPROLIFERATION OPTIONS

by Victor Mizin1

Victor Mizin is a lawyer in the Department of International Organizations of the Russian Ministry of Foreign Affairs. The views expressed in this article are solely those of the author and do not necessarily reflect those of the Russian government.

ecent allegations that Rus- proliferation from Russia. First, it international collaboration in the Mis- sian firms are aiding missile outlines the development of the na- sile Technology Control Regime Rprograms in Iran and India tional export control system in Rus- (MTCR); beginning development of have renewed fears that sensitive sia. The article then sketches the a joint U.S.-Russian ballistic missile technology is leaking to countries of current situation in the Russian mis- defense program; and broadening the proliferation concern from the eco- sile and space industry. Despite the involvement of the Russian missile nomically strapped Russian missile continuing economic turmoil in this industry in new and innovative inter- industry. Pessimists argue that the sector of the Russian economy, the national space launch programs. leakage of Russian technology could article argues that the greatest threat greatly reduce the time needed by of missile proliferation stems from a THE DEVELOPMENT OF potential proliferants to develop relatively small group of “pariah” THE RUSSIAN EXPORT medium- and longer-range missiles firms. These firms have not suc- CONTROL SYSTEM with the capability to deliver war- ceeded yet in developing international Russian officials and academics heads armed with weapons of mass contracts to substitute for the dras- on tours abroad tend to portray an destruction (WMD). In turn, the tic decline in military procurement in almost idyllic picture of an imma- spread of such capabilities would Russia since 1992, and, therefore, ture but still substantially developed increase instability in conflict-prone may still be tempted to sell missile system for controlling sensitive tech- regions of the world like South Asia technology to potential proliferants. nologies. They are at least partly and the Middle East. A detailed In its conclusion, the article suggests correct, since Russia has established analysis of the current situation in several policy initiatives to minimize the fundamental elements of a na- the Russian missile industry, how- the threat of missile proliferation from tional export control regime. Signifi- ever, reveals that these fears, while Russia and the NIS, including: cant steps were taken in 1992-1994 justified, are often exaggerated, and strengthening the bureaucratic posi- to introduce Western principles and can be adequately addressed with tion of Russian export control ser- mechanisms of export control. Rus- creative policy initiatives. vices and increasing efforts to sia, as the economically most devel- educate Russian industry about the This article presents a detailed oped and bureaucratically most export control system; intensifying examination of the threat of missile sophisticated of the Soviet succes-

36 The Nonproliferation Review/Spring-Summer 1998 Victor Mizin sor states, was the first of them to same year. The Export Control De- export violations. However, it is in- introduce a relatively comprehensive partment of the Russian Federal Ser- teresting to note that although cases national export control system vice for Currency and Export Control of export control violations are nu- adapted from Western models.2 serves as the working group or per- merous, no one in Russia has yet Under the provisions of the 1993 manent secretariat for the Export been prosecuted and convicted un- Russian Constitution, which assigns Control Commission. The commis- der this legislation. substantial legislative powers to the sion is charged with making decisions In the area of control over the ex- president, the Russian export control on the most controversial applica- port of missile technologies, Russia system was established quickly on tions for sensitive exports, including introduced its first missile control the basis of presidential decrees and nuclear, chemical, biological, and gen- list under Presidential Directive No. government resolutions. Major ex- eral dual-use- technology. 20 of January 11, 1993, even though port control legislation has yet to be The Interagency Commission on Moscow did not officially become a adopted by the Federal Assembly, Military-Technical Cooperation was full-fledged MTCR member until however. In the meantime, indi- established in 1992 to review appli- October 1995. The early establish- vidual articles of other laws, together cations for conventional weapons ment of a missile technology con- with the decrees mentioned above, exports, but it was disbanded two trol list was in keeping with Russian form the legal basis of the Russian years later in a government reshuffle. government policies of 1992-93, export control system. According to It re-emerged only in 1997 under the which aimed to prove the “civilized” Article 16 of the Law on State Regu- chairmanship of the prime minister. nature of the newly “independent” lation of Foreign Trade Activity, for Since 1992, Russia has also partici- Russian state as it sought to become example, control lists and registers pated actively in the Nuclear Sup- a respected member of the interna- of all sensitive hardware, raw mate- pliers Group and the Zangger tional community and of the G-7. rials, know-how, technologies, and Committee, and has adopted nuclear Russia’s move to join the MTCR scientific information that can be materials control lists that corre- was also spurred on by the ill-fated used for developing WMD, missile spond to the guidelines of these in- sale of cryogenic booster production delivery systems, or other weapons ternational bodies. Moscow was a facilities to India, which was that are subject to special export con- founding member of the post- strongly opposed by the United trol are approved by presidential COCOM Wassenaar Arrangement States. Following a compromise on decree. The Russian Federal Assem- on Export Controls for Conventional the sale of the cryogenic technology bly has no role in constructing or Arms and Dual-Use Goods and to India, Russia was finally admit- approving the lists. The resulting Technologies. Russia is now also ted to the MTCR in August 1995 and regulatory documents are normally considering membership in the Aus- participated in its plenary meeting published in governmental newspa- tralian Group which regulates inter- in Bonn in October 1995. 4 pers, but they are often neglected or national chemical exports. While Moscow bureaucrats may overlooked by the relevant industry Some attention has also been paid view these newly introduced export and elements of the government bu- to creating viable enforcement pro- control structures and regulations as reaucracy not specifically respon- cedures for punishing those who vio- impressive, Russia is still unable to sible for export control. This late export control regulations. April persuade some Western experts that situation frequently results in pro- 1993 amendments to the Russian her national export control system tracted debates about the legality of Criminal Code provided for crimi- is sufficiently foolproof to prevent specific export proposals. nal punishment (up to eight years of illicit exports, especially since Rus- Four presidential decrees issued imprisonment) of those convicted of sia has a high level of trade and sig- in 1992, provide the initial legal export control violations and illegal nificant technological potential in foundation for the Russian export exports of proscribed items included critical areas. It is true that business control system in the transitional on control lists. Articles 188 and 189 competence, adequate funding, and period.3 To ensure a unified policy of the new Russian Criminal Code state-of-the-art management may all on exports, the interagency Export that entered into force in January be lacking. As a result, the Russian Control Commission was created the 1997 stipulate similar penalties for export control system often seems

