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"Though we have acheived progress, our work is not over. That is why I support the mission of the Arms Control Association. It is, quite simply, the most effective and important organization working in the field today." 

– Larry Weiler
Former U.S.-Russian arms control negotiator
August 7, 2018
U.S. Nuclear Weapons

Hyping Chinese Espionage

Spurgeon M. Keeny, Jr.

With little evidence and flawed logic, the Cox Report has concluded that China, exploiting purloined U.S. nuclear weapons design information, can now match U.S. nuclear weapons technology and emerge as a major nuclear threat to the United States. The report, presented in three lavishly illustrated volumes suitable for coffee table display, is clearly designed to hype a new Chinese nuclear missile threat rather than objectively examine the extent and implications of alleged Chinese nuclear espionage. Whatever the truth about the extent of the espionage, this extreme worst-case assessment is grossly misleading and threatens rational U.S. diplomatic and defense policy toward Beijing.

The report's case rests primarily on a reference in a classified Chinese document to certain aspects of the design of the Trident D-5 missile's W-88 thermonuclear warhead, which indicates Chinese access to classified information from an unidentified source. However, Cox Committee member Representative John Spratt (D-SC), in an act of considerable political courage, has revealed the paucity of evidence supporting the report's stark conclusions and pointed out that the Cox Committee had no evidence that the Chinese had actually obtained any blueprints or detailed engineering specifications on the W-88 or any other U.S. thermonuclear weapon. This important conclusion was also reached by the intelligence community in its damage assessment of the material presented in the classified version of the report.

While China would undoubtedly profit from the details of the W-88, Beijing would pay a steep price to make a "Chinese copy" of the sophisticated W-88, which does not match China's strategic requirements or its existing technology infrastructure. The W-88 is carefully designed to fit inside the D-5's slender reentry vehicle, which is necessary to achieve extremely high accuracy against hard targets. The Chinese ICBM force, numbering only 20 missiles, is clearly intended as a minimal deterrent against city targets where high accuracy is irrelevant. The report fails to recognize that China, with a substantial nuclear weapons program and 35 years' experience since its first test in 1964, already has the ability to develop small thermonuclear warheads based on its own technology. Such weapons would be suitable for China's anticipated, more survivable mobile ICBM or for future MIRVed missiles if it decides to develop them. Consequently, even if Beijing did obtain the detailed blueprints for the W-88, which is pure speculation, this would not change the limited Chinese nuclear threat to the United States that has existed for almost 20 years.

The report's feigned outrage with China's alleged efforts to steal U.S. nuclear secrets is an exercise in naivete or hypocrisy by members of Congress, who approve some $30 billion annually for U.S. intelligence activities and press for the increased use of spies. At the same time, while recognizing the pandemic nature of espionage, one cannot tolerate violations of trust by persons in sensitive positions or inadequate security practices that facilitate such actions. The report has created a cottage industry of recommendations on how to solve this difficult problem. But the answer certainly does not lie in creating insulated, Soviet-style nuclear cities where many of the brightest U.S. scientists would not work.

U.S.-Chinese relations have been dealt a serious blow by the report's implicit message that the United States should not do business with a country that presents a serious nuclear threat to U.S. security and engages in espionage against the U.S. nuclear establishment. However, there is no reason to believe China is any more of a threat today, or will be in the foreseeable future, than it has been for many years; and the charges of espionage, if true, are only the latest manifestation of an international environment where gentlemen read each other's mail whenever possible. Since President Nixon's opening of relations with China, every U.S. president has sought to improve U.S.-Chinese relations. In the interests of U.S. security, this policy should continue to be pursued on its own merits and not be undercut by hyped assessments of the Chinese nuclear threat or espionage activities.

If the Cox Committee is as concerned about Chinese espionage as it professes, it is puzzling that it chose to reject Spratt's proposal to recommend ratification of the CTB Treaty, which would prevent future Chinese tests from exploiting alleged purloined information. Experts agree that no rational state would risk producing thermonuclear weapons based on information, including even blueprints and full technical specifications, obtained from another state without tests, and would not rely on another country's computer codes to simulate the detonation of a device as a surrogate for actual testing. The U.S. Senate now has the opportunity and responsibility to correct this glaring omission by promptly ratifying the test ban treaty, which Senate Foreign Relations Committee Chairman Jesse Helms has held hostage—to advance his own agenda—for nearly two years.

With little evidence and flawed logic, the Cox Report has concluded that China, exploiting purloined U.S. nuclear weapons design information, can now match U.S. nuclear weapons technology and emerge as a major nuclear threat to the United States.

Arms Control Agenda After ACDA

On March 26, with only days remaining in his tenure as the last director of the Arms Control and Disarmament Agency (ACDA), John D. Holum delivered the keynote speech at the annual luncheon meeting of the Arms Control Association (ACA). Holum, who is serving as acting under secretary of state for arms control and international security affairs as ACDA prepares for its formal merger into the State Department on April 1, discussed the current state of U.S. arms control policy and the implication of ACDA's demise as an independent agency. The following is an edited version of his prepared remarks followed by the question and answer period.

   

It's a pleasure to be back after too long. The interval, plus the pace of events, leaves us a lot to discuss. But I have an aversion to speeches that try to cover everything, or even the most important things. They're either too long or too shallow—or both.

Fortunately we have a question and answer session. So, I propose to give you just a couple of mini-speeches on subjects chosen for their timeliness. One is on our proliferation strategy, which is being sorely tested. The other is on how we're organized for arms control and non-proliferation, which is being changed.

We are in a maddeningly complicated period for these missions. International events are ominous enough. We also have internal divisions, which seem to turn virtually every element of our policy into a monumental struggle—whether ratification of a treaty like the comprehensive test ban, or engagement on non-proliferation with a country like China, or sufficient funds to pursue effective diplomacy, or anything else. So it may be useful to sketch out our non-proliferation strategy, to put these measures, and others, in context, and show there is a method here which makes sense and deserves essential support.

Consider, first, the challenge. It is an understatement to say that 1998 was the sort of year non-proliferators are glad to see through the rearview mirror. Unfortunately, the trend, not the calendar, was at fault, and I see the same hazards through the windshield in 1999 and beyond:

• When they shattered the silence at their nuclear test sites, India and Pakistan stepped into a profoundly more dangerous relationship, taking the rest of the world with them.

• Iraq continues its ambitions to acquire weapons of mass destruction [WMD] and has stepped-up its defiance of the United Nations.

• Iran's intermediate-range missile potential threatens its own region and beyond, and its nuclear ambitions are ominous.

• In addition to the suspect nuclear site, North Korea's three-stage missile capability potentially could land payloads on the United States.

So, should we abandon arms control and non-proliferation as a failure? On the contrary, it must remain central to our approach. Let me just briefly review the elements of our strategy against proliferation.

Stronger Regimes: The Comprehensive Test Ban Treaty [CTBT] in force, the fissile material cutoff treaty, a strengthened Biological Weapons Convention [BWC], and the Nuclear Physical Protection Convention; we need these additions to the nuclear Non-Proliferation Treaty [NPT], the Chemical Weapons Convention [CWC] and other regimes, not because everyone can be counted on to obey the rules, but because rules can impede them by creating international standards, justifying sanctions, creating short-notice inspection rights or drying up sources of supply. It helps our non-proliferation efforts when we can remind Russia or China of their legally binding obligations under the NPT, the CWC or the BWC not to assist other countries in acquiring those weapons. The next best thing is their commitment to us and other partners in the various supplier regimes with common export controls, which is why we want China in the Missile Technology Control Regime [MTCR] and the Nuclear Suppliers Group. Again, it doesn't solve all the problems in a single stroke, but it gives us another tool to stroke with.

Better Detection: Not only our own intelligence assets but also those provided internationally; such as the International Atomic Energy Agency's [IAEA's] enhanced safeguards and the CTBT international monitoring system.

Sanctions: Sanctions have a key role. Nobody likes them much, but the conventional wisdom that they never work is wrong. Multilateral is best, but even bilateral sanctions, or the threat of sanctions, can change conduct—the 1996 ring magnets episode being a case in point.

Sanctions warn others that proliferation entails costs.

We also need a flipside—positive inducements. Of course a sanction becomes a positive inducement when you take it off. Activating the 1985 nuclear cooperation agreement with China was done in the context of significant Chinese actions, to phase out even peaceful nuclear cooperation with Iran. The president's Enhanced Threat Reduction Initiative—$4.5 billion over five years—can make a major additional contribution to arms control and non-proliferation goals in the Newly-Independent States [NIS]. Of course our most controversial positive inducements are light-water reactors and interim heavy fuel oil deliveries, linked to North Korea's commitments under the Agreed Framework.

Technical Support: Assuming a commitment to control sensitive technologies and goods, some countries, particularly of the former Eastern bloc, don't know how. Export control assistance is a growth industry. Helping Russia protect sensitive materials is another.

Diplomacy: Demarches about problem shipments, presidential interventions, on patterns of conduct, and everything in between convey unmistakably that proliferant behavior affects our relations.

Finally, country-specific strategies, combining all these basic tools in the ways best calculated to attain results, whether addressing loose nukes in Russia, or Russian and Chinese technology transfers, or North Korean nuclear and missile capabilities or the potential arms race in South Asia, or others.

Without all these efforts, the world would be a far more dangerous place than it is. They are worth it even when they do not fully succeed, for they still delay proliferators' efforts, narrow their choices, and channel and confine the potential threat. But we must admit they do not always succeed. Arms controllers must also recognize their discipline's limits. If government were capable of commonsense definitions, which it often is not, this would be the point where non-proliferation crosses over to counter-proliferation.

More specifically, based mainly on the launch last August by North Korea, the intelligence community tells us the possibility of WMD-armed, rogue-state ICBMs aimed at the American homeland is, at best, just a few years away. Deterrence, of course, is widely accepted as an appropriate response to such threats. Depending on the circumstances, counterforce or pre-emption might also be an option. In between falls active defense, most prominently now national missile defense [NMD], which is closer to becoming another integral part of our strategy against proliferation. What has been done thus far is to pursue development of a system and put deployment money in the budget, not for 2000 but later in the five-year defense plan, to preserve the option. No deployment decision has been made.

By the middle of next year, we expect development will have proceeded far enough for a decision whether or not to go ahead with a limited national missile defense, specifically addressing the risk from rogue states. That decision will be based on the threat, which, as I said, can no longer be placed beyond NMD lead times, as well as on the effectiveness of the system and on cost considerations. The decision will also include a review of progress on our arms control objectives.

Does this signal that we are getting ready to abandon the 1972 ABM Treaty? The president said on March 5: "I have never advocated, initiated, encouraged, sanctioned or blinked at the possibility that we would unilaterally abrogate the ABM Treaty. I personally would be very opposed to that." The reason is not a nostalgic attraction to a venerable agreement, but the plain fact that the ABM Treaty retains value. Most importantly, it contributes to strategic stability and enables continued deep reductions in the one nuclear arsenal in the world that today could rain down overwhelming devastation on the United States. As a result, it also bears indirectly on our other non-proliferation efforts with Russia; for example, safeguards on the critical materials coming out of Russia's arsenal, which might otherwise end up in nuclear weapon design labs in Iran, Iraq or North Korea.

So, among our arms control objectives is to negotiate whatever ABM Treaty amendments are required if we decide to proceed with a limited defense. The kind of system we are considering would not have the capability to undermine Russia's strategic deterrent. It would not, therefore, undermine the treaty's purpose. We should be able to accommodate it within the treaty, just as we have done in drawing a more precise line between national and theater defenses. Indeed, under these conditions, I would argue that amending the ABM Treaty as needed is a way to preserve it, by demonstrating, again, that arms control is not the enemy of measured defenses to respond to real threats.

Does acceptance of the Cochran bill last week mean we've revised our approach? A change in position makes a good story, but it didn't happen here. The amendments to Cochran meant we could square it with precisely the policy I have outlined. The White House made that clear at the time. So, we will be practicing the proposition I have long advanced, that arms control is a national security mission. Of course it has altruistic elements and budgetary motivations. But its main task is to make us more secure.

