BEYOND NUNN-LUGAR:

CURBING THE NEXT WAVE OF WEAPONS

PROLIFERATION THREATS FROM RUSSIA

Edited by

Henry D. Sokolski

and

Thomas Riisager

Nonproliferation Policy Education Center

April 2002
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ISBN 1-58487-086-9

ii
CONTENTS

Introduction

Henry D. Sokolski ··················v

Acknowledgements · · · · · · · · · · · · · · · · · · · · xi

Chapter 1. Beyond Nunn-Lugar: Curbing the

Next Wave of Weapons Proliferation Threats

from Russia

Working Group on U.S.-Russian

Nonproliferation Cooperation············1

Chapter 2. The Foundations of Russian

Strategic Power and Capabilities

Stephen J. Blank · · · · · · · · · · · · · · · · · · 25

Chapter 3. Russian Rule and the Regional Military

Industrial Complexes

Ariel Cohen· · · · · · · · · · · · · · · · · · · · · 57

Chapter 4. The Health and Future

of Russia’s Population

Murray Feshbach · · · · · · · · · · · · · · · · · 83

Chapter 5. New Metrics for Denuclearization

Thomas B. Cochran · · · · · · · · · · · · · · · · 99

Chapter 6. Demilitarizing Russian Weapons

Scientists: The Challenge

Mark Kramer · · · · · · · · · · · · · · · · · · · 115

Chapter 7. Defense Conversion: How Far

Can Russia Expand Small and

Medium Enterprises?

Matthew Partan ················· 195

Chapter 8. Turning the Next Generation

of Russians Away from Weapons Work

Thomas Riisager · · · · · · · · · · · · · · · · · 241

About the Contributors · · · · · · · · · · · · · · · · · 259

iii
INTRODUCTION

Although the present book never intended to be quite so

timely, Beyond Nunn-Lugar: Curbing the Next Wave of

Weapons Proliferation Threats from Russia is one book that,

coming so soon after the events of September 11, 2001, and

shortly before President Bush’s Russian summit, should

find a ready audience. The essays in the book were

originally commissioned by the Nonproliferation Policy

Education Center (NPEC) as part of a year-long study on

the future of U.S.-Russian nonproliferation cooperation.

What makes the book different from other studies of

U.S.-Russian cooperation is its reliance on competitive

strategies.1

Originally devised as a business management tool and

subsequently used by the Pentagon to guide its military

planning against the Soviet Union, the analytical approach

based on competitive strategies requires analysts to

evaluate long-term trends, 10 to 20 years out. Rather than

beginning with one’s own aims and strategies, however,

competitive strategies demands that analysts first

understand the objectives, strengths, and weaknesses of

competitors and other key parties. A key objective of

competitive strategies is to detail how best to pit one’s

strengths against a competitor’s enduring weaknesses in a

series of moves and countermoves. The goal is to devise

strategies that force one’s competitor to spend more time

and resources shoring up his weaknesses than in taking

offensive action.

Although businesses and other organizations generally

use competitive strategies analysis to secure advantage

over their challengers, it also can be used to help them

identify beneficial opportunities for cooperation. To date,

this has not been the approach U.S. officials have taken on

nonproliferation cooperation with Russia. Instead, they

have assumed that the specifics of cooperation should be

v
determined by whatever goals and strategies Russia and

the United States share. This book takes a very different

approach. The authors first focus on how Russia’s and

America’s proliferation-related strategies and goals differ.

They then identify each nation’s relevant strengths and

weaknesses and determine where these might best be

mated to produce new forms of cooperation.

An example of what this kind of analysis is capable of

producing can be found in the first chapter, the final report

of the competitive strategies working group on U.S.-

Russian nonproliferation cooperation. Here the different

goals of each nation regarding medical and health services

are identified. Russia still has a good number of biological

weapons-related experts that it has yet to find civilian

employment for, but a relatively poor level of medical

services. It also has a population whose health is seriously

deteriorating and a Russian president who wants to change

this. Finally, although the availability of medical services is

very low, Russia still has a fairly competent, functioning

public health system.

In contrast, provision of medical services in the United

States is quite high, but America’s public health system is

barely functional. Unlike Russia, it has few, if any,

biological weapons experts, but it is very concerned about

being able to detect the use of biological weapons and the

spread of dangerous diseases and pathogens within

America and from other nations (including Russia).

After reflecting on these issues and the commissioned

research of health demographer Murray Feshbach reported

in Chapter 4 (“The Health and Future of Russia’s

Population”), the working group focused on the prospects for

U.S.-Russian cooperation on health monitoring both to

enhance the health of Russia’s population and to increase

the chances of detecting the spread of dangerous diseases

caused by either nature or the hand of man. One of the

nation’s leading health surveillance experts, Dr. Alan

Zelicoff of Sandia National Laboratory, was brought in to

vi
brief the group about a health monitoring system already

operating in New Mexico known as Rapid Syndrome

Validation Project, or RSVP.

RSVP uses computers, touch-screen entry, and the

Internet to enable physicians to make speedy reports to

public health authorities when they encounter patients who

have a particular set of symptoms. A physician’s report can

be filed in less than a minute, assumes no prior knowledge of

exotic diseases, and can address over 90 percent of the

diseases a biological-weapons attack might spread. The

system is also cheap to deploy—an entire global system of

10,000 reporting stations could be put in place for between

10 and 20 million dollars.

After learning this and more about RSVP, the working

group recommended that the U.S. Government support

RSVP’s deployment in Russia as a cooperative threat

reduction effort and that the United States use biological

weapons experts at Russia’s former biological weapons

research laboratories to set up and run the system. NPEC

staff subsequently briefed this recommendation to U.S.

officials in the Departments of Defense and Energy. As a

result, both departments agreed early in 2002 to fund

deployment of RSVP in Russia and several former Soviet

Republics.

The working group also made several other

recommendations. One set had to do with how best to

account for Russian nuclear weapons materials and to help

pay for reducing the threats they and other Russian

strategic weapons activities present. Discussion of this set

of recommendations, which focused on allowing Russia to

earn money storing U.S.-origin spent fuel from East Asia

and Europe in exchange for better data on its nuclear

inventory and the use of profits to help pay for important

Nunn-Lugar programs, also can be found in Chapter 1. In

making these recommendations, the working group

benefited from the analyses of Army War College researcher

Dr. Stephen Blank (“The Foundations of Russian Strategic

vii
Power and Capabilities,” Chapter 2); of Heritage

Foundation’s Russian Studies Director Dr. Ariel Cohen

(“Russian Rule and the Regional Military Industrial

Complexes,” Chapter 3); and of the Natural Resource

Defense Council’s Dr. Thomas Cochran (“New Metrics for

Denuclearization,” Chapter 5).

Finally, the working group made a set of

recommendations regarding the next generation of Russian

strategic weapons workers. This set of recommendations,

which focused on increasing the quantity and quality of

Russian and Western student exchanges, turned heavily on

the analysis found in Chapter 6 by Professor Mark Kramer

of Harvard University (“Demilitarizing Russian Weapons

Scientists: The Challenge”); in Chapter 7 by Centra

Technologies’ Matthew Partan (“Defense Conversion: How

Far Can Russia Expand Small and Medium Enterprises?”);

and Chapter 8 by this book’s coeditor and NPEC’s

Wohlstetter Fellow, Thomas Riisager (“Turning the Next

Generation of Russians Away from Weapons Work”).

None of these chapters makes for breezy reading.

However, given how high the costs of U.S.-Russian

nonproliferation cooperation failure might be—terrorist

access to weapons materials and the further proliferation of

strategic arms to unstable, hostile states—they are all too

timely and deserve to be read with care.

HENRY D. SOKOLSKI

Executive Director

Nonproliferation Policy Education

Center

viii
ENDNOTE - INTRODUCTION

1. Henry D. Sokolski, ed., Prevailing in a Well-Armed World,

Carlisle Barracks, PA: Strategic Studies Institute, March 2000, pp.

1-26.

ix
ACKNOWLEDGEMENTS

Because this volume is the result of a year-long study of

the future of U.S.-Russian nonproliferation cooperation,

more than just authors and editors were required. First, the

project itself had to be funded. Here, as has been the case

since the inception of the Nonproliferation Policy Education

Center (NPEC), the Smith Richardson Foundation

underwrote nearly the entire effort. The balance was

secured from the U.S. Air Force’s Institute of National

Security Studies. Without the generous support of these

two foundations, there would have been no project. In

addition, the current and previous chairman of the Army

War College’s Department of National Security and

Strategy—Professors Robert “Robin” Dorff and Joseph

Cerami—played a critical role in securing the support of the

U.S. Army War College’s Strategic Studies Institute, which

in turn was responsible for this book’s publication and

posting it on the internet. Without their help, there would be

no book.

The actual work of the book was done by those NPEC

commissioned to write papers and by those who

participated in a series of workshops at which these critical

essays were discussed. The authors’ essays are in this book.

As important as their contributions were, those of the

workshops’ group leaders—Dr. Jacob Kipp of the U.S. Army

Training and Doctrine Command, Dr. Bill Green of the

National Security Studies Program at the University of

California at San Bernardino, and Dr. Mark Kramer of the

Davis Center for Russian Studies at Harvard were equally

important. These scholars kept all of the participants

focused on the project’s key issues.

Finally, a special word of thanks is due to Tom Riisager,

the center’s Wohlstetter Fellow and research coordinator,

who ran the project and marshaled the book into its final

form. Tom worked long hours—many more than could be

xi
reasonably asked. Without his efforts and close work with

Ms. Marianne Cowling of the Strategic Studies Institute,

this edited volume would not have been possible.

xii
CHAPTER 1

BEYOND NUNN-LUGAR:

CURBING THE NEXT WAVE OF

WEAPONS PROLIFERATION THREATS FROM

RUSSIA

Working Group on U.S.-Russian

Nonproliferation Cooperation

Foreword.

With so many analyses already available of

U.S.-Russian cooperative threat reduction efforts, it is not

obvious why one should bother with yet another. There are,

however, three good reasons for doing so. First, with the

recent warming in U.S.-Russian relations, it makes sense to

review what is clearly the current mainstay of existing

U.S.-Russian cooperation—the one billion dollars per year

worth of government-funded Nunn-Lugar programs—to see

what can be done better. Certainly, if the Cooperative

Threat Reduction Program’s worthy objectives can be better

achieved, this, in turn, should enhance the prospects for

increased U.S.-Russian security cooperation generally. Of

course, the reverse is also true.

Second, although there is broad support to continue

these programs, there is a growing divide between the

programs’ backers and their critics as how best to proceed.

Among the programs’ supporters, the key recommendation

is to spend substantially more on existing projects. Critics of

the programs’ defense conversion efforts, however, insist

1
that these projects be made self-sustaining as soon as

possible.

Finally, since September 11, 2001, the inventory of

threats that the United States and Russia need to cooperate

on reducing has clearly grown.

Overview.

The current centerpiece of U.S.-Russian security

collaboration is the Nunn-Lugar Cooperative Threat

Reduction Program. Costing nearly a billion dollars

annually, this effort and the projects it supports have run

for nearly a decade now and gained the kind of political,

bureaucratic, and budgetary support that has all but

institutionalized them. Indeed, not only are they likely to

continue for many more years, their success or failure has

become identified with the future of U.S.-Russian

cooperation generally.

Looking at the current state of these programs, it is easy

to see why. On the one hand, they have succeeded in helping

Russia pay for the dismantlement and securing of a

significant number of deployed strategic weapons systems

and related research, production, and storage facilities.

What they have yet to extend to, however, are the most

worrisome of Russia’s strategic weapons activities—

Moscow’s continued proliferation of missile and nuclear

technology exports to those nations still at odds with the

United States, e.g., Iran, Iraq, and China.

Thus, at the very time Nunn-Lugar supporters were

trying to secure $316 million more in funding, Russian

President Vladimir Putin signed a major security treaty of

friendship with China and a $300 million arms deal with

Iran. Russian nuclear and missile cooperation with Tehran,

moreover, continues. Indeed, some now believe that Iran is

so far along in its nuclear missile efforts that, even if Russia

cut off all further assistance, Tehran could deploy a

long-range nuclear system in the next 5 to 8 years. As for

2
Iraq, Putin recently sent an official delegation to meet with

Iraqi President Saddam Hussein to assure Baghdad of

Moscow’s continued interest in resuming arms sales and

military cooperation just as soon as the United Nations

sanctions are lifted.

As U.S.-Russian cooperative threat reduction efforts

succeed or fail in demilitarizing and controlling the further

spread of U.S. and Russian strategic weapons capabilities,

then, so too does the fate of U.S.-Russian security

cooperation generally rise or fall. Beyond Russia and the

United States backing the goals of Nunn-Lugar and acting

in good faith, though, success in these efforts also requires

sound cooperative programs and proper implementation. In

this regard, congressional hearings, General Accounting

Office studies, and several official reviews have highlighted

a number of concerns. Among these are:

• U.S. assistance to demilitarize Russia’s strategic

weapons production and research institutes has been so

poorly monitored that, in some cases, it could have actually

helped to maintain Russia’s weapons capabilities;

• The metrics for these programs’ success and failure

are egregiously vague;

• Despite years of spending to encourage defense

conversion, there is little to show in the way of commercial

Russian venture enterprises;

• The costs to the U.S. taxpayer for many of the defense

conversion programs are growing despite congressional

calls for the executive branch to devise ways to defederalize

their support.

This listing of worries brings us to the last reason that a

reassessment of the cooperative threat reduction programs

is warranted. After September 11 and a decade of

implementing the current crop of Nunn-Lugar programs,

the list of threats U.S.-Russian threat reduction

3
cooperation must now address has grown. In l991, the

immediate proliferation concern was the likely spread of

Russia’s existing nuclear weapons materials and

long-range missile expertise to Iran or Iraq. Now,

U.S.-Russian cooperative threat reduction efforts need to

address at least three other longer-term worries:

• As the number of infectious diseases and their ability

to spread quickly increases, insufficient effort will be made

to detect their outbreak early and precisely enough in the

United States and Russia to ascertain whether the epidemic

was natural or the result of terrorist or state action, and to

limit the harm that might otherwise be done to the general

populations.

• Several factors will only increase the risks of nuclear

theft and terrorism: the huge and growing stockpiles of

nuclear weapons materials in the United States and Russia

from dismantled weapons; the significant remaining

uncertainties regarding these and civilian holdings

(particularly in Russia); and the proposed conversion of

surplus weapons plutonium into reactor fuel.

• Lacking the ability or interest to create private sector

employment opportunities, Russia will again find its best

and brightest drawn to the security and prestige of working

in Russia’s weapons-related facilities and government,

thereby becoming further estranged from the West and

indifferent or hostile to U.S. and allied proliferation

concerns.

None of these longer-term concerns is yet a major focus of

existing U.S.-Russian cooperative threat reduction

programs. Nor has much been done to explain how currently

supported programs will be able to meet the growing list of

congressional effectiveness criteria, including these

programs’ ultimate defederalization.

The report that follows, which is the result of over 2 years

of planning, some 13 commissioned studies, and the

4
participation of over 30 Russian experts, attempts to

address each of these issues.

What makes this report different from other studies of

U.S.-Russian nonproliferation cooperation is its use of

competitive strategies analysis. Rather than focusing

merely on current events, this methodology encouraged the

study’s participants to concentrate on the security

challenges and opportunities the United States and Russia

would face over the next 10 to 20 years. Use of competitive

strategies analysis also forced the study’s working groups to

consider how differences in U.S. and Russian security

aims and strategies might help guide future

nonproliferation cooperation. Finally, rather than focusing

on ways to shore up the weaknesses in existing cooperative

threat reduction efforts, the use of competitive strategies

helped the working groups to determine how U.S. and

Russian strengths might be pitted against enduring

weaknesses to suggest new, sounder paths of

nonproliferation cooperation. An additional objective of this

study was to suggest leveraged cooperative efforts that

could be paid for within existing or significantly reduced

levels of funding.

The study’s participants and commentators suggested

four specific undertakings:

• First, the United States and Russia should work

immediately toward the joint deployment of a health

monitoring system to detect outbreaks of infectious

disease. The deployment of such a system would serve two

purposes. First, it would permit timely protective actions to

be taken in the event of biological agent attacks against

civil or military populations. In this regard, establishing

such a system would help support the objectives of the

Biological Weapons Convention (BWC). Also, expanding

such a monitoring system to include other nations is a task

that former Russian biological weapons-related experts

might undertake as a peaceful alternative enterprise.

Second, joint deployment could help the United States and

5
Russia determine how best to address Russia’s own growing

health concerns, which if not properly addressed could

jeopardize not only Russia’s future vitality, but the health of

nations that have routine contact with Russia.

• Second, the United States and Russia should

coordinate plans to have Russia receive U.S.-origin

spent reactor fuel from other nations for a fee, for

getting a more accurate inventory of Russia’s

nuclear weapons and nuclear weapons-usable

materials holdings, and for jointly forswearing the

chemical separation of plutonium for commercial or

nuclear weapons purposes. U.S. and Russian officials

have already discussed how lucrative commerce in spent

fuel storage (worth as much as 15 billion dollars over the

next decade) could be used to help pay for critical

Nunn-Lugar programs. This business, however, would

require Washington’s approval since it would mainly

involve nuclear fuel of U.S. origin. Before granting such

permission, the United States should secure Russia’s

cooperation to get a more accurate inventory of Russia’s

existing civil and military nuclear holdings. Securing and

sharing such inventory data are essential: without it,

neither Russia nor the United States will be able to learn

how well their other nuclear cooperative threat reduction

efforts are reducing the risk of illicit proliferation and

nuclear theft. In addition, the United States should

condition such commerce on Russia’s willingness to reduce

the flows of nuclear weapons-usable materials (as the

United States has already done) by foreswearing chemical

separation of plutonium for civilian or nuclear weapons

purposes.

• Third, the United States, the European Union,

and Russia need to cooperate much more extensively

to increase the quality and number of student

exchanges. If U.S.-Russian cooperative threat reduction

efforts are to lead to true lasting defense conversion, it is

essential that Russia’s most talented youth not be drawn to

6
work in Russia’s military-industrial-research sectors

simply because no better alternatives exist. A recent poll of

Russian university students indicates that over a third

would consider working in closed nuclear cities, while over

60 percent of the very best students would choose to work in

one of Russia’s state enterprises. This must change. To

accomplish this, however, requires awareness among

Russia’s youth of civilian private sector alternatives not yet

present in Russia. This can most easily be secured through

exchanges with the United States and Europe where such

alternatives are common. Unfortunately, to date the

numbers of such exchanges have been far, far too low.

• Finally, to the extent possible, those cooperative nonproliferation programs that cannot be

privatized should be paired with transparent

cooperative defense conversion programs that can.

The idea here is initially to help pay for cooperative

programs that cannot be privatized with profits from those

that can. In time, this approach would also give Russians

and Americans a profit motive to pressure their

governments to complete those cooperative threat reduction

programs that cannot make money. Finally, this approach

might help reduce concerns that monies invested in or

raised by cooperative defense conversion projects might

indirectly end up supporting those Russian weapon-related

activities that the projects are supposed to replace.

Each of these recommendations, along with the analysis

they were based upon, is presented below.

Key Assumptions.

In assessing what should guide U.S.-Russian

nonproliferation cooperation efforts over the next 2 decades,

the study’s working groups tried first to understand in what

relevant ways Russia’s foreign policy and military views

might differ from those of the United States. This analysis

produced three major findings:

7
• Russia’s foreign policy agenda and nonproliferation concerns in the mid- and short-term are

likely to be very different from those of the United

States. Whereas the United States will continue to want to

maintain global order, Russia will see its ability to influence

events in its near abroad (i.e., Central Asia, the Balkans,

and the Baltic states) as being critical to maintaining

national authority over its own diverse populations and

territories. Thus Russia (particularly its military) is very

likely to remain sensitive to expansion of the North Atlantic

Treaty Organization (NATO). In addition, Moscow will see

strategic cooperation and good relations with Iran, Iraq,

India, and China as being in its short- and mid-term

interest to help it maintain influence over Russia’s

relatively unstable periphery.

• Russia’s long-term foreign policy and nonproliferation concerns, though, are less likely to

clash with those of the United States. There are two

reasons why. First, over the next 2 decades, Russia by itself

will be unable to compete economically (and thus militarily)

with China. It could subordinate itself in some loose alliance

with China against the United States and its European and

Asian allies. Or Russia could cooperate more closely with

the West to gain the economic skills and capital to become a

more vital nation in its own right. Second, Moscow will

naturally have a good deal to lose if states on its periphery

(e.g., Iraq and Iran) increase their military might to a point

where the United States or its allies are compelled to

intervene.

• Russia only partially shares Washington’s

views regarding nuclear weapons and nuclear

power. While the Russian military is willing to reduce the

number of strategic weapons Russia deploys, it sees

continued deployment and enhancement of its theater

nuclear weapons systems as being critical to shore up

inadequacies in Russia’s conventional forces. With regard to

civilian nuclear power, Russia is eager to save (and expand)

8
as much of its current nuclear infrastructure as possible and

believes it can do so through nuclear exports to such nations

as India and Iran (nations to which the United States has

blocked U.S. nuclear exports on nonproliferation grounds).