The Nonproliferation Review/Spring-Summer 1998 37 Victor Mizin to be little more effective than other control community can take credit the first world’s first ICBM and first structures recently founded by the for the fact that no major proscribed space launcher in 1957.6 ex-Soviet nomenklatura. One par- item on international control lists has All of the giant Russian compa- ticular problem in the missile area been deliberately sanctioned by the nies that eventually grew out of these is that the Russian defense manufac- Russian government for export since initial efforts in the missile sector are turing sector has many highly skilled the imposition of national regula- splinters of the former Ministry of experts with negotiating experience tions controlling missile transfers. General Machine Building or the gained during the U.S.-Soviet arms former Ministry of Defense Indus- control talks. These industry figures RUSSIAN MISSILE EXPORTS trial Facilities. Most of them are now are actively lobbying the govern- AND THE MTCR: THE awaiting privatization and ment for increased exports of mis- HUMAN FACTOR downsizing, which have been ham- siles and space launcher systems. Russian export controls are prima- pered by the lack of day-to-day con- Among the most visible of these fig- rily aimed at other Russian govern- trol of these essentially state-owned ures is Yuriy Koptev, director of the mental agencies involved in foreign enterprises by the government. Fre- Russian Space Agency (RSA). Un- trade in high technology items, in- quent reorganizations of the govern- der Koptev’s leadership, the RSA cluding armaments. Russian experi- ment departments responsible for has developed from a mere inter- ence shows that government oversight of these enterprises have agency coordination board into a bureaucrats are seldom proponents exacerbated this problem. After the powerful ministry managing the mis- of illegal deals. All known cases in- Ministry of Defense Industries was sile-space industry, which owns or volving smuggling of nuclear mate- dissolved in March 1997, for ex- controls dozens of major missile and rials or missile technologies have ample, its powers were transferred space production facilities and de- been perpetrated by individual en- to the Ministry of Economics, an sign bureaus and has established it- terprise managers or the owners of agency which lacks the necessary self as the major supplier of missiles private companies. The reckless es- expertise to supervise or promote to the Russian Ministry of Defense. capade of Lieutenant General armaments design and production. Another problem is that missiles Anatoliy Kuntsevich, a former presi- Russian missile-manufacturing have an almost magical appeal to tra- dential aide on chemical and biologi- facilities employ approximately one ditional Russian bureaucrats as a cal weapons issues who has been million scientists, designers, engi- symbol of Russian power and tech- accused of trying to illegally export neers and technicians, if the person- nical prowess. Missiles are among proscribed chemicals, is the excep- nel of subcontractors and support 5 Russia’s most technically advanced tion that proves the rule. facilities are included.7 For analyti- and potentially lucrative export So who are the most likely poten- cal purposes, these facilities can be products, especially at a time when tial proliferators of Russian missile subdivided into three categories or the bulk of Russian exports are raw technology? A close look at the Rus- tiers, corresponding to their current materials, like oil and gas. As a re- sian missile industry can provide status and the potential proliferation sult, it is sometimes difficult for ex- some interesting insight into the risk they pose. port control officials to track or to most probable answers to this ques- stop, if intercepted in time, major The first tier, the “leaders,” are tion. The Soviet missile complex, deals involving transfer of missile huge consortiums with thousands of part of the military-industrial ma- technology. Nevertheless, in the past employees, enjoying strong ties to chine created by Stalin’s Politburo few years Russian export control au- the government and established pat- after World War II, was designed to thorities have managed to create a terns of international cooperation. offset “the imperialist-launched” climate of restraint as industry offi- All of them evolved from the lead- arms race specifically by forging a cials have become increasingly ing Soviet missile design bureaus potent “missile shield of the social- aware of MTCR-related national that had been engaged in military ist motherland.” A group of compet- export control legislation and have and space-related activities. The sec- ing specialized design bureaus, shied away from illegal exports ow- ond tier, an intermediary layer of established under the tight control of ing to the fear of administrative sanc- “aspirants,” consists of facilities designer Sergey Korolev, produced tions. In addition, the Russian export large enough to survive and to ob-