We have the task now of advancing, together, our agendas on non-proliferation, through the strategy I outlined on arms control, by pursing START and related initiatives, and on defense, by considering further modernization of the ABM Treaty. Reconciling these purposes is a tall order, but success will be in Russia's interest as well as in ours.

We will be doing all this with a new structure. As you know, I have the sad distinction of serving as the last director of a small but proud and prolific part of the national security apparatus, the Arms Control and Disarmament Agency. By law, at midnight next Wednesday, ACDA will cease to exist. It expires at what I now consider to be relative youth—not quite 38 years old. But if achievements are the measure, it has had a full life.

ACDA has led the way to major arms control achievements: nuclear test bans from partial to comprehensive; the NPT and the decision to make it permanent; strengthened IAEA safeguards; SALT, START and the Intermediate-Range Nuclear Forces Treaty; the BWC and the CWC; limits on conventional forces, including on the most inhumane: landmines; confidence-building measures in Europe and elsewhere; and many, many others.

It also leads in interpreting and enforcing those treaties—where benefits recorded on paper are realized on the ground. It has broadcast the truth—even when it was uncomfortable or inconvenient—on arms control compliance, on treaty verifiability, and on treaty interpretation or misinterpretation, as the case may be. It has spawned several generations of experts who earned their stripes at ACDA and are now found throughout the government, in think tanks, in the NGO community and elsewhere, still applying their talents, energy and insights to this noble cause.

And it still has in its ranks one of the finest, most gifted groups of public servants to be found anywhere, who have always known their stuff and applied it diligently, and have shown their mettle, especially over the past decade, refusing to be distracted even when their agency seemed perpetually poised at the edge of oblivion. And all this has been done at an annual cost roughly matching a couple of fighter aircraft, as measured in current fighters. So, I suggest that by tangible returns, real value to the taxpayer, security added, defense costs avoided, ACDA has been one of the great bargains of all time. So, of course, we must get rid of it.

As you know, I bear the responsibility for accepting that option. I owe some explanation why.

In return, I ask that you pay close attention to the specific terms of the reorganization. They are unusual. They will make a difference for arms control and non-proliferation. And whether they can be sustained over time in their new form will be, in substantial part, up to people like you, who care deeply about this cause and follow it closely.

After fighting very hard for ACDA's survival in 1995 and 1996, why did I accept its demise in 1997? The first reason is that at Wilson School in South Dakota, I had a good third-grade teacher in reading comprehension. Drawing on that, in the winter of 1996–97 I went to Capitol Hill, to the White House and to many in the NGO community. I saw a lot of walls. They had handwriting on them.

The message was: ACDA could no longer survive. If we limped through, with no assistant directors confirmable and a budget under assault, we would have been marginalized, further weakened, and ultimately rendered defenseless. That would have set ACDA up to be not reorganized, but obliterated. So the choice was not whether to keep an independent agency, but whether to go down in flames or try for a soft, upright landing that would allow for redesign and resumed flight.

The second reason is affirmative. We were at a moment of high achievement for arms control. We had a secretary of state who understood and cared deeply about this cause, and so would accept extraordinary steps to protect it, to be included in a consensus recommendation to the president. That opened the way for a successful negotiation. Consider the results:

Over the last decade, the various studies supporting ACDA all focused on its independent advocacy as the decisive reason. State's dominant mission, it is said, is country relations; it naturally prefers to avoid sanctions, to downplay unpleasant reports on arms control compliance, to treat arms sales as an instrument to improve relations, and so forth. Because the stakes are so high, ACDA makes sure the arms control perspective is brought to the table, all the way to the top.

Secretary Albright agrees that independent advocacy is crucial. As a result, when ACDA expires, its voice will carry on, with the same force, in the same places. The under secretary of state for arms control and international security will also be the senior advisor to the president, with authority to attend deputy- and principal-level National Security Council meetings, express independent views, and even go directly to the president, through the secretary of state. That's not only in the plan, it's in the law, subject to discretion. It's also in a presidential decision directive, which means only a president can change it. President Clinton won't. Arms control's friends need to be vigilant, to make sure a future president doesn't.

The plan also provides for the integrity of ACDA's compliance reports. It maintains specialized arms control legal resources, including a new associate legal advisor and a new assistant legal advisor for arms control. It consolidates arms control functions that have grown up elsewhere in State, such as in European Affairs, into the new arms control bureau. It provides new interagency roles for the new Department of State, including interagency leadership on non-proliferation. Compared to the ideal, this deal has deficiencies. But compared to any remotely realistic alternative future, I believe it is a very good outcome.

Some of you may have seen the suggestion recently in a well-known arms control journal that ACDA was going out with a "whimper." [See ACT, October 1998.] My basic point here is that no one at ACDA is whimpering; what we've been up to, as the structure changes, is to preserve, protect and strengthen the mission. And that endeavor, as in the past, will always need your informed help and advocacy.

We took advantage of the two-year delay between agreement in April 1997 and implementation in April 1999 to practice something called "virtual integration"—collaborating across institutional lines. In the process, ACDA's people have been establishing themselves very well in that bigger pond, and so have the people in State's Bureau of Political-Military [PM] Affairs. Working together they have had a powerful impact on START III planning, on addressing problems with North Korea, on South Asia, and on a number of other vital issues.

By combining ACDA and PM, we are shifting the center of gravity in the State Department and building strong new bureaus. We are combining ACDA's strong expertise and memory with State's institutional authority and diplomatic capabilities. That gives us a chance not only to blandish but to lead; not just to make points but to shape events.

This is by no means finished. To realize the full potential, State also needs to recast its vision—to think globally more than regionally, and to see issues systemically rather than episodically. And, perhaps the hardest requirement, it needs to build and keep strong expertise not only on the ways of diplomacy, but on the substance of arms control and non-proliferation, and on the related international institutions and arrangements. In the State Department's own interests, our experts, and those in other functional areas, too, need to be first-class citizens in a culture that has operated differently in the past.

Many efforts are underway to see that these things happen. If we manage it, and I'm betting we can, the merger will prove to have been not only the right decision for the circumstances, but a good decision for the arms control cause and for the country. So we have grave new challenges and a new structure—not entirely to all arms controllers' satisfaction—to address them.

Then consider as well the added complications of START II ratification, Mr. Milosevic's exquisite timing, the forthcoming NATO summit, U.S. and Russian elections, the deadlock at the Conference on Disarmament [CD], the NPT Preparatory Committee [PrepCom] in April and the review conference next year, and numerous other events. You might easily conclude that the breaks have not been falling in arms control's favor.

These are not endeavors for the faint of heart or for those easily discouraged. People who see issues in bright colors or who like to pursue things in straight lines will be uncomfortable. But that only confirms what you already know: We live in complex times and in a dangerous world, one in which the preventive medicine of arms control is both more important than ever before, and harder.

We will be up to the task. Those who work to control arms and combat proliferation have shown repeatedly that they can shrug off adversity and thrive in hard times. Notwithstanding the obstacles, we will keep arms control and non-proliferation, with sound defense, at the center of our international security strategy as we advance America's interests and its safety as a new century begins. Thank you very much. [Back to top]


Questions and Answers

Q: Assuming that the administration's conditions for deployment of a national missile defense (regarding the nature of the threat, technical capability, cost, and impact on arms control) are met, or can be met, do you believe that a positive decision to deploy a nationwide defense will be taken in this administration?

Holum: I think it is quite possible that there will be an affirmative decision next June, but it would depend on all four of those conditions.

Q: Do you think it is possible to cooperate with Russia on the common equipment and procedures for missile defense, and if so, would you extend that to China also?

Holum: We've explored this at various times; I've been part of delegations going back to 1994, when we were talking about theater missile defense [TMD]. In fact, there are things under way now with the Russian Academy of Sciences and the Ballistic Missile Defense Organization. But I think it's quite unlikely that there would be across-the-board development of a common technology for a national missile defense. What they're working on are things like discriminating incoming warheads.

Q: And regarding China?

Holum: I think that's unlikely too. It's certainly a subject that comes up in our discussions with the Chinese. They don't like the idea of theater or national missile defense. But I don't foresee a collaborative effort on actual technology.

Q: What role will you as under secretary of state and the State Department have in the June 2000 decision on national missile defense deployment?

Holum: Each significant step that's been taken so far—for example, the decision to put money in the five-year defense program—was made by the president on the advice of the principals committee, which Secretary Albright and I participated in. I'm sure that will be the same when and if we get to this deployment decision.

Q: Following the elimination of ACDA, what is going to be the mechanism in the State Department for maintaining institutional memory on arms control issues?

Holum: You've focused on what is my biggest worry about this, because we are moving into a culture that is dominated by foreign service and by regional considerations. I have had conversations with the director general of the foreign service, with the secretary and deputy secretary, with the management of the department, with the Foreign Service Institute, and also with the other functional under secretaries, to work on a variety of ways to make sure we recognize, advance and protect civil service substantive expertise. There are a number of ways to do that, including making sure that these people have the same roles in international negotiations that the foreign service officers do.

This will not work—and a few years from now we will be thinking, How can we create a new Arms Control and Disarmament Agency?—if the arms control people who have been negotiating treaties end up writing talking points for foreign service officers. I'm confident that won't happen. But it's going to take continuous effort.

Secretary Albright recognizes, and others in the department do as well, that the real competition with the State Department in this sphere has not been ACDA. ACDA was adjacent, was convenient, and was digestible. The real competition is in other places in government: the Department of Defense, National Security Council, Department of Energy, and various other places that have been developing arms control expertise. If we don't retain and promote and advance and use effectively the experts that we have at ACDA, they'll disappear. They'll go other places. They'll be in demand, because they're the best there are, and the State Department will end up losing. So the State Department has an institutional interest in making this work.

Q: Do you have any assurance on when the hearings on your nomination to your new post might be held? If you're not confirmed, how long can you stay in office in an acting position?

Holum: I can't stay in the position at all in an acting position. This is a complicated legal question that has engaged ACDA's general counsel, State's legal adviser, and the Office of Legal Counsel in the Justice Department, and they've concluded that the Vacancies Act doesn't apply to this under secretaryship because it's a new position. I have to be a senior adviser to the secretary until I'm confirmed.

Confirmation hearings have not been scheduled. The secretary has talked to Senator Helms and Admiral Nance and I think they'll arrange something, probably in April. Senate Republicans are not trying to defeat the reorganization and all that goes along with it. It's partly Senator Helms' production as well.

Q: Since the administration will not negotiate START III until START II is ratified, how does the administration plan to move forward with Russia on issues relating to offensive weapons, as well as missile defense issues, in the meantime?

Holum: Your question is extremely important and a very good one. There are some legal limitations on our ability to pursue further reductions formally or informally beyond START II until it's ratified. Also, it will be very hard to discuss national missile defense in a vacuum. Obviously, the environment for strategic offensive arms reductions will have a big bearing on our prospects for success in renegotiating the ABM Treaty.

The true answer to your question is that we haven't made those decisions yet, in part because we don't know what (if any) ABM Treaty amendments we'll want to make. We won't know that until the architecture is decided, and that's a month or two or three away.

Q: If ratification of the Comprehensive Test Ban Treaty is not forthcoming, what are the likely consequences for next year's NPT review conference?

Holum: I think it'll be very tough. The PrepCom is going to be difficult this year because of the stalled condition of the START process. There will be increasing pressure by the time of next year's review conference. How that would manifest itself in terms of decision making is hard to say at this stage, but there are very severe intermediate consequences.

We're now in the position of pressing India and Pakistan to forgo options that we're preserving for ourselves if we don't ratify the test ban treaty; that certainly undercuts our diplomacy in South Asia. There's going to be a conference this fall of countries that have ratified to decide what to do about bringing the treaty into force. Our leadership on arms control and non-proliferation will be questioned if we haven't ratified the treaty by the time that happens.

Obviously the secretary and president have made clear our interest. What we need to do is get a date for a vote that we can organize around.