Russia also hopes to make money providing spent fuel

storage and reprocessing services to other nations even

though the United States has been uneasy about both the

further expansion of civil reprocessing and increased

international commerce in nuclear weapons-usable fuels.

In addition to identifying these differences, the study’s

working groups used competitive strategies analysis to

pinpoint U.S. and Russian strengths and weaknesses

relevant to devising and guiding future cooperative

nonproliferation initiatives. This gave rise to the following

determinations:

• The United States should continue to tie U.S.

cooperation with Russia to the latter’s ending its

missile and nuclear assistance to Iran but recognize

that doing so may no longer be as rewarding as it

once might have been. As already noted, Iran has

received so much nuclear and missile assistance over the

last decade that some analysts believe that cutting off all

further Russian assistance now may have only a negligible

impact on Iran’s ability to deploy long-range nuclear

systems. This doesn’t mean that the United States should

stop calling on Moscow to end all assistance. The United

States should indeed continue to help slow these programs

down. What Washington must recognize, however, is that

the days when demanding this might keep Iran from

achieving ballistic or nuclear capability may be past.

Indeed, Iran is now so close to development of these

capabilities it may be difficult for the United States and its

allies to know for sure whether Russia had cut off all further

assistance even if it had. In any case, Russia’s good

behavior now would be unlikely to prevent the current

regime in Iran from developing long-range nuclear systems.

Thus it is important that if the United States or Russia

9
proposes any major new forms of nonproliferation

cooperation, they be tied to some more ambitious mutual

nonproliferation goal than preventing Iran from acquiring

the means to deploy long-range nuclear arms.

• The most promising areas for future nonproliferation cooperation are most likely to be in the

health and nuclear waste management fields. In these

two areas, U.S. and Russian strengths and weaknesses

complement one another. In the United States, high quality

medical services are readily available but America’s public

health institutions have fallen into disuse. In contrast, the

health and vitality of Russia’s population are shaky and

projected to get worse. Russia, on the other hand, still has

an extensive public health system left over from the Soviet

era, but it is poorly equipped. As for Russia’s most advanced

medical and pharmaceutical research institutions, too

many in the past have been connected with biological and

chemical weapons work. When one turns to nuclear power,

the U.S. Government is more interested in maintaining its

nuclear infrastructure than expanding it. Russia, on the

other hand, believes it must expand its nuclear exports

simply to keep its nuclear industry alive. With Russia

selling its reactors to a shrinking market for a fraction of the

prices charged by its Western competition, though, it is

unclear how profitable such business will be. This explains

Russia’s interest in getting into the nuclear waste

management business, which is potentially worth many

billions of dollars and for which there clearly is a market.

Indeed, Western demand for spent fuel storage services is

quite high. What Russia lacks, however, is the enabling

authority needed to receive a good portion of the world’s

spent fuel, which, because of its U.S. origin, cannot be

moved without Washington’s consent.

• Future efforts to convert Russian strategic

weapons expertise and assets into profitable civilian

enterprises will have to rely less on U.S. taxpayer

largesse and reflect less optimism concerning the

10
Russians’ near-term drive or ability to create private

businesses. Although Nunn-Lugar programs remain

popular, draft legislation this fall made it clear that the U.S.

House of Representatives expects the program’s defense

conversion projects to be defederalized within 4 years.

Implicit in this demand is the expectation that after 4 years

of support, defense conversion projects should be

self-sustaining private enterprises. The problem here is the

U.S.-Russian track record: the United States has too often

pushed projects the Russians have not fully supported,

while U.S. and Russian government officials have too

frequently promoted projects that lacked serious business

plans or sound management. The moral of this experience is

basic: if entrepreneurial forces are to be harnessed in Russia

to spur defense conversion, it will not be the result of U.S.

Government decisions or management. Instead, it will

require major reform of Russia’s tax, legal, and financial

systems to make them far friendlier to the creation of small

and medium private enterprises than they are today. In

addition, it will require the creation of many more able

Russian entrepreneurial managers (particularly in the high

technology sectors) to draw Russians (and Russia) away

from their historical attraction to large, command-style

enterprises run by the state. As a practical matter, such

structural changes will take time and will require selective

mutual exposure between the right Russians and the

appropriate Americans and Europeans.

Additional Analysis and Recommendations.

In keeping with this guidance and the previously noted

findings, the study’s working groups made the following

recommendations:

First, the United States and Russia should work

immediately toward the joint deployment of a health

monitoring system to detect outbreaks of infectious

disease. The objects of deploying such a system would be to

enhance enforcement of the BWC, improve the health of

11
Russia’s citizens, and assure early detection in the United

States and Russia of thenatural spread of deadly infectious

diseases and of bioterrorist attacks.

The George W. Bush administration recently requested

that the members of the BWC support the World Health

Organization’s health surveillance program. The World

Health Organization has been working to promote

international monitoring of infectious disease for years. The

problem is that, so far, it has only been able to get its

membership to monitor and report on three sicknesses—

yellow fever, plague, and cholera. The reporting, moreover,

is generally limited to information regarding confirmed

outbreaks, rather than the type of preliminary data needed

to contain such outbreaks in a timely fashion.

This sort of reporting conservatism may make sense to

an underdeveloped nation fearful of losing tourism dollars,

but it makes no sense if you need early warning of the

possible outbreak of a vast array of infectious diseases

before they spread out of control.

The U.S. Government understands this. That is why

following the anthrax letter attacks of the fall of 2001, it

supported the expansion of an inexpensive and proven

reporting system already working in New Mexico known as

the Rapid Syndrome Validation Project (RSVP). RSVP uses

computers, touch-screen entry, and the Internet to enable

doctors to make speedy reports to public health authorities

when they encounter patients who have a particular set of

symptoms. A report can be filed in less than a minute. The

system assumes no prior knowledge of exotic diseases and

covers over 90 percent of the diseases a biological weapons

attack might inflict. The program is also cheap. A basic U.S.

national system of 1,000 stations could be set up for

approximately $5 million; a crude global system of 10,000

reporting stations for approximately $20 million.

The immediate benefit of deploying this system beyond

U.S. borders would be to improve public health reporting

internationally. Certainly, anything the United States or

12
others do in this respect could support the health

surveillance efforts of the World Health Organization. The

long-term payoff would be to establish a baseline from

which to detect unusual events, such as bioterrorist attacks

or epidemics. These could then be identified early enough to

allow actions to be taken to prevent harm from coming to

any nation’s general population.

In Russia’s case, the benefits of deploying such a system,

though, would be more substantial. Russia’s population is

not healthy, and it is projected to get much, much sicker.

Indeed, Putin highlighted this point last year when he cited

Russia’s declining population (a decrease of 750,000 people

per year) as one of the nation’s most serious problems.

Analysis commissioned by this study forecasts a Russian

population decline by approximately 50 million (i.e., over 30

percent) over the next half-century. The most important

cause for this demographic decline is the deteriorating

health of Russia’s population. The incidence of HIV/AIDS,

tuberculosis, hepatitis C and B, and syphilis are all on the

rise. This has had and will continue to have a major impact

on the health of all sectors of Russia’s population.

To reverse these trends, it is critical that Russia’s public

health authorities be able to detect and monitor new

outbreaks of infectious diseases early and precisely enough

to locate their sources and take appropriate measures

before they further harm Russia’s population. This

conclusion is one now becoming apparent to both U.S. and

Russian officials. In fact, late in the summer of 2001, after

this study’s working groups recommended joint deployment

of RSVP, several working group participants contacted

senior U.S. and Russian officials who evinced interest in

backing such an undertaking. One idea currently being

considered is using Russian biological research institute

scientists to help deploy the system in Russia. Assuming

they gain the experience they need, these experts could then

provide their services in deploying RSVP to other nations

for a fee. The profits from this activity eventually could be

13
used to help support the operation of RSVP within Russia

itself.

Second, the United States and Russia should

coordinate plans to have Russia receive U.S.-origin

spent reactor fuel from other nations for a fee, while

getting a more accurate inventory of Russia’s

nuclear weapons and nuclear weapons-usable

materials holdings and jointly forswearing the

chemical separation of plutonium for commercial or

military purposes.

In the late 1990s, a private group of U.S. representatives

from the environmental, business, and national security

communities known as the Nonproliferation Trust, Inc.,

proposed to store foreign (i.e., non-U.S., non-Russian) spent

fuel in Russia and use the revenues thus raised for a variety

of cooperative threat reduction programs and other causes.

Russia’s Duma and Russia’s nuclear industrial

organization, Minatom, have both shown considerable

interest in this proposal. So have German and U.S. officials.

Under the scheme, the United States would have to give

Russia permission to receive U.S.-origin spent reactor fuel

from Europe, Taiwan, and South Korea. These countries’

utilities would then pay Minatom a fee for storing the spent

fuel in dry storage casks for 40 years.

Assuming a proper customer base, this business should

generate as much as 15 billion dollars in revenue. Of this

figure, approximately 3 to 4 billion dollars would be needed

to transport and store the spent fuel. This would leave over

11 billion dollars that could be used to support a variety of

Nunn-Lugar programs and other causes. The

Nonproliferation Trust has already proposed to use this

money to provide for Russian fissile material security (1.5

billion dollars), construction of a Russian spent fuel

repository (2 billion dollars), environmental clean-up (3

billion dollars), salaries for Minatom workers (1.8 billion

dollars), and humanitarian causes and pensions (2 billion

14
dollars). Each of these activities and their funding would be

overseen and audited by a corporate board that would

include prominent U.S. national security and

environmental experts as well as Russians.

Clearly, implementing this proposal could go a long way

toward paying for some of the more expensive critical

cooperative threat reduction efforts. In addition, these

monies could keep a significant portion of Minatom’s staff

employed and do so without raising proliferation risks.

This last point, however, is not assured. Minatom would

like to get into the business of chemically separating

plutonium from spent reactor fuel and using it to make

mixed oxide uranium-plutonium fuels for power reactor use.

Such a business is so unprofitable, though, that no private

investor has offered to fund it. More important, such fuel

services would initiate the transit of thousands of nuclear

weapons’ worth of nuclear weapons-usable materials all

over Russia and much of the world. Certainly, if the United

States and Russia are serious about reducing the threat of

nuclear terrorism and theft, this is not a business their

cooperative threat reduction efforts should promote. At a

minimum, none of the monies that might be raised through

implementation of the Nonproliferation Trust idea should

help finance such activities.

But there is more cause for concern. Russia is still

producing nuclear weapons-usable materials.

Compounding this nuclear threat is the dearth of

knowledge regarding Russia’s current nuclear weapons

material holdings. Although Russia has declared 50 tons of

weapons-grade plutonium to be in surplus, very little is

known about Russia’s total military inventory of nuclear

weapons materials. Thus, in 1999, senior U.S. Department

of Energy officials privately conceded that the United States

knew only to within 30 percent (plus or minus) what this

figure might be. That’s a big number, one equivalent to

approximately 23,000 advanced thermonuclear weapons’

worth of material, i.e., nearly four times the amount of

15
material contained in all of the strategic nuclear warheads

the United States has deployed.

Again, if the United States and Russia are serious about

reducing the threat of nuclear terrorism, nuclear theft, and

nuclear proliferation generally, these uncertainties about

Russia’s nuclear holdings are unacceptable. Certainly, it

makes no sense to pay for and focus so much on the storage

and disposition of 50 tons of surplus nuclear weapons

material if well over ten times as much may exist

unaccounted for. Just as implementation of the

Nonproliferation Trust proposal should be conditioned upon

Russia’s offering a pledge to forgo nuclear weapons or

civilian reprocessing, implementation should not proceed

unless the United States and Russia first reach some

understanding about what their nuclear weapons materials

holdings actually are.

This understanding ought to be more than an oral

agreement. Specifically, implementation of the

Nonproliferation Trust proposal should be tied to clarifying

and reducing existing uncertainties. This means that both

the United States and Russia will have to be more

forthcoming about sharing nuclear inventory information

and opening up facilities to mutual or international

inspection than they have been to date. These conditions are

a price worth paying. Indeed, the potential financial and

nonproliferation benefits of proceeding with the

Nonproliferation Trust proposal are too great not to insist

that these conditions be met.

Third, the United States, the European Union, and

Russia need to cooperate much more extensively to

increase the quality and number of student

exchanges.

As already noted, many of Russia’s best and brightest

university students find the prospect of working in the

government’s military research industrial complex more

attractive than facing the obstacles and risks associated

with seeking private employment or starting private

16
civilian businesses of their own. Clearly, no lasting defense

conversion can occur so long as this is the case. These

Russian students’ current attraction to working for state

enterprises is partly due to the impressive number of legal

and financial obstacles erected by the state against private

entrepreneurs. They also are aware of the risks and costs

imposed on such ventures by state-supported corruption

that preys upon the profitable. By contrast, employment in

state enterprises seems to offer a far more certain and

attractive future. Wages may be low, but the social benefits

of such employment—e.g., free housing, access to quality

health care and education, daycare, and subsidized food,

etc.—are still substantial.

Finally, and perhaps most important, most Russians

have developed a work ethic that is ill-suited for private

enterprise. The top-down directive style of management, so

common during the Soviet years, is still popular and all too

effective in stifling the kind of initiative and responsibility

private businesses require of their employees. Also, there is

the matter of Russian tolerance of and cultural sympathy

for cheating, which makes accountability and sound

accounting—both essential to any private enterprise—

nearly impossible.

These and other anti-business cultural traits, of course,

are learned and can be undone. To do so, however, Russia’s

best and brightest youth need relevant, first-hand exposure

to the West. Conversely, those American and European

students most interested in Russia need to understand how

Western business practices, the rule of law, management

techniques, etc., can be introduced into Russia without

being stymied by ingrained cultural norms. This dictates

vigorous student and youth leadership exchanges.

The numbers of Russian students (high school students,

undergraduates, and post-graduates) currently enrolled

each year in the United States (over 5,000), the United

Kingdom (approximately 2,500), Germany (approximately

900), and Australia (approximately 800) are not

17
insignificant. Still, they are paltry in comparison to the

number of visiting Chinese students, who last year

exceeded 100,000 in the United States alone. In fact, the

per-capita rate of visiting Russian students is far below that

of many lesser nations. Also, only a small percentage of

advanced Russian students that attend U.S. schools and

return to Russia get an opportunity to work in serious

career-related jobs while they are in the United States.

More important, roughly 85 percent of these visiting

Russian students are 19 years or older, i.e., well beyond the

age of adolescence when one’s social habits are still very

much being formed.

There are a variety of reasons why the number of

Russian students enrolled in universities in Europe and the

United States is so low, and why the number of Russian high

school students enrolled in these countries is lower still.

Russian students must first learn English (or German) to

make their visits worthwhile. It has often been difficult for

Russians to get Russian academic credit for the work they

do overseas (particularly if they attend less rigorous

American high schools). Outside Moscow, Russian students

have less knowledge of the benefits of becoming an exchange

student.

But perhaps the most important impediment to

increasing the number of Russian high school students

visiting the West is the appalling insufficiency of

U.S.-Russian student exchange programs. In l992 when the

United States Congress passed the “Freedom Support Act”

for Russia, it authorized 20 million dollars to fund what it

hoped would be over 15,000 U.S.-Russian high school

exchange students a year. In addition, it provided another

30 million dollars to fund a similar number of

undergraduate and graduate exchanges. After nearly a

decade of promoting these programs, though, the number of

U.S.-Russian exchange students is still woefully shy of

these targets.

18
In l999, for example, there were only some 5,300 Russian

exchange students (of all ages) enrolled in the United

States, and fewer than 500 American exchange students (of

all ages) enrolled in Russian schools and universities.

Almost all of the American students and a large majority of

the Russian students (85 percent or more) were over 19

years of age.

Clearly, the numbers here are far too small. Among the

key obstacles to increasing the number of American

students enrolled in Russian schools and universities is that

not enough American students are sufficiently fluent in

Russian, and that parents are rightfully concerned about

their children’s health and well-being while in Russia. As a

result, there are likely to be more American undergraduate

and graduate students interested and equipped to visit

Russia than there will be high school students. If the

number of American and European student visits to Russia

were higher, the number of Russian visits to Europe and the

United States would increase as a matter of course.

The question is how to make this happen. The study’s

participants had several ideas:

• Expanding current European Union and U.S.-funded

student exchange programs to support Russian exchanges

with the United States, European Union nations, and

Australia. The idea here would be to encourage Russian

exchanges with the United States and nations friendly to

the United States rather than the United States alone.

• Creating a joint U.S.-European Union-Russian

commission that would work to identify and eliminate as

many of the current obstacles as possible to increasing

Russian, European, and U.S. student exchanges.

• Treating American high school, undergraduate, and

graduate exchange students as a single category so as to

increase the numbers from which Russian high school

exchange students might be paired.

19
• Creating more mentoring and internship programs

for Russian exchange students visiting Europe and the

United States so that their academic work in their chosen

careers would be complemented by exposure to the Western

work ethic prevalent in the appropriate professions. Such

programs, in turn, could be created for U.S. and European

exchange students visiting Russia as well. Certainly, these

and other ideas need to be examined on a priority basis.

Finally, to the extent possible, those cooperative

nonproliferation programs that cannot be privatized

should be paired with transparent cooperative

defense conversion programs that can.

As already noted, Congress has increased its scrutiny

over the defense conversion projects that the Nunn-Lugar

program funds. As a result of this oversight, Congress has

generated an impressive list of desirable attributes for these

projects. Just a sampling drawn from the most prominent

analyses demonstrates how detailed the list has become.

These criteria include making sure that the projects:

• avoid enhancing Russian strategic weapons

capabilities;

• avoid the reinvestment of project profits and startup

capital in weapons institutes;

• offer work that draws Russian weapons workers as

far away from the activities of their weapons or nuclear

institutes as possible;

• operate with transparent management and

accounting procedures;

• create jobs for weapon scientists rather than

employment for others at the weapons sites (e.g., spending

on day care centers at the weapons institutes);

20
• draw future generations away from work in the

military complex;

• encourage private sector employment as much as

possible over public sector employment;

• promote nonproliferation results, e.g., quantifiable

weapons reductions, increased monitoring of adherence to

existing nonproliferation agreements, reduction in the

threat of strategic weapons capabilities leaking to others

outside of Russia, reduction of the chances for terrorist

seizures, etc.;

• are designed to eventually be sustainable without

congressional funding; and,

• have clear objectives and deadlines for completion.

It would be desirable, of course, if all U.S.-Russian

cooperative threat reduction efforts met all of these

requirements. As a practical matter, however, it is unlikely

that any project has or ever could. Still, failing to meet these

criteria could defeat the purpose of the projects. Certainly,

no one in Congress wants to fund defense conversion efforts

that might help Russia to sustain its weapons capabilities.

Nor should the United States and Russia cooperate on

programs that can never get done or that produce negligible

nonproliferation benefits.

These realizations rightly troubled several of this

study’s working group members who, after several weeks of

additional consideration, hit upon the idea of pairing. They

recognized that many of the Nunn-Lugar program projects

could operate only if they receive congressional funding,

while others could not be initiated without such money.

They also recognized, however, that frequent U.S. and

Russian government support and involvement in these

projects reduce the likelihood that they will ever make it

commercially on their own.

21
There are, of course, exceptions. One example of a

defense conversion effort that became self-sustaining

recently is a small software company that was set up in the

early 1990s to capitalize on the mathematics expertise of

seven scientists from the All-Russian Research Institute in

Sarov. Since then, the firm has created permanent civilian

employment for about 100 former weapon scientists. These

scientists now make three times what they made in the

weapons institutes.

As significant as this success might be, however, it has

done nothing to support the other cooperative threat

reduction efforts that cannot make money. Could such

profitable endeavors that are capitalized with U.S. funding

be paired with necessary but unprofitable cooperative

threat projects? This was the question several working

group members raised. What inspired their question was

the Nonproliferation Trust’s business concept whereby

profits from one activity—the storage of spent reactor

fuel—would go to support other cooperative threat

reduction activities that are incapable of generating

revenue. It was this proposal that also suggested this

report’s recommended approach to deploying RSVP—

getting the Russians to be the purveyors of health

monitoring to other nations and using the monies raised to

help maintain RSVP within Russia.

Members of this study’s working groups learned from

inquiries in the fall of 2001 that although such pairing has

not yet been used in U.S.-Russian cooperative threat

reduction efforts, it was attractive to U.S. officials on at

least three counts:

• First, it could help defray the costs to the United

States taxpayer of supporting cooperative threat reduction

efforts generally, i.e., help defederalize them;

• Second, it would give both Russian and American

officials an even greater incentive to develop defense

22
conversion programs that could succeed commercially on

their own;

• Third, it would give both Russian and American

entrepreneurs a profit motive to ensure that their

governments concluded (with a date certain) the

unprofitable cooperative threat reduction programs that

their business profits were being used to support.

The apparent advantages of this approach, of course,

have to be tempered by reality: not all cooperative threat

reduction programs will be profitable, nor will those that are

be able to pay for all those that are not. That said, to the

extent possible, this pairing approach should be tried and

applied.