38 The Nonproliferation Review/Spring-Summer 1998 Victor Mizin tain some new orders from the State, market is quite solid. Some Ameri- increases the Russian quota of the even in the cash-strapped current can experts estimate that the United world launch market to 16 to 20 transition period. However, they do States would need 10 years and $10 launches into geostationary orbit not enjoy the same influence in the billion to catch up with Russian through the end of the year 2000. corridors of power in Moscow and space propulsion technologies and This is an increase from the nine have fewer international contacts experience.8 launches permitted under the previ- than the “leaders.” The third cat- The Khrunichev State Research ous 1993 agreement. Pricing restric- egory, which may be termed “pari- and Production Center is probably tions are relaxed as well, allowing ahs,” consists mostly of the leading Russian space facility, Russian prices to be 15 percent subcontractors for major missile de- and its director Anatoliy Kisselev, lower than those of Western provid- sign bureaus or highly specialized has close ties to Russian President ers. Partly as a result of this agree- defense facilities. Most are located Boris Yeltsin. In the early 1990s, ment, according to Yuriy Koptev, far away from Moscow or St. Pe- Khrunichev was the first Russian director of the RSA, Russian space tersburg, and thus they have much firm in the missile and space sector and missile firms earned $700-800 less access to the bureaucratic cen- to create an elaborate framework of million in 1997 from the sale of 10 ters of power and almost no interna- collaboration with U.S. companies space launch services. tional connections. such as Lockheed and Boeing. In Under the direction of the primary The evolution of the “leaders” is 1995, it established International contractor Boeing, Khrunichev is generally a success story. This group Launch Services, a joint venture also building a Functional Energy of powerful front-runners includes with Lockheed Martin and RSC Block which is designed to become such well-known Russian space en- Energia, to market heavy-lifting Pro- the first orbiting element of the In- terprises as the Khrunichev State ton and Atlas launch services . Used ternational “Alpha” Space Station Research and Production Center, the successfully in 230 launches, Proton (ISS) and provide its initial propul- Rocket Space Corporation Energia has an outstanding reliability record. sion and power. This unit is sched- (RSC Energia), and Energomash. In On April 8, 1996, Proton launched uled to be launched into orbit in June the years after the demise of the its first Western commercial pay- 1998 on a Proton booster. Although USSR, they managed to successfully load, the “ASTRA-1F” satellite, built this project ran into an eight-month restructure, downsize, and at least by Hughes Space & Communica- delay owing to inadequate govern- partly privatize. Privatization in this tions Company, for Luxembourg- ment funding for the Russian Space sector of the Russian economy, as based Societe Europenne des Agency, the money was finally in the rest of the economy, has actu- Satellites. This alliance with found through international loans, ally left much power in the hands of Khrunichev and RSC Energia has and the work continues. Another the state bureaucracy. Nevertheless, helped Lockheed to increase its mar- Khrunichev-made space launcher, these giants of the Soviet space sec- ket share of commercial payloads, derived from the SS-19 interconti- tor devised ingenious schemes for now ambitiously projected to reach nental ballistic missile, is used for retaining at least some portions of 50 percent in the year 2000, and has the Eurokot Launch Services joint their revenues. These schemes al- allowed it to expand into foreign venture with the Deutsche Aero- lowed them to raise or at least main- markets. As a result, additional com- space Agency.11 tain salary levels, although they petitive pressure is being placed on Another leading Russian space remain under pressure from high tax the European firm, Arianespace, entity, the RSC Energia, can trace its rates. Most of these industrial behe- which currently conducts up to 60 origins to a research unit founded in moths survive only because they percent of world commercial 1946 to develop a long-range ballis- quickly jettisoned military projects launches. tic missile. RSC Energia designed for which the Russian Ministry of This competition will be further the first Soviet ICBM, the SS-6 (R- Defense halted payments, and re- intensified by implementation of the 7), and manufactured the Mir space oriented their activities toward space bilateral space-launch agreement station. U.S.-Russian cooperation in programs involving international co- signed by the United States and Rus- sending American astronauts to this operation. As a result, their position sia in January 1996.9 This agreement ailing pioneer station provides $100 in the international space-launch

The Nonproliferation Review/Spring-Summer 1998 39 Victor Mizin million in annual revenue to the Rus- rubles (about 20 cents at the 1994 Russian engine was selected for its sian partner. Energia is a member of exchange rate), sold for as much as reliability and performance ratings Lockheed-Khrunichev-Energia In- $400 each. as well as for its low cost and short ternational (LKEI), a joint venture In this situation, the Ministry of assembly time. Pratt & Whitney for marketing Protons internationally, State Property wanted to reduce the plans to will build the engines to be and has foreign subsidiaries in the state share in the company to 25.5 used for American military launches United States and Germany. RSC percent, which would be sufficient in the United States under license. Energia has also joined forces with to block any changes in RSC Energia This contract marks the first use of Boeing, the Ukrainian Yuzhnoye that the government did not approve a Russian-designed propulsion sys- Design Bureau, and the Norwegian of. RSC Energia management, how- tem on a U.S. launch vehicle. Prior firm Kvaerner to found the Sea ever, urged the government to retain to winning this contract, NPO Launch Partnership devised to its 38 percent share, which it has Energomash was facing closure due 13 launch satellites to geostationary done. As a result, the board of di- to the lack of domestic orders. In orbit on a modified Zenit booster (en- rectors of RSC Energia is appointed addition, California-based Aerojet is hanced with a fourth stage from Pro- by government decree, not elected actively marketing NK-33 and NK- ton) from a site in the Pacific Ocean. by the company’s shareholders. 43 engines, made by another Hughes Space & Communications Given the political influence of RSC “leader,” the Samara Central Spe- Co. and Space Systems/Loral have Energia management, it is not sur- cialized Design Bureau, which de- already ordered the first 18 launches prising that of the 11 members of the veloped the unfinished Soviet lunar planned by this system. board, eight are also top manage- N-1 booster. Aerojet is selling these RSC Energia was also one of the ment officials at RSC Energia, while engines to Kelly Space Access LLC first Russian companies to initiate a the government has only one seat on and Kistler Aerospace Corporation privatization plan in accordance with the board. Management’s control of for a “war-surplus price” of $4 mil- 14 the Russian government regulations the board allows it to control the lion each. issued in April 1994. Difficulties company’s cash flow. Thus, al- Even the most successful Russian that have emerged since then dem- though RSC Energia showed a profit companies in the missile and space onstrate the flaws of the existing of 358 billion rubles ($60 million) sector experience deep financial cri- privatization process in the Russian in 1997, the board decided not to pay sis from time to time. They continue missile sector. RSC Energia was out any dividends to shareholders. to depend heavily on government founded by presidential decree in The Ministry of State Property is subsidies. The Federal Space Pro- 1994, and under a government de- currently attempting to change RSC gram, adopted in 1993, does not pro- cree issued that same year, 38 per- Energia’s charter, in order to exer- vide adequate funding because of the cent of its stock was retained by the cise control over a company in which general crisis of payments in the state, while 25 percent of its stock the state theoretically has a control- Russian economy. The partial (in preferred non-voting shares), was ling interest but really has little voice privatization of these famous facili- given to the “working collective” of in the making of major decisions.12 ties has not produced economically the firm, including both workers and NPO Energomash, another of the viable independent entities that managers. According to the same “leaders,” is Russia’s premier devel- could compete with Lockheed Mar- 1994 government decree, after a oper of liquid-fuel rocket engines. tin, Boeing, or Arianespace—either two-year waiting period, that 25 per- Lockheed Martin agreed in January in amount of sales, or in management cent of non-voting stock could be 1996 to buy 101 Energomash-de- efficiency. This situation is the re- converted into common stock and signed RD-180 kerosene-liquid oxy- sult of several factors, including the put on the open market. After 1996, gen engines for $1 billion from delay of Russian economic reform, these shares were sold to various Energomash’s North American mar- ill-devised and corruption-stricken private investors, although nearly 20 keter Pratt & Whitney. They are to privatization, and the continuous percent was purchased by another be used for the advanced Atlas IIAR tight control by the government of firm controlled by RSC Energia launcher and for the U.S. Air Force`s enterprises viewed as potentially management. The shares, which had next generation space booster. The important for military use. A criti- originally been valued at 1,000 cal problem has been created by con-