Q: If we ask India and Pakistan to give up their nuclear weapons, don't we have an obligation to actively promote nuclear disarmament and fulfill our Article VI obligation under the NPT? Have we taken any steps to do so?

Holum: We certainly have an Article VI obligation. It doesn't apply to India and Pakistan, because they're not members of the NPT, but it is nonetheless an international obligation that we need to pursue. I differ with the Indian approach—which a number of other nonaligned countries support—that this ought to be done in the Conference on Disarmament. I think a 61-member negotiation on the U.S. and Russian nuclear arsenals would not be a productive enterprise. While the pace of progress has been difficult and slow on the bilateral context, it would be slower and more convoluted if negotiations were among 61 countries in a consensus organization.

Q: How about among the nuclear powers?

Holum: That is, I think, more realistic, but I think it's not time yet. One of the things we do need to do is describe in a more collective way what the nuclear-weapon states are doing—that is, the rapid pace of reductions in the United States and Russia. We're running ahead of schedule on vehicle and warhead elimination for START I. The Russians are also ahead of schedule in eliminating systems required under START I. The French and the UK have also been scaling back their systems rather dramatically. China's the one country that is still modernizing, but it's a very small force.

It will take one or two more rounds of reductions bilaterally before we could have a formal five-party negotiation, but I think we certainly should be talking in those terms. There are regular P-5 [the five permanent members of the UN Security Council] discussions of nuclear issues in the CD context, and I think it's worth building on them.

Q: Last year the Chinese promised to study joining the Missile Technology Control Regime and not to provide support for weapons of mass destruction [WMD] systems in South Asia. Has China kept to that pledge regarding South Asia? And secondly, has there been any sign of progress on the Chinese side on joining MTCR? What is the likelihood of future progress if the Chinese are true to what they said about the significance of TMD deployment in East Asia?

Holum: The formulaic answer, which is the best we can do, is that we don't have any evidence or any reason to believe that the Chinese are not abiding by their commitments on supporting WMD programs in South Asia. That obviously leaves room for things we don't know about, but the indications are that they're complying.

On MTCR, they gave us a long list of very good questions last year—about what the implications of the regime are—which we have answered orally and also in writing. They have the process under active consideration, but they've given us no timetable for when they'll complete that process. They are very concerned about TMD on Taiwan, that kind of issue. Whether they will formally link those things or not I don't know.

Q: Do you see the Conference on Disarmament as a possible arena for an ad hoc committee to begin focusing on the technical requirements for nuclear disarmament? Could that perhaps help end the stalemate in the CD and provide evidence that the United States is interested?

Holum: I have to put on my personal hat because our position as an administration is that there's not much you should do in the CD, and there are good arguments for that. At the same time, there is, I personally think, some logic to the proposal that some countries have advanced that you could look at issues such as how to verify zero nuclear weapons. When you get to that stage, you are obviously talking about a global issue, whereas the process of reductions is, I think of necessity, a bilateral and then a five-party process.

At the end of the day you certainly are going to want to have some kind of an international, multilateral system to verify the elimination of nuclear weapons. So I think there's some logic to that. But we haven't embraced that idea.

Q: I wanted to compliment the administration in finally getting the highly enriched uranium deal at least temporarily fixed. But given the Russian statements that they're only going to be able to support a force of a few hundred warheads in the future, it's clear that there will be massively more excess highly enriched uranium in Russia. Why doesn't the administration offer to purchase additional quantities with government money instead of relying on the private market?

Holum: First of all, we have spent so much time on the first 500 tons. It really has been a convoluted effort, resolved in the end (in large part) because Senator Domenici and Congressman Obey were adamant about getting funds to buy the accumulated stocks of natural uranium.

We're also working in meetings with MINATOM Minister Adamov this week on plutonium disposition. When you think of the pace of destruction of plutonium, you see the same kind of long-term problem, because we're talking about very low rates of disposition for the first 50 tons that the president identified, let alone what comes beyond that. This underscores the importance, obviously, of not only further disposition efforts but protection, control and accounting for the material in the meantime. Since that's somewhat cheaper and less complicated, the big part of our focus will be there.

Q: The recent increase in funds for the Cooperative Threat Reduction program is really a restoration of contemplated cuts. Why doesn't the administration ask for a great deal more, even at the cost of not getting it from Congress, in order to draw attention to the problem?

Holum: We went through a very ambitious study during the course of the last year to identify good uses for resources in threat reduction. We certainly could use more than we requested—productively. But we ask Congress for only as much as the traffic will bear.

John Deutsch chaired a commission to look at the government's organization for dealing with non-proliferation, focusing in part on these particular problems: How do we come up with the necessary resources, and how do we manage the programs that are scattered among the State Department, Defense Department, Department of Energy, Commerce and other places, to make sure that we can make things happen? I suspect if we come up with a satisfactory answer, that might create stronger advocacy.

Nobody suggests much, other than different organization or money, that we already aren't doing in terms of programs. Among all the various agencies—and they do meet so that everybody knows what everybody else is doing—we are working the problem from every angle that anyone's been able to imagine. But nobody is authorized to talk about the whole thing. We do need to do a better job of explaining comprehensively what we are doing and what the stakes are. This in turn would likely generate more sympathy for resources.

Q: While it is U.S. policy to take the necessary steps to sign the Ottawa Treaty by 2006, President Clinton's budget request has money for a non-compliant landmine system called RADAM that would be, if the decision were made to deploy after 2006, hugely controversial. I wonder if you could comment on that. Secondly, Jonathan Dean has been working on a proposal for a series of three treaties dealing with the problem of conventional weapons systemically and globally; I wonder whether you've had a chance to look at that proposal and what you think about it.

Holum: I have had a chance to look at it because Jonathan sent a very detailed description of it and we responded. I'm concerned about the possibilities of dealing with conventional weapons on a global basis. There are some things you can do globally—illicit trafficking in firearms and focusing on the most hazardous weapons, those most indiscriminate or most dangerous to civilians, like anti-personnel landmines [APLs]. But we've taken the approach, and I've yet to be persuaded away from this, that the greatest hope lies in regional and country-specific approaches, such as confidence-building and constraints, the OAS convention we're working on, and so on.

There's good reason for impatience because some areas are fairly far advanced, while others are woefully behind. We've supported a variety of locally based initiatives—the Mali initiative and a number of others—that are aimed at collecting firearms and reducing the weapons that should be of major concern because they're the ones that are causing most of the casualties around the world. But I still remain to be convinced on the global aspect of it.

APLs are an extraordinarily painful issue for us because we have conflicting humanitarian interests. In Korea, APLs are important. Elsewhere, mixed-munitions are important, and the question becomes whether we can come up with a treaty-compliant approach to mixed-munitions. I know a lot of thoughtful people suggest that RADAM would not be treaty-compliant. We'll just have to continue to work on that problem. It depends on a technical solution that I think, as of now, isn't visible to us, but that is being worked on under the president's instruction by the Department of Defense.

At the same time, recognizing that we are—for the near term, at least—going to be outside the Ottawa Convention, there are things that are very important to do. One is to ratify the landmine protocol to the Convention on Conventional Weapons, which does focus on indiscriminate landmines—non-self-destruct landmines, non-detectable landmines. It's a very important step and has broad participation. We need to bring that into force. The humanitarian and demining effort is extremely important; it is getting a lot of resources and is expanding to more countries and, I think, is a constructive response. In addition, we want to negotiate in the Conference on Disarmament a ban on exports of landmines. Those three steps take a big bite out of the problem. It's not completely satisfactory, I know, but it's very significant.

Q: On the agenda of the German coalition government is a no-first-use policy on nuclear weapons. What are the prospects that this position will gain broader international support?

Holum: I don't think it will. I suspect it will be discussed over time, but I don't think it's likely to be adopted in a NATO context. It's even less likely in Asia, where it causes more alarm than in Europe among allies. I know the arguments for making a change; I also don't see it as a major priority at this stage. There are a lot of other things I want to get done before I turn to that.

Q: Should we be optimistic about a successful adaptation of the CFE Treaty?

Holum: I'm optimistic. I think we will come to terms on adaptation. We made a great deal of headway in the last few months on issues that four or five months ago looked hopeless. That's why I think there's a realistic prospect. We still have to solve some elements of the flank issue and some concerns on the center as well, but I think that we've got a good shot.

START I Cuts on Track; U.S. Violations Charged

On October 5, Ambassador Steven Steiner, U.S. representative to the Joint Compliance and Inspection Commission (JCIC), told the Senate Foreign Relations Committee that Russia, Belarus, Kazakhstan and Ukraine have gone below START I numerical limits for deployed strategic nuclear delivery vehicles more than three years ahead of schedule. The four states "have verifiably eliminated more than 300 former Soviet ICBMs, 290 [ICBM] launchers, 170 submarine-launched ballistic missiles [SLBMs], 130 SLBM launchers and 47 heavy bombers," said Steiner. According to the latest START I memorandum of understanding, these four states have collectively deployed 1,577 strategic nuclear delivery vehicles (23 fewer than the treaty's 1,600 limit) and 7,540 strategic warheads (1,540 more than the treaty's 6,000 limit).

According to Russian press accounts in late August, however, Russia has accused the United States of violating START I. Moscow has reportedly raised a series of complaints regarding the number of warheads attributed to Trident II SLBMs, the U.S. unwillingness to allow complete inspections of Trident IIs to verify their actual loadings and the U.S. refusal to allow inspections of certain facilities at the Silverdale submarine base in Washington. Russia has also charged the United States with improperly destroying MX ICBMs under the treaty and with making repairs to B-1B bombers at operational bases rather than designated repair depots.

A U.S. official familiar with the issue would not comment on the specific accusations, but did say that the United States believes it is in compliance with START I. Russia has raised its compliance concerns at the JCIC, where they remain under discussion.

Defense Threat Reduction Agency Created

On October 1, Secretary of Defense William Cohen announced the merger of several Pentagon agencies to form the new Defense Threat Reduction Agency (DTRA), whose mission is to combat the danger of weapons of mass destruction. "At least 25 countries are in the process of developing nuclear, biological or chemical weapons and the means to deliver them," warned Cohen at DTRA's headquarters near Dulles International Airport. "We must confront these threats in places like Baghdad before they come to our shores."

The formation of DTRA, recommended by the 1997 Defense Reform Initiative, consolidates the Defense Technology Security Agency, Defense Special Weapons Agency, and On-Site Inspection Agency. DTRA's eight directorates include Nuclear Support, On-Site Inspection, Cooperative Threat Reduction, Technology Security, Special Weapons Technology, Chem-Bio Defense, Counterproliferation, and Force Protection. DTRA Director Dr. Jay C. Davis, former associate director of the Lawrence Livermore National Laboratory, will report to the under secretary of defense for acquisition and technology. The new agency has roughly 2,100 employees and a fiscal year 1999 budget of about $1.9 billion.

START I Cuts on Track; U.S. Violations Charged

On October 5, Ambassador Steven Steiner, U.S. representative to the Joint Compliance and Inspection Commission (JCIC), told the Senate Foreign Relations Committee that Russia, Belarus, Kazakhstan and Ukraine have gone below START I numerical limits for deployed strategic nuclear delivery vehicles more than three years ahead of schedule. The four states "have verifiably eliminated more than 300 former Soviet ICBMs, 290 [ICBM] launchers, 170 submarine-launched ballistic missiles [SLBMs], 130 SLBM launchers and 47 heavy bombers," said Steiner. According to the latest START I memorandum of understanding, these four states have collectively deployed 1,577 strategic nuclear delivery vehicles (23 fewer than the treaty's 1,600 limit) and 7,540 strategic warheads (1,540 more than the treaty's 6,000 limit).

According to Russian press accounts in late August, however, Russia has accused the United States of violating START I. Moscow has reportedly raised a series of complaints regarding the number of warheads attributed to Trident II SLBMs, the U.S. unwillingness to allow complete inspections of Trident IIs to verify their actual loadings and the U.S. refusal to allow inspections of certain facilities at the Silverdale submarine base in Washington. Russia has also charged the United States with improperly destroying MX ICBMs under the treaty and with making repairs to B-1B bombers at operational bases rather than designated repair depots.