23
CHAPTER 2

THE FOUNDATIONS OF RUSSIAN STRATEGIC

POWER AND CAPABILITIES

Stephen J. Blank

INTRODUCTION

Will the availability and quality of Russian strategic

capabilities increase or decline over the next 2 decades and,

whichever result, why? Conventional wisdom has it that

Russia’s strategic capabilities will either grow or remain

intolerably high over the next 2 decades, yet there are some

reasons to believe that the human expertise and capital

assets related to strategic weapons may decline. Given

current economic trends, Russia’s military forces and

production surge capabilities should be able to approach the

quality and quantity enjoyed by the Soviets during the late

1980s. Moscow, however, would like to modernize its

nuclear forces, dual-use information systems, and advanced

conventional weapons and also invest in new weapon

systems such as direct energy weapons, lasers, microwave

radiation emitters, particle beam generators, and mass

plasma weapons. The problem is how to pay for this.

Certainly, Russia’s military budget will not be able to carry

these programs, even if Russian President Vladimir Putin’s

recently proposed economic and defense reforms are

successful.1 Thus the only way Russia can achieve its

military ambitions is to secure and maintain substantial

new sources of foreign financial investment and technical

cooperation.

25
This chapter has three sections. The first describes how

the Russian military plans to modernize its existing nuclear

forces and acquire new strategic weapons capabilities by

increasing central control over the defense industry and

expanding Russia’s influence in the former Soviet Union.

The second section identifies the two major obstacles to that

plan—the economic crisis and the steady decline in the

numbers of Russian scientists. Section three illustrates that

the Russian elite understand these problems and are trying

to overcome them by relying on arms sales, space launches,

the Cooperative Threat Reduction Program (CTR), and

other foreign capital flows to fund Russia’s acquisition of

strategic capabilities. This chapter concludes that Russia’s

current path can only lead to failure, and how far they

progress is dependent on how far other countries are willing

to finance them.

WHAT STRATEGIC CAPABILITIES RUSSIA

WANTS AND HOW IT PLANS TO ACQUIRE THEM

Russia’s Wish List.

To understand what strategic weapons capabilities the

Russian military wants to acquire over the next 20 years, we

must first understand what the Russian military defines as

strategic. When one thinks of strategic weapons, the first

thing that comes to mind is submarine- or land-launched

long-range ballistic missiles armed with nuclear weapons.

But the writings of many Russian observers plus evidence

from Russian exercises such as ZAPAD-99 indicate that, in

the Russian view, tactical nuclear weapons (TNW) can do

strategic duty by bringing about Russian control of any

intra-war escalation, thus forcing the North Atlantic Treaty

Organization (NATO) to negotiate on the basis of the status

quo ante and cease military operations. Since Kosovo, the

volume of official writing endorsing heavier reliance on such

nuclear weapons has only increased.2

Similarly, many leading Russian military thinkers

argue that information weapons and information warfare

26
(IW) can achieve strategic outcomes. They see IW as a

strategic threat comparable to nuclear weapons in their

functional outcome.3 Here IW and/or various forms of

electromagnetic warfare in general become a potentially

self-sufficient operation in their own right. For example,

retired General M. A. Gareyev, President of the Academy of

Military Sciences and the dean of Russian military thought,

believes IW capabilities could by themselves achieve a

definite strategic goal.

Future wars could be fought without even resorting to

force, purely by informational and electronic means. In fact,

the cataclysm culminating in the collapse of the Soviet

empire and the Soviet Union illustrates that states and

coalitions can disintegrate as a result of confrontation on

the international arena without the direct application of

force.4

Another nonnuclear capability that could have strategic

impact is advanced conventional weapons (ACW). These,

according to many Russian thinkers, if targeted on key

strategic targets like command, control, communications,

computers, intelligence, surveillance, and reconnaissance

(C4ISR) systems, nuclear power plants, or nuclear weapons

silos can, by purely conventional means, effectuate decisive

strategic outcomes. Consequently, such ACW attacks upon

conventional targets might justify a first-strike nuclear

response.5 That guidance was expanded to lower the

threshold for nuclear use and apparently remains operative

in the 2000 defense doctrine, largely due to NATO’s

campaign in Kosovo.6

Russian military thinkers also believe that integrated

space technologies relevant to projecting power for naval

and land operations constitute a strategic weapons

capability that Russia must acquire.7 These writers

optimistically emphasize that Russian submarines and

aircraft can already launch global monitoring satellites.

Space will become the high ground whose possession offers

potentially decisive strategic benefits and advantages. They

27
also point out that recent technological trends plus the

revenues accruing to Russia from projects like the

International Space Station (ISS) indicate that funding for

at least some of those capabilities is available as long as

Russia participates in foreign operations like the

ISS.8 On the other hand, these writers are concerned that

U.S. missile defenses will trigger an arms race whereby

control of space and thus anti-space weapons from nonspace

platforms, e.g., land-based anti-satellite weapons (ASATs),

become weapons endowed with potential strategic

significance.

How Russian Military Planners Intend to Acquire

Capabilities.

Although a new cycle of reforms has just been announced

in military policy, we cannot categorically state that they

can or will be implemented or that they will seriously

address Russia’s basic strategic dilemmas. Indeed, for the

last 3 or 4 years, it has been almost impossible to discern any

consistently implemented threat assessment and defense

policy. As a reporter for Segodnya observed in August 2000,

The blatant incompatibility of the defense minister and the Chief of the

General Staff confirms that we have no united military leadership and that

none of the key defense documents (military doctrine, national security

concept) has any practical value, because they do not express a

consolidated view on military organizational development.9

What is more important to understanding Russia’s

military future, however, is not how coherent its military

planning might be, but that it no longer has the means to

unilaterally provide for its own defense. In fact, it cannot

support its military industrial structure without large-scale

foreign subsidies and transfers. In this sense, Russian

security depends quite literally on the kindness of

strangers. Whether these transfers originate in arms sales,

foreign subsidies through programs like the Nunn-Lugar

CTR, foreign fees for space launches using Russian and

Soviet missiles, or joint production with foreign producers,

28
they alone allow Moscow to supplement its budgeted and

extra-budgetary defense programs and maintain the

current defense economy.

The paucity of available domestic resources and the

absence of a state capacity rule out a Stalinist-like autarkic

defense sector. Given available resources, Russia can only

be “a great power” or global power on the basis of other

states’ sufferance. Therefore, to compete militarily and

politically Russia must find allies and friends on each

individual issue in international security.10 This search for

alliances is as true for defense economic policy, weapons

sales in Asia and Europe, and the search for joint projects in

aerospace and defense procurement contracts with the

West, as it is for foreign and national security policy.

Russia therefore openly seeks to generate maximum

foreign collaboration to develop its strategic capabilities. Its

objectives are transparent. It aims to win contracts to create

a basis to solidify its position abroad while creating a basis

for joint production of conventional or strategic systems.

Moscow also seeks political leverage within those areas and

access to higher levels of technological capability,

particularly in Western Europe, through either the rather

nebulous proposal for a “nonstrategic” European-Russian

missile defense or joint ventures with European defense

firms.11

Russia also pursues an exclusive sphere of influence

within Confederation of Independent States (CIS)

economies through defense-economic integration, e.g., with

Ukraine, Belarus, and Kyrgyzstan. Reintegrating the

former Soviet defense industrial network offers Moscow

access to capabilities that had been lost with the breakup of

the Soviet Union. Foreign subsidy and arms sales programs

also let the government circumvent unwelcome scrutiny of

the true extent of military spending and the defense

economy. That scrutiny would likely force further

retrenchment and result in less foreign subsidization in an

effort to make the government accountable to the people

29
and force it to live within its real means. Earlier trends to

reduce the opacity of the budget to the Duma have been

reversed, and Putin’s recent call to reduce the budget

approval process to a formality and establish an

authoritarian police state in Russia have become quite

evident.12

The excessively large defense industrial complex

testifies to the authorities’ failure to properly align Russia’s

threat assessment with available strategic resources.

Retention of this excessively large sector demonstrates the

continuing failure of defense and economic reform, a

continuing flight from strategic reality that jeopardizes the

military and any hope for a true democratic future.

Meanwhile, its perpetuation ensures Russia’s continuing

poverty and isolation abroad despite the terrifying

socio-economic challenges confronting it. Speaking about

prospective nuclear forces, Dr. Nikolai Sokov observed that,

Essentially, today only economic constraints continue to operate, and they

appear a relatively weak variable. There is strong belief that a stronger

government which is oriented toward national interest rather than more

universal goals of democracy, market, and integration into the

international community, could generate economic growth and yield

resources, including for defense spending. Whether this belief is correct

or not does not matter much under the current conditions. The powerful

mayor of Moscow, Yuri Luzhkov, has already demonstrated that there is

at least a theoretical possibility to combine market with an authoritarian

regime and that such a combination could generate money. The fact that

he was able to spend some money from the city budget to finance arms

acquisition serves as proof in the eyes of the military leadership and the

defense industry that economic constraints are not insurmountable.13

This neo-Soviet approach also suggests that arms sales

are surrogates for reform in order to keep this system afloat.

Putin’s defense of this neo-Soviet outlook and policy implied

as much:

The unique peculiarity of military-technical cooperation is that it lies

where several important areas meet international activities in general,

military-political work both inside the country and abroad, and trade and

economy.... Judging from the volumes that military-technical

30
cooperation gives to the country’s budget, this is one of the most

important areas for us. . . . It is common knowledge that the export of

weapons and military hardware earns the budget considerable sums in

currency. These means allow us to maintain cooperation between

science and industry in the country, preserve the scientific and industrial

potential, and keep personnel at defense enterprises.14

Although General Thomas Wilson, Director of the U.S.

Defense Intelligence Agency, testified that, absent a total

collapse of state power, he cannot imagine a non-nuclear

Russia in 2015, several Russian and even foreign analysts

fear just such a collapse.15 Yet Russia still spends far too

much on its armed forces, and the return on the investment

appears to be quite low relative to other peer competitors.

One thing is thus clear: if Russia attempts to acquire the

strategic capabilities it wants, it will need help from other

nations.

THE OBSTACLES TO RUSSIA’S REALIZING ITS

STRATEGIC WEAPONS ACQUISITION AMBITIONS

Russia’s Lack of Money.

Not only is economic growth slowing amidst widespread

predictions of a crunch by or in 2003 as foreign debt rises,

but capital outflow remains an estimated $20 billion a year,

indicating a continuing lack of domestic confidence in

Russia’s prospects. That outflow and lack of confidence

severely impede efforts toward civilian or military scientific

and technological progress through 2020. The economy’s

high-tech component is severely stressed from the lack of

investment and accelerating decline since the time of former

Soviet First Secretary Nikita Khrushchev. There also are

serious dysfunctional trends throughout the high-tech and

electronic sectors of civilian and defense industry. Finally,

beyond Russian science’s structural defects, the state, too

strong to permit autonomous market-driven change in

defense industry and too weak to implement effective statist

controls, has increased its presence in the defense industry

and will likely be overwhelmed by its incapacity to make its

31
policies work. Absent a coherent growth strategy, plus

military and defense spending reforms, Russia cannot

produce the desired increases in quality, quantity, and

availability of all forms of military power.

Apart from its heavy defense burden, Russia has $48

billion in foreign debts coming due between now and 2003.

Moreover, it must spend enormous sums to retrieve the

health, ecology, and demographic potential of the country in

order to be a major regional power, let alone a global player.

Putin understands some of this dilemma and recently

observed that the foreign debt burden makes it unclear

whether Russia can find “enough money for education,

defense, health care, space, and science under such gloomy

conditions.”16 However, those are precisely the areas that

must be built up under conditions of fiscal and capital

shortage in an economy, 40 percent of whose state revenues

apparently come from “rents” on oil and gas exports, even as

production of those commodities declines.17 Nor are the

resources to reverse that decline to be available soon. The

cumulative decline of the infrastructure and capital stock,

as well as the shortage of domestic and foreign investment

capital, cripples efforts to develop an autonomous civilian

high-tech sector.18 Though Russia largely retains the Soviet

capital stock, it is usable only autarkically, not as part of a

world economy despite favorable exchange rates since 1998.

Therefore Russian exports remain uncompetitive except for

energy and some defense sectors. Since this lopsided, even

neo-colonial structure of trade goes back years, it is not

surprising that the defense industry and its spokesmen

quickly realized that, in post-Soviet conditions, arms

exports were their only salvation as well as an obstacle to

the true marketization of the economy which would force

them to reform and become even more competitive.19

32
Russia’s Shrinking Pool of Scientifically Trained

Personnel.

In addition to not having enough money to develop the

strategic weapons capabilities it wants, Russia’s pool of

scientifically trained personnel is shrinking. The

decades-long decline, lack of opportunity, and paucity of

investment have put Russian science on the brink of a

catastrophe. As of February 2001, about 4,000

organizations deal with scientific research but obtain only

about 16 percent of the financing available in 1990. Russia

spends on researchers 4 percent of other developed nations’

expenditures. The average life expectancy for a Russian

male is 59. The average age of a Russian researcher is

approaching 60, and few young people join scientific

organizations because of the poor pay. Such younger people

make up only 11 percent of those engaged in fundamental

scientific research.20

Meanwhile a brain drain steadily erodes Russian

science. This drain takes many forms: 75 percent of

world-class mathematicians and 50 percent of physicists

have emigrated; many scientists now work on foreign

contracts or for foreign-owned firms; many sell patents and

designs, including those for sophisticated military systems,

abroad. Indeed, this huge outflow and diversion of scientists

threaten Russia’s security and independence. In all, 85

percent of Russian doctors of science are working abroad.21

The number of scientists as of 1997 had fallen to 1.3 million,

and by 2000 to 910,000, with at least 10 percent of those

actively seeking to go abroad. Although Russian scientists,

especially programmers, are in demand abroad, their

activity in Russia is limited by obstructions facing business

and science which must be removed for science to flourish.22

These trends also exist in key military installations like

the closed missile cities. Although the desire to emigrate is

not as high as was feared, demoralization is widespread and

high enough to be alarming. Ever more scientists make ends

meet primarily from moonlighting for other organizations

33
that can pay. Fewer and fewer specialists are being

educated at the best centers in Moscow. As opportunities

decline and assignment to closed cities is no longer feasible,

those cities can replenish their labor force only from within.

All these trends point to a decreasing capability to provide

ever more sophisticated future missile and nuclear

systems.23

Although Putin has announced measures to promote

and retain scientists, especially in the defense sector, the

trends are not promising.24 Neither are they encouraging

for the future due to shortages of funding for education and

a decade or more of misplaced priorities. The “internal and

external brain drain” obstructs Russia’s full exploitation of

the current technological revolution.25

Barring a major reversal of trends, Russia, between

2010 and 2020, could lose the capability to keep pace with

advanced Western and Asian countries (Japan, India, and

China) in defense technologies. This does not mean Russia

will be unable to field a reasonably robust strategic force

consisting of weapons based on new physical principles,

space and informational weapons, chemical and biological

weapons, and a large tactical and strategic nuclear

deterrent, the latter consisting primarily of some 750-1,000

land-based intercontinental ballistic missiles (ICBM). Nor

does it preclude an ability to wage at least some forms of IW.

What it does mean is that the ability to produce

sufficient ACWs; precision-guided munitions (PGM); and

space, informational, and high-tech systems using

advanced information, bio-technology, and electronics will

be severely though not totally constricted. Russia’s

mobilization base will remain severely inhibited relative to

past capabilities. Hence Russia’s capacity to wage sustained

war in any of these domains could fall below its current

level. Still, Russia retains a strong capacity for waging IW

against American targets.26

This analysis suggests that, despite high military

spending, the unlikelihood of major structural reform in the

34
government, economy, and military, and the continuing war

in Chechnya will prevent Russia from soon deploying what

its rulers believe are sufficient conventional forces to defend

and advance its interests. Given the concurrent

demographic challenge, the reliance on both strategic and

tactical nuclear weapons and/or on a relatively small

number of ACWs and information systems comparable to

them could continue to dominate defense policy in practice,

despite official proclamations and even spending to the

contrary.

Russian military thinkers recognize these difficulties

and discuss three different possibilities for surmounting

them. The first is a massive increase in foreign support

through arms purchases or subsidies. The second is a major

domestic economic-technological breakthrough resulting

from broad economic-political reform. The third is a major,

albeit limited, breakthrough in the defense industrial sector

that will generate tremendous returns in the civilian sector

over time. Each of these possibilities is unlikely to succeed.

Trying to secure a massive increase in foreign support

through arms purchases or subsidies ignores how difficult it

will be to upgrade Russia’s decrepit infrastructure without

Western and American support. But some officials now

advocate an openly anti-American policy of military sales to

America’s enemies, a policy whose overtness can only

increase external economic pressures on funding sources,

while not appreciably increasing arms sales revenues.27

So far as a major domestic economic-technological

breakthrough due to broad economic-political reform is

concerned, this, too, seems unlikely to succeed because the

government is retreating from democratization and

transparency, restricting the free exchange of information

and taking control of the Internet. The various moves

towards police-state repression, like legislation to control

the Internet, argue against a decisive breakthrough to an

information society and information-era military.28 These

actions also herald an autarkic development pattern that is

35
quite contradictory to contemporary requirements and will

produce further obstacles to reform.

Finally, there is the third alternative, a major but

limited breakthrough in the defense industrial sector that

will generate enormous returns in the civilian sector over

time. This appears to be the preferred path of the current

government and fits with its statist outlook, to include

economic planning and control. Unfortunately, this is a

move backwards, because today’s revolution in military

affairs, contrary to Russian elite thinking, has been largely

spawned by new civilian technologies and companies.

Therefore, this line of action seems wrongheaded from the

start and will not produce lasting benefit.

HOW RUSSIA THINKS IT CAN SQUARE

THE CIRCLE

Spend More.

Faced with all these challenges, Russia’s military

planners have reverted to old solutions. One is to increase

funding to a more centralized defense industry, and the

other is to increase foreign capital flows by exporting more

arms.

Russia’s defense sector is still too large. In 1999 the

government exceeded the annual budgetary figures on

defense and spent another 56.8 million rubles on domestic

security. That figure also exceeded the stipulated budget.

This suggests the extent of the burden on state finances

wherein defense spending already consumes between 20

and 25 percent of the official budget, not counting the

extra-budgetary spending defense receives.

Yet, even with these measures there is never enough.

The related military and industrial constituencies are now

actually getting 5 percent of the annual gross domestic

product (GDP), not just the 3.5 percent that Boris Yeltsin

had promised when he was president. This percentage will

likely increase as the economy grows, and the Chechen war

36
continues. Stated military requests continue to exist in the

realm of illusion. To sustain future programs, the

government has indulged in its own fantasies by raising the

defense budgets annually since 1998. For 2001 it raised

official spending on research and development (R&D) by 43

percent and cut procurement by 13 percent. This reflects the

commitment to rely temporarily on nuclear deterrence,

even as missiles go gradually out of service and are replaced

at the rate of 10 ICBMs (mobile SS-27s or Topol-Ms) per

year.29 All the military spending in 2000-2001 added to the

original draft budget for 2001 totals over 50 percent of the

original draft.30

Hence, there is a direct linkage to the crisis in science

and technology. Science Minister Alexander Dondukov

observed that most of the industrial growth in 2000, about

10 percent, was due to high-tech branches.

In March 2001, Alexander Roubtsov observed that the

defense industry still includes about 1,700 plants and a

labor force of 3.5 million. With families, this comprises

about 10 percent of Russia’s total population and embraces

all of Russia’s territory. There are still over 70 factory cities

and restricted administrative-territorial entities totally

dependent on the defense industry. Since these institutions

remit taxes to regional and provincial leaders, they worry

that any marketization will lead many of them, which are

generally noncompetitive, to close down, face high

unemployment, or lose revenues. Those factories placed

under central control will now pay taxes to Moscow, not to

the regions. Thus the projected reform of defense industry is

also part of Putin’s overall centralization plan.31 Meanwhile

defense production is about 6 percent of the 1991 level.32Therefore,

Dondukov et al. push arms sales and technology transfer

wherever possible regardless of international agreements.

Yet, while policy now focuses on upgrading existing

equipment, some firms either want to produce utterly new

weapons that cannot be bought, or are simply waiting for

orders from Moscow without any conception of a market

system.33

37
This suggests that if Russia follows Putin’s course

through 2020, it can, given the preservation of the Soviet

capital stock and possible added value from the CIS and

foreign subsidies, approach the Soviet level of conventional

weapons. But given the attrition and qualitative decline of

capital and labor assets in the scientific and military

sectors, that is the best that can be hoped for from the

surviving shell of Russia’s nonmarketized defense

economy.34 Despite higher investment due to moderate

growth and high energy prices, Russia will probably remain

30 years behind the West in applied technology. There will

be pockets of excellence but not a truly competitive military

machine.35

Use Budgetary Tricks.

To fund this program, more extra-budgetary tricks will

be used.36 The goals of such strategems in helping the

defense and science sector are quite transparent. Deputy

Prime Minister Ilya Klebanov, who supervises defense

industry and arms sales, stated that the government will

spend 135 percent of what it did in 2000 on defense contracts

through 2010 and give priority to new fifth-generation

aircraft and air defenses, tanks, and ships. These systems

include new sea-launched strategic missiles, cruise

missiles, a fifth-generation fighter jet, and new infantry

fighting vehicles, tanks, and armored personnel carriers.