40 The Nonproliferation Review/Spring-Summer 1998 Victor Mizin siderable decay of the Russian do- still think in terms of government or special discounted shops and child mestic market for space and missile defense orders (Goszakaz), and la- care facilities.15 technology. As a result of the con- ment the by-gone days of Soviet It is highly unlikely that the man- tinuing economic crisis in Russia, military and space triumphs. agement of the enterprises among neither the Russian governent nor The engagement of thousands of the “leaders,” which are earning mil- Russian firms are ordering many workers in international space coop- lions of dollars through international missiles or satellite launches. To eration programs helps to provide space-cooperation projects, would make the situation worse, the lead- employment for a vast army of Rus- attempt to sell their know-how to ing Russian private banks seem to sian engineers and technicians, al- potential proliferators (either on the be reluctant to invest in the space though their plight remains state level or to individual black sector, since it remains under tradi- unenviable. Salaries remain quite market purchasers). Nevertheless, tionally stringent government con- low, while only a very thin layer of there exists the possibility that dis- trol, and does not promise big and top managers receive high compen- satisfied, inadequately paid person- quick returns on invested capital. sation packages. It is very difficult nel from these entities, who have not Futhermore, the bulk of the revenues to calculate the exact average salary benefited from the revenues gener- generated by these relatively suc- in the Russian aerospace industry. ated by international space projects, cessful Russian space-oriented fa- Much depends on an employee’s could offer their special expertise or cilities is usually appropriated by the position in his or her company and stolen blueprints to the agents of a government. on the company itself, but it should proliferant state or rogue organiza- More generally, the actual dives- be noted that wages in space and, tion. titure of state ownership in the Rus- especially, military missile enter- This possibility is significantly sian defense sector has never really prises are generally lower than those greater for personnel in the “aspir- begun. It was blocked by communist prevailing in aviation firms. ants” tier of enterprises, which have and nationalist forces under the pre- Practically all “leader” facilities few if any international contracts. text of preventing the sale to foreign have created small private enter- Such enterprises as Komplex NTT, interests of Russian national defense prises. This results in the directors which has been trying to market its production capabilities. Many of of enterprise being paid from many Start-1 and Start-2 space launch ve- Russia’s major missile manufactur- different contracts in addition to hicles, which are derived from the ers are included on special lists, their regular salaries. To be more SS-25 mobile ICBM, or the Makeev signed by President Yeltsin, that for- specific, a head of a department in a Design Bureau with its numerous bid their privatization. This reveals space enterprise whose official conversion projects based on subma- the strong intrinsic doubts about pri- monthly salary might be in the $350- rine-launched ballistic missiles, still vate ownership, which are still held 500 range may net $3,000 to $5,000 hope to land major foreign partners by many Russians. They continue to in additional compensation. At the or customers, but have little prospect ignore the fact that in the United same time, rank-and-file engineers, of finding domestic orders.16 States all primary defense contrac- not to mention ordinary workers, Komplex NTT, however, has man- tors, such as Lockheed Martin, make much less. They usually do not aged to obtain orders for launches Raytheon, Boeing, or United Tech- receive supplementary lucrative using Start vehicles from Canada nologies, are privately owned. Even compensation packages and most and a potential exists for launches those Russian entities that are al- live on a meager monthly salary of from Australia and Alaska.17 lowed to privatize remain under sti- approximately $150-250. However, fling government control. They also The Samara Central Specialized as major Russian missile-producing Design Bureau teamed with its Rus- lack energetic, well-educated, entre- factories remain more like work preneurial, and market-experienced sian patron the Russian Space communes than Western-type com- Agency in the STARSEM joint ven- managers with commercial agility mercial entities, in the typical Soviet and a broad international outlook. ture with leading French aerospace manner their workforce continues to companies Aerospatiale and Their managers are generally hold- enjoy some social privileges, such overs from the Brezhnev era, who Arianespace to offer launch services as cheaper food in factory canteens on the Soyuz-class vehicles pro-