A U.S. official familiar with the issue would not comment on the specific accusations, but did say that the United States believes it is in compliance with START I. Russia has raised its compliance concerns at the JCIC, where they remain under discussion.

'Not with a bang but a whimper'

Almost unnoticed, the Arms Control and Disarmament Agency (ACDA) ends on April 1, 1999. Provisions buried in the 1999 omnibus appropriations bill formally integrated the once independent agency into the State Department. While long accepted as a fait accompli, the lack of comment on the fundamental change in the arms control policy process resulting from ACDA's demise is deeply disturbing.

Although Senator Jesse Helms has taken credit for abolishing ACDA, Secretaries of State Warren Christopher and Madeleine Albright were both anxious to integrate the agency into the State Department. So when the opportunity arose to fold ACDA into State as part of the deal to get a Senate vote on the Chemical Weapons Convention, it was an easy sacrifice that the administration could claim was part of the "reinvention of government."

President Kennedy created ACDA to provide presidents with arms control options as alternatives to the nuclear arms race and to provide an institutional base for the negotiation and implementation of agreements. While recognizing the pre-eminence of the secretary of state in dealing with foreign countries, Kennedy rejected the option of locating the new agency within the State Department because it was dominated by a foreign service bureaucracy more concerned with bilateral relations with other nations than alternative security strategies. As a compromise, ACDA was established as an independent agency reporting to both the president and the secretary of state.

The new agency quickly demonstrated the wisdom of Kennedy's decision. During the Johnson administration, ACDA's persistence in negotiating the nuclear Non-Proliferation Treaty (NPT), despite frequent State Department reservations, made it possible for Johnson to direct the completion of the NPT over the objections of major NATO allies. During the Nixon regime, an independent ACDA headed a strong interagency team that negotiated the ABM Treaty and SALT I with the Soviet Union despite a less-than-enthusiastic Defense Department and an apathetic State Department. During the Carter administration, a strong ACDA made it possible to pursue Carter's ambitious arms control agenda, which would have succeeded but for the Soviet invasion of Afghanistan.

ACDA's effectiveness has always been dependent on the president's interest in arms control and its own leadership. During the Reagan years, the agency's directors were as often opponents as advocates of arms control. During the Bush administration, Secretary of State James Baker and a small group of senior officials made considerable progress on agreements and parallel unilateral initiatives with the Soviet Union. Today, however, the arms control agenda has become too complex both in designing initiatives and implementing agreements to be handled without a strong institutional base.

During the Clinton administration, ACDA has been systematically marginalized by failure to fill its senior positions and excluding it from key policy meetings. Nevertheless, the agency took the lead in delivering a consensus approval for the indefinite extension of the NPT and the successful negotiation of the Comprehensive Test Ban (CTB) Treaty, the Clinton administration's only major arms control initiative.

Fortuitously, the current top State Department officials are knowledgeable and supportive of arms control, but this will normally not be the case. Under the present stewardship, State has reacted pragmatically and generally wisely to difficult challenges, such as the North Korean nuclear program and the situation in South Asia following the Indian and Pakistani nuclear tests, successfully balancing nuclear non-proliferation with other foreign policy objectives. However, in advocating NATO expansion, with likely eventual inclusion of the Baltic states, the same officials produced a predictably strong Russian reaction, jeopardizing deep reductions in the Russian nuclear arsenal.

The transfer of ACDA, lock, stock and barrel to the State Department has stifled even whimpers from the departing staff. How long this arrangement will survive remains to be seen. The new office will provide attractive posts for foreign service personnel, and the question remains whether it will retain the institutional memory and technical expertise necessary for effective policy formulation.

As ACDA fades into history, those who inherit its responsibilities must not forget why it was created. The State Department will have to inform the president on arms control opportunities, even if they raise foreign policy problems, and of the possible negative impacts of proposed foreign policy actions, such as NATO expansion, on arms control objectives. And the National Security Council staff will have a greater responsibility to make certain the president receives a balanced assessment of arms control issues and options. Only time will tell whether Kennedy was right in believing this arrangement would inadequately serve U.S. security interests.

Privatizing U.S. National Security: The U.S.-Russian HEU Deal At Risk

Just before their end of summit press conference on September 2, Russian President Boris Yeltsin informed President Bill Clinton that he was going to announce the end of the historic "HEU deal" signed by the two countries in 1993. Under this unprecedented government-to-government agreement, the United States agreed to purchase, over a 20 year period, 500 metric tons of highly enriched uranium (HEU) from dismantled Soviet weapons that Russia would "blend down" to low-enriched uranium (LEU) for sale to the United States as fuel for civilian nuclear reactors. The deal—worth an estimated $12 billion to Moscow—would guarantee that the Russian HEU, enough to build more than 20,000 nuclear weapons, would never again be used for weapons purposes.

The HEU deal, initiated by President George Bush and signed by President Clinton in February 1993, arose from a proposal to U.S. and Russian officials in October 1991 (only weeks before the dissolution of the Soviet Union)< 1 > and subsequently became the centerpiece of U.S. efforts to address what is arguably the most extreme proliferation threat since the beginning of the nuclear age: the possibility that nuclear weapons, the fissile material from them, or the technical skills necessary to make them would be diverted from the rapidly decaying Soviet military industrial complex to rogue states, terrorist groups or countries with nuclear ambitions. To date, Russia has shipped LEU made from about 50 tons of HEU (10 percent of the total)—the equivalent of about 2,000 nuclear weapons.

Because Russia's closed "nuclear cities" that are responsible for making nuclear weapons are unavoidably involved in the destruction of these weapons and the purification and blending down of HEU, the U.S.-Russian deal ensures that money flows to precisely those places and people that present the largest proliferation threat to the world. The need to verify that the LEU that Russia sells under the deal truly comes from HEU has given the United States the opportunity not just to monitor the destruction of Russian weapons-usable fissile material, the so called transparency process, but also to assist Moscow in improving fissile material protection, control and accounting systems that further protect inventories of these materials. In addition, U.S. national laboratories have developed active relationships with an increasing number of Russian "nuclear cities," an engagement that builds peaceful relationships with the most capable of Cold War adversaries and the most dangerous potential contributors to global nuclear weapons proliferation. These otherwise intrusive measures—and new initiatives on plutonium and closed cities—are possible largely because of the more than one half billion dollars per year Russia gains from the HEU deal.

In short, the HEU deal benefits Russia, the United States and international security. Why then did Yeltsin threaten to end the deal? The answer lies in recurrent failures on the part of both governments to implement the deal. While this failure is due in part to Russian bumbling and commercial incompetence, it is the United States that has created the real impediments to success. Despite warnings and opportunities to intervene, Washington has consistently put domestic commercial and financial interests, most notably those involved in the recent privatization of the U.S. Enrichment Corporation (USEC), ahead of U.S. national security interests. If the deal is to be repaired, the United States must reassume the responsibility it has abdicated. If decisive action is not taken, shipments will end, perhaps permanently.

 

An Unusual Deal

The basic terms of the HEU deal are outlined in an agreement signed by the United States and Russia on February 18, 1993. However, the HEU deal is unusual in that it calls for the parties to carry out their obligations through commercial mechanisms. Under the agreement, each government was to appoint an "executive agent" that would carry out commercial implementation of the deal through contracts for the purchase and sale of the Russian LEU.

Russia assigned implementation to its Ministry of Atomic Energy (MINATOM), which would utilize its experienced government trade organization AO Techsnabexport (TENEX). In a fateful move, the United States, which initially made the Department of Energy (DOE) its executive agent, committed to make USEC—a newly created, government-owned corporation—its ultimate executive agent. Created by the Energy Policy Act of 1992 and slated for eventual sale to private investors, USEC was the result of a 20 year effort to make the government's uranium enrichment operations more "business-like."

Unfortunately, actions taken by U.S. government officials—some of whom later joined USEC—to assure the corporation profitability and increase its value at privatization have systematically worked against the HEU deal. National security officials, skilled in negotiating agreements and wielding U.S. power in conventional ways, have either failed in their oversight of the commercial implementation at home, been misled, or simply been outvoted in the administration.

While some administration officials now take the position that the United States has no financial responsibility for the HEU deal, and that Russia must simply take what it can get, the 1993 agreement is quite clear that the ultimate responsibility belongs to the governments. The agreement specifies that the "[commercial] terms (including price), shall be subject to approval by the Parties." The United States committed to "use the LEU converted from HEU in such a manner as to minimize disruptions in the market and maximize the overall economic benefit for both Parties." Such provisions show the responsibility of both governments to manage carefully the commercial implementation of the HEU deal. From the Russian perspective, the United States has failed to do so.

The Uranium Problem

While the United States is committed under the government to government agreement to purchase LEU from Russian HEU and the initial contract was for the purchase of LEU, that is not how things have turned out. The Russian LEU contains two inputs of value: the natural uranium (as uranium hexafluoride, or UF6) and the "enrichment" services (measured in separative work units, or SWUs). (See sidebar.)

The current problem is that Russia is not being paid for the uranium component, which is a state asset of the Russian government, like gold. The enrichment component is being purchased by USEC, with that money going to MINATOM. Because it is not possible to ship a SWU (except as an input of enriched uranium) and because Russian law prohibits export of state assets without a contract for sale and payment within 180 days, LEU derived from HEU cannot be exported from Russia without a uranium sales agreement. Thus, the whole HEU deal rests on finding a workable solution to the uranium problem.

The uranium problem has been present from the beginning of the deal. Following the intergovernmental agreement, an implementing contract for the HEU deal was negotiated with MINATOM and TENEX by DOE Deputy Assistant Secretary Philip Sewell in May 1993. That contract called for DOE to purchase Russian LEU but to pay immediately only for the enrichment component. The uranium component (actually, an equivalent amount of feedstock material that USEC customers had previously delivered for enrichment) was to be paid for when USEC "used or sold" the uranium equivalent or at the conclusion of the deal, which might be as late as 2013. At the time the contract was negotiated, it was expected that USEC would be assigned the contract after the company came into existence in July 1993. Indeed, Sewell left government for USEC several months later and the final contract was signed by USEC and TENEX at the January 1994 Moscow summit.

This defective LEU purchase contract, which Russia contends did not carry out the intent of the 1993 agreement, was designed more to benefit the commercial interests of USEC than to implement the intergovernmental agreement. USEC would get control of the uranium component of Russia's LEU without having to pay for it until the company wanted to. Of course, USEC would not be able to resell the accumulating inventory of displaced feedstock for some years because of trade restrictions on the sale in the United States of Russian uranium. USEC could have used the uranium for a process called "overfeeding," that is, using more uranium in the enrichment process to reduce consumption of electricity. DOE had been overfeeding the two gaseous diffusion plants it owned for years, a practice that was assumed to continue when the HEU deal was proposed. However, subsidies provided to USEC (in particular, DOE's below-market-value electricity contracts) eliminated incentives to overfeed and it soon became apparent that Russia would not get paid for its uranium anytime soon.

Thus, even from the beginning, the United States did not act to ensure payment to Russia for the uranium component of the LEU, which was estimated to be worth up to $4 billion over the course of the agreement. But USEC supporters were too clever by half: the corporation would, two decades hence, have to pay for the Russian uranium it held title to under the contract, a major liability that would interfere with the ultimate privatization of the corporation.

The uranium problem was addressed, but not fully solved, by the USEC Privatization Act, which Congress passed and President Clinton signed into law on April 26, 1996.< 2 > The legislation called for the United States to purchase the uranium component of the Russian LEU delivered in 1995 and 1996 and, overriding the defective LEU purchase contract, returned title to the uranium content (rather, the displaced uranium set aside by USEC) to Russia for it to sell on its own beginning January 1, 1997. To facilitate Russian uranium sales, the legislation overrode trade restrictions imposed on Russia in 1992 (as a result of an anti dumping action against uranium exporters from the former Soviet Union) by creating a new and gradually expanding quota for Russian sales of uranium to the United States.

