The Nuclear Cities Initiative

THE NUCLEAR CITIES INITIATIVE: STATUS AND ISSUES January 1999 Background The Nuclear Cities Initiative (NCI) is a new U.S.-Russian nonproliferation program designed to facilitate economic development and downsizing in the Russian nuclear weapons complex. The program was initiated because there is a serious economic strain on key facilities in the Russian nuclear complex and this situation has raised nuclear proliferation concerns, in particular the potential leakage of fissile materials and knowledgeable scientists to countries posing a proliferation risk. Also, the Russian government has determined that its nuclear complex should be re-configured to a smaller size and that this objective requires creating alternative, peaceful employment opportunities for many of the weapons scientists, technicians and engineers that would be displaced by this process. The NCI goal is to create 30,000-50,000 jobs in the Russian nuclear complex by the end of the program (estimated at 5-7 years) at a cost of approximately $550 million.1 The major installations of the Russian nuclear weapons complex are the ten "closed nuclear cities" managed by the Russian Federation Ministry for Atomic Energy (Minatom). These facilities design, maintain, and dismantle weapons and produce fissile material and weapon components. It is estimated that 732,000 people live in the closed cities, and approximately 127,000 are employed in the key nuclear enterprises.2 As part of the U.S.-Russian discussion on the structure of the NCI it was determined that the program would initially focus its efforts on three of Russia's closed cities: the nuclear weapon design laboratories Arzamas-16 (Sarov) and Chelyabinsk-70 (Snezhinsk), and the plutonium production facility Krasnoyarsk-26 (Zheleznogorsk). U.S. government managers of the program have stated that the effort could be expanded to six closed cities in two years and all ten in three years.3 The NCI was created through discussions between the Russian-American Nuclear Security Advisory Council (RANSAC), a nongovernmental organization, and the U.S. and Russian governments. These discussions began in May 1997 and culminated in a U.S.-Russian agreement on the Nuclear Cities Initiative in September 1998. However, this work built on years of laboratory-to-laboratory and government-to government contacts between U.S. and Russian officials. The original RANSAC concept proposed that the Nuclear Cities Initiative consist of several inter-related components to help transform the Russian complex. These were: private sector development; creation of nonproliferation research and analysis centers; and expansion of U.S.-Russian cooperation on environmental clean-up activities.4 The U.S.-Russian governmental structure for the NCI has provided the flexibility for the creation of these three "legs" of the NCI program, but the early emphasis of the program is clearly on business development. To date, the majority of work under the NCI has focused on developing the structure and legal basis for the cooperation, funding a number of specific projects at closed cities, and exchanging visits to U.S. and Russian facilities. (Click here to see a map of Russia's Closed Nuclear Cities.) NCI Objectives The overarching objective of the NCI is set out in Article I of the September 1998 intergovernmental agreement. It states that the purpose is "to create a framework for cooperation in facilitating civilian production that will provide new jobs for workers displaced from enterprises of the nuclear complex in the 'nuclear cities' controlled by the Ministry of the Russian Federation for Atomic Energy."5 Other official statements make clear that the initiative is regarded as an equal partnership between both countries that will require a long-term commitment and funding provided by U.S. and Russian government programs, multinational organizations, and private firms.6 The program has set out a sequence of goals that are mutually reinforcing. The short term objective is to generate civilian employment for displaced weapons workers, while the longer term goal is to assist Russia with the downsizing of its nuclear weapons complex. In the view of Russian government officials, the orderly shrinkage of the Russian nuclear complex will be difficult, if not impossible, without the creation of alternative jobs for displaced weapons complex employees.7 Under the terms of the NCI agreement, the U.S. will seek to facilitate the creation of new jobs by engaging with Russia in the following types of activities: • Sharing experience in the diversification of production; • Facilitating the selection of promising projects for production diversification and creating the conditions that will enable them to be implemented; • Developing entrepreneurial skills in employees displaced from enterprises of the nuclear complex, training them in how to write a business plan, and facilitating development of such plans; • Facilitating creation of the conditions necessary for attracting investment in the nuclear cities for purposes of implementing the projects; • Facilitating the search for potential investors for production diversification projects, market analysis, and for marketing products and services; • Facilitating access to existing investment mechanisms, including investment funds; and • Identifying mechanisms for the funding of projects under the Initiative. In the first year, the U.S. managers of the NCI have stated that they would like to create one significant business employing about 200 people in each of the three closed cities chosen as the first testing grounds for the program.8 A number of specific activities that could be implemented to reach these near-term and broader objectives are outlined in the Department of Energy's "Report to Congress on the Nuclear Cities Initiative." (See Annex III). NCI Structure During 1998, significant progress was made in creating a structure for the operation and implementation of the NCI. The plan calls for three levels of activity: an intergovernmental, interagency steering committee; an advisory committee composed of non-governmental experts; and informal joint working groups focused on issues specific to individual nuclear cities. The activities of the steering group include developing joint action plans, reviewing project recommendations, and serving as a dispute resolution mechanism. The steering committee also is responsible for establishing the joint working groups. The U.S. Energy Department (DOE) and Minatom serve as steering committee co-chairs. The U.S. steering committee, in addition to DOE, consists of representatives from the Commerce, State, and Defense Departments, as well as the Agency for International Development, the National Security Council, the Office of Science and Technology Policy, and the Office of the Vice President. Besides Minatom, the Russian members of the steering committee include the Ministries of Economics, Finance, Industry and Trade, and Foreign Affairs. The Russian Federal Security Service will also participate. At present, the Russian Ministry of Defense is not a member of the steering committee. The non-governmental experts committee is currently scheduled to be selected in early 1999. It is envisioned that the advisory committee will consist of about a dozen senior figures drawn from industry, the finance and academic communities, and non- governmental organizations. The joint working groups have been created to address and monitor issues in the three cities initially targeted by NCI. One DOE Defense Programs laboratory and one non- defense laboratory will work with each Russian nuclear city. At present, Sandia National Laboratory (SNL) and Oak Ridge National Laboratory (ORNL) are working with Krasnoyarsk-26; Lawrence Livermore National Laboratory (LLNL) and Pacific Northwest National Laboratory (PNNL) are collaborating with Chelyabinsk-70; and Los Alamos National Laboratory (LANL) and the Savannah River Site (SRS) are coordinating with Arzamas-16. To date, the working groups have concentrated mostly on traveling to the nuclear cities to familiarize themselves with the facilities, infrastructure, and existing activities at the locations. In November 1998, the LLNL-PNNL working group conducted a site visit at Chelyabinsk-70. There they viewed on-going conversion attempts and held a series of meetings with Russian scientists and local government officials. In early December, the Los Alamos-Savannah River team conducted a similar visit to Arzamas-16. Reciprocal visits by Russian delegations to U.S. facilities have also occurred. During the Summer and Fall of 1998, representatives from Arzamas-16, Chelyabinsk-70 and Krasnoyarsk-26 made week-long visits to PNNL to review economic conversion at the laboratory and surrounding communities. An Arzamas-16-Minatom team also toured the Oak Ridge facility to review economic development activities at that location. Other U.S. laboratories have also held NCI-related meeting with their Russian counterparts. DOE plans to analyze the information from these lab-to-lab exchanges and distribute them to the public to facilitate a more intensive exploration of possible commercial development opportunities. The plan is to eventually expand working group membership to include major business, finance, and technology leaders from the United States, and officials from local and regional governments in Russia. (Click here for information about U.S.-Russian Nonproliferation Programs Complementing NCI.) NCI Status Since the U.S.-Russian decision to create the NCI in

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