The Nonproliferation Review/Spring-Summer 1998 41 Victor Mizin duced by the Samara facility. In an- these firms, only NPO Trud, which enced labor and expertise that could other example, the Kosmostras joint is involved in the development and theoretically be made available to stock company established from the marketing of turbofan engines, has the missile programs of potential remains of the Soviet Ministry of reasonable prospects of finding cus- proliferants. The community of Rus- General Machine-Building by Mos- tomers for its products. sian specialists in the missile R & D cow-based Rosobschemash Aside from trying to circumvent has not avoided the generally deplor- ASKOND and the Ukrainian Russian export controls and selling able plight of scientists in Russia. Yuzhnoye Design Bureau, entered their products to countries of prolif- Once the most revered part of the into negotiations with Microsoft eration concern, the only real hope Soviet technological elite, on the subsidiary Teledesic Corporation to for these companies is that a possible same level with nuclear designers, offer its Dnepr launcher (converted change of regime in Russia could missile constructors are now not paid from the Soviet SS-18 heavy ICBM) lead to a revival of the frenzied mili- for months, have almost no new or- for up to 80 launches of commercial tarization of the Soviet era, result- ders or contracts, and see no realis- low-orbit communications satellites ing in raised orders for armaments tic prospects for improvement in the providing Internet access. However, and in renewal of missile transfers near future unless they are employed while promising, these proposed to former client states such as Syria, by the most successful enterprises. deals are still only in the planning Libya, Iran, and Iraq. This strategy According to some estimates, half of stages, leaving the “aspirants” in an is actively promoted by some radi- all Russian scientists have lost their uncertain financial position. cal nationalists in Moscow. jobs since 1991. During the period In stark contrast with the “aspir- between 1991 and 1996, RSC In 1996, Russia became the third Energia laid off 7,000 employees ants” and “leaders,” the “pariah” largest exporter of armaments world- enterprises cannot count on Western and the Ukrainian Yuzhnoe Design wide with sales of $3.5 billion, dou- Bureau lost 5,000 people. Recent money to fend off the collapse of the bling from $1.7 billion in 1994. domestic procurement system. Russian government efforts to pool Revenues from arms exports consti- resources by organizing so-called Lacking either foreign partners or tute up to 75 percent of the total rev- domestic orders, these companies financial-industrial groups consist- enues received by the Russian ing of major banks and some lead- are in dire economic straits, which defense industry. The defense indus- may push them to violate national ing defense enterprises (such as the try is sustained on this money, be- Makeev Design Bureau or RSC nonproliferation legislation in search cause the domestic procurement of new markets for their products. Energia), have produced few results budget has dropped to two or three because of diversity of interests Examples of such firms are NPO times less than the minimum needed Trud, located in Samara, which has among the members of the groups, to keep the Russian defense indus- poor management, and the absence been accused by the Russian Federal trial base intact. At the same time, Security Service of trying to sell of clear business programs identify- because only a few export produc- ing potential clients, resources, missile engine parts to Iran under the ers have access to Western markets, 18 goals, and marketable products. guise of gas pipeline compressors. a mere 18 Russian defense enter- Another company which falls into prises account for fully 80 percent Such miserable conditions make this category is NPO Polyus, which of total export revenue. The remain- Russian defense engineers easy prey has been accused of selling missile ing defense facilities, including the for aggressive head hunters from the 19 guidance components to Iran. An- “pariah” firms in the missile sector, countries of proliferation concern. other firm which could possibly fall cannot achieve an adequate level of For example, Russian designers are into this category is the income from exports.20 reportedly instrumental in North Mashinostroyeniya Design Bureau, Korea’s missile program. In Decem- located in Kolomna, near Moscow. At the moment, then, the highly ber 1992, Russian counterintelli- This company designed the SS-21, qualified personnel of “pariah” en- gence barely prevented 32 Russian Tochka, and Oka short-range mis- terprises, whose capabilities are on scientists from the Makeev Design siles, but now has no buyers for its a par with the engineers and highly Bureau (which created Scuds) from SS-X-26 missile, nicknamed “son of skilled technicians from larger facili- leaving to work in North Korea.21 SCUD,” or its other production. Of ties, represent a reservoir of experi- According to other reports, in 1993,

42 The Nonproliferation Review/Spring-Summer 1998 Victor Mizin hundreds of Russian scientists were major difference by themselves. The of general economic situation or, con- working at various institutes under experience of industrialized states versely, by its deterioration and the the Chinese Academy of Aeronau- indicates that massive transfers of perception of vulnerability to emerg- tics, although Russian authorities expertise and sustained programs of ing international threats. Even today, have denied these allegations.22 Ex- infrastructure development and in- Russia is actively deploying a the new amples such as the designers from vestments would be required to de- Topol-M ICBM (SS-X-27), a fol- the Makeev Design Bureau who at- velop indigenous long-range missile low-on to the SS-N-20 SLBM called tempted to defect to North Korea, or programs in most Third World states. SS-NX-24/26 (D-31), a new SS-X- the efforts of Chinese intelligence If access to scientific and technical 26/29 Oka-type short-range missile, agents to obtain drawings of the SS- information was all that was neces- and new types of airborne or antiair- 18 ICBM in Ukraine, indicate that sary, many more states would have craft missiles. The official state de- the threats of clandestine transfers developed indigenous ballistic mis- fense order allocations for R & D is genuine.23 In addition, the possi- sile programs because in today’s in- were approximately $2 billion in 1994 bility that some of the thousands of formation-saturated world, basic and doubled during each of the fol- impoverished Russian military per- data regarding WMD and missiles lowing two years, reaching $12.8 bil- sonnel might steal or divert missiles is available from many sources. lion in 1997, although actual 24 in their custody, or attempt to use What is much more crucial to expenditures were probably lower. them for blackmail, cannot be totally combat missile development is the Grants recently made to Russian dismissed. Fortunately, however, not necessary technical and industrial in- scientists by the American billion- a single case of such diversion from frastructure and specialized knowl- aire and philanthropist George Soros Russian military forces has yet been edge about certain critical aspects of or the U.S. Civilian Research and reported. missile engineering. For example, Development Foundation are help- The danger that missile-related nosecone design, insulating thermal ful in ameliorating these miserable technology and know-how will leak coatings, specialized propulsion data economic conditions. However, they from Russian firms to potential relating to rocket clustering and stag- are often too miniscule and humili- proliferants is magnified by the feel- ing, tactical missile defense penetra- ating for some Russian scientists to ing of many discontented Russian tion aids and techniques, advanced accept. In interviews with the au- designers that the present regime has guidance systems, and warhead de- thor, leading Russian scientists have betrayed them. That conclusion sign and fusing methods are all very expressed frustration that such makes them sympathetic to various difficult technologies for aspiring grants often amount to no more than radical political groups in Russia, proliferants to master. Hiring Rus- $100/month—less than the income ranging from the traditional commu- sian specialists who are expert in of many Chinese peasants. There- nists to ultra-nationalists. Assisting these areas could shorten a fore, much more comprehensive so- former Soviet clients to continue re- proliferant’s time table for develop- lutions that could engage Russian sisting the “neo-imperialist” foreign ing a long-range ballistic missile, but missile scientists in long-term pro- policy of the United States, by giv- it would still require substantial tech- liferation-safe design projects are ing them access to modern technolo- nical infrastructure and massive in- urgently needed. Nevertheless, de- gies and weaponry for protection vestments to bring the program to spite the dire financial conditions against possible American reprisal, fruition. facing contemporary Russian missile comes naturally to these deprived Another possible outcome for the designers, most of them do not re- Russian engineers’ minds. Russian missile complex might be gard the possibility of defecting to To date, however, there is little the initiation of a new arms race to so-called “rogue states” as a real evidence of a mass exodus of Rus- employ the currently idle talents of option. sian scientists, engineers, and mis- Russian missile designers. Assum- sile designers to countries of ing the current democratic regime POSSIBLE NEW POLICY proliferation concern. Even if a few remains in power, Russia could start AVENUES FOR THE WEST Russian scientists end up in Iran or its own active arms build-up— Although it should be taken seri- Libya, they are not likely to make a prompted by either an improvement ously, the threat of Russian missile