By returning title of the displaced uranium to Russia, USEC was relieved of a $4 billion liability on its books, but Russia was left with a substantial amount of uranium to sell. When annual Russian LEU shipments to the United States are scheduled to reach 30 metric tons HEU equivalent in 1999, the uranium component will reach 9,000 metric tons (23.4 million pounds U3O8) annually. By comparison, the United States consumes about 17,000 tons of uranium each year, while other Western nations together consume about 36,000 tons.

Moscow will face serious obstacles to selling such large amounts of uranium in the current market. Both the United States and the European Community impose restrictions on the amount of Russian uranium that can be sold, and Japan is reluctant to buy Russian uranium because of ongoing territorial disputes with Moscow. In addition, because most utilities purchase uranium under long term contracts that cover requirements for several years forward, there is little near term market for new sales of any kind of uranium. Thus, Russia will not be able to sell its uranium directly to utility end users, but only to companies that are willing to purchase the uranium and hold it for future sales when market demand and trade restrictions allow.

On June 2, 1998, Russia reached a preliminary agreement with a consortium of three Western uranium companies (CAMECO of Canada, COGEMA of France and NUKEM of Germany) to purchase its uranium at USEC for a 10 year period, including the 11,000 tons remaining from LEU deliveries to USEC in 1997 and 1998. Under the preliminary agreement, Russia would receive payment promptly when the uranium contained in the LEU delivered to the United States was returned to Russian control at USEC. The companies offered to pay the going market price, less a profit margin when prices rose above $29 per kilogram of uranium (as UF6).

For this deal to make commercial sense, the price of uranium would have to be expected to increase at a rate at least as great as the interest rate used to finance the purchase and holding of the uranium. Based on their own market analyses, the companies clearly believed that uranium prices would rise, particularly if the sale of the Russian uranium was handled responsibly, and that they would not have to hold the Russian uranium for more than a few years. After an extensive review, the Russian government approved the draft agreement by issuing a formal decree. In its own effort to be clever and put pressure on the companies to pay a minimum price in a final contract, MINATOM asked that the decree establish $29 per kilogram of uranium as the minimal acceptable price.

 

USEC Privatization

Unfortunately, just as Russia was approving its agreement with the uranium companies, the United States was completing its plans for USEC's privatization. Unbeknownst to all but those directly involved, USEC had convinced mid-level DOE and Office of Management and Budget (OMB) officials to transfer large amounts of DOE inventories of uranium to USEC to increase the company's value. The existence of this uranium was not generally known until May, when merger and acquisition bidders involved in USEC's privatization tried to find buyers for the uranium as part of their plans to finance the company's acquisition.

On May 20, the author alerted national security officials at the State Department and the National Security Council to the uranium transfers, and the potential negative implications for the HEU deal of USEC sales of uranium in competition with Russia. National security officials subsequently met with DOE and Treasury Department officials to discuss the implications of possible USEC uranium sales for the HEU deal. However, Treasury and White House officials pushing USEC privatization overruled any actions. The reasons given ranged from the parochial to the absurd: nothing could be done that might threaten the privatization, and government officials were forbidden to discuss any matters concerning USEC (even among themselves) during the "quiet period" mandated by the Securities and Exchange Commission (SEC). The latter turned out to be a fabrication—SEC rules apply only to company management's public disclosures and only after a securities offering is filed with the SEC. Neither was the case.

On June 26, Senator Pete Domenici (R-NM), who co authored the USEC Privatization Act, wrote to national security advisor Samuel Berger (with a copy to Secretary of the Treasury Robert Rubin) stating his concern that "sale of [the USEC uranium inventory] would negatively impact the sale of HEU Agreement derived natural uranium and could significantly reduce the Russian Federation's incentive to continue the [HEU] Agreement." Domenici concluded: "I have worked for over a decade to privatize the USEC. But if circumstances are different than what we have assumed, you need to take those new circumstances into account before a decision to privatize is made." Three days later, the Treasury Department proceeded to file the prospectus for the sale of USEC with the SEC, starting the countdown to the sale of USEC shares to private investors.< 3 > Domenici never received an answer to his letter.

If the president's highest national security advisor could, or would, do nothing, Secretary Rubin should have been in a position to weigh the foreign policy implications of USEC privatization against the domestic forces promoting privatization. But on June 24, Rubin delegated to the undersecretary for domestic finance the necessary authority for all matters relating to the privatization of USEC.< 4 > Whatever Rubin's reasons, he delegated the decision-making authority to the government's leading cheerleader for USEC privatization, a move that had the full support of more than 60 Wall Street investment firms set to profit from the sale of USEC.

The June 29 SEC filing confirmed not only the huge size of USEC's uranium stockpile, but also the fact that USEC was stockpiling additional uranium at one of the plants it was leasing from DOE by a process called "underfeeding."< 5 > To make matters worse, the SEC filing committed USEC to sell more than 60 million pounds of uranium on an accelerated schedule, before July 2005. A subsequent leak of an internal USEC planning document revealed plans to sell nearly 90 million pounds in this period, reaching a peak level of more than 22 million pounds in 2002.< 6 > If USEC and its administration supporters had intended to sabotage Russia's pending agreement with the three uranium companies, they could not have done more. USEC's planned sales totally changed the economics of any commercial deal to buy and hold Russian uranium. Not only would the holding time, and thus holding costs, increase, but the ultimate price received would be lower because of the additional supply to the market.

Perhaps coincidentally, DOE, under pressure from OMB (which strongly supported USEC privatization and DOE uranium transfers to the company), advanced a proposal in May to sell about 30 million pounds of its uranium inventories (in addition to that already transferred to USEC) between 1998 and 2003. New projections of uranium prices by industry analysts and the independent Energy Information Administration soon showed reductions of up to 40 percent in future uranium prices.< 7 > Not surprisingly, in the face of USEC plans and DOE uncertainties, the three Western companies re evaluated the draft agreement and informed Russian authorities it would have to be revised.

As USEC's privatization moved forward, Russia also made clear its serious reservations about the future of the HEU deal. On July 17, Russian Minister of Atomic Energy Yevgeniy Adamov wrote a letter to Domenici, who had visited Moscow in early July and discussed the deal with Russian officials. Adamov wrote:

 

We are not sure that after actual privatization USEC as a private company will be able to fulfill its commitments of the U.S. executive agent under this Agreement and ensure further acceptance and full payment for the low enriched uranium supplied…. We think that this constitutes deviation of the U.S. Party from the implementation of agreed provisions of the Agreement and affect its fulfillment. In such situation Russia will bear significant financial losses and this will result in strengthening the negative reaction of the Russian legislators both with respect to the implementation of this Agreement and other arrangements with the USA on the issues of nuclear arms control.

Adamov was undoubtedly referring to the opposition in the Russia Duma (the lower house of parliament) to the ratification of START II, to intrusive transparency and security measures, and pending legislation to end the HEU deal itself. Adamov's warning, which foreshadowed Yeltsin's threat to end the deal at the upcoming Moscow summit, should have made the dangers clear to the United States.

Additional interagency meetings on the HEU deal broke down because OMB officials insisted that President Clinton had approved a go ahead on privatization on July 25, 1997, and had not altered this order. In fact, Clinton reportedly had read a press article questioning privatization and forwarded it to his advisors, asking: "Are we sure we are doing the right thing?" Despite U.S. officials' prior knowledge of the impending problem and sober warnings from responsible Russian officials, the privatization juggernaut plowed on, raising questions about the source of the pressure to proceed at any cost, including U.S. national security interests. On July 28, USEC became a private company.

 

The Current Situation

At the Moscow summit, Clinton managed to dissuade Yeltsin from withdrawing from the HEU deal by assuring him that the United States would find a solution to the problems. Adamov and Energy Secretary Bill Richardson were appointed to coordinate the effort. However, Richardson was soon handicapped by differences within the administration about how to deal with the uranium feed issue. For a long time, White House officials steadfastly refused to consider a U.S. purchase of any part of the uranium feed component, arguing that Moscow must recognize that market circumstances had changed (even if the United States changed them) and therefore must settle for much less money from commercial buyers. In effect, these officials contended that the United States had no responsibility under the government-to-government agreement, and that Russia was on its own in the commercial implementation of the HEU deal.

This position arises from a fundamentally flawed assumption about the HEU deal. When it was first proposed, it was thought that the HEU deal would be "budget-neutral." At that time, it was the U.S. government, through DOE, that was to purchase the Russian LEU. DOE would then resell the LEU without requiring an appropriation by a Congress that was trying to balance the U.S. federal budget. It was thus politically and budgetarily necessary to assert that DOE would incur no costs when it entered into the contract. In fact, under government accounting rules for the enrichment enterprise, the HEU deal would not only be budget-neutral, but "profitable." The price the United States would pay for the uranium content of the Russian LEU would be recovered by reduced costs (according to government accounting rules at least) from overfeeding the enrichment plants, and the price paid for the SWUs would be far below the full-cost recovery values attributed to operation of the enrichment plants.

In privatizing the U.S. enrichment enterprise and transferring large amounts of uranium, administration officials themselves destroyed the budget neutrality of the HEU deal. The transfer of below-market-value electricity supplies to the new government corporation and the failure to charge a capital cost per SWU for use of the enrichment plants not only destroyed any incentive to overfeed and thus buy the uranium, but also subsidized USEC production costs for SWUs so that they were below what was promised Russia. The privatization of USEC compounded this problem, since the private corporation—unlike the government corporation—must make a profit in reselling the Russian SWUs. As discussed below, it is now impossible to pay Russia a fair market value for its enrichment services. Transfer of amounts of uranium greater than was statutorily authorized and aggressive USEC uranium sales plans made it impossible for Russia to sell the uranium from HEU at prices even close to those originally agreed.< 8

If U.S. actions taken in connection with USEC privatization have altered not just the economic factors, but also the fundamental assumptions of the deal, it is important to ask what responsibilities the United States retains under the original government-to-government agreement. In the world of commercial agreements, the answer would be clear: the United States would be obligated to compensate Russia for any lost income. Of course, Russia lost the Cold War and is desperate for money. Perhaps U.S. officials believe Russia will just have to accept the dictates of the victors.

For its part, Russia holds the United States responsible for purchasing the LEU and will not continue to ship without payment. Russia is undoubtedly counting on the importance of the HEU deal to the United States to force a resolution. However, this is a dangerous game of brinkmanship: Washington may push Moscow so far that it is impossible to revive the deal. The inability of policy makers to perceive the consequences of their actions, or inaction, or to act to fix things, does not give confidence. Nor is it easy to identify anyone in Russia who would champion a resumption of the deal once it ended.

 

Domenici's Proposal

In a September 8 letter to Clinton, Domenici wrestled with this dilemma and came down on the side of prudence. Commenting that he did not think Russia could bend further on terms and that changed political circumstances in Russia would make it difficult for ministries involved to accept much lower prices, Domenici suggested that the United States take partial responsibility for the situation and intervene in a limited way.

Under Domenici's proposal, the United States would, in effect, purchase about 28 million pounds of uranium from Russia's 1997 and 1998 LEU shipments—at a cost of about $300 million—conditional on Moscow reaching a long term commercial agreement for the uranium component of its future deliveries. The United States would hold the Russian uranium and remaining DOE stocks of uranium off the market for 10 years. The hope was that removing an estimated 58 million pounds of uranium from the market (28 million pounds of Russian uranium and 30 million pounds of DOE inventory) would partly reverse the negative market impact of uranium transfers to USEC. Domenici also called for the United States to define terms for returning the uranium component of the LEU to Russia for use in the blending down of HEU or as fuel in Soviet design reactors in Russia and elsewhere.