Until these “wonder weapons” are ready (and bearing in

mind that this funding excludes weapons based on new

physical principles, information weapons, command,

control, and communication and intelligence [C3I] systems,

nuclear weapons, etc.), the armed forces will have to rely on

upgrades to existing equipment.37

Obtaining all these new capabilities would entail

recentralizing state power and unifying defense industries

under virtually monopolistic state ownership. Animating

this program is the key players’ neo-Stalinist ideology that

defense industry is the locomotive of recovery. This is hardly

38
surprising since most high-tech research originates there.

Deputy Defense Minister Nikolai Mikhailov stated that

since the military are regular consumers of science and

technology (S&T) products, they can fulfill any combat

mission using those systems “only in the event of the

maximum and effective use of the potential of domestic

science, engineering, and economy. I emphasize

domestic.”38 Accordingly, this sector is the permanently

operating catalyst of technological recovery whose role in

the development of new technologies is worldwide. This

utterly false and misleading idea is belied by global

economic reality.39 Since Russia globally lags in computers

and technology exports, and risks falling even further

behind, Mikhailov outlined a comprehensive program of

military-technological modernization designed to bring

Russia back to a competitive level in 5-7 years.40

Mikhailov outlined key areas for Russia in which it must

compete given the rising American threat. These include

space and missile engineering to build Topol-Ms, missile

defenses, a new generation of space apparatuses “for

various targeting procedures,” aeronautical engineering for

new fighter planes, antiair and air defense engineering, 4th

and 5th generation submarine missile cruisers, heavy

aircraft-carrying cruisers, precision guided missiles, tanks,

command and control systems for ground forces,

domestically built highly integrated microprocessors,

super-computers, and neuroprocessors, etc.

To obtain these systems, Putin has reconcentrated arms

sales and defense industry under his control, supposedly to

maximize revenues. To raise exports he has merged

Russia’s arms exporters into one group under his direct

authority. That group will also force central control of all

intergovernmental military-technical commissions, except

those for China and India which Klebanov controls, and will

issue licenses for foreign exports. This will supposedly force

many smaller or noncompetitive plants to concentrate

resources and production and create truly marketable

products. Putin also decreed cuts of over 600,000 mostly

39
administrative jobs in defense industry through 2006,

possibly closing factories and even whole design groups. The

aerospace and shipbuilding industries in particular are

supposed to be drastically concentrated into statecontrolled holding companies.41

By August 2000, observers had already seen that this

plan essentially returned to the Soviet model.42 Vitaly

Shlykov, one of Russia’s foremost experts in defense

economics and a scathing critic of the system, noted that the

arms sales program is a Ponzi scheme, since Russia is

selling weapons it cannot yet produce and using revenues

obtained from preliminary agreements on them to finance

that production.43 The system is so broken that, at best, it

produced only 10 percent of Soviet defense output in 1991.

Ninety percent of the 1,700 defense firms have no orders

and could not fulfill them if they received them, and

subcontractors have lost interest in dealing with the

system. Whereas 800,000 people work in aviation and

aerospace in Russia, compared with 98,000 in Europe,

Europe’s production is more efficient, and its volume is

greater. Russian military hardware’s real costs are so high

that they approach Western costs. Given the low quality of

production and workmanship, Russia is actually at a

disadvantage. While the few producers and exporters who

have been privatized are profiting and finding a way in the

market, Klebanov and Putin are nationalizing the defense

industry. By restoring the Soviet model, Moscow almost

certainly ensures the system’s ultimate failure.

Conventional and nuclear missile branches (since the latter

are to be severely cut) will break down and the Russian

Ministry of Defense (MOD) will have to finance the entire

rearmament out of its own budget.44

The Poverty of Budgetary Tricks and Selling Arms.

Spending and budgetary tricks and foreign arms sales

will not be able to fully fund Russia’s strategic weapons

acquisition ambitions. The key reason is that they currently

40
are spending more than they can afford, and their plans

would have them spending even more. We can estimate the

extent of defense spending and its likely direction to 2020.

First, assumptions of massive reductions in Russian

defense spending since 1991 are unduly optimistic. At least

some analysts believe that total current Russian spending

on its armed forces, including spending by regional and local

governments to maintain the military (which is much

greater than the published budgetary figures),

approximates (as of 2000) the expense burden of the

military upon the economy during Soviet times.45

Second, the armed forces and defense industry survive

on the basis of hidden or unreported noncash and/or

extrabudgetary subsidies. This opacity extends as well to

the armed forces which cannot even keep track of their own

expenses. Spending by the armed forces, therefore, includes

not just the debts owed to the MOD since 1992, but also the

debts owed by the armed forces for procurement that is not

paid for.

Third, military spending remains much greater than

assumed in the West. Christopher Hill of the United

Kingdom’s Ministry of Defence estimates that actual

spending in 2000 was 143 billion rubles, rising significantly

from 1999, with the official defense budget amounting to

little more than half of true defense spending.46 Based upon

computations in constant 2000 prices, he and MOD argue

that defense spending fell from $130 billion in 1992 to $42

billion in 1998. In 2000, however, Putin increased the

official budget outlays by 50 percent, and at least some

aspects of R&D by 80 percent.47 Since then, defense

spending has risen to $50 billion in constant 2000 prices.

Also in 2000, the trend towards increased funding for

strategic forces, influenced by then Minister of Defense Igor

Sergeyev, apparently gave way under pressure from Chief

of Staff General Anatoly Kvashnin and others to more

funding of the regular conventional forces, procurement,

and R&D on new higher-tech systems. Recently it was

announced that the government intends to impose an even

41
50-50 ratio by 2011. Hill’s figures are roughly confirmed by

the International Institute for Strategic Studies (IISS) in

London, which assumes total defense spending of $57

billion.48

Notwithstanding continued growth, the most likely

major sources of underwriting for those rising outlays are

arms sales and joint projects with other states. Many

industry insiders and observers believe that only this

“transnational” integration with foreign clients keeps this

industry going.49

Hill argues that, however one slices this cake, it cannot

lead to a massive resurgence of military power. Indeed, the

numbers of troops will be slashed, and demography is

pushing Moscow towards a professional army though its

officers viscerally reject the idea and show no

understanding of what that means.50 Force structures will

be transformed, too, with armored vehicles, tanks, combat

aircraft, and major naval platforms likely to be cut by a

third.51 Furthermore, spending on current procurement is

largely restricted to upgrading existing weapons and

reorienting R&D funds toward the next generation of

systems or entirely new kinds of weapons, while squeezing

every drop of deterrence out of the existing nuclear

systems.52 New systems are going abroad, not to Russian

forces, to sustain defense industry until a reduced military

can actually buy enough weapons.

These figures entail a reduced nuclear force and lower

rates of production of new generations of nuclear weapons.

They also suggest that Moscow is stressing current R&D of

high-tech combat aircraft and electronic, control, and

information systems, and weapons based on new physical

principles and the use of TNWs in conventional conflicts.

Though estimates of the future size of the nuclear forces

vary greatly, undoubtedly Moscow can sustain a land and

sea dyad, or perhaps a triad with a small aerial leg of

750-1,000 missiles as a minimum, more than enough to

guarantee a second-strike capability by 2015. General Staff

42
analysts also say that, as of 2007, Russia will still have some

3,000 tactical nuclear warheads. So Russia should be able to

field about 1,000 TNWs by 2020 if it starts building them

now.53 Given the external linkages that Moscow is forming

and the expectation of economic growth through 2020,

Russia could probably also sustain several pockets of

excellence regarding space, ASAT, information, and

perhaps new weapons.

But since a concealed capability for surge production

exists within Russian industry, Russia could produce and

export these weapons provided there is sustained growth

and a robust technology sector. Russia needs sufficient

financial resources to generate those capabilities, although

it would remain qualitatively behind the most advanced

leaders in defense production. However, the issues of

growth and a robust technological sector present more

problems than are commonly realized.

Securing Foreign Technical Cooperation.

What kind of inputs into Russian technological and

military capabilities will provide Moscow with security,

deterrence, and a strategic warfighting capability by 2020?

Clearly the leadership wants to invest in modernized

nuclear weapons, dual-use information systems, and

ACWs. Russia also is pouring large funds into research on

directed energy weapons: lasers, microwave radiation

emitters, and particle-beam generators using subatomic

particles to destroy targets at the speed of light, a new mass

plasma weapon that could ionize the atmosphere and

destroy incoming missiles and enemy aircraft, anti-stealth

radar, stealthy air-launched cruise missiles, newly tested

anti-aircraft and anti-missile systems, and a plasma

coating to make fifth-generation Russian aircraft invisible.

These programs broadly comport with policy directives from

the top to make Russia a competitive player in advanced,

conventional, high-tech platforms and systems, including

informational and perhaps biogenetic technologies.54

43
These enormous programs are probably being financed

by foreign capital flows. As James Oberg recently observed,

the government in 2000 earned $800 million from sales of

space services, two-thirds of which was profit, besides

receiving several hundred million more from the Russian

government.55 Space launches and other foreign sources

that fund programs like the Cooperative Threat Reduction

(CTR) Program and related efforts to manage Russia’s

nuclear arsenal, perform their stated mission, and let

Moscow fund systems that would otherwise not be available

for defense modernization. Other sources could also become

available for that purpose.

For instance, Russia’s state-owned domestic oil and gas

industries currently operate at 50 percent of capacity. If

energy prices remain high and Russia’s productive capacity

grows, the government can then reap $50-100 billion

annually. Obviously much of that funding could go into

defense production. Russian weapons production rose 60

percent in 1999-2000, suggesting the depth of available

surge capability for conventional and nuclear weapons, not

to mention new forms of biological and chemical warfare.

Therefore, Russian defense industry possesses a great

deal of unused production and even surge capability,

especially if it can be augmented by linkages to CIS plants

and new sources of capital. Those revenue sources would

allow Russia to modernize nuclear, information, chemical,

and biological weapons by easing the burden on the

government to finance exclusively the demobilization of

obsolete systems. Another source of funding is expanded

arms sales abroad, mainly to China, India, and perhaps

Iran. Putin and the defense industry share the Soviet

delusion that arms sales are a, if not the, locomotive of

general industrial recovery.56 Consequently, Putin aims to

reorganize defense industry and arms sales programs to

ensure greater state control and profitability of both these

instruments of policy.

44
The surprising tenacity of this delusion and the

consequent political strength of Russia’s defense industry

are a major explanation of that lobby’s ability to obtain a

continuing, though smaller, high level of funding from an

exhausted economy and society, even though an

uncontrolled defense industry is now seen as one of the

major causes of the Soviet collapse.

Meanwhile, Moscow views the expansion of military

sales abroad in a long-term context. For example, China is

Moscow’s biggest client, online to buy an estimated $15

billion worth of weapons through 2004-2005. Actually their

agreement is for 15 years and contemplates ultimate joint

production of both conventional and strategic

systems. Russian sources claim that bilateral military

contacts have doubled or tripled since 1999, thus

corroborating Alexander Nemets and John Scherer’s

assertion that the total of all known Russo-Chinese

military-technological exchanges approximates $5 billion a

year through 2004, doubling the rate for 1996-99 and

quadrupling the rate of annual arms sales for 1991-96.57

Moreover, these figures omit “black” or classified programs

and the extensive scientific-technological exchanges among

Russian and Chinese scientists whose scope, extent, and

parameters cannot be determined.

Russian analysts describe such military exchanges,

which they claim will give Russian factories abundant

orders for at least 5 to 7 years, as “primitive forms of

mediation in military trade.” They want the next phase of

Sino-Russian military bilateralism to focus on a

relationship that goes beyond Russia selling and China

buying to more “advanced” forms, e.g., joint development

and manufacture of munitions and weapons.58 This outlook

harmonizes with the idea of the 15-year cooperation plan

and focuses on the perspective of increasing jointness.

During the first 5 years (2000-05), China would

purchase from Russia up to $15 billion of new generation

weaponry in the form of either manufactured items or

45
production licenses. Meanwhile, joint exercises and

military training would be expanded across all branches.

Perhaps the most important aspects of the Sino-Russian

military cooperation would be in the areas of joint research

and development for the next generation of airplanes,

missiles, and laser-based and other high-tech weapon

systems. Joint efforts in developing these systems would be

the focus for the second and longer-term phase of the plan

(2005-15).59

Russian officials have also indicated that if the United

States builds missile defenses, Russia and China will

cooperate jointly to resist or penetrate them.60 That

cooperation would undoubtedly involve some of the

technologies and weapons contemplated in the 15-year

plan. Joint production could entail some fungibility of

strategic systems between Russia and China, further

complicating an assessment of either state’s future

capabilities. We may also assert that it is likely that the next

major advance in Russian space and/or satellite technology

will occur in behalf of either Iran or China, which are both

obtaining or being solicited to buy Russian models of

spacecraft and satellites.61

Russia’s new agreement with Europe on the European

Air Defense System (EADS) also offers major contracts to

sustain the aerospace and air defense industries while

providing access to European funding, technologies, and

defense decisionmaking.62

The Need to Reform.

Moscow’s remedies clearly regress to an autarkic,

state-controlled system based on restricting the flow of

information and attempts at preferential treatment for the

military and future scientists. They also are based on

Mikhailov’s and Putin’s Stalinistic fantasies concerning

defense industry. Although high-ranking officials have laid

out high-tech objectives, a neo-Stalinist defense economy

based on raw materials exports and a shrinking base of

46
competitive military production, as well as the crushing

demographic and infrastructural problems, cannot provide

those systems and still manage to compete with other major

powers. But the size of the Soviet nuclear, biological, and

chemical weapons complexes, Moscow’s abiding reticence

about these programs, and repeated claims that it cannot

afford to destroy some 40,000 tons of chemical weapons (the

largest program in the world), make it likely that either

those weapons stocks will continue, be preserved, or be

ready for quick reconstitution.63

The precise number of nuclear weapons also depends on

foreign developments, particularly the fate of the American

missile defense program and Chinese modernization, as

well as on the success of economic reforms and conventional

modernization. Putin’s approach entails considerable

structural remilitarization and coincides nicely with his

overall progress towards a neo-imperial authoritarianism.

On one hand, if we are wrong and Russia can prevail in

its war with Chechnya and successfully deal with other

conventional threats by restoring some measure of its

former conventional weapons power, Russia can

successfully reduce its dependence on nuclear weapons and

continue to follow the long-term trend towards fewer but

more survivable and precise nuclear weapons, including

tactical nuclear weapons. While the nuclear deterrent will

be smaller, Russia’s high-tech, IW, and space capabilities

will be greater. On the other hand, if defense and economic

reforms fail by 2020, as this chapter projects, then Russia

will have to stop cutting nuclear weapons, including TNWs,

and instead rely more on them as well as on chemical and

biological systems, given the defects of its conventional

defense systems and war economy. Space and IW

capabilities will become even more prominent and unstable

precisely because of Russia’s overall instability.

Indeed, if reform fails or the external environment

becomes truly menacing, Russia might even become unable

to cope. Then some of the nightmare scenarios of state

47
decomposition feared by the Russian elite might come to

pass. While Moscow undoubtedly can retain usable

“strategic” capabilities—nuclear, biological, chemical,

informational, and space weapons—until 2020 or develop

some new ones, the faster it tries to develop those weapons

by the means currently employed, the fewer it will develop,

the harder it will be to develop them, the worse their quality

or sustainability will be, and the greater the likelihood of

Russia’s continuing military decline. In this connection, the

Russian armed forces’ ability to stonewall its own and

foreign governments regarding the reduction of its huge

chemical and biological warfare stocks is of great concern

and must be overcome.64 For today’s Russian elites that is

an unacceptable conclusion. Yet to avoid these nightmare

scenarios, they continue to run on the treadmill of reform to

recapture the past, not to keep up with the present.65

ENDNOTES - CHAPTER 2

1. Russia’s military may try to resolve this dilemma by increasing its

dependence on its most mature, high-leverage weapons capabilities—

i.e., its nuclear, biological, chemical, and informational systems. The

costs of retaining and developing these specialized strategic

capabilities, however, will only further accelerate the overall decline of

Russia’s general military forces.

2. Russian officers and analysts, interviews by author, Helsinki and

Moscow, June 1999; Bill Gertz, “Russian Forces Help China in Mock

Conflict,” Washington Times, April 30, 2001, p. A1; Sokov, Russian

Strategic Modernization, pp. 124-200; “Press Conference with

Vyacheslav Romanov, Chief of the National Center for Nuclear Threat

Reduction of the Armed Forces General Staff,” Federal News Service,

February 28, 2001, obtained from Lexis-Nexis; Oleg Odnokolenko,

“Chill Before Using,” Segodnya, December 19, 2000, obtained from

Lexis-Nexis; “Russia Capable of Rebuilding Nuclear Shield,” Military

News Agency, March 1, 2001; Giles Whittell, “Russia’s Missile Warning

to U.S.,” London Times, February 17, 2001.

3. Segodnya, August 3, 2000, in Foreign Broadcast Information

Service (henceforth FBIS SOV), August 3, 2000. In another example,

Sergei Stepashin, head of the Auditing Commission, observed in 2000,

“Either we preserve Russia’s territorial integrity—or we rush headlong

into the implementation of the Zbigniew Brzezinski plan,” an argument

48
that Russia will (or should) split into seven independent states.

“Stepashin Promises To Turn the Screws,” Komsomolskaya Pravda,

June 10, 2000, obtained from Lexis-Nexis.

4. V. Men’vikov, I. Golovanev, and S. Pavlov, Soldiers of the Future,

National Air Intelligence Center, July 1997, p. 3.

5. General M.A. Gareyev, M.V. Frunze, Voyennyi Teoretik, Moscow:

Voyenizdat, 1985, p. 438; “Osnovnye Polozheniia Voyennoi Doktriny

Rossiiskoi Federatsii (Izlozhenie),” Krasnaya Zvezda, November 19,

1993, pp. 3-8.

6. FBIS SOV, October 12, 1999; FBIS SOV, January 14, 2000;

Rossiiskaya Gazeta, April 22, 2000, in FBIS SOV, April 24, 2000.

7. Peter Raimov, “If War Will Come Tomorrow,” in Stephen J.

Cimbala, ed., The Russian Military into the Twenty-First Century,

London: Frank Cass, 2001, p. 32.

8. Such thinking about space was already being published before the

end of the Soviet Union in 1991. John Erickson, “Quo Vadis: The

Changing Face of Soviet/Russian Forces and New Russia,” in Stephen J.

Blank and Jacob W. Kipp, eds., The Soviet Military and the Future,

Westport, CT: Greenwood Publishing Group, 1992, pp. 33-58; Mary C.

Fitzgerald, “The New ‘Aero-Space War’ in Soviet Military Thought,” in

Blank and Kipp, pp. 59-88. More recently, see Giles Whittell, “Russia

Threatens to Take Arms Race to Space,” The Times of London, January

25, 2001, obtained from Lexis-Nexis; “Russians to Launch Satellites

From Plane,” London Times, February 24, 2001; Martin Nesirsky,

“Russian Military Fete Gagarin, Build Space Forces,” Reuters, April 12,

2001. On Soviet space policy, strategy, and programs, see Jacob W. Kipp

et al., Soviet Views on Military Operations in Space, College Station, TX:

Center for Strategic Technology, Texas Engineering Experiment

Station, 1986; Jacob W. Kipp, The Problem of Space in Soviet

Operational Art, Ft. Leavenworth, KS: Soviet Army Studies Office,

1987; Nicholas L. Johnson, Soviet Military Strategy in Space, New York:

Jane’s, 1987; Stephen Blank et al., The Soviet Space Theater of War

(TV), Stratech Studies 88-2, College Station, TX: Center for Strategic

Technology, Texas Engineering Experiment Station, 1988.

9. Segodnya, August 3, 2000, in FBIS SOV, August 3, 2000; Federal

News Service, “Press Conference With Alexander Konovalov, President

of the Strategic Assessments Institute, and Sergei Oznobishchev,

Director of SAI,” Moscow, January 15, 2001.

49
10. Yevgeny Primakov was the originator of this approach, and his

successor Igor Ivanov as well as Putin have consistently followed it.

Komsomolskaya Pravda, September 30, 1998, in FBIS-SOV, September

30, 1998; Ye. Primakov, “Russia and the Outside World,” International

Affairs [Moscow], No. 3, 1998, pp. 7-13; V. Lukov, “Russia’s Security

Challenges,” International Affairs [Moscow], No. 1, 1997, pp. 14-15.

11. Nikolai Sokov, “Russia’s Missile Defence Offer,” Jane’s Defence

Weekly, April 18, 2001, pp. 24-25; “Russia Sees Rapid Anti-Missile

Force,” Reuters, April 16, 2001; Luke Hill, “Russia Shifts Missile

Defence Position,” Jane’s Defence Weekly, February 28, 2001, p. 3.

12. Pavel Felgengauer, “Who’ll Control the Budget,” Moscow Times,

April 12, 2001; Brian Taylor, “The Duma and Military Reform,”

Program on New Approaches to the Study of Russian Security, No. 154,

Cambridge, MA: Harvard University, December 2000. On the other

hand, a countertrend, imposed by the crisis in the armed forces, may be

making itself felt. Simon Saradzhayn, “Future Russian Defense

Budgets May Feature Line items,” Defense News, May 14, 2001, p. 36.