The Nonproliferation Review/Spring-Summer 1998 43 Victor Mizin proliferation is not apocalyptic, and U.S.-Russian cooperation along although Russian officials have effective means and measures to the lines of the 1994 U.S.-Russian doubts about the feasibility of the avoid it in the future do exist. Pos- Memorandum of Intent on Coopera- last objective. A realistic assessment sible policy options to address this tion in the Area of Export Control of current regional powers having threat include improving export con- should also be reinvigorated. The missile capabilities suggests that trol enforcement and cooperation; U.S. Department of Commerce they are unlikely to give up their strengthening international collabo- could also more actively share its missile capabilities in the near fu- ration through the MTCR; joint de- experience and technologies (such as ture. velopment of theater missile defenses specialized computers which are not In this context, drastic changes (TMD); and enhancing Russian par- useful for military purposes) used in in the current international environ- ticipation in international commercial enforcement and oversight of U.S. ment are necessary in order to intro- projects. private industry with its Russian duce an international regime which counterparts. Some activity in this either bans ballistic missiles or Improving Export Control direction is already underway. After globalizes the 1987 Intermediate- Enforcement and Cooperation the March 1998 session of the joint Range Nuclear Forces Treaty. None- U.S.-Russian Commission on Eco- The most direct and logical way theless, both Russia and the United nomic and Technical Cooperation to seal Russian borders against ille- States should work toward identify- (formerly known as the Gore- gal transfers of items that are pro- ing a wide array of possible mea- Chernomyrdin Commission), U.S. hibited by the MTCR and relevant sures to allay the demand-side Vice President Albert Gore an- Russian domestic regulations is to concerns that drive missile prolifera- nounced that a joint Russian-Ameri- strengthen Russian national export tion. For example, this could be done can working group would monitor controls, encourage compliance by by building on the Bush the implementation of a January 1998 Russian high-tech and military re- administration’s initiative to restrict Russian government decree tighten- search and production facilities, and advanced conventional arms sales to ing dual-use export controls.25 ensure effective enforcement of the Middle East. New initiatives these controls when they are vio- could be devised for creating mis- lated. Emphasis should be placed on Intensify Multilateral sile and advanced weapon-free providing more competent person- Collaboration through the zones in regions of high conflict po- nel to the export control services and MTCR tential. While it would be unrealis- equipping them with state-of-the-art The United States and Russia, tic to assume that they would technology in order to assure real- long before Moscow officially immediately be accepted by states in time exchange of data and informa- joined the regime, discussed steps to the most conflict-prone regions, such tion from Moscow to customs improve and clarify the provisions a coordinated initiative by Washing- checkpoints. The Federal Service for of the MTCR and their implementa- ton and Moscow could help improve Currency and Export Control that tion. As President Clinton noted in the image of the MTCR and could currently serves as a watchdog for 1993, both countries share respon- lay the groundwork for its gradual the Interagency Export Control sibility for gradually transforming transformation from a supply-side Commission has too little influence the MTCR from a suppliers’ group cartel to a broader international ar- and often finds itself between a rock into an agreement that is widely ad- rangement. and a hard place in internecine bu- hered to within the international Confidence and security building 26 reaucratic struggles between various community. Both nations support measures could also be promoted by Russian agencies. To improve its prudent expansion of MTCR mem- Russia and the United States in or- effectiveness, its status and influence bership to include additional coun- der to reduce mistrust and minimize should either be increased, or it tries that subscribe to international the risk of miscalculation or acciden- should be merged back into a more non-proliferation standards, the en- tal launches in conflict-prone areas. powerful bureaucratic structure, forcement of effective export con- To motivate some states not to pro- such as the Ministry of Economics trols, and the abandonment of cure missiles, Russia and the United or the Ministry of Finance. offensive ballistic missile programs, States could extend broad security

44 The Nonproliferation Review/Spring-Summer 1998 Victor Mizin assurances to them. Such mutual as- tion by Russian strategic missile contracts, and genuine concern will surances were successful in convinc- forces. continue to fuel proposals for at least ing Ukraine to relinquish the If the potential for an accidental a limited national missile defense sys- Soviet-era nuclear weapons that or unauthorized launch from Russia tem,” then such systems should be were based on its territory. If such is one of the most important secu- developed with Russia, rather than 28 approaches were emphasized vigor- rity challenges facing the United imposed on it. ously, they might produce positive States today, discussions about how results in South Asia, North Asia, to allay such concerns, whether real Increased Russian Participation and elsewhere. To be successful, or imaginary, should become a pri- in Joint Commercial Efforts however, such bilateral initiatives ority issue for both states. In the new Another promising way to stem must take into account Russian pres- security environment, both sides the potential proliferation of missile tige and treat Russia as an equal part- could jointly review the theoretical technology from Russia would be to ner with the United States. basis of strategic stability. It might further develop U.S.-Russian coop- even be possible for both nations to erative projects in space launch ve- Cooperative Development of come to agreement that the infamous hicle design. This approach could TMD/BMD strategy of “mutual assured destruc- bring tangible commercial benefits On January 29, 1992, Russian tion” has outlived its usefulness. In to both the U.S. and Russian aero- President Boris Yeltsin proposed that the meantime, Russian engineers and space sectors. To be most effective, the United States and Russia jointly designers could cooperate with their this proposal would involve engag- develop a “global defense system” U.S. colleagues in the development ing designers from enterprises that for the world community. This glo- of advanced theater missile defenses, have little or no government access bal missile defense system would be sharing their joint experience accu- or support in specific goal-oriented based on a reorientation of U.S. re- mulated over many years of re- commercial projects, which could be search on ballistic missile defense, search. kept largely free of bureaucratic and would also “make use of high Of course, such a process would meddling and government tutelage. technologies developed in the Rus- be neither quick nor smooth. It Such projects should be focused on 27 sian defense complex.” Yeltsin’s would obviously have many oppo- technology development rather than proposal did not receive any practi- nents in both Moscow and Washing- on political and diplomatic rigma- cal response from the U.S. govern- ton. Some in Moscow would criticize role. While benefiting both Russian ment, however. This proposal it for undermining the ABM Treaty. and U.S. investors, the projects provides an opportunity for testing In Washington, those who believe the would also help prevent the spill- the commitment of both sides to es- United States has a technological over of critical technologies or tablishing a new relationship that is edge in missile defense would object “brain drain” across the borders of free of Cold War rivalry and suspi- to giving Russia access to sensitive the former Soviet Union. Russian cions. The process of creating such defense-related research. However, scientists and engineers, or perhaps a joint defense system should of the alternative to a cooperative pro- even entire enterprises, might then course be gradual. First, bilateral cess is to continue a situation in be invited to participate in selected talks on global strategic stability which both countries remain locked projects coordinated or managed by should be revived. The United States in a mutual hostage relationship. Con- U.S. aerospace companies aimed at should then begin to share data from tinuing this relationship means that a developing dual-use commercial its early warning systems with Mos- fundamental aspect of the Cold War hardware such as space boosters. cow. This step would not only help security environment remains un- The participants in such projects Russian defense networks compen- changed, despite the end of the Cold would be selected on the basis of sate for the loss of air defense radar War. If, as one U.S. analyst has ob- their expertise and experience. If facilities that were based outside served, “parochial interests are pro- carefully constructed, such an ap- Russia in former Soviet republics, but pelling missile defense systems proach could protect U.S. compa- would also enhance U.S. security by forward to production” and “ideo- nies’ sensitive information while reducing the chance of miscalcula- logical agendas, potentially lucrative providing flexibility and budgetary