Essentially, Domenici invited Clinton to join in a bipartisan effort to strengthen the HEU deal and signaled congressional receptiveness to a budget request under the president's emergency appropriation powers. Such a presidential request would not be unusual; Congress finally settled on more than $20 billion of such emergency requests. On September 22, Richardson and Adamov, meeting in Vienna, issued a joint report on the status of implementation of the HEU deal.< 9 The framework proposed in the report was intended to facilitate a purchase agreement between Russia and the Western companies. The framework included most of the Domenici proposal, but no commitment to purchase the uranium from 1997 and 1998 deliveries. Subsequently, after a great debate at high levels, the administration agreed to accept a congressional appropriation of $325 million for the 1997 and 1998 deliveries, which was passed into law on October 21.

The resolution of the uranium problem is still uncertain. Russia continues to insist on prices for its uranium that are now significantly above market and refuses to recognize that commercial buyers will have to pay even lower amounts due to the high costs of holding the uranium until market and trade conditions allow it to be resold. Some in the administration still resist spending the funds authorized by Congress and seem unwilling to accept limits on DOE sales of uranium. Between Russian inflexibility, administration equivocation, and worsening uranium market conditions, it will be hard to reach a commercial deal that relieves the United States of all future responsibility for the HEU deal.

 

The Future of the Deal

If the uranium problem can be solved, the next challenge to the HEU deal will come from USEC's obligation to pay Russia for the enrichment component of its LEU deliveries. As a government owned corporation, USEC was—at least in principle—under the control of the U.S. government. The United States could ask USEC to pay for Russian enrichment services even if the cost was greater than the company's own cost of production and the corporation made no profit on the Russian SWUs. With privatization, USEC has no strong incentives to continue its role in the HEU deal. In fact, according to revelations in its SEC filing, USEC has a strong incentive to quit its role and even to seek to end the HEU deal.

Moreover, even when it was a government-owned corporation, USEC put its business interests ahead of the HEU deal. In 1996, Russia asked USEC to increase its 1997 purchases of LEU from 10 tons HEU equivalent to 18 tons. According to a protocol, or summary, of discussions in Moscow in July (in which no non-USEC U.S. government official participated), "USEC responded that because of power and labor commitments and level of demand for SWUs, this could not be done in 1997," offering instead to purchase the HEU equivalent of 12 tons.< 10 USEC officials asked U.S. government officials to approve the 12 ton level, but failed to inform them of the Russian offer to deliver more. Russian officials naturally assumed that USEC was speaking on behalf of the U.S. government. Without outside intervention, Washington might never have detected this subversion of the HEU deal.

The dominance of USEC's commercial interests has been amplified by privatization, enrichment market developments and continued ineffective oversight by government officials. According to the company's SEC filing: "Unit costs of SWU purchased under the Russian HEU Contract are substantially higher than the Company's marginal cost of production." Increasingly large volumes of Russian SWUs result in USEC having to operate its two enrichment plants at inefficient levels, raising unit costs on the SWUs that USEC does produce. The plants are most efficient at a production level of about 13 million SWUs per year. USEC sells 11 million to 13 million SWUs per year, but, by next year, Russian LEU deliveries will reach 5.5 million SWUs, meaning that USEC will have to operate its plants far below their optimum production levels.

Meanwhile, USEC's portfolio of old high priced SWU contracts, inherited from DOE, are ending and market prices for new contracts are declining. Under its present contract with Russia, USEC must, in 1999, pay about $88.90 per SWU (including transportation)—more than the current price for new SWU contracts, implying that USEC must market Russian SWUs on which it can make no profit. When USEC was owned by the U.S. government, the United States could simply tell USEC to buy and resell the SWUs even if it did not make a profit. Obviously, privatization has changed this; private shareholders demand a profit.

Thus, the best outcome, by far, for USEC is for the HEU deal to fail entirely; that is, for the Duma or the Russian government, in nationalistic frustration, to stop exporting its sensitive national treasure. Based on the above SWU-cost factors and the higher prices expected for uranium if Russian uranium were kept from the market, USEC's profits would be approximately three times as high as at present if the HEU deal ended completely.< 11 USEC's private investors and the Wall Street firms that still hold stock could see an increase in their return on investment from about 7 percent to 22 percent, or, equivalently, a trebling of share price.

The transfer of large amounts of uranium to USEC by its administration supporters, together with USEC leaks of aggressive sales plans, nearly caused an end to the HEU deal on September 2. Failure of the United States to ensure payment for Russia's uranium may yet guarantee that result. Given declining SWU prices and increased deliveries, it is inevitable that USEC will seek a deferral of Russian SWU purchases and a substantial reduction in the price paid to Russia to ensure the company's profitability. The U.S. government would either have to explain to Russia why it has to sell at a price well below the market price—so a private American company can make a profit—or subsidize that profit from taxpayer funds. Of course, it may not come to such a clear conclusion: there are many ways to frustrate performance of a contract to the point that Russia finds continuing the HEU deal unacceptable.

 

Solutions

The United States must recognize that its own actions have severely undermined the HEU deal and that the assumption that the deal can be accomplished at no net cost to the United States is a serious mistake. In subsidizing and otherwise biasing USEC financial incentives against the SWU part of the deal and by transferring large amounts of uranium to the corporation without limits on sales, Washington may have increased the value received by the Treasury Department for USEC's sale but created a threat to national security that will most likely require continued expenditure of funds to alleviate. But even if the United States cannot shift the entire cost of the deal to the private sector, the HEU deal is a good buy, perhaps the most cost effective national security initiative in history. Trillions of dollars were spent in the Cold War to counter the threat of tens of thousands of Soviet nuclear weapons. If the United States can forever remove large numbers of such weapons from the world for less than the cost of one B-1 bomber, it will be money well spent.

There are several immediate tasks for the administration. The first is to use the uranium-funding "carrot" provided by Congress to secure the best possible long-term commercial agreement for the sale of Russian uranium beginning in 1999, and to formalize such an agreement in a way that ensures that it will continue in the future. To do so, the United States needs to convince Russian officials to be realistic about market conditions and the low salability of its large volumes of uranium, recognizing the Russian complaint that U.S. actions—from USEC transfers to trade restrictions—have significantly worsened the market situation for Moscow.

The second is to improve U.S. oversight over the HEU deal to a level commensurate with its national importance and U.S. commitments under the intergovernmental agreement. The president appointed an interagency oversight committee, but it has failed to recognize problems and take timely action. This failure is due partly to inadequate staffing and lack of information, partly to the inattention by national security officials preoccupied with other crises, and partly to the lack of influence of national security advisors in the White House policy process.

An immediate need is better information about what is happening in the HEU deal. The memorandum of agreement between the U.S. government and USEC defers excessively to USEC commercial interests.< 12 The United States should not depend on limited self reporting by the corporation about what is happening in the HEU deal. USEC's position, endorsed by the agreement, is that all information connected with the HEU deal is proprietary, preventing public as well as government scrutiny of developments—including those initiated by USEC—that involve profound public and national security interests. In short, privatizing USEC appears to have resulted in the privatization of an important aspect of U.S. national security. At the very least, a U.S. government observer should participate in all negotiations and meetings relating to the HEU deal and all documents should routinely be provided to a more knowledgeable and attentive oversight process.

With regard to the impending SWU problem, the United States could take several actions to alter USEC's economic incentives so that it was more willing to continue the HEU deal. After all, the United States owns the enrichment plants that USEC leases for only a few million dollars a year, and DOE holds the below market-value electricity contracts that benefit the company. One measure would be to increase power costs; another would be to impose an increasing fee per SWU for use of the enrichment plants above a certain level of production, so that USEC would have to pay more to produce SWUs that would otherwise replace Russian SWUs. Such a fee would also correct the artificial incentives that lead USEC to underfeed its enrichment plants and thus accumulate more uranium. If this cannot be done, the United States should itself (through DOE, for instance) replace USEC as executive agent for the HEU deal, taking over direct relations with Russia and reselling Russian SWUs to the highest bidders. If politically necessary, USEC might be given a right of first refusal to purchase the Russian SWUs.

Alternatively, while one must always be wary of institutional invention, creating a government owned corporation that could take on nuclear security tasks on a multi year basis, without the constraints of annual budget cycles and with a certain amount of commercial intelligence and flexibility, offers a number of advantages. Indeed, USEC was not a bad idea in principle; it was largely the pursuit of privatization and inadequate supervision that led to problems. The creation of a USEC II, for example, would provide the United States with a vehicle with which to bargain with both Russia and commercial parties to achieve the most efficient implementation of the HEU deal, including the ability to enter into long term commercial agreements that are impossible for government agencies. Such a government-owned corporation could also take on other post-Cold War tasks, including those relating to plutonium disposition, securing (including by direct purchase) smaller quantities of HEU and plutonium at diverse sites across the former Soviet Union, and other nuclear security matters that require sustained attention and funding.


NOTES

1. Author's meeting with Soviet Minister of Atomic Energy Viktor Mikhailov, October 18, 1991; Thomas L. Neff, "A Grand Uranium Bargain," The New York Times, October 24, 1991, and author's subsequent meetings in Washington and Moscow in 1991 and 1992.

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2. The USEC Privatization Act (Public Law 104-134) treatment of uranium reflected a delicate compromise between the interests of USEC, the domestic uranium mining industry, and the HEU deal. The legislation imposes a 4-million-pound annual limit on the sale of uranium transferred under the act to USEC. However, Congress was not aware of other transfers made by DOE to USEC, sales of which USEC contends are not limited by the act. U.S. uranium producers have brought legal action against DOE, contending that the other transfers were illegal.

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3. The SEC "S-1" filing is available at http://www.sec.gov or from Morgan Stanley Dean Witter at (212)761-4000.

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4. Treasury Order Number 103-04, Federal Register, June 30, 1998, pp. 35644-35645.

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5. By using additional electric power, USEC can produce LEU using less uranium than its utility customers actually deliver, keeping the remainder. Underfeeding is commercially feasible for USEC because DOE resells its below-market-value electric power supplies to USEC at cost.

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6.Nuclear Fuel, Vol. 23, No. 14, July 13, 1998, p. 1.

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7. "The Uranium Market Outlook," Quarterly Market Report, Uranium Exchange Company, July 1998; and U.S. Energy Information Administration, unpublished analyses, July to September 1998.

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8. The original contract negotiated by DOE listed prices of $28.50 per kilogram of uranium and $82.10 per SWU, or $780 per kilogram LEU (enriched to 4.4 percent U-235). The current market price for uranium is about $25 per kilogram, while the value if purchased and held for later resale is about $15 per kilogram due to substantial holding costs.

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9. The text of the report was obtained unofficially and published in Nuclear Fuel, Vol. 23, No. 20, October 5, 1998, p. 6.

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10. "Protocol of Meetings Between MINATOM, Techsnabexport and USEC in Moscow," July 8-11, 1996.

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11. Thomas L. Neff, "The U.S.-Russia HEU Deal: Strategic Realities," presentation to the Nuclear Energy Institute Forum, July 29, 1998.

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12. Under the April 28, 1997 memorandum of agreement between the U.S. government and USEC, the United States would only be able to detect actions, like those taken in 1996 by USEC to limit purchases of HEU, if USEC chose to report them.

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Thomas L. Neff is a senior member of the Center for International Studies at the Massachusetts Institute of Technology in Cambridge.

Just before their end of summit press conference on September 2, Russian President Boris Yeltsin informed President Bill Clinton that he was going to announce the end of the historic "HEU deal" signed by the two countries in 1993.

The 1996 ICJ Opinion and the Legality of Nuclear Weapons

June/July 1998

To the Editor:

In "Dismantling the Concept of 'Weapons of Mass Destruction'" (April 1998), Wolfgang Panofsky makes the following inaccurate statements regarding the legality of the use or threatened use of nuclear weapons and, in particular, the July 1996 International Court of Justice (ICJ) advisory opinion on this question. (See ACT, July 1996.)

1. "[P]ossession and some uses of nuclear weapons by the five nuclear-weapon states remain legal…."