13. Nikolai Sokov, Russian Strategic Modernization: Past and

Future, Boulder, CO: Rowman & Littlefield, 2000, pp. 199-200.

14. “Russia Plans Increased Earnings from Military Cooperation,”

ITAR-TASS News Agency, March 21, 2001, obtained from Lexis-Nexis;

Craig Covault, “Russian Air Force Faces Deepening Crisis,” Aviation

Week & Space Technology, March 5, 2001, pp. 61-63.

15. “Testimony of Vice Admiral Thomas R. Wilson, Director of the

Defense Intelligence Agency,” Senate Armed Services Committee,

107th Congress, Senate Select Committee on Intelligence, March 8,

2001.

16. Rossiiskaya Gazeta, April 17, 2001, obtained from Lexis-Nexis.

17. On the truly precarious condition of the Russian energy

industry, see the discussion in “A New Era for Investment,”

International Affairs, Vol. XLVII, No. 2, 2001, pp. 6-47.

18. “Newsline,” Radio Free Europe/Radio Liberty, April 16, 2001.

19. Stephen J. Blank, “Challenging the New World Order: The Arms

Transfer Policy of the Russian Republic,” Journal of Slavic Military

Studies, Vol. VI, No. 2, June 1993, pp. 234-261.

20. “Minister Sounds Alarm for Russian Science," Agence France

Presse, February 15, 2001; Hugh Barnes, “Russia’s Lost City of Science

50
Looks to Block the Brain Drain,” Agence France Presse, February 23,

2001.

21. Ibid; “Secutity Watch,” Radio Free Europe/Radio Liberty,

December 7, 2000; Olga Ruban, “Russia’s Brain Drain,” Moskovskiy

Komsomolets, December 21, 2000, obtained from Lexis-Nexis; “Few

Graduates Go into Research” [Moscow], February 14, 2001, obtained

from Lexis-Nexis; “Russian Science Underfinanced, Minister,” Interfax,

February 14, 2001.

22. Astrid Wendlandt, “Inside Track,” Financial Times, March 27,

2001, p. 16.

23. Valentin Tikhonov, Russia’s Nuclear and Missile Complex: The

Human Factor, Washington, DC: Carnegie Endowment for

International Peace, 2001; and www.ceip.org

24. Mark Kramer, “Demilitarizing Russian Weapons Scientists:

The Challenge,” chap. 6 of the present volume.

25. National Intelligence Council, Russia’s Physical and Social

Infrastructure: Implications for Future Development: Seminar Series

Report, Washington, DC: 2000, pp. 18-19, 36-45.

26. James Adams, “Virtual Defense,” Foreign Affairs, Vol. LXXVI,

May-June, 2001, pp. 98-104.

27. Carl Emerick Hanusa, “Russian Weapons Firms Eye National

Sales of $6Bln,” Reuters, April 17, 2001.

28. “About 12 Million Internet Users in Russia,” in www.Pravda.ru,

March 26, 2001.

29. Interfax, June 6, 2000, in FBIS SOV, June 6, 2000. Nikolai

Novichkov, “Commander Reveals Future Vision for Russian Navy,”

Jane’s Defence Weekly, April 18, 2001; “Newsline” RFE/RL, January 18,

2001.

30. Krasnaya Zvezda, June 7, 2000, in FBIS SOV, June 6, 2000; The

Jamestown Monitor, October 18, 2000.

31. Aleksandr’ Roubtsov, “Defense Industry Eager for Long-awaited

Reform,” Strana.ru, March 23, 2001.

32. Ibid.

51
33. James Clay Moltz, “Russian Nuclear Regionalization: Emerging

Local Influence over Far Eastern Facilities,” NBR Analysis, XI, No. 4,

Essay 2, 2000, p. 12.

34. Alexander Kennaway, The Russian Political Economy 1999,

Camberley, Surrey, England: Conflict Studies Research Centre, Royal

Military Academy, Sandhurst, 1999, p.9; Alexander Kennaway, “What

Can the Military-Industrial Complex of Greater Russia Deliver in the

Next Decade?” in Michael H. Crutcher, ed., The Russian Armed Forces

At the Dawn of the Millennium, U.S. Army War College, Center for

Strategic Leadership, December 2000, pp. 169-187.

35. Ibid.

36. “Rearmament,” Current Digest of the Post-Soviet Press,

(Henceforth CDPP), Vol. LIII, No. 1, January 31, 2001, pp. 13-14.

37. “Army to Buy ‘Wonder Weapons,’” ibid., pp. 13-14.

38. Nezavisimoye Voyennoye Obozreniye, July 21-27, 2000, in FBIS

SOV, July 24, 2000.

39. Ibid.

40. Ibid.

41. “Russian Reform of Arms Trade to Continue Says Klebanov,”

Interfax, November 22, 2000, obtained from Lexis-Nexis.

42. Vitaly Shlykov, “Potemskinskii Kompleks,” Itogi, No. 14, April

2001, pp. 30-32; Fred Weir, “Can Russia Deliver on Arms Sales?”

Christian Science Monitor, November 29, 2000, p. 6, in FBIS SOV, July

27, 2000; Kommersant, August 3, 2000, in FBIS SOV, August 3, 2000.

43. Ibid.

44. Segodnya, August 3, 2000, in FBIS SOV, August 3, 2000;

Federal News Service, “Press Conference with Alexander Konovalov,

President of of the Strategic Assessments Institute, and Sergei

Oznobishchev, Director of SAI,” Moscow, January 15, 2001; Ian

Traynor, “Russia Halts Military Cuts as Hawks Take Over in US,”

Guardian Unlimited, January 18 2001; and www.guardian.co.uk/

russia/article,2763,423745,00.html Dana Lewis, “Russia Suspends

Dismantling Weapons,” MSNBC.com, March 11, 2001; Robert Cottrell,

“Russia to Restructure Army,” Financial Times, April 26, 2001; The

Jamestown Monitor, January 26, 2001; “Military Reform Plans Faulted

52
as Secretive, Inept,” Current Digest of the Post-Soviet Press, Vol. LIII,

No. 6, March 7, 2001, pp. 4-9.

45. The author and analysts from the U.S. Army debated in favor of

this proposition with other analysts from the American intelligence

community who opposed it at a conference on the Russian military,

Carlisle Barracks, PA, December 2000.

46. Christopher Hill, British Ministry of Defence, presentation at

the Center for Strategic and International Studies, Washington DC,

January 31, 2001.

47. Irina Isakova, “The Kosovo Air Campaign’s Impact on Russian

Military Thinking,” RUSI Journal, August 2000, pp. 56-57; Richard

Staar, “A Russian Rearmament Wish List,” Orbis, XLIII, No. 4, Fall,

1999, pp. 605-612; Richard Staar, “Funding Russia’s Rearmament,”

Perspective, Vol. X, No. 1, September-October, 1999, pp. 1-2, 8-10.

48. “Russia Needs Strong Infantry after Chechnya, Defense

Minister Ivanov Says,” Reuters, April 26, 2001.

49. Nezavisimoye Voyennoye Obozreniye, August 4-10, 2000, in

FBIS SOV, August 10, 2000.

50. Hill; Alexander Golts, “Signals of Reform: But under Soviet

Principles: Military Must Go Further to Bring About Real Changes in

Russia,” The Russia Journal, May 4-10, 2001; and Golts, “Why the

Generals Don’t Want a Professional Army,” The Russia Journal, April

20-26, 2001; “Newsline,” Radio Free Europe/Radio Liberty, April 11,

2001.

51. Hill.

52. Nezavisimoye Voyennoye Obozreniye, June 30, 2000, in FBIS

SOV, July 11, 2000.

53. Sokov, Russian Strategic Modernization, pp. 124-200; Interfax,

July 12, 2000, in FBIS SOV, July 12, 2000.

54. RIA, November 23, 1999, in FBIS SOV, November 23, 1999;

ITAR-TASS, November 23, 1999, in FBIS SOV, November 23, 1999;

Interfax, November 23, 1999, in FBIS SOV, November 23, 1999;

Russian Public Television First Channel Network, November 17, 1999,

in FBIS SOV, November 17, 1999; Kommersant, November 24, 1999, in

FBIS SOV, November 24, 1999; Simon Saradzhayn, “Russia to

Emphasize Replenishing Spy Satellite Fleet,” Defense News, October

25, 1999, p. 6; Simon Saradzhayn, “Russia to Emphasize Electro-Optics

53
in Future Projects,” Defense News, November 22, 1999, p. 22;

Christopher Foss, “Russia Develops MEADS Lookalike,” Jane’s Defence

Weekly, October 21, 1998, p. 18; Interfax, April 25, 1999, in FBIS SOV,

April 25, 1999; Interfax, August 31, 1999, in FBIS SOV, September 1,

1999; Simon Saradzhayn, “Russia Set to Invest More to Modernize

Weapons,” Defense News, December 13, 1999, p. 22; Simon Saradzhayn,

“Russia Seeks to Catch Up With West in Microelectronics,” Defense

News, December 13, 1999, p. 8; Isachenkov, Douglas Barrie, and Simon

Saradzhayn, “Russian Air Force to Improve Tactical Strike Capability,”

Defense News, December 6, 1999, p. 5; Radiostantsiya Ekho Moskvy,

November 2, 1999, in FBIS SOV, November 3, 1999; ITAR-TASS,

October 28, 1999, in FBIS SOV, October 28, 1999; Interfax, October 27,

1999, in FBIS SOV, October 27, 1999; Colonel Vladimir Mukhin,

“Military’s Draft Budget Is Destined for Review,” The Russia Journal,

No. 41, December 6, 1999; Staar, “A Russian Rearmament Wish List,”

pp. 605-612; Isakova, pp. 56-57, in FBIS SOV, December 9, 1999; Staar,

“Funding Russia’s Rearmament,” pp. 1-2, 8-10.

55. James Oberg, interview by author, March 15, 2001; James

Oberg, “Comment & Analysis,” Financial Times, March 22, 2001, p. 19.

56. Interfax, December 15, 1999; ITAR-TASS, November 6, 1999, in

FBIS SOV, November 6, 1999; Nezavisimaya Gazeta, July 22, 1998, in

FBIS SOV, 98-222, August 13, 1998; Izvestiya, December 24, 1996, in

FBIS SOV, 96-248, December 26, 1996; Nezavisimaya Gazeta, July 22,

1998, in FBIS SOV, 98-222, August 13, 1998; Izvestiya, December 24,

1996, in FBIS SOV, 96-248, December 26, 1996; Nezavisimaya Gazeta,

in FBIS SOV, 98-077, March 18, 1998.

57. Alexander V. Nemets and John L. Scherer, Sino-Russian

Military Relations: The Fate of Taiwan and the New Geopolitics,

forthcoming as an electronic publication.

58. Ibid., Mark Galeotti, “Putin Looks to the Orient,” Jane’s

Intelligence Review, December 2000, obtained from Lexis-Nexis; RIA,

July 18, 2000, in FBIS SOV, July 18, 2000; Yu Bin, “Putin’s Ostpolitik

and Sino-Russian Reactions,” Turkistan Newsletter, Vol. IV, No. 209,

December 6, 2000.

59. Ibid.

60. RIA, July 18, 2000, in FBIS SOV, July 18, 2000; Yu Bin.

61. On Russia’s building satellites for Iran, see Russkiy Telegraf,

February 25, 1998, in FBIS SOV, 98-056, March 2, 1998. On China, see

Galeotti, and Andrei Kirillov, “China, Russia Will Cooperate in Peaceful

54
Uses of Space,” ITAR-TASS News Agency, April 18, 2001, obtained from

Lexis-Nexis.

62. Alexey Komarov, “Western Agreements Offer Hope to Russian

Industry,” Aviation Week & Space Technology, April 23, 2001, p. 52;

Simon Saradzhayn and Gopal Ratnam, “EADS Accord Boosts Russian

Aerospace Industry,” Defense News, April 16, 2001, p. 1.

63. United States General Accounting Office, Biological Weapons:

Effort to Reduce Former Soviet Threat Offers Benefits, Poses New Risks,

GAO NSIAD-00-138, April 28, 2000; ITAR-TASS, July 27, 2000, in

FBIS SOV, July 27, 2000; “Russia Fails to Complete 2000 Chemical

Weapons Destruction Plan,” Military News Agency, January 3, 2001;

“Russia Set to Begin CW Destruction,” Disarmament Diplomacy, No.

54, 2001; “Newsline,” Radio Free Europe/Radio Liberty, March 15,

2001; Joris Janssen Lok, “Erasing Agents,” International Defense

Review, March 2001, pp. 29-33; “A Deadly Soviet Threat Lives On,”

MSNBC.com, January 19, 2001; “EU Sees Russia Moving on Chemical

Weapons Stockpile,” Reuters, March 10, 2001.

64. Tom Mangold and Jeff Goldberg, Plague Wars: The Terrifying

Reality of Biological Weapons, New York: Griffin Books, 2001; Anthony

Rimmington, “From Military to Industrial Complex? The Conversion of

Biological Weapons’ Factories in the Russian Federation,”

Contemporary Security Policy, Vol. XVII, No. 1, April 1996, pp. 80-112;

Anthony Rimmington, “Fragmentation and Proliferation? The Fate of

the Soviet Union’s Offensive Biological Warfare Program,” ibid., Vol.

XX, No. 1, April, 1999, pp. 86-110; Anthony Rimmington, “Invisible

Weapons of Mass Destruction: The Soviet Union’s BW Programme and

Its Implications for Contemporary Arms Control,” Journal of Slavic

Military Studies, Vol. XIII, No. 3, September, 2000, pp. 1-46; Amy E.

Smithson, Toxic Archipelago: Preventing Proliferation from the Former

Soviet Chemical and Biological Weapons Complexes, Report No. 32,

Stimson Center, Washington, DC, 1999.

65. Indeed, attempts at reform have gone on for over 30 years with

little to show for it. Alexander Kennaway and John A. Battileaga,

“Innovation in the Russian Defense Industrial Base and Acquisition

Process: A Russian Play in Three Acts,” paper presented to the

Workshop on Russian Military Innovation, McLean, VA, January 12,

1999.

55
CHAPTER 3

RUSSIAN RULE AND THE REGIONAL

MILITARY INDUSTRIAL COMPLEXES

Ariel Cohen

Introduction.

Since the collapse of the Soviet Union, the U.S.

Government and the West in general have been concerned

about the proliferation of weapons of mass destruction

(WMD) stemming from the far-flung Soviet/Russian

military-industrial complex. Beneficiaries of weapons

proliferation may include rogue states and terrorist

organizations acquiring nuclear WMD, e.g., warheads and

missiles; chemical and bacteriological weapons, such as

toxins and bacteria/virus cultures; and ready-made

technology to produce all of these. In addition, the U.S.

Government and the American expert community have

raised concerns about the safety and accountability of

materiel, such as weapons grade uranium and plutonium.

The unsafe storage of radioactive materials in civilian use,

ranging from fuel for nuclear power stations to

trans-uranium substances used in medicine and research,

represent a proliferation threat, as it is possible to acquire

and enrich such materials to weapons-grade levels, or use

them in dirty, sub-critical devices. A separate but related

issue is the availability of experts capable of developing

strategic systems who are for hire by rogue states, whether

the projects the experts contract for are completed abroad or

while they continue to reside in Russia.

57
Problems with control over strategic weapons and

nuclear materials in the regions have been widely reported

on all levels: at the federal center, in the military, in

security/law enforcement, and in the national economy.

This chapter will examine the factors affecting

proliferation, and will draw conclusions regarding the

interaction between proliferation and questions of

center-periphery relations.

Conventional wisdom holds that the decline in resource

allocation to maintain Russia’s far-flung military-related

facilities is encouraging the scientists and managers of

these facilities to sell their goods abroad. Yet some believe

that local economic and environmental concerns have also

encouraged local authorities to contain and restrict the

activities of these facilities. This chapter will identify the

factors determining which of these trends is likely to be

prevalent.

The conclusions are far from hopeful. In view of the

overwhelming evidence that the military and the Russian

military-industrial complex are the leading proliferators,

there is little reason to believe that local authorities have

either the motivation or the power to act as efficient

inhibitors of proliferation.

The pervasive corruption among national and local

authorities; inadequate and corrupt law enforcement;

powerful criminal organizations with links to global

organized crime; severe problems of budgeting insufficiency

and irresponsibility in Moscow and at the regional (oblast)

levels; lack of interaction between nationally owned

facilities and local governments; and turf battles between

the center and the local governments, all combine to make

the Russian military-industrial complex and the civilian

facilities of the Ministry of Atomic Energy (Minatom) leaky

and dangerous vessels bearing some of the most deadly

weapons systems and technologies on the planet. As these

vessels sink, WMD technologies are being sold and

smuggled out of Russia.

58
At the time of this writing, evidence abounds that

proliferation of strategic weapons is under way, with the

complicity of Russia’s central and regional authorities. It

seems that the government of Russia, the U.S. Government

specifically, and Western allies as a group failed to develop a

comprehensive strategy to address this issue, and a quick

and comprehensive solution to the problem may not be

achieved in the near future.

The Russian Military and The Military-Industrial

Complex: Primary Agents of Proliferation.

As the Soviet Union collapsed in the wake of Mikhail

Gorbachev’s rule, a taste for personal enrichment spread

within the ruling communist bureaucracy. During the

period 1988-90, economic liberalization under

“self-sufficient accounting” (khozraschet), and the Law on

State Enterprises, promulgated in 1988, allowed

state-owned economic units to sell their production at state

prices to small commercial firms set up by their managers,

which could in turn sell the goods abroad at international

market rates. For the first time since Lenin’s New Economic

Policy of the 1920s, the outlook of Russia’s industrial

managers began to change, as profit once again became the

main motivating force behind economic activities. The call

was, “Get it while you can.” Unfortunately, the pursuit of

profit in the absence of the rule of law and adequate

mechanisms of control opened the Pandora’s box of weapons

proliferation.

The Economic Roots of Proliferation.

By 1990, assets were being transferred from the state

pocket to a vast number of companies set up by the Central

Committee of the Communist party with the participation

of its most trusted agents, usually from among Committee

for State Security (KGB) officers and others. These “red

directors” were joined by military and security generals in

gigantic asset-stripping schemes. During this period,

59
industrial enterprises, including those in the

military-industrial sector, began selling strategic stockpiles

of raw materials, an activity that was previously punishable

by death.

For the first time in Soviet history, unprecedented

events in the area of licit and illicit foreign trade in

military-related goods were noted by Russian and Western

observers. For example, ANT, a company with ties to Prime

Minister Nikolay Ryzhkov and other senior Soviet officials,

was caught trying to sell and ship modern Soviet tanks

(T-80s) and other military equipment out of the port of

Novorossiysk.

In 1990-92, while serving on the Board of the

California-Russia Trade Association (CARTA), a small

non-profit organization, I witnessed a flurry of faxed

business offers from the Soviet Union (and later Russia)

containing proposals to sell anything from rare metals used

in military production to military equipment, helicopters,

and aircraft. The floodgates of the Soviet economy, bottled

up for 60 years, had suddenly burst.

This General Went to Market.

As Gorbachev negotiated the withdrawal of Soviet

troops from East Germany, the Soviet generals launched

“economic” activities, selling off military materiel and

equipment worth billions of U.S. dollars. For example, the

Western Group of Forces (Zapadnaya Gruppa Voisk, or

ZGV) entered frenetic economic activities, selling vast

supplies of the fuel that had been stored in East Germany

for the Soviet Army’s future thrust into Western Europe and

the conduct of World War III.

General Pavel Grachev, who later became President

Boris Yeltsin’s Minister of Defense, and General Matvei

Burlakov were often mentioned in the Russian news media

as being leading culprits of this sell-off. Grachev even

earned the nickname “Pasha-Mercedes” for allegedly using

60
Russian transport aviation to import luxury cars, such as

Mercedes Benzes and Volvos, into Russia. Both Grachev

and Burlakov were linked to the murder of investigative

journalist Dmitrii Kholodov, who was assassinated by an

exploding briefcase after publishing allegations of

high-level corruption in the military. The head of an

intelligence unit with the Russian air assault troops was

convicted of the Kholodov murder years later.

The 1990s yielded a bumper crop of accusations of and

indictments for corruption in the post-Soviet military. In

addition to Grachev, Air Marshal Shaposhnikov, the last

Soviet Minister of Defense, was fingered in the news media

as being deeply involved in corruption. Colonel-General

Konstantin Kobets, one-time acting Minister of Defense of

the Russian Federation and a hero of resistance to the 1991

putsch, was sentenced to a relatively short jail term. A

Pacific fleet commander, an Air Force Major-General in the

Far East Military District,1 as well as a number of general

officers in the strategic rocket forces were accused of

corruption. Some were dismissed, but very few were

actually convicted. Generals also in a few cases used

conscript labor to build villas and to farm out labor to

civilians for construction and other projects—an activity

both corrupt and harmful to the morale of their troops.

Russia’s junior officers were not far behind their leaders.