The Nonproliferation Review/Spring-Summer 1998 45 Victor Mizin savings. Russian scientific skills intact and The battle against internal corruption This process of developing such reduce the likelihood that Russian can be won by introducing more ef- projects could be staged so that they scientific expertise might be diverted fective legislation. An even more im- would initially focus on nonprolif- to the missile programs of potential portant step in this direction would eration as the key objective, and later proliferants. be actually beginning the establish- place more emphasis on commercial ment, with the assistance of the world viability. The ultimate goal would be CONCLUSION community, of a truly market-based economy built on genuinely private the creation of profitable joint en- The proliferation of missile tech- enterprises, not on a quasi-Soviet terprises in the aerospace sector. For nology and hardware from Russia “Red directors-robber barons” example, in the first phase, the and the NIS could follow one of model. framework of a project would be three potential pathways: govern- defined, major participants identi- ment agencies could export items Over the longer run, the best way fied, and a detailed business plan proscribed by international and Rus- to prevent Russian missile scientists prepared, outlining initial funding sian export control regulations; dis- from seriously considering selling and the incremental introduction of gruntled scientists could leave the their expertise to rogue regimes is to self-sustaining commercial opera- NIS to work in countries seeking to actively involve them in cooperative tions. During the second phase, the develop or expand their missile ca- developmental efforts with Western Russian participants could be pabilities; and, finally, technology companies in which their work is brought to a joint conference where and materials could be illegally ex- mutually beneficial. American com- information would be exchanged on ported from the NIS for sale on the panies are already deeply involved export controls in the U.S. and Rus- international black market. If the in technological projects with some sia. This conference would also dis- Russian government adheres to a Russian entities, such as the Russian cuss the status of Russian aerospace course of political and economic re- Space Agency. Precedents have thus entities and address the prospects for forms, based on the principles of already been set, but much broader real privatization, economic restruc- building a market economy, creating and deeper partnership is needed. turing, and defense industry conver- a democratic state, and expanding Such efforts will not only aid Russia sion. At this conference, Russian civil society, Russia’s future will in- in retaining it corps of missile spe- scientists could interact with their creasingly be tied to the global cialists, it will also hasten the intro- U.S. counterparts, and ideas for prac- economy. Following this strategy of duction and acceptance of private tical collaborative projects that avoid development will help stem WMD enterprise in the still rigidly conser- government interference could be or missile proliferation activities. vative Russian defense and high-tech identified. Although all such Even today, Russia is competitive in sectors. This possibility clearly offers projects would ultimately need to be many international export markets a win-win outcome for both Russia sanctioned by the both the Russian for goods other than weapons and and the West. and U.S. governments to avoid dis- related technologies. The prospects closure of classified information, the for expanding these exports of tech- goal would be to develop projects, nology and raw materials will only products, and services that are com- grow as the Russian economy is fur- mercially marketable. This process ther liberalized. would allow Russian scientists to In the short term, however, spe- bring their experience and the tech- 1 cial attention should be paid to up- The author would like to thank Professor nologies developed in their enter- James Brown and Dr. Pauline Dobranich of the grading Russia’s national export prises to the attention of their U.S. Cooperative Monitoring Center at Sandia Na- control system, disseminating infor- tional Laboratory and Dr. Kerry Herron of the counterparts. It would also help the Institute of Public Policy at the University of mation on export regulations through- Russian participants to learn about New Mexico for their insightful comments on out industry, and implementing an earlier draft of this article. Western research, production, and 2 effective enforcement and anti- On Russian export controls development see marketing techniques. Such a coop- Elina Kirichenko, “The Evolution of Export Con- corruption measures within customs erative program would help keep trol Systems in the Soviet Union and Russia,” and trade administration agencies. in Gary Bertsch, Richard Cupitt, and Steve