The ICJ ruled that the use or threatened use of nuclear weapons was generally illegal, but could not determine whether there would be an exception to this general finding in the extreme circumstance of self-defense, when the very survival of a state was at stake. Some commentators have erroneously assumed that this indecision over the exceptional circumstance is the same as a declaration of legality in such circumstance. The court, however, clearly refuted this when it did not support the view of certain nuclear-weapon states that the use of "clean," low-yield tactical nuclear weapons accurately targeted on military targets would be legal in such extreme circumstance. (ICJ Opinion, paragraph 94).

Then-ICJ President Mohammed Bedjaoui said the court's inability to determine absolute illegality in the extreme circumstance "can in no manner be interpreted to mean that it is leaving the door ajar to recognition of the legality of the threat or use of nuclear weapons." Bedjaoui noted that this opinion differed considerably from the often cited Lotus case, which held that what was not expressly prohibited by international law was therefore permitted. "The Court, in this opinion is showing much more circumspection than its predecessor in the Lotus case in asserting today that what is not expressly prohibited by international law is not therefore authorized," he said.

2. "[T]he ICJ ruled (11-3) that [existing] specific injunctions [against the threat or use of nuclear weapons] did not constitute 'comprehensive and universal prohibition' of the threat or use of nuclear weapons."

Mr. Panofsky here reverses the order of the ICJ findings, thus changing their meaning. The court declared firstly that there was no comprehensive and universal prohibition on the use or threatened use of nuclear weapons as such, but then followed this by concluding (unanimously) that specific laws of peace and war, including Articles 2 and 51 of the UN Charter and international humanitarian law, apply to nuclear weapons, and that the threat or use of nuclear weapons would thus be generally illegal.

3. "However, neither the nuclear-weapon states nor the 'threshold' states have formally accepted the jurisdiction of the ICJ in this matter."

Mr. Panofsky confuses contentious cases (disputes between states, for example), in which acceptance of ICJ jurisdiction is necessary, with advisory opinions, in which acceptance of ICJ jurisdiction by states is not necessary. The July 1996 ruling was an advisory opinion, not a contentious case. Even so, Britain, a nuclear-weapon state, and India, a "threshold" state, have accepted jurisdiction of the ICJ in contentious cases.

Finally, Mr. Panofsky makes no mention of the most important decision of the ICJ, which was adopted unanimously and does impact on possession of nuclear weapons: "There exists an obligation [in international law] to pursue in good faith and bring to a conclusion negotiations leading to nuclear disarmament in all its aspects under strict and effective international control." By refusing to implement this obligation, the nuclear-weapon states are setting a bad example of non-compliance with international law, which will continue to stimulate other states to develop or acquire nuclear weapons.

Alyn Ware
Executive Director, Lawyers' Committee on Nuclear Policy

 

The author responds

The references in my article were intended to document that the ICJ's advisory opinion did not establish a broad international norm prohibiting nuclear weapons, comparable to the norms established by the international conventions on chemical and biological weapons.

With regard to my first statement, Mr. Ware does not challenge it as it applies to "possession," and agrees that in respect to "uses" the ICJ could not determine whether there would be an exception (to illegality) in the extreme circumstance of self-defense, when the very survival of a state is at stake. As a layman, this signals to me that the court agrees that possession and some uses of nuclear weapons remain legal. Mr. Ware's formulation is not in conflict with my statement.

On the second point, I stated that the specific injunctions in certain international treaties against the use or threatened use of nuclear weapons "did not constitute a comprehensive and universal prohibition of the threat of use of nuclear weapons." Mr. Ware agrees with my citation of the ICJ opinion, but then proceeds to list a series of specific laws of war under which use of nuclear weapons would be illegal. To a layperson, our differences seem to be analogous to the distinction between a glass being half empty or half full.

My third statement—that the nuclear-weapon states had not "formally accepted the jurisdiction of the ICJ" on the issue of nuclear weapons policy—is correct. In fact, the United States, Britain and France opposed the ICJ taking jurisdiction in this matter, arguing that the case was not appropriate for an advisory opinion.

Finally, Mr. Ware accuses me of a sin of omission by not explicitly citing the portion of the ICJ advisory opinion that there exists an obligation to pursue in good faith steps leading to nuclear disarmament. Indeed, that obligation is codified in the nuclear Non-Proliferation Treaty and was reaffirmed during the treaty's indefinite extension in 1995. Thus, this part of the ICJ opinion is hardly novel. Needless to say, I fully share the concern that the pace of nuclear disarmament is woefully slow.

I suggest that little good is served to signal differences in opinion when, in fact, such differences are insignificant and a common goal is shared. Wolfgang K. H. Panofsky

The 1996 ICJ Opinion and the Legality of Nuclear Weapons

Challenges of Nuclear Stockpile Stewardship Under A Comprehensive Test Ban

March 1998

By Harold P. Smith, Jr. and Richard S. Soll

The nuclear weapons policy and posture of the United States face unique political and technical challenges as the country balances a requirement to maintain its nuclear stockpile against the obligation and desire to provide strong leadership in arms control and non-proliferation. In a world of uncertain dangers and evolving security needs, nuclear weapons and the robust deterrent deriving from them remain fundamental to U.S. national security, although at a level sharply reduced from that required during the Cold War. As Under Secretary of Defense for Policy Walter B. Slocombe told a congressional panel last year, "nuclear weapons will continue to fulfill an essential role in meeting our deterrence requirements and assuring our non-proliferation objectives" until the conditions for the complete elimination of nuclear weapons in the context of general and complete disarmament are realized.(1)

When President Bill Clinton signed the Comprehensive Test Ban Treaty (CTBT) September 24, 1996, at the UN General Assembly in New York, after nearly three years of negotiations, a new phase of the nuclear age began. The treaty eliminated one of the primary means of maintaining the safety and reliability of nuclear weapons, but the requirement to maintain a high level of confidence in weapons safety and reliability remains. Although the treaty's "early" entry into force may be blocked by certain states whose ratification is necessary (such as India and Pakistan), their possible continued intransigence will have no effect on nuclear testing by the five acknowledged nuclear powers (the United States, Britain, China, France and Russia), which have all signed the treaty. In addition to the principle of international law that signatories should not violate the objectives of a treaty once it has been signed, each nuclear-weapon state has already declared a unilateral moratorium.

One of the key events in the treaty's negotiations came in August 1995, when President Clinton announced that the United States would seek a true "zero-yield" test ban. At the same time, he reaffirmed the vital role of nuclear weapons in national security: "I consider the maintenance of a safe and reliable nuclear stockpile to be a supreme national interest of the United States."(2)

The maintenance of safety, security and confidence in the nuclear deterrent, while the United States continues to provide global leadership in arms control and non-proliferation, will require new and innovative perspectives and processes as the stockpile becomes the oldest in the 50-year history of the nuclear age.

In the absence of underground nuclear test explosions and with no new U.S. nuclear weapons in development, the future arbiter of confidence in the nuclear arsenal will be the Stockpile Stewardship and Management Program (SSMP), conducted jointly by the Department of Energy (DOE) and the Department of Defense (DOD). The program specifies activities to maintain a high level of confidence that the nuclear stockpile will meet DOD requirements. Rather than relying on the empiricism of testing, the program provides a set of initiatives that will promote an understanding of the fundamental sciences of nuclear explosives and the effects of aging on those explosives. The approach is new, parts of it are relatively unfamiliar, and the program will require an estimated 15 years to reach maturity; thus, the United States could incur some risk as it progresses along the learning curve of science-based stewardship. Nonetheless, several SSMP-related initiatives are already underway, including efforts in stockpile surveillance, the evaluation of aging effects and the development of advanced computational technologies.

The SSMP is tied to a new certification procedure. Each year, DOD and DOE must review the stockpile and recertify its safety and reliability. In the event that the secretary of defense and the secretary of energy determine that a high level of confidence in a particular type of nuclear weapon deemed critical to our nuclear deterrent can no longer be certified, the president, in consultation with Congress, would be prepared to withdraw from the CTBT under the "supreme national interest" clause in order to conduct whatever testing would be required. Obviously, the Department of Defense would play a critical role in such a momentous step.

The successful implementation of the new SSMP approach will require an understanding of the issues raised below and more importantly, a sustained commitment by the current and future administrations and Congresses to maintaining the safety and reliability of the U.S. nuclear deterrent while sustaining and promoting a prohibition on nuclear testing. Political skill will be just as important as technical skill, given the U.S. need to balance the disparate capabilities and interests of the recognized nuclear "haves" (the five weapon states); undeclared regional nuclear powers (India, Israel and Pakistan); various aspirants to nuclear weapons status; and the remaining countries. While this latter group embraces the concept of a denuclearized world, its members have an understandable concern regarding their own security in a world of sovereign powers, some of which have or could have nuclear weapons.

 

A World Without Testing

Articles in the press would have one believe that the debate within the executive branch on a test ban was long, bitter and divisive, with DOD single-mindedly arguing vociferously that low-yield testing equivalent to a few hundred tons of high explosives was essential to the security of the country. In fact, DOD's recommendation was to pursue a comprehensive ban that included the clause in the draft treaty text regarding a party's right to withdraw from the accord if it were to decide that extraordinary events related to the subject matter of the treaty jeopardized its "supreme interests," a right that is included in most arms control agreements. The president had no difficulty accepting the recommendation for a variety of reasons, not the least of which was the thorough briefing by DOE and DOD of all the key decision-makers on the technical advantages and disadvantages of low-yield testing. Rather than bitter and divisive, the road to the decision was an excellent example of good government: collegial, thorough and timely, and the decision itself was sound.

Make no mistake; if the only goal were a technical one—to ensure a reliable stockpile—testing offers the best path for any acceptable level of confidence. However, other political and national security goals, whose importance ranks with reliability, can only be met by not testing. Therefore, the correct question is: Can the United States maintain an acceptable level of confidence at acceptable expense without recourse to nuclear testing? There is good reason to conclude that it can.

First of all, some of the country's best and brightest scientists have been working on nuclear weapons for 50 years. The weapons have been extensively tested and, as a result, there is a comprehensive database that was optimized during the Cold War with the presumption of continued testing and with a new system always on the drawing boards. Now, we are able to draw upon that data, experience and talent. Most importantly, the United States has no requirement to develop advanced new designs of nuclear weapons to increase performance. While the role of nuclear test explosions in developing new, increased-performance designs is essential, it is less important in maintaining the status quo, which includes refurbishing, rebuilding or remanufacturing existing weapons as necessary, or making necessary modifications to improve their safety, reliability and effectiveness. Whether nuclear test explosions can be dismissed altogether for maintaining the enduring stockpile is the challenge that we face.

Britain's experience during its self-imposed testing moratorium from 1965 to 1974 offers a critical counter-example of what can happen even to a very competent party. During the moratorium, the British relied primarily on computer simulation to provide the information they needed concerning their arsenal. However, the advent of ballistic missile defense (BMD) using nuclear weapons on interceptors changed the requirements; the British feared that their warheads would be vulnerable to such nuclear explosions, thus forcing them to design new warheads to meet the new and more demanding environment. Under the 1958 U.S.-British nuclear cooperation agreement, the British revealed to the United States their initial concepts for a new warhead design that was derived solely on the basis of computer simulation. However, U.S. weapons designers, who had already had the benefit of testing warheads under conditions simulating the environment of nuclear BMD forces, concluded that there were performance deficiencies in the British waread design. The British database lacked the new and critical insight that American testing had provided during the British moratorium.

Most experts agree that new designs to increase performance require testing, but is it also true that the United States can maintain an enduring stockpile without benefit of nuclear test explosions? That is what the Stockpile Stewardship and Management Program will address.

 

The Role of DOD

The Department of Defense must be both a faithful partner and a smart customer of DOE. Of the first, there can be no doubt; the latter remains to be determined. In hearing after hearing before various congressional committees, DOD officials have consistently and effectively supported DOE and its budgets to implement the stockpile stewardship program.