In Murmansk, headquarters of the Northern Fleet, five

naval officers were arrested and charged with attempts to

sell radioactive rods from a number of nuclear submarine

reactors anchored in the bay. In a particularly notorious

case, the former head of Pacific Fleet counter-intelligence

became an operations officer for one of the organized crime

gangs in Vladivostok, headquarters of the Pacific Fleet.

Thus, towards the end of the Gorbachev era and throughout

Yeltsin’s rule, the Russian military demonstrated pervasive

corruption, often at the highest levels. Moreover, with the

beginning of the war in Chechnya (December 1994), reports

began to surface alleging sales of weapons to the Chechen

rebels seeking independence. Some cases of officers selling

61
conscripts to the Chechens as slaves or to be ransomed later

by their families were also reported in the news media.

Unauthorized sales of Russian and Ukrainian weapons

were publicized, as wars raged in the former Yugoslavia and

Africa.

It was only a matter of time before the trade would begin

in WMD systems, components, and technology. In one of the

more notorious of such cases, General Anatoly Kuntsevich,

former head of the Russian chemical weapons program and

later adviser to Yeltsin on chemical disarmament, was

caught selling chemical precursors to binary weapons to

Syria. In 1995, he was charged by the Federal Security

Service with selling 800 kilograms of chemicals in 1993 and

five and half tons in 1994.2 Still, Kuntsevich did not serve

out his jail term.

Even more disturbing are reports that Aum Shinrikio, a

Japanese doomsday cult, reportedly obtained chemical

weapons from Russia. It used the deadly nerve gas Sarin

during its 1995 attack on a Tokyo subway station. There

were reports that Aum was also negotiating for the

purchase of a nuclear warhead from Russian sources. An

even greater cause for concern is reports that Osama bin

Laden’s Al-Quaeda terrorist organization, harbored by the

Taliban regime in Afghanistan, attempted to acquire

nuclear capabilities. Bin Laden may have the means, the

dedication, and the motive to do so.3

An American researcher and former Pentagon official,

Phil Petersen, claimed that while visiting Russia on a

research project in 1992, a missile base commander offered

to sell him a decommissioned SS-20 missile. Although

Russia was supposed to have destroyed all of its SS-20s

under the Intermediate-range Nuclear Forces Treaty (INF),

several apparently were stored “for instruction purposes.”

The Clinton administration refused to go ahead with a sting

operation to catch the culprit.4

Not only missiles but also submarines were available for

sale. U.S. law enforcement authorities thwarted an attempt

62
to sell a Russian submarine to a Colombian drug cartel,

complete with a crew and a vice admiral to command the

vessel. Senior officials in the Ministry of Defense in Moscow

were supposed to clear the submarine sale. An almost

completed sub, along with blueprints in Russian and

various components, was discovered in the Colombian

jungle—yet another attempt to sell a sensitive weapons

platform to a drug cartel.

As James Woolsey, former Director of the Central

Intelligence Agency, testified,

If Russia either follows the path of Weimar Germany’s collapse into

fascism or breaks apart, our problems in this regard will become far

more severe. At the heart of the matter is Russia’s failure, in the

aftermath of the fall of the Soviet Union, to establish the rule of law.5

Woolsey pointed out another important phenomenon which

U.S. authorities dealing with Russian proliferation were

slow to understand—the nexus and inter-penetration

between Russia’s security services, organized crime, and

Russian firms, which regularly do business with the two

other segments of the corrupt Russian society.6

The Russian government often tolerated and sometimes

even facilitated these transactions. For example, Evgeny

Primakov, in his capacity as chief of the foreign intelligence

service (SVR), foreign minister, and prime minister, was

interested in these sales as a means to curry favor with his

supporters in the armed services and the

military-industrial complex. Primakov scored points with

the political “red-brown” coalition, which supported both his

foreign policy and his prime ministership.7 In addition,

Primakov, who cultivated high-level contacts among most

radical and anti-American Middle Eastern leaders, could

easily facilitate weapons sales. Another politician who

developed expertise in promoting arms sales, particularly to

Iraq, is Vladimir Zhirinovsky, the rabble-rousing,

ultra-nationalist leader of the Liberal-Democratic Party.

63
People living in the relatively orderly Western world,

ruled by laws and lawyers, have a difficult time fully

grasping the dire significance of the phenomenon described

by Woolsey. This was a merger between a sophisticated and

ruthless global intelligence service, criminal organizations

with world-wide reach, and a decaying and corrupt military

possessing sufficient resources, including WMD, to wage an

intensive nuclear world war. As of 1990, there were no

government, no laws, and no legal mechanisms to stand in

the way of the unprecedented opportunity to proliferate

strategic weapons.

Regions in Chaos: From Decentralization to

“Strengthening the Vertical Flow of Power.”

The dynamics of center-periphery relations affected

Russia’s proliferation of WMD in the 1990s, and will

continue to do so in the new millennium. During 1992-99,

the executive power in Russia’s federal government rested

with an erratic and increasingly ill Boris Yeltsin. While not

a dissident, Yeltsin had at least some inclination toward

promoting a “Russia of regions,” and experimented with a

federal structure that delegated some authority to regional

governors and the presidents of ethnic constituent republics

of the Russian Federation.

Weak Center and Feeble Control: The Yeltsin Years.

In the beginning of Yeltsin’s tenure (1991-92), governors

were nominated, but after the adoption of the Russian

Constitution in 1993, they were elected. Yeltsin’s political

advisers included a number of academics who sought to

build a federal structure different from the rigid Soviet

system. These included Leonid Smirniagin, a Moscow State

University political geographer who was Yeltsin’s adviser

on federal affairs; Georgy Satarov, a liberal political

scientist who became Yeltsin’s political aide; and Emil Pain,

an expert on ethnic affairs who advised on nationality

issues. The period of the early 1990s is best summarized by

64
Yeltsin’s famous call to the regions, “Take as much

sovereignty as you can carry away.”

In some cases, that dictum was taken too far, too fast.

Moscow could not stomach the attempts of Chechen

president General Jokhar Dudaev to declare independence.

A long and bloody war ensued, which continues to this day.

Tatarstan had negotiated a more autonomous status for

itself than other ethnic republics, which were somewhat

more independent from Moscow than the regular regions.

However, the loosening of Moscow’s grip on the provinces,

and the poor leadership of the armed forces, which tolerated

corruption and the sell-off of military hardware, resulted in

more emboldened governors, local military commanders,

and others pursuing risky deals which involved

increasingly sophisticated weapons.

While dozens of incidents of nuclear smuggling were

reported during the 1990s, security experts believe that

only 10-15 percent of these activities were uncovered. While

in most cases the amounts of intercepted radioactive

materials were too small to produce even a single nuclear

weapon, some experts believe that these were samples, and

that larger amounts of uranium and plutonium may have

been shipped to customers. Moreover, the higher the rank of

the officials involved, the better their capabilities to cover

up the smuggling and the smaller the chances of their being

apprehended.

In any event, during this period most of the military and

military-industrial facilities with the potential to

proliferate were under federal control—that of the armed

services, the Ministry of Defense, and the ministries in

charge of military production. What facilitated smuggling

in the 1990s were loose border controls, corrupt customs

officials, and ill defined (and sometimes, nonexistent) laws.

Local generals were sometimes dependent on the governor’s

largesse, while Federal Security Service (FSB) commanders

in the regions were either in the local oligarchs’ pockets or

engaged in business themselves. Federal prosecutors’

65
offices in the region did not function well, to put it mildly.

Thus, the bureaucratic structures that were supposed to

prevent proliferation by investigating, apprehending, and

prosecuting the culprits were corrupt and inefficient.

Russia was dizzy with its newfound freedom, and often

put it to ill use. Still, WMD smuggling was an activity that

carried a high risk and uncertain reward. Many other

commercial ventures, such as trade in oil, gas, and metals,

were both safer and more lucrative. Still, regional leaders in

the government, business, the military, and organized

crime were minor league players in comparison with their

Moscow betters. The center, on one hand, led the way in

proliferation activities, while on the other, it lacked the tools

to effectively prevent such activities when undertaken in

the regions.

Recentralization under Putin.

The rise of Vladimir Putin and the allied group of St.

Petersburg FSB officials, businessmen, and government

bureaucrats changed the tone, but not the substance, of

proliferation as related to federal control over the regions,

and center-periphery relations. By appointing seven

presidential plenipotentiary representatives (governorsgeneral), five out of seven of them former KGB and military

generals, to oversee the regions, Putin changed the

constitutional make-up of Russia without changing the

Constitution. These presidential envoys have already been

nicknamed “sovereign’s eyes.” They will obviously report to

the Kremlin about any suspicious activities undertaken in

their region, including anything as politically lucrative and

sensitive as sales of WMD and related technology.

Through this latest reform, Moscow is attempting to

reassert its control and to diminish the power of the elected

governors. As part of Putin’s new order, the regional

governors will cease to be ex officio members of the Council

of the Federation (the upper house of the Parliament).

Instead, they will appoint “senators” to represent the

66
regions in Moscow. By diluting the prerogatives of the

governors, the Kremlin is attempting to consolidate its

authority. Rumors abound that constitutional reforms will

be introduced, cutting down the number of Russian regions

from 89 to 30-40. Thus, at least theoretically, it will be more

difficult to engage in proliferation activities under Putin’s

rule without the Kremlin’s approval and financial

“participation” in the profits. However, this does not

necessarily mean that proliferation will become more

difficult—just more orderly.

While reports of corruption continue unabated, a survey

of those named indicates that the Prosecutor General’s

office has been used as a political battering ram against

hostile oligarchs, not as an institutional tool to fight official

graft and organized crime. Few, if any, high profile

corruption trials have taken place under Putin thus far. No

prominent criminal “godfathers” have been jailed. The only

public investigation focusing on Ministry of Defense

generals who allegedly committed embezzlement involves

former Ukrainian Deputy Prime Minister Yulia

Timoshenko and former Russian Deputy Minister of

Finance Sergei Vavilov, and their alleged offense was

purely financial fraud, not corrupt proliferation activities.

This investigation may have been a part of a political

struggle to bring the Ministry of Defense under control of

Putin’s political appointees. No trials of high-level generals

from the military or the FSB have taken place so far—for

proliferation or otherwise.

On Putin’s watch, as under Yeltsin, the most crooked

officials are either quietly dismissed or pushed out, often

being given prestigious jobs. For example, after being

dismissed, Governor Evgeny Nazdratenko was appointed

Chairman of the State Committee (Minister) of Fisheries,

while Governor Nikolai Kondratenko of Krasnodar was

approved for appointment to the upper house (the Council of

the Federation) by his handpicked successor.

67
Putin himself has admitted that the Customs Service is

beyond repair, and that he cannot see a way to clean it up.

Governors and presidents of the autonomous republics are

learning to coexist with Putin’s viceroys, sometimes

publicly trading barbs, as in the case of the young and brash

former Prime Minister Sergei Kirienko, special envoy for

the Volga area, and Tatarstan’s erstwhile President

Minitmer Shaimiev and Bashkortostan authoritarian

Murtaza Rakhimov. However, in most cases, the regional

leaders cooperate in business areas, rather than conduct

open political warfare.

Two areas of concern have emerged to date under Putin’s

rule: first, with a more pliant mass news media, Russia is

becoming less transparent. If, under Yeltsin, reports of

high-level corruption in the military and arms exports,

including WMD proliferation, were relatively numerous,

today little on the subject reaches the newspaper pages, let

alone the television screens.

Secondly, under Putin, powerful state structures such as

Minatom began to openly proliferate, primarily to China,

Iran, and North Korea. These activities are well covered

elsewhere.8 While high officials usually are behind such

activities, they are instances of the blurring of lines between

state and private interests, not the outright contraband

that many feared during the period of lax controls over

regions under Yeltsin.

Some experts have expressed the hope that a more

centralized or even authoritarian Russia will deal with

proliferation more effectively. However, such an

undemocratic Russia could take anti-Western stands and

find its ideological soul mates among rogue states. Such a

Russia would be more likely to conduct an orderly,

government-sponsored proliferation that could be even

more difficult to contain than the semi-clandestine, black

market variety, which is at least subject to law enforcement

activities both domestically and internationally.

68
The Scope of the Proliferation Threat.

An examination of the sources of proliferation in the

Russian regions highlights the multiple sources of danger:

• Nuclear weapons in active service in the hands of the

military, primarily the Strategic Rocket Forces. During the

Soviet era, 45,000 nuclear bombs and warheads were

produced;9

• Decommissioned nuclear weapons in storage by the

Minatom;

• Stockpile of nuclear materials, such as highly

enriched uranium (HEU) and plutonium (altogether 1,200

tons, enough to produce thousands of nuclear devices),

stored by Minatom;10

• Stockpile of low enriched uranium (LEU) and

plutonium for nuclear power stations, which can be

enriched into weapons-grade materials, also stored by

Minatom;

• Nuclear substances used in medicine, civilian

research, and other fields, which could be used in fission

bombs after enrichment, or in “dirty” radioactive devices

powered by regular explosives. These nuclear substances

are widely dispersed, mostly unprotected, and difficult to

control and inventory;

• Nuclear warhead and missile factories and research

facilities, often located in closed or highly restricted

“nuclear” and “missile” cities;

• Chemical weapons deployed in the field and in

storage;

• Precursors for binary chemical weapons;

• Technology to produce chemical weapons;

69
• Biological weapons (toxins, bacteria, viruses, and

other micro-organisms) stored in research labs in Russia

and countries of the former Soviet Union, such as

Kazakhstan;

• Technologies to build biological and chemical

weapons; and,

• Scientists, engineers, and other experts necessary to

build the WMD arsenals.

Since the Soviet Union did not have a military

industrial complex, but rather was one, these sources of

proliferation are widely scattered from Moscow to Eastern

Siberia. Dispersed throughout eleven time zones, Russia’s

WMD “crown jewels” are hard to count and harder to keep.

Table 1 indicates closed cities which, in some cases, are

not even shown on the map. In other cases, severe

restrictions apply to foreigners wishing to visit them.

Table 1. Specialization of Closed Cities.11

70

CITY SPECIALITY

Sarov Nuclear weapons development; the

Federal Nuclear Center

Snezhinsk Nuclear weapons development; the

Federal Nuclear Center

Trekhgorny Serial production of nuclear weapons

Lesony Serial production of nuclear weapons

Zarechny Chemical industry complex

Zelenogorsk Chemical industry complex

Ozersk Chemical industry complex

Novoural’sk Chemical industry complex

Zhelznogorsk Chemical industry complex

Seversk Chemical industry complex

Miass Rocket Center: Makeev Design Bureau

(submarine-launched missiles)

Votkinsk Votkinsk machine building plant (SS-27

Topol ICBMs)

Korolev Outer space systems and orbiting

stations
As the Soviet Union collapsed, the Cold War rationale for

huge defense budgets and gigantic strategic stockpiles

became a legacy of the past and Russian military production

plummeted. In 1992, military procurement budgets were

slashed by 67 percent.12 While many Russian towns and

regions were dependent upon the military-industrial

complex for their welfare, healthcare, and education, since

the early 1990s the federal government in Moscow began

cutting corners and budgets. The military-industrial

complex was told to fund its research and development

through raising export revenue. The situation did not

change until 1999, when a 50 percent increase in the

military budget was announced.

The regional governments never felt ownership over

these federally owned and controlled enterprises and closed

cities. Regional jurisdiction over these areas was extremely

restricted in the Soviet era and remains quite limited today.

Still, enterprising and corrupt former governors, such as

Leonid Gorbenko in Kaliningrad, Evgeny Nazrdatenko in

the Maritime Province (Primorskii Krai), and others, are

capable of pillaging the resources of the military-industrial

facilities and closed cities to generate a cash flow for their

own needs.

Masses of scientists and technical experts—between

60,000 and 70,000 in the Russian nuclear complex alone,

according to one U.S. estimate—remained stranded in the

closed cities with salaries below Russia’s poverty line, or

unemployed.13 Severe unemployment—up to 50 percent or

higher—has devastated many of these towns. Prominent

scientists, such as the scientific director of one of the nuclear

research centers (Arzamas-16/Sarov nuclear research

facility) have even committed suicide.

Living standards have fallen precipitously in those

geographical areas that are most capable of spawning

proliferation. The national government is often months

behind in paying salaries in the military-industrial

factories on which whole towns depend. The majority of

71
scientists and engineers with master’s degrees in technical

disciplines are paid $50-$100 a month. According to a recent

study, only 3 percent of technical experts are paid $100-

$125 a month.14 Many residents in the military-industrial

factory towns have become depressed and desperate, taking

to drinking and suffering from other social ills such as drug

addiction. The residents in nuclear and missile towns are

hobbled by the residency registration (the infamous—and

unconstitutional— propiska system), which in many cases

prevents them from leaving and seeking employment

elsewhere.

Even with massive aid from the U.S. Government,

sensitive weapons, enriched uranium, and technology are

not safe from illicit acquisitions by rogue states or terrorists.

According to a report by the U.S. General Accounting Office

in February 2001, after spending $2.2 billion over almost 10

years, only 14 percent of Russia’s weapons grade material

has been fully secured.15 Obviously, nuclear safety is not a

priority for the Russian government, which, with its

increasing anti-Americanism, makes cooperation by

Minatom and other official Russian agencies with

American-funded programs sponsored by the Departments

of Defense and Energy (and with some American

nongovernment organizations [NGOs] in Russia),

particularly difficult.16 This is unfortunate, as the Russian

federal government has partially abandoned responsibility

for maintaining the social infrastructure of the closed cities,

leaving it to the regional governments to provide social

services, including schools, healthcare, subsidized heat, and

housing.

It comes as little surprise that under these conditions of

extreme hardship, Russians find ways to cash in on their

expertise. For example, the Reutov Mashinostroyenie

Science and Production Association in the Moscow oblast,

and Aksion, a firm from the highly militarized city of

Izhevsk (Udmurt Autonomous Republic), are participating

in selling to Iran a national satellite communications

system with numerous defense capabilities. Other firms

72
from the regions are participating in transferring SS-4

Intermediate Range Ballistic Missile (IRBM) technology

and cooperating with Iran on developing its Shihab series

IRBMs and intercontinental ballistic missiles (ICBM).17

Russian government agencies, led by Minatom,

facilitated the transfer to Iran of 500 technicians and

engineers who work on the Bushehr nuclear reactor project,

and cooperated with Iran in bringing other Russian

scientists to develop less innocuous nuclear projects.

Employment of Russian specialists abroad alleviates the

domestic employment situation in closed cities and

money-starved military-industrial facilities; earns hard

currency for the state; and lines the pockets of corrupt

government officials who facilitate such projects.

Russia’s Regions: First in Production, First

in Commerce.

Since the late 1990s, the Russian regions realized the

naivete of passively waiting for handouts from the center.

Instead, they are actively seeking markets abroad for the

conventional weapons systems they manufacture. For

example, firms from cities with strong military-industrial

capabilities such as Per’m, Sverdlovsk, Tula, and Izhevsk

regularly participate in a huge weapons show in the United

Arab Emirates. Alexei Arbatov, Deputy Chairman of the

Duma Defense Committee, stated recently that Russian

weapons exports to China, India, and Iran are equal to

one-half of the Russian military acquisition budget.18 It is

only logical to assume that players from the regions with

business and technical expertise are being approached to

sell more sensitive systems, including WMD.

Sometimes, cases of outright violation of applicable laws

occur, but these are hushed up by the proliferators’ friends

and associates who work for the security services and other

influential branches of the government—often in exchange

for a percentage of the profits or an agreed-upon sum of

money. Thus, a prominent businessman from Siberia

73
admitted in an interview with a credible, well-known

Russian sociologist, whom the author knows personally,

that a large part of his wealth comes from sales of

weapons-grade enriched radioactive materials from

Krasnoyarsk-26, a well-known closed city, to Middle

Eastern countries. FSB, the Russian secret police and

successor to the KGB, summoned the researcher and

requested that he not publish the story, effectively playing

the role of “roof” (criminal protection) for the businessman

who admitted violating Russian laws.19

Instead of participating in proliferation, it has been

suggested by American experts that nonproliferation and

arms control centers can be created in Russian nuclear

cities. Such centers, employing some of the scientists and

engineers, could be given the status and authority of

proliferation monitors responsible for keeping tabs on

Russia’s sensitive exports. Western advisers further

suggested that these centers be granted a more prominent

role by the Russian government in export control and

evaluation, similar to that of U.S. government labs, which

are routinely consulted by the U.S. Department of Energy in

export control decisions. The center in Snezhinsk already

performs such a role.20 However, Moscow has been slow to

delegate its controlling authority over sensitive exports to

regional players.

Russia’s Regional Rationale for WMD Proliferation.

As time goes by, the Russian regions, military districts,

and industrial enterprises are developing direct relations

with countries around them. No longer do all economic ties,

including those in the military sector, have to be approved

by Moscow. Thus, the Russian Far East oblasts have

developed particularly strong connections with the People’s

Republic of China. Tatarstan has made a point of developing

bilateral economic ties with foreign countries while paying

little attention to Moscow’s wishes. Iran has developed ties

to research and academic institutions in Moscow and St.