46 The Nonproliferation Review/Spring-Summer 1998 Victor Mizin

Elliott-Gower, eds., International Cooperation missile industry facilities (names withheld on Arms Control Today 22 (January/February on Nonproliferation Export Controls (Ann request). 1992), pp. 38, 49. Arbor: University of Michigan Press, 1994). 16 Jeffery M. Lenorowitz, “U.S. Entrepreneurs 28 Joseph Cirincione, “Why the Right Lost the 3 For an overview of the legal basis of the Seek Russian SLBMs,” Aviation Week and Space Missile Defense Debate,” Foreign Policy Russian export control system, see Monterey Technology, May 3, 1993, pp. 22-23; Jeffery (Spring 1997), p. 55. Institute of International Studies and Carnegie M. Lenorowitz, “U.S.-Russian SLBM Venture Endowment for International Peace, Nuclear Suc- Plans Initial Test for 1994,” Aviation Week cessor States of the Former Soviet Union: Status and Space Technology, April 19, 1993, pp. Report on Nuclear Weapons, Fissile Material, 60-61; James T. McKenna, “NTSB Cites Con- and Export Controls, no. 5, (Washington, D.C.: fusion In Pegasus Launch Room,” Aviation Week Carnegie Endowment for International Peace, and Space Technology, June 21, 1993, p. 62; March 1998), pp. 94-97. Ben Iannotta, “Two U.S. Firms Set Sights on 4 For a discussion of these international export Sea-Launched Rocket,” Space News, Decem- control regimes, see Tariq Rauf, et al., Inven- ber 5, 1993, p. 8. tory of International Nonproliferation Orga- 17 ANSER, NPO Energomash; Warren Ferster, nizations and Regimes, 1996-97 Edition “Australia Seeks Commercial Launch Role,” (Monterey: Center for Nonproliferation Stud- Space News, April 24-30, 1995, p. 24. ies, Monterey Institute of International Stud- 18 Embassy of the Russian Federation, Press Re- ies, 1997). lease, October 2, 1997, “No Facts of Transferring 5 Maksim Glikin, “Those Taking a Lot Are Given Missile Technology to Iran, Russian Security Ser- Little—A Tabulation of the Rankings, Bribes, and vice Says.” Preventive Punishment,” Obshchaya gazeta, 19 Steve Rodan, “Secret Israeli Data Reveals Iran January 21-28, 1997; in “Inquiry Into Cor- Can Make Missile in Year,” Defense News, Oc- ruption of Top Officials,” FBIS-SOV-97-022- tober 6-12, 1997; Bill Gertz, “Russia, China Aid S. Iran’s Missile Program,” The Washington Times, 6 Steven Zaloga, Target America: The Soviet September 10, 1997. Union and the Strategic Arms Race, 1945-1964, 20 The International Institute for Strategic Stud- (Novato, CA: Presidio, 1993). ies, The Military Balance 1997/98 (Oxford: Ox- 7 Author’s interviews with Russian government ford University Press, 1997), pp. 101-107; Igor officials charged with oversight of the defense Khripunov, “Have Guns Will Travel,” Bulletin of industry (names withheld on request). the Atomic Scientists 53 (June 1997), p. 47; Ac- 8 Janet Guyon and Betsy McCay, “Launch De- cording to some reports, the world missile mar- layed: Russia’s Technology In Rockets Is Spark- ket is worth about $114.3 billion. See V. ing Mixed Western Interest,” TheWall Street Muradian, “Study Concludes World Missile Mar- Journal Europe, September 9, 1996, p. 1; Will- ket Valued at $114.3 Billion,” Defense Daily, iam Broad, “Russian Rockets Get Lift in U.S. March 18, 1997, p. 20. From Cautious and Clever Design,” The New York 21 Greg Gerardi and James Plotts, “An Annotated Times, October 29, 1996, p. 1. Chronology of DPRK Missile Trade and Devel- 9 “Agreement Between the U.S. Government and opment,” The Nonproliferation Review 2 (Fall the Russian Government to Amend the Previously 1994), pp. 65–98; Andrew Lawler, “Libya and Existing Agreement Regarding International Iran Seek Ex-Soviet Scientists,” Science, March Trade in Commercial Space Launch Services,” 15, 1996, p. 1485. January 30, 1996, available from the U.S.-Rus- 22 John J. Fialka, “U.S. Fears China’s Success in sian Joint Commission on Economic and Techni- Skimming Cream of Weapons Experts from Rus- cal Cooperation at http://www.usis.usemb.se/ sia,” The Wall Street Journal, October 14, 1993, regional/bnc/usrussia/gcc6/space/launch.htm. p. A12; Pavel Spirin, “Unconfirmed Rumors of 10 Dmitriy Payson, “Sobranie kosmosa Russian Missile Builders Hired by PRC,” ITAR- prodolzhaetsya,” Nezavisimaya gazeta, April 11, TASS (in English), October 18, 1993; in FBIS- 1998 (electronic version). SOV-93-199. 11 On the activities of the Khrunichev State Re- 23 “SBU Safeguarded Missile Design from Chi- search and Production Center, see Dmitriy nese Nationals,” Interfax, February 2, 1996; in Loryagin, “Alpha—A Project With Flying Start,” FBIS-SOV-96-024; “PRC Citizens Expelled over Kommersant-daily, April 15, 1997, pp. 43-44, in Smuggling,” Interfax, January 30, 1996; in FBIS- “Fiscal Woes Could Jeopardize Russian Partici- SOV-96-021; Bill Gertz, “China`s Arsenal Gets pation in ‘Alpha’ Space Station Project, FBIS- a Russian Boost,” The Washington Times, May UST-97-017; Peter B. de Selding “Rockot 20, 1996, p. A1. Venture Pursues Plan To Repay Russian Debt,” 24 Izvestiya, February 3, 1997; Rossiiskaya gazeta, Space News, June 12-18, 1995, p. 14. January 4, 1996. 12 Andrey Vasiliyev, “Energiya soprotivleniya,” 25 Thomas W. Lippman, “Gore Lauds Russia’s Russkiy Telegraf, April 3, 1998 (electronic ver- Policy Curbing Arms for Iran,” The Washington sion). Post, March 12 1998 (electronic version). 13 See Analytic Services, Inc. (ANSER), NPO 26 President William Jefferson Clinton, Address Energomash (Washington, D.C.: ANSER, 1996). to the 48th Session of the United Nations Gen- 14 Tim Furness, “Russian Engines Eyed For New eral Assembly, New York, September 27, 1993, U.S. Launcher Concepts,” Flight International, available at the White House web site: http:// October 23-29, 1996, p. 23. www.whitehouse.gov/WH/html/library.html. 15 Author’s interviews with officials at Russian 27 “Yeltsin Suggests Joint Missile Defense,”

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