With regard to being a smart customer, it is interesting to note what has changed insofar as the nuclear stockpile and nuclear test explosions are concerned. In the past, acceptance of DOE's certification that the weapon was reliable was based on the very evident, indeed awesome, results of a nuclear explosion. Now, DOD will have to become a smart customer, one possessing the expertise to examine and question DOE reports of simulations, comparisons with archival data and non-nuclear experiments in much the same manner as a prime contractor must judge the performance of highly specialized subcontractors. The country cannot and should not provide duplicate capability in each department, but DOD must be able to accept responsibly or, if necessary, reject authoritatively a DOE certification of a particular nuclear weapon. A failed nuclear test would have been more than sufficient in the past. It will not be available in the future.

The nuclear weapon is the only system DOD procures for which it does not already possess the requisite "in-house" technological expertise. That situation will have to change, but it is an easier change today than previously. Veteran designers from the weapons laboratories will be available, as they are today within DOE, to lend their expertise to DOD's portion of the certification process. In the longer term, DOD must ensure the cultivation and availability of a new generation of nuclear weapon engineers trained in warhead design, that is, engineers capable of providing oversight of suitability of the warhead provided by DOE.

To accomplish this, DOD personnel will participate in the forensics, by which weapons are taken from the stockpile and dissected in order to determine whether they are aging predictably and/or acceptably. Under a process called "dual revalidation," DOD personnel will work closely with their DOE colleagues on two independent teams, each led by personnel from one of the two weapon design laboratories (Lawrence Livermore National Laboratory and Los Alamos National Laboratory) to ensure mutual, thorough and independent understanding of each nuclear weapon system. Thanks to the good sense of former Secretary of Energy Hazel O'Leary, who set aside a potentially damaging recommendation of the Galvin Committee,(3) there will continue to be two weapon design laboratories to ensure independence and to provide directly to DOD two unabridged reports on each weapon system.

Hopefully, from this kind of peer review, with its two independent reports to an educated and cooperative customer, we will understand whether our weapons will continue to be safe, secure and reliable. Peer review may not be a substitute for testing, but given the political importance and advanages of banning nuclear test explosions, it is the next best thing. The United States has successfully encouraged its allies to do the same.

The Department of Defense is depending on DOE to develop and maintain the forensics to identify and evaluate potential safety and reliability problems in U.S. weapons, and to build and maintain the facilities and capabilities to refurbish, rebuild or remanufacture the weapons as required. These are not easy tasks: some materials and manufacturing techniques will not be acceptable or will be unavailable, and original vendors will have disappeared. Nonetheless, despite tight budgets and possible complications incurred in remanufacture, the two departments must find a way to provide the necessary replacements and must ensure that the exercise of the supreme national interest clause, under which the president can decide to forgo the terms of the CTB Treaty and resume testing, will not be necessary.

To carry out this mandate, DOD will support whatever DOE budgets are required, but DOD should not provide the funding. Maintenance of the nuclear arsenal, for sound and long-standing reasons, has never been the province of the military. It should not become so today.

 

Deterrence Under a CTB

Deterrence, unlike art, is not solely in the eye of the beholder; it is also in the eye of the holder. Deterrence is as much dependent on the will and confidence of the deterrer as on the fear of the deterree. If the government were to lose confidence in the reliability and safety of its stockpile and if such loss of confidence were to become known, deterrence could vanish. Therefore, one of the principal vulnerabilities of dual revalidation, strangely enough, is the would-be whistle blower who claims that a given weapon is unreliable or unsafe. Unlike Cassandra, who was correct but not credible, one worries about the malcontent or the misinformed who is credible but not correct in claiming that a given weapon will not work or is not safe. Such news will inevitably get into the media and justifiably cause public concern. Eventually, candidates for office may play on public anxiety by using these allegations in much the same way that the purported but non-existent "missile gap" distorted the presidential election of 1960.

At the same time, the United States will not have the ability to test and thus to show whether the whistle blower is a malcontent or a Cassandra. The ensuing debate could degenerate into the world of the "schoolmen" of the Middle Ages where, this time, the debates will not be over angels dancing on heads of pins but over endless computations, and the nuclear weapons experts, upon whom the government must rely, will lose the confidence of the public and the national leadership. While the concern is real, there remains, nonetheless, no other way than to maintain a steadfast commitment to competent, independent review by peers and knowledgeable evaluation of those reviews by the customer. To be forewarned of the problem is, perhaps, to be forearmed.

 

Debunking Misconceptions

There are two misconceptions clouding the CTB debate concerning U.S. relations with the other nuclear-weapon states. The first is that the French would not have had to conduct their most recent series of tests (during 1995 and 1996) in the South Pacific if the United States had been willing to provide them its computer simulations. The second is the assumption that because the United States has superior computational capability, the CTBT will give the United States a clear advantage over Russia in an era without testing.

Allegedly, the French would not have needed to test nuclear weapons in the South Pacific if the United States had provided them its impressive computational models, which, it is claimed, have become the archive of all the information, all the knowledge, that one needs to develop and maintain nuclear weapons. The assertion is simply not true. The models or computer codes are only as valuable as the databases upon which they are based. Application of U.S. codes to the French database would be of little value to the French, nor would their codes be of any significant benefit to the United States.

The second misconception presumes that the absence of testing will give the United States a significant advantage over Russia. This seems highly unlikely, however, because the challenge of maintaining a nuclear deterrent and adhering to the CTB Treaty is essentially the same for Washington as it is for Moscow. The United States may have begun development of nuclear weapons a few years before the Russians, but more than 50 years have now passed with the result that any U.S. lead has disappeared. Russia's best and brightest scientists have been working on its weapons for the same half century—more than enough time to overcome the U.S. head start, which itself was essentially nullified by effective espionage. The Russians have extensively tested their weapons, with the result that they have a comparable database. The allegation that the United States has a lead in computation is probably true, but computation is by no means everything. Cleverness still counts, as do mathematical and physical insight, and the United States has no monopoly on such insights.

It is important to understand, further, that computational capability is only one of the tools available to nuclear-weapon states for maintaining a high level of confidence in their respective nuclear weapon stockpiles. Other tools include rigorous programs of weapon inspections, laboratory tests and experiments, simulators, and other theoretical and experimental research. In addition, the capability to produce, refurbish and remanufacture nuclear weapons has been and will continue to be, under the CTBT, indispensable to maintaining confidence in the stockpile. This entails the active participation of creative individuals with a thorough understanding of the design and development of nuclear weapons. Russia has outstanding capabilities in all of these areas.

This brings us to the fundamental question: Will the CTBT impact equally U.S. and Russian capabilities to maintain their respective stockpiles? Historically, U.S. practice had been to design, develop and deploy a new warhead for each new weapon system. Given the evolving national security requirements of the time, such replacements occurred well before the end of the useful stockpile lifetimes of the replaced warheads, thus allowing the United States to avoid, for the most part, age-related stockpile problems. In addition, the United States resolved some serious stockpile problems by developing new and improved replacement nuclear warheads which, of course, required testing, sometimes of an extensive nature. Testing was also used to answer definitively questions regarding weapon performance that could not be resolved by other means.

Whether the Russians depended on nuclear testing to maintain confidence in their stockpile to the same extent as the United States is difficult to say. There is reason to believe that they did ot. We think that the Russians ensured stockpile reliability through conservative weapon designs that included lavish use of fissile material and high explosives and by remanufacturing nuclear weapons at periodic intervals before age-related problems appeared. In summary, one can conclude that over the years the Russians (as well as the other nuclear-weapon states) have developed effective tools that work for them to ensure the level of confidence they require in their nuclear weapons under a CTBT.

The United States must find ways to discourage all parties from building the massive arsenals that were held by the United States and the Soviet Union during the Cold War. The world does not need another half century of anxiety about the triggering of Armageddon, either on a global level or regionally.

The CTB Treaty, as a corollary to the nuclear Non-Proliferation Treaty (NPT), is a required step. The United States could not have argued so strongly during the NPT extension conference to make the treaty permanent if it had not committed itself to no further testing. The United States was placed in that position by moral and pragmatic considerations, and the president's decision on a test ban was the correct one.

Using the various tools which our scientists have developed and continue to develop, the United States will be able to ensure through the Stockpile Stewardship and Management Program that its stockpile is eminently safe, secure and reliable. The United States should do everything feasible—as this administration is doing—to persuade the other four declared nuclear powers and the other countries of the world that the CTB Treaty can enhance the security of us all. Adherence to the treaty is in the best interests of all sovereign powers, even though the nuclear terrorist may remain undeterred no matter how reliable or large our arsenal. By never losing sight of our vital national security interests and the global requirement for nuclear stability, the United States can make the treaty a reality while, at the same time, making the maintenance of a robust deterrent as certain as science will permit.


NOTES

1. Statement before the Senate Governmental Affairs Subcommittee on International Security, Proliferation and Federal Services, Hearing on Nuclear Weapons and Deterrence, February 12, 1997. [Back to (1)]

2. Statement by President Bill Clinton released by the White House, Office of the Press Secretary, August 11, 1995. [Back to (2)]

3. Robert Galvin, Secretary of Energy Advisory Board, "Alternative Futures for the Department of Energy National Laboratories," February 1995. [Back to (3)]

 


Harold P. Smith, Jr. was assistant to the secretary of defense for nuclear, chemical and biological defense programs from June 1993 to January 1998, where he was responsible for nuclear matters, including stockpile management and implementation of the CTB Treaty. Richard S. Soll is senior scientist and head of special projects at Science Applications International Corportation's Center for Verification Research in Springfield, VA.

Challenges of Nuclear Stockpile Stewardship Under A Comprehensive Test Ban

U.S., Russian Missile Commanders Agree to New Transparency Measures

GENERAL EUGENE Habiger, commander in chief of U.S. Strategic Command, and Colonel General Vladimir Yakovlev, head of the Russian Strategic Rocket Forces, have agreed to an exchange of officers for the purpose of observing each other's nuclear command and control procedures. In a November 4 Defense Department briefing, Habiger outlined the nature of these exchanges and indicated that, on the basis of his observations and conversations with high level Russian officials during his October 22 28 visit to Russia, he is confident that Moscow's nuclear arsenal is safe and secure.

During his trip, Habiger examined a nuclear weapons storage facility at Kostroma, a rail mobile SS 24 ICBM base located approximately 300 kilometers northeast of Moscow. Habiger said he was impressed with its safety and security procedures and was assured that Kostroma was "representative" of ICBM bases throughout Russia. As an example of these security measures, he said access to nuclear weapons in Russia requires the presence of three people, whereas the United States has a two person policy.

Under the proposed exchanges, which could begin within the next few weeks, a team of four or five Russian specialists would visit a U.S. ICBM base to observe the safety and security procedures instituted at nuclear weapon storage facilities. A team of U.S. specialists would also have similar access in Russia. Habiger and Yakovlev also agreed to establish a so called "shadow program," under which Russia would send the equivalent of a wing commander, a squadron commander, a flight commander and a missile crew member to the United States to shadow their respective counterparts for a one week period. A similar U.S. team would pay a reciprocal visit to a Russian missile base.

Habiger said he also had access to various Russian nuclear command and control centers, from the national level down to the unit level. In an apparent effort to alleviate lingering concerns about an accidental or unauthorized Russian nuclear launch, he stated that these centers seek to function in a "fail safe" mode, whereby any one of the centers (even at the unit level) can inhibit the launch of an ICBM.

During his Pentagon briefing, Habiger also discussed Russia's plans to modernize its strategic nuclear forces. He said the single warhead SS 27, which will constitute the backbone of the Russian ICBM force under START II, is expected to achieve initial operational capability around the middle of 1998. Habiger noted that Russia laid the keel for a new class of ballistic missile submarines (known as the Borey) in the fall of 1996, which is expected to become operational around 2005. As for its bomber force, he said Russia has a research and development program for a new air launched cruise missile and that new Blackjack bombers may come on line in the near future.

Habiger noted that the Russians did not modernize their strategic forces during the 1980s when the United States was moving forward with systems such as the B 2 bomber, the Trident submarine and the corresponding D 5 ballistic missile. As a result, he pointed out that Russia is pushing hard for a START III agreement in part because the service life of its systems, including the SS 18 ICBM, is "coming to an end."

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