74
Petersburg, where the bulk of Iranian students study

nuclear physics, military engineering, and space-related

disciplines.21

Moscow actively pursues high profile contacts with the

leaders of rogue states, such as the visit of President

Khatami of Iran to Moscow in the spring of 2001, and the

“historic” train ride through Russia in August of 2001 by

North Korean leader Kim Jong-il. While in Russia, these

leaders visit Russian aerospace and nuclear facilities in

highly publicized media events. These contacts send a clear

message to the Russian regions that rogue countries are

respectable military-industrial partners of the Russian

Federation.

It is only a matter of time before these foreign parties

request their Russian counterparts to provide sensitive

technologies, either dual-use or WMD. At the same time,

export and customs controls have been rendered ineffective

due to pervasive corruption, which allows Russian regional

players with pecuniary interest in military-related sales to

serve as intermediaries and facilitators in such sensitive

transactions. Civilian officials, such as governors,

military-industrial “red directors,” and senior military

officers have their networks of contacts and patronage.

They are in a position to bribe customs officials, obtain

export control exceptions and necessary export licenses, or

arrange for items to be exported using the ubiquitous

Russian military-transport aviation. This air transport

system often flies around the world, sometimes on missions

having little to do with ferrying Russian troops, such as

transporting illegally trafficked arms and drugs.22

Brain Drain or Brain Upgrade?

The employment situation in the military-industrial

complexes in the regions is desperate, and an absolute

majority (80 percent) among Russian technical experts in

the closed cities would be willing emigrate and work for the

military industries of other states.23 It is worth mentioning

75
that 64 percent of those prepared to emigrate would be

willing to work with “any” organization to achieve their

goal, while 24 percent would like to cooperate with a “special

state-run agency.”24 This is a strategic threat in itself, and

will be treated separately in Chapter 6 of the present

volume.25 However, there is another clear and present

danger—Russia still boasts an impressive array of colleges

and universities which can prepare competent scientists

and engineers capable of producing WMD arsenals. These

institutions of higher learning, which specialize in nuclear

physics and chemistry, ballistics, and rocketry, are located

not only in Moscow and St. Petersburg, but also in

provincial towns, often those which boast advanced military

industrial facilities, as well as in the closed cities.

One of the more prominent among such institutions is

the Baltic State Technical University in St. Petersburg,

which specializes in ballistic missile design and space

technology. Together with ten other institutions, the

University was selected for sanctions by the U.S.

Government for educating Iranian students. While a

professor at the University claimed that he earned 83 cents

a day in Russia, Iranians were willing to pay salaries in

excess of $2,500 a month—a fortune for a Russian academic

who is close to retirement. Some of the faculty, such as

Baltic Technical University Rector Yurii Saveliev, do not

hide their anti-American animus.26 The authorities in these

institutions of higher learning not only tolerate, but even

approve education for students from India, Iran, Iraq, and

other problematic states. They also authorize faculty travel

to rogue states to teach in technical institutions there.

While, during the Soviet era foreign students from the

Third World were provided free education, lodging, and

stipends, today these students or their governments pay for

their education.27 Thus, the “export of higher education” not

only keeps Russian professors employed, it earns otherwise

scarce funds for colleges and universities.

76
There is no unified authority in Russia monitoring the

education of foreign students in sensitive fields. When the

author recently raised this issue with Russian security

experts and government officials, the answer was that the

West is educating even more Iranian and other students in

physics and sensitive technological fields, and that Russia is

no more to blame than the West. According to the Russian

Foreign Ministry, “hundreds” of Iranians and Iraqis

received advanced degrees in physics and other disciplines

in Great Britain, France, and the United States in the 1980s

and 1990s. Moreover, according to the Russian Ministry of

Foreign Affairs, when Moscow raised this issue with the

United States, the answer allegedly was that the United

States was a free country, and no academic censorship was

tolerated.28 The government of Russia thus refuses to take

responsibility for the proliferation of sensitive knowledge

from its colleges. This is yet another aspect of proliferation

which allows often unstable regimes in developing countries

to build up their WMD arsenals.

Conclusions.

The role of Russia’s regions in this process is important,

but still secondary when compared to that of Minatom, the

Ministry of Defense, and Moscow-based aerospace firms. It

is Moscow that sets the pace for sabotaging international

efforts against proliferation. While the Russian government

maintains that it adheres to international export controls,

such as the Missile Technology Control Regime (MTCR), the

Nuclear Suppliers Group, and the Australia Group, the

reality is different. Russia is exporting sensitive systems

and technologies to countries hostile to the United States

and her allies, such as China, North Korea, Iran, and Iraq. It

is likely that Russia’s military exports of conventional,

dual-use, and WMD systems and technology to clients in the

Indian subcontinent, East Asia, and the Middle East will

grow in the future. These technologies cover the whole

spectrum of nuclear, missile, chemical, and elements of

biological weapons.

77
The gap between rhetoric and performance is yawning,

while American protests encounter a range of responses

which are totally inadequate, from marginal attempts to

bring illegal and sensitive military exports under control to

outright sabotage and denial.

Russia’s regions cannot fail to notice the double

standard, which Moscow promotes, rhetorically denying

proliferation while pursuing it in practice. It can only be

expected that the regions will follow Moscow’s lead in the

dangerous proliferation game the Russian government is

playing. And as long as the regional players keep Moscow’s

gatekeepers happy by sharing the proceeds, the deadly

exports will continue.

It would be in U.S. interests if the Russian government

were to offer alternatives to proliferation to the militaryindustrial enterprises and the military units possessing

strategic systems and technology. Military conversion and

civilian economic development, possibly involving U.S.

firms, would provide an alternative source of revenue to

potential and actual proliferators. However, the degree of

transparency and reliability of Russian partners has been a

problem in past U.S. efforts, and must be held to the highest

standard. Safeguards designed to prevent proliferation

activities by beneficiaries of U.S. conversion and

investment programs must be designed and adhered to.

Finally, information is the key to monitoring and

preventing proliferation. While Moscow and St. Petersburg

boast ample contingents of American diplomats and

consultants, the situation is different outside the capital

areas. Thus, the United States might consider increasing its

presence and developing contacts in the regions. This could

include official U.S. Government representatives and

American NGOs. Even more importantly, contacts have to

be expanded with potential Russian allies in the

government and the NGO communities, who may play a role

in curtailing proliferation activities. The official institutions

could include governors’ offices, the FSB, the General Staff,

78
military district commanders and staff, and customs

officials. The nongovernment community could include the

environmentalist movement, the news media, and

authorities in higher education.

Only through broad cooperation with Russian

institutions can U.S. efforts to stem the flow of proliferation

have a chance at succeeding.

ENDNOTES - CHAPTER 3

1. Gregory J. Rattray, “Explaining Weapons Proliferation: Going

Beyond the Security Dilemma,” USAF Institute for National Security

Studies, FNSS Occasional Paper I, July 1994, p. 6. See www.usafa.

af.mil/inss/ocpl.html.

2. Kent Esbenshade, “Weapons Proliferation and Organized

Crime,” USAF Institute for National Security Studies, FNSS Occasional

Paper X, p. 17. See www.fas.org/irp/threat/ocp10.

3. “Plutonium for Sale,” New Scientist, May 12, 2001, p. 6.

4. Phil Petersen, former Pentagon official, interviewed by author,

Washington, DC, 1994.

5. R. James Woolsey, “Russian Weapons Sales to Rogue Nations,”

testimony before the House International Relations Committee,

Thursday, May 25, 1999, p. 2, as reported by Federal Document

Clearing House. See www.web2.westlaw.com.

6. Ibid.

7. Ibid.

8. Stephen J. Blank, “Russia as Rogue Proliferator,” Orbis, Vol. 44,

No. 1. See also Blank, “Russia Seeks to Profit from Iranian

Rearmament,” Jane’s Intelligence Review, Vol. 13, No. 4, April 1, 2001.

9. Vitaly Shlykov, “Chto pogubilo Sovetskii Soyuz. Amerikanskaya

razvedka o sovetskikh voyennykh raskhodakh” (What Destroyed the

Soviet Union. American Intelligence on the Soviet Military Expenses),

Voyennyi Vestnik (Moscow), No. 8, April 2001, p. 26. U.S. estimates were

lower: “only” 30,000 nuclear weapons.

10. Ibid.

79
11. Valentin Tikhonov, “Russia’s Nuclear and Missile Complex. The

Human Factor in Proliferation,” Washington, DC: Carnegie

Endowment for International Peace, 2000, p. 5.

12. Shlykov, p. 9.

13. “Transforming the Russian Nuclear Weapons Complex. The

Role Of Non-governmental Institutions,” Russian Nuclear Complex

Conversion Consortium (RANSAC), June 22-23, 1999, p. 1. See

http://www.ransac.org//new-web-site/pub/reports/ccc-report.html.

14. Tikhonov, p. 9.

15. “Plutonium for Sale.”

16. Steve Howard, Executive Director of Russian Technology

Initiative, interview by author, Washington, DC, June 2001. Russian

Technology Initiative is a Russian-American NGO dedicated to military

conversion.

17. Stephen J. Blank, “Russia and the Proliferation of Weapons of

Mass Destruction,” The World and I, Vol. 13, No. 10, October 1, 1998.

18. Alexei Arbatov, “Russian National Security at Home and

Abroad,” lecture, Washington, DC: Center for Nonproliferation Studies,

Monterey Institute of International Studies, August 13, 2001.

19. Source interviewed by author, Washington, DC, June 2001. The

source requested anonymity stemming from his fear of invoking more

wrath of the businessman in question and the FSB.

20. “Transforming the Russian Nuclear Weapons Complex,” p. 12.

21. A Russian aerospace academic expert who requested anonymity,

interview by author, New York City, May 2001.

22. Rattray.

23. Tikhonov, p. 11.

24. Ibid., p. 57.

25. Mark Kramer, “Demilitarizing Russian Weapons Scientists:

The Challenge,” chap. 6 in this volume.

80
26. Colin McMahon, “For Russia’s Top Scientists, Disillusionment

and Misery,” Chicago Tribune, September 9, 1999, reprinted in Orlando

Sentinel, September 12, 1999, p. G1.

27. Tuition ranges from $5,000 to $7,000 a year in “non-technical”

universities. Engineering degrees that require extensive lab use may be

even more expensive. Professor Z. I. Mishina, Patrice Lumumba

University, interview by author, Moscow, May 2001.

28. Official, Department of North America, Russian Ministry of

Foreign Affairs, interview by author, Moscow, May 2001.

81
CHAPTER 4

THE HEALTH AND FUTURE OF RUSSIA’S

POPULATION

Murray Feshbach

Demographic Trends.

The dynamics of Russian demographic trends will

reduce the number of persons born. They will also increase

the death rate because of the deteriorating health of the

population stemming from major increases in unhealthy

children born and subsequent illness and mortality

patterns. They portend a decline in the new labor supply.

They portend a decline in the number of 18-year-olds

available for the draft, and of this declining number, they

portend a greater proportion who are poorer and thus

unhealthier. Finally, they will affect family formation and

dissolution, bringing about declines in total fertility rates

through a reduced number of women in the prime fertile

ages, which in turn will lessen the potential numbers of

births now and into the future. By the year 2050, these

dynamics will result in the decline of perhaps one-third (or

more) in the population of 144.8 million persons existing at

the beginning of 2001.

Sometimes even more apocalyptic projections are found

in Russian government and legislative reports or speeches.

Russian Labor Minister Aleksandr Pochinok, Russia’s

current Prime Minister Mikhail Kasyanov, and others

speak of sharp declines in the labor supply in the immediate

future or several years from now. These trends, combined

83
with the poor health of newborns, will adversely affect

future productivity gains and other economic possibilities.

Huge impending increases in mortality from Human

Immunodeficiency Virus/Acquired Immunodeficiency

Syndrome (HIV/AIDS) or associated opportunistic illnesses

(including tuberculosis [TB], on its own or as a cofactor with

HIV/AIDS and others) likely will make for major shifts in

the prevailing causes of death. They will also increase

mortality while concomitantly lowering average life span.

Russian President Vladimir Putin’s hope for the

immigration to Russia of 500,000 persons per year will not

fulfill the requirement of at least 750,000 new births per

year simply to sustain the population, let alone provide for

growth.

Moreover, cultural impediments to assimilation

encountered even by Russians returning from the near

abroad (i.e., the former Soviet territories plus the Baltic

states) as well as by emigrants from other nationality

populations, will be difficult to resolve because of, among

other issues, the lack of facilitative funding by federal and

local authorities. Such impediments further reduce the

potential for a solution through immigration. My projection

of 100 million people in Russia by the year 2050 may well be

optimistic.

Putin, in his first State of the Union message in June

2000, listed 16 major problems facing the country.

Remarkably, and without precedent for a national leader,

he cited the demographic problem first. He underscored the

net decline in the population (births minus deaths plus or

minus net migration) of some 750,000 per year as the basis

for his anticipation of the problem. However, he stipulated

that economic growth depended on an increase in the

number of people. Of importance is not only the gross

number, but also the numbers surviving for future fertility

(which affect future labor force numbers and the future

recruit pool for the military) and the morbidity and

mortality patterns existing currently and in the future. My

projection of some 100 million by the year 2050 is eclipsed in

84
terms of apocalyptic magnitude by Nikolay Gerasimenko,

the head of the Duma Committee on Health and Physical

Fitness, who projects a population of 50 to 75 million by the

year 2075. (It is a bit heroic to go out this far into the future.)

Russian demographer Sergey Yermakov and a colleague

have projected a figure of 70 to 90 million for the year 2050,

and the higher figure may be quite reasonable. Projecting

the bare numbers, however, is not truly to the point. What is

to the point are the implications of these projections for the

society, the economy, the military, social stability, and the

like.

Official Russian governmental projections for the 20- to

29-year-old female population indicate that the

demographic echoes of the decline in the number of births

which had begun in 1987 will continue to be felt. This

decline will have a dramatic impact on the numbers of

women at the prime fertile ages beginning in 2007. The

numbers are expected to decline from 12.7 million women at

these ages to 7.2 million by the year 2022, and decline even

further by 2050 to 6.4 million. Unless fertility increases

dramatically, by these numbers alone the likelihood of an

increase in population is very, very small. Moreover, as we

shall see from the health of the population in general and of

females in particular, the negative health trends will clearly

affect future fertility in a manner depressing potential

growth even further.

Mortality will increase markedly without a doubt as the

impact of HIV/AIDS and TB hit in full force beginning in

about 2005 and continuing until major breakthroughs

occur in prevention and treatment, and the necessary

funding becomes available. These conditions are not easily

met. The numbers of TB deaths alone have increased by 33

and 30 percent in 1999 and 2000, respectively, and promise

to increase even more as the amnesty of prisoners with TB,

especially multidrug-resistant TB (MDR-TB), continues

apace. In this instance, the authorities are damned if they

do—for releasing pathogenic individuals—and damned if

they don’t—by the human rights community because of

85
incredibly bad conditions in Russian detention centers and

prisons. If people were not sick before they entered in jail, it

is almost guaranteed they will be sick with TB or other

diseases upon release.

The leadership, as one possible solution to the

population problem, is currently considering migration

possibilities, which also have important military

implications for the long run. With net in-migration having

peaked at some 800,000 plus in the early 1990s, the net

in-migration totaled only about 140,000 in 1999. The first 11

months of 2000 saw a total of 338,000 in-migrants

(excluding out-migration), which is one-third of the 1994

figure of 1,140,000. Putin and others have expressed the

hope and desire that the number will increase to some

500,000 (on a net basis) from the near abroad. On one hand,

a major influx is very unlikely to occur at the desired level in

the near term without the push of major economic, ethnic,

ecological, or other disasters in these areas. While the

Taliban threat to the southern tier is a consideration for

these policymakers, it may not come quite to the level of

actual war. Emigrants from Afghanistan number about

150,000, but only 500 have formal refugee status.1 An

Armenian earthquake or another Chernobyl event in

Ukraine might lead to a large number of migrants, but

would likely be only one-time events.

Of greater help would be the improvement in conditions

for legal, let alone illegal, migrants already in Russia. Many

of these legal migrants have not been supported in the

manner promised, nor is it likely that sufficient monies will

be forthcoming from the federal or local governments to

handle a large increase. Nor will the indigenous populations

be so welcoming, given their own problems of resource

availability for housing, health care, and jobs. The

lebensraum of southern Siberia and the Far East might be a

draw for large numbers of Chinese. Currently, estimates of

the number migrants there, including Chinese, vary from

700,000 to 1.5 million legals and from 500,000 to 4-5 million

illegals.

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While China could spare several hundred million (out of

a current total population of 1.3 billion), it is doubtful that

numbers of this magnitude are realistic. A large number,

say 50 million, undoubtedly would be seen as a threat to the

national security of the Russian state. Moreover, on the

assumption that even a smaller number (perhaps tens of

thousands) of young Chinese move into Russia under legal

regulation and passports to become permanent residents,

would they be subject to conscription? Would they serve?

Would they be in sufficient numbers to worry the General

Staff about their loyalty? Would they be assigned to

sensitive strategic combat arms? Would a professional army

(if the government can afford it) obviate large numbers of

such citizens for a conscriptee pool? These are all relevant

questions, albeit not yet much talked about in the public

domain.

While China expert Steven Mosher points out that there

are some 5 million permanent Chinese workers and their

families resident in the area, it would appear from other

evidence that this number is too high.2 In January 2001,

experts from several Russian government agencies,

including the Federal Border Guard Service, estimated that

the number of illegal migrants in the previous 5 years from

all countries had increased by 10 times. According to their

figures, the total number of illegal Chinese migrants

approached 750,000, while some 250,000 additional

Chinese citizens were officially registered.3 These figures

are much lower than Mosher and some others estimate. But

the military input continued to warn of the potential for

large numbers of “residents” (read the Chinese in

particular) to eventually demand “establishment of

national autonomies.” Nothing is said in the agency experts’

report about what might be done about it, but the warning is

clear.

Such concerns are valid. Valentina Matviyenko, a

Deputy Prime Minister for Social Issues, noted the Chinese

emigration problem in a speech in the Far East, declaring it

a national security threat. Mosher quotes former Russian

87
Defense Minister Pavel Grachev, who warned as long ago as

1995 that “the Chinese are in the process of making a

peaceful conquest of the Russian Far East.”4 So have others

since, but the recent rapprochement with China may lead to

further regularized influxes of aid to the regional economy

and perhaps limit the Chinese to this area. Whether it will

lead in the future to territorial claims is unclear, but such is

not impossible. Will this be another Chechnya? National

patriots and various strategic policymakers worry about the

loss of territory in Chechnya and its precedent for other

regions of the Federation. James Billington, the Librarian

of Congress and a renowned Russian historian, in a speech

given at the U.S. Institute of Peace in May 1999, is quoted by

Mosher as predicting a likely Chinese intervention in

“Siberia in the next 10 to 15 years.” The potential is high for

this to ensue, but as yet still uncertain.

Russian policy seems to be one of trying to head off a

large influx at least. Putin has ordered the formation of a

working group to prepare proposals on the regulation of

immigration. Their report was due on March 20, 2001. The

report’s actual contents are not yet known, but likely will

pay much attention (even if not spelled out in any public

announcement) to the “Yellow Peril,” to cite a historical and

cultural expression of the Russian fear of the Chinese. The

potential influx does not appear to have been factored into

the migration projections of the State Statistical Agency. In

its official report, it projected a figure of 132,000 net

in-migrants in 2000 and only 60,600 in 2015.5 This figure is

very different from the desired figure, according to the Putin

policy initiative. Within the regions the Chinese are

expected to “occupy,” the Goskomstat projects a decline of

20,600 net in-migrants in the West Siberian Region, 26,900

in the East Siberian Region, and 33,900 in the Far East

Region—a decline totaling 81,400, rather than the millions

being anticipated. Interesting. One awaits the next year’s

Statistical Bulletin on population projections to see if this

issue has impacted the technical authorities rather than

88
simply those political and military operatives concerned

with the future of the region.

Health Trends.

Perhaps the most important factor that will affect

Russian national security will be the impact of the numbers

of deaths projected by Russia’s leading epidemiologist on

HIV/AIDS. Vadim Pokrovskiy, head of the Federal

HIV/AIDS Prevention and Treatment Center of the Russian

Ministry of Health, predicts that 10 million or so

predominantly 15- to 29-year-old males will begin to die by

2005, definitely by 2010. I fully anticipate that this

eventuality, in combination with the deaths and illnesses

from other causes, will seriously affect not only the overall

demographic trends, but future labor supply and quality,

the armed forces’ combat capability, family formation,

family stability, international status, and on and on. When

combined with the very major increases in deaths from TB

mentioned previously, the numbers of people affected and

concomitant economic costs become staggering. Such costs,

when added to other costs to the economy from illness due to

poor water, solid particulates in the air, past overuse of

pesticides, and chromosomal aberrations causing

spontaneous abortions/miscarriages in the so-called

military chemical cities such as Dzerzhinsk and

Chapayevsk, may become well-nigh intolerable. The growth

of drug abuse, the spread of syphilis both in itself and as a

precursor to the transition to HIV/AIDS, and the spread of

hepatitis C as a cause of death and as another precursor to

HIV/AIDS, add even more detriments to the declining

health of the population.

The global infectious disease threat emanating from

Russia and the region is part and parcel of the strategic

implications for other countries, with TB, syphilis (due to

the export of women for the sex trade), HIV/AIDS, and

possibly malaria affecting near and far distant countries in

the future, if not already. Sweden has seen a large,

89
unexpected growth in syphilis, for example, and a strain of

TB is spreading to other countries like that found in Russia,

especially MDR-TB. The U.S. National Intelligence

Council’s report titled Global Infectious Disease Threats

and Their Implications for the United States issued in 2000,

reveals the tip of the likely large iceberg of threats to other

countries posed by Russia unless the Russian (and

Ukrainian, one can add) health situation improves

dramatically. It may be too late to head off these threats, but

much can be done to mitigate the regrettable impact.

Where to begin? How will Russian health authorities

deal with the simultaneous increases in drug and substance

abuse plus the spectacular increase in sexually transmitted

diseases, especially syphilis, HIV/AIDS, TB, hepatitis C,

and hepatitis B? How will they deal with the low survival

rate of 16-year-old males (only two-thirds of the rate of

16-year-old males in the United States who reach age 60),

and the increasing proportion of children born unhealthy,

who have chronic conditions leaving them impaired for the

rest of their lives, especially at age 18, the draft age?

Another alarming trend is the declining reproductive health

of women and the consequent adverse impact on the health

of newborn children. If the leading pediatricians (Tabolin

and Baranov, as well as other public health authorities) are

correct, only 10 or perhaps 15 percent of children under age

15 are healthy.

Stunting (that is, lower height by age, based on world

health standards) and wasting (lower weight by age) are

increasing among the young, which of course also leads to

ineligibility of 18-year-old males for the draft. The national

health indicator averages projected by Tabolin and Baranov

need to be supplemented by information on regional health

status differentials, with particular attention to the

regional sources of recruits for the military. Efforts can then

be targeted to improve the overall health status of young

persons in the least healthy regions.

90
The need to improve health conditions is certainly

manifest when the head of the Moscow Military District,

Mikhail Sorokin, can declare that only one in ten Muscovite

males will be available for the spring 2001 draft in his

district, a main reason being that 40 percent cannot be

drafted because they are too ill and 10-20 percent are draft

dodgers (many of whom have “acquired” a certificate

affirming mental problems). At the same time, he notes that

a whole army company stationed in the Caucasus, 80

persons in all, “really do have mental and psychiatric

problems.” Of those actually drafted, many are drug addicts

and HIV-carriers, which does not bode well for their active

duty performance.

The problem of conscript health can be readily

demonstrated by tracking the pattern of syphilis rates, drug

abuse, and substance abuse in the last decade. From 1989 to

1998, for example, the rate per 100,000 population of new

incidence of syphilis has increased by over thirtyfold, drug

abuse by over tenfold, and substance abuse by over 20

percent. Due to changes in legislation which made new

syphilis sufferers subject to legal penalties beginning in

1998, the actual number of new syphilis incidence is

undoubtedly higher among the conscript age cohort.

Especially given the putative major reduction in

conscription for the armed forces by 2010, why then does the

military not press the Putin government to do more? Given

the military’s opposition to a nonconscript force, is the

military’s expressed concern strictly for the record? Putin

asserted on March 21, 2001, that (as quoted by ITAR-TASS

the next day) “the navy, air force, missile forces, and some

other arms and branches of service are 80 to 90 percent

staffed by professionals.” These figures seem high compared

to other information and surprising, given demographic and

health constraints. Where the funding to pay for an entirely

voluntary military would come from is far from clear.

91
The Educational System.

Disarray in the educational system continues in Russia.

Though educational reforms have been implemented, the

results are quite uncertain and could negatively affect

human capital formation in the future.6 This threat to

training of current and future generations is due not only to

the professional fields that students individually decide to

study or not to study, but also the debatable quality of many

so-called private schools and college-level institutions. In

addition, the health of students as a reflection of society in

general and of the youth culture in drug abuse and other

socially aberrant behavior, has led to many discussions

about the impact on the student population and students’

participation in society, if and when they graduate. For

example, several reports indicate that St. Petersburg’s

Education Department, as of March 2001, was worried

about the further worsening of school children’s health over

the previous 3 years, and noted that this generation’s health

was becoming “significantly worse.” In addition, they found

that only one of every ten children 10 years of age and under

was healthy, and only one in 20 above age 10 was healthy.7 If

this situation continues, and it likely will, then what does

this do to the students’ ability to study as well as function in

society? Not to be outdone, in a regrettable kind of

competition, Leonid Ivanov on the same date indicated that

in Tyumen city (located in West Siberia) the city’s medical

community held a special session to discuss the significant

rise in tuberculosis among students of higher educational

institutions.8 The report asserts that the main reasons for

such increases in TB are the “socially aberrant behavior”

cited above, as well as “poor nutrition, a poor

epidemiological situation, and a genetic predisposition to

illness.” I do not know how the latter point could be proved,

but the other possible underlying causes are widespread

and germane to such situations.

Shortages of funding for salaries, for computerization,

and the like, which led to strikes by about 300,000 teachers

92
in 39 regions of the country on February 27, 2001, could well

lead to further deterioration of this sector and adversely

affect the economy as well.9 The potential for economic

discrimination is being realized as the shortage of money for

education has led not only to the growth of private higher

educational institutions, but also to high tuition, leaving

behind many who are at the lower end of the economic

ladder. Moreover, the share of tuition-paying students has

increased markedly since 1995. In 1995, one of every 5

rubles (20 percent) for the sector was paid by so-called

“commercial” students; in the 2000-01 school year, 56

percent is derived from private payments. Will talented

students be excluded?

Much has been accurately written on the growth of

educational achievement by the Russian population, but the

future is more tenuous because of the recent volatile and

uncertain educational climate. The demographic downturn

in the number of births by 50 percent over the past 13 years

(1987 to 2000) will provide a much smaller college

population beginning in 2015 as students reach 18 years of

age. The number of graduates could be too small for the

needs of the country, both in absolute terms and in numbers

of high-quality students.10 The past is thus no longer

prologue in terms of quantity, and perhaps even in quality,

as the confusion in the educational system continues to

grow. Attempting to make projections of the number of

future scientists in all sectors of the economy is frustrated

not only by the declining numbers of potential students, but

also by the unknown pattern of fields of study they will

choose; ignorance of whether they will join the public or the

growing private sector; and lack of certainty as to whether

they will reside in Russia, given the alarming trends in the

permanent and temporary brain drain. In addition, one

would need to know whether graduates will actually do the

work they trained for or work in other job slots (for example,

many engineers now work in business or finance); what the

relative shares of civilian versus military employment will

be; and whether students will be subsidized with adequate

93
stipends in their training (e.g., with college or university

fellowships). Such uncertainties make any projection very

tentative and likely wrong.

During a talk given by a former Russian Minister of

Science, Boris Saltykov, at Georgetown University in

1997—well before much had changed in population

numbers, enrollment, expansion of the private educational

sector, and announcement of major reforms in the Russian

military—he asserted that only about 100,000 scientists

were actually active in their science specialties. As reported

by Dr. Harley Balzer, head of the Center for Eurasian,

Russian, and East European Studies at Georgetown

University, Saltykov stated that roughly half of the

scientists were employed in civilian research and half in

military-related work.

At the same time, the number of researchers among

scientific workers (nauchnyye rabotniki) was reported by

the State Statistical Agency as having dropped sharply over

the period 1992-98 (from 804,000 in 1992 to 417,0000 in

1998).11 At the same time, the number of admissions to

graduate studies and enrollment in their physicalmathematical, chemical, biological, and technical studies

programs increased from 6,606 students in 1992 to 14,350

in 1998.12 This rise in science enrollments is quite contrary

to the trend of the overall number of scientists. Graduations

over the same period, however, declined from 8,102 to

7,798.13 All disciplinary fields cited above declined, except

for those students who finished graduate schooling in the

biological sciences. This is an interesting development, but

too imprecise to indicate anything about where they ended

up working.

In sum, then, I do not consider it possible to prepare any

serious projections related to science graduates until the

educational, employment, military reforms, and/or budget

allocations become realistic. This is especially true when

these factors are combined with the future demographic and

health dynamics. In addition, the difference to date between

94
words and reality leave too large a gap to hazard anything

more than completely untenable estimates and projections.

What is reappearing from the past is a growing

“demand” for a return to the system of obligatory

assignment upon graduation from a higher educational

institution. Putin noted in a speech at Novosibirsk State

University in November 2000 that he did not believe in such

obligatory assignments because “people have to learn to be

self-sufficient.” However, he went on to explicitly exempt

state-owned defense enterprises. Since there is a system of

government contracts, and it includes a specific table of

organization and types of specialists needed to perform the

work, free choice allowed since the early 1990s will change.

Within 12 to 18 months, the former personnel distribution

system for training engineers for the defense industry

throughout Russia will be restored.14 This action would

appear to be closely linked to the discussion at a conference

held in the Kremlin Palace on December 14, 2000, under the

rubric “Professional Engineering-Technical Education and

Military Education in the Twenty-First Century.” The title

of an article appearing in the military newspaper Krasnaya

Zvezda on February 16, 2001, is “Engineers Are the Golden

Reserve of Russia.” Clearly, the military sector has had

trouble retaining young engineer lieutenants and/or

recruiting the quantity, and likely the quality, of engineers

it needs to fill its national security role. Thus, freedom of

choice for college and university engineering graduates will

be restricted. The pre-1990 rule for a 3-year period of

obligatory time in the assigned job is not specified in the

source, but likely will be at least that amount of time when

the details emerge from this initiative.

Implications for the Future: A Brief Summary.

The relation between demography and health trends is

not very positive for productivity gains leading to economic

growth or for enhanced national security of the state

because the limits engendered by an unhealthy and much

95
smaller population impact the following generations.

Denial by some members of the establishment in Russia

continues to this day. Coming out of a meeting of the Board

of Directors of the Ministry of Health of the Russian

Federation on March 20, 2001, Minister of Health

Shevchenko is reported to have affirmed that the health

concept adopted 3 years earlier had been “basically

realized.” Yet, contradictorily, he is then said to have added,

“But the health situation has worsened.” I would have

thought these two statements are at odds with one

another—but he apparently did not. However, according to

the same report, during an unscheduled visit, Vice Minister

for Social Affairs Valentina Matviyenko issued a “short

unplanned statement” to the effect that the “budget

allocation for the health sector is declining, and this affects

the situation as a whole.”15 Moreover, she went on to say

that “tuberculosis is growing as a threat, and

HIV-infections are threatening to grow out of control.” How

then could Shevchenko affirm that the “health component is

insignificantly small in the demographic problem.” He

suggested that only “war, repression, and prisons” are

affected by the “demographic crisis.” Prisons are crucial,

obviously, but certainly TB, HIV and its trends, and

reproductive and child health remain vital considerations

in any discussion of the demographic crisis, to use his term.

As to which of the two trends—demographic or

economic—will become ascendant, it is impossible to predict

with certainty, but I expect the demographic (read health

and educational problems, as well) to nullify any potential

economic progress.

I have not addressed the casualty threats from

remaining nuclear, biological, and chemical weapons, or

from terrorism, or from thefts of associated materials for use

by individuals internally or externally, by organizations,

and/or by governments, because they are beyond the scope

of the present chapter. However, they should not be omitted

from a full analysis of health hazards as well as security

issues facing Russia.

96
ENDNOTES - CHAPTER 4

1. Parliamentskaya Gazeta, August 23, 2000, p. 7, from

Lexis-Nexis.com, “What the Papers Say,” August 23, 2000.

2. Steven Mosher, Hegemon: China’s Plan to Dominate Asia and the

World, San Francisco: Encounter Books, 2000, pp. 106-109.

3. See the Military News Agency internet site, http://www.militarynews.

ru.

4. Mosher, p. 108.

5. Predpolozhitel’naya Chislennost’ Naseleniya Rossiyskoy

Federatsii do 2016 Goda (Statisticheskiy Byulleten’) (Hypothetical Size

of the Population of the Russian Federation Until 2016: Statistical

Bulletin), Moscow, 1999, p. 144.

6. Osnovnyye Polozheniya Kontseptsii Ocherednogo Etapa

Reformirovaniya Sistemy Obrazovaniya Rossiyskoy Federatsii (Basic

Directive on the Concept for Step by Step Stage of Reforming the

Educational System of the Russian Federation), Moscow, 1997.

7. SPB Vedomosti, March 13, 2001, p. 2.

8. Leonid Ivanov, Trud, March 13, 2001, p.3.

9. Segodnya, February 28, 2001, p. 2.

10. Assuming a lognormal distribution.

11. Goskomstat Rossii, Rossiyskiy Statisticheskiy Yezhegodnik

(Russian Statistical Yearbook), Moscow, 1999, p. 471.

12. Ibid., p. 473.

13. Ibid., p. 474.

14. Vremya Novostey, February 12, 2001, p. 3.

15. Kommersant-Daily, March 21, 2001, p. 9.

97
CHAPTER 5

NEW METRICS FOR DENUCLEARIZATION

Thomas B. Cochran

Introduction.

The legacy of Cold War nuclear weapons programs in the

United States and Russia represents serious continuing

threats to each country’s national security. Today, the

primary danger to the United States from Russia’s

possession of nuclear weapons is not from a deliberate

attack, but from a mistaken, unauthorized, or accidental

missile launch. In addition, the Russian nuclear weapons

program—more so than that of the United

States—represents a continuing global proliferation threat

as well as a public health and environmental hazard. The

proliferation threat stems from the facts that Russia (1) is

still producing and separating plutonium; (2) has some

15,000 to 20,000 assembled nuclear weapons and about

1,700 metric tons of separated nuclear weapon-usable

fissile materials (much of it under inadequate security); and

(3) lacks alternative jobs to offer the 67,000 workers who

live in ten closed nuclear cities. Russia suffers from the most

severe environmental pollution of any country and lacks the

funds to clean it up. A failing economy and widespread

corruption compound these problems. To reduce these risks,

the United States and Russia have been engaged in a

variety of programs that can be loosely described as a

program of “denuclearization.”

99
In the first part of this chapter, I examine a new

approach for establishing priorities and measuring

progress in denuclearization and nonproliferation. The

second part addresses a new method of funding a portion of

the denuclearization effort.

The Denuclearization Metric.

“Denuclearize” can be defined as either removing

nuclear arms from an area or prohibiting the presence/use

of nuclear weapons/arms within an area. It is the first of

these two definitions that will mainly concern us here. A

limitation of our definition, of course, is that it does not

reflect the threats represented by partially assembled

nuclear warheads, stockpiles of nuclear materials, or

nuclear weapon production technologies and nuclear

weapon expertise.

A useful, albeit narrow, technical metric for measuring

progress in denuclearization would be a curve plotted

relative to two axes, displaying the cumulative number of

nuclear weapons that a state could launch or use as a

function of the time it would take to use them (setting aside

employment policy considerations). By this metric (see

Figure 1), denuclearization is the process of reducing the

area under the curve and shifting the curve and the area

under it to the right. This is tantamount to reducing the

number of nuclear warheads, reducing warhead potential,

and increasing the time to achieve “use ready” status (e.g.,

to render strategic weapons ready for launch), or

operational status of nonstrategic weapons. One can

compare various denuclearization strategies by examining

how the curve shifts over time under various proposals.

100
Now look at Figure 2. The same metric can be used to

describe the status of nonweapon states in terms of how long

it takes each state to acquire nuclear weapons and the

state’s capabilities to produce and field nuclear weapon

arsenals. By definition, these states have no nuclear

weapons at present, so the curves representing their

respective weapon potential intersect the horizontal axis

(representing number of days) rather than the vertical axis

(representing number of nuclear warheads). But the

nonproliferation objective is the same as for weapon states,

that is, to shift the curves to the right. In Figure 2 the

international safeguards “timely warning criterion” is met

for a given country only if the time period represented by the

distance from the origin to the horizontal axis intercept is

sufficiently long for the international community, through

diplomatic pressure and sanctions, to prevent the state from

acquiring nuclear weapons should the state seek such a an

option. In a non-nuclear world, all states would be

represented by curves similar to those depicted in Figure 2.

101

Figure 1. Notional representation of the number of

nuclear warheads that can be brought to launch

ready or use ready status as a function of time.
To avoid having to determine and address a state’s

capability to fabricate nuclear warheads and delivery

vehicles, the nonproliferation metric in Figure 2 can be

usefully simplified by changing the vertical axis so as to

portray “quantity of weapon-usable fissile material” in

place of “nuclear weapons ready for use.” Or an agency like

the International Atomic Energy Agency (IAEA) might plot

“Significant Quantities of Fissile Material,” to use a

different example.

Returning to Figure 1, to accurately plot such a curve one

needs to know the number of warheads and the amounts of

fissile materials in various categories of warheads, warhead

components, and fissile materials. For example, today the

United States has over 2,600 warheads on “launch ready”

alert that can be launched in a matter of minutes. Within a

few days the United State could bring its strategic forces to

“Generated I” alert status by moving some five or so

additional submarine-launched ballistic missiles (SLBMs)

102

Figure 2. Notional representation of the number of

nuclear warheads that can be produced and brought

to launch ready or use ready status as a function of

time.
on station, thereby adding another 960 or so warheads to

use ready status.

One can continue this exercise by including the strategic

bomber force, nonstrategic bomber weapons, and hedge

weapons, some of which would take progressively longer to

bring to launch ready status. It would take even longer to

activate inactive warheads, still longer to reassemble pits

and canned subassemblies into usable warheads, and even

longer still to manufacture new warheads from fissile and

other materials.

Table 1 ranks various categories of warheads, warhead

components, and fissile materials in terms of how long it

would take to attain use ready status. As seen from the

table, denuclearization is more complicated than just

eliminating nuclear weapons. Denuclearization is the

process of moving warheads and materials from categories

high on the Table 1 list to categories lower on the list.

Moreover, movements between any two categories are not of

equal worth. For example, when there are numerous

warheads in the higher-ranked categories, as is the case

today in the United States and Russia, then progress in

moving fissile materials down through the lower ranks will

not substantially alter the risks associated with a state’s use

of nuclear weapons. In general, the “worth” of each step

becomes progressively less as one moves down through the

list of categories in Table 1. In order to make the area under

the curve more representative of the “worth” of the weapons

and weapon materials, I have selected a logarithmic scale

for the horizonal axis in Figures 1 and 2, meaning that the

number of days increases exponentially with each

incremental move to the right.

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Thus far we have discussed denuclearization in the

context of reducing the risks associated with a weapons

state’s use of nuclear weapons, either deliberately or

accidentally. We also want to reduce the risk of nonweapon

states and nonstate entities acquiring nuclear weapons, for

example, by diverting nuclear weapons, weapon-usable

materials, or expertise from a weapon state. The

proliferation risks associated with a weapon state’s nuclear

weapons program can be reduced by the following

measures:

• Reducing the total stocks of weapon-usable nuclear

materials available for diversion;

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RELATIVE EMPLOYMENT PREPARATION TIME

Launch Ready Alert Level Warheads

Warheads Added by Bringing Forces to Generated Alert

Status

Other Deployed Warheads

Non-Deployed Warheads in the Active Stockpile

Inactive Stockpiled Warheads

Warheads Awaiting Disassembly

Stored Pits and Canned Subassemblies

Plutonium (Pu) and High-Enriched Uranium (HEU) in

Metallic Form

Pu and HEU Oxides and Other Chemical Forms

Pu and HEU in Fresh Fuel Assemblies

Pu and HEU in Spent Fuel Assemblies

Low-Enriched and Natural Uranium

Spent Fuel in Geologic Repositories

Uranium Ore

Table 1. Warheads, Warhead Components, and Fissile

Material Stocks Ranked Approximately According to

the Time It Takes to Achieve Launch Ready Warhead

Status.
• Improving the security of existing stocks of fissile

materials; and/or

• Reducing the likelihood of transfer of nuclear

expertise for unauthorized purposes.

Note that reducing the total stocks of nuclear weapons

and weapon-usable nuclear materials reduces both the

weapon state threat and the nonweapon state threat

associated with these materials. The denuclearization

metric therefore has utility in measuring progress in

reducing the risk of diversion. The denuclearization metric,

however, is less useful for establishing priorities for

measuring progress in improving security of fissile material

or reducing the likelihood of transfer of nuclear expertise,

except that taking steps to move the curve down and to the

right does lessen the prospect of readily available warheads

and materials and it potentially leads to a lessening of

expertise.

U.S. Denuclearization Priorities.

The United States is pursuing several somewhat

independent denuclearization and nonproliferation efforts

in cooperation with Russia: (1) nuclear arms reduction

negotiations—the START II/III treaty negotiation process,

which the Bush administration may replace by unilateral

actions; (2) the START I verification program; (3) the

Cooperative Threat Reduction Program (so-called

“Nunn-Lugar”), under which launch vehicles are

dismantled; (4) the 500 metric tons highly-enriched

uranium (HEU) purchase agreement, under which HEU

from weapons is blended down into nonweapon-use fuel for

power reactors; (5) the joint U.S.-Russian plutonium

disposition program; and (6) various efforts to improve the

security of existing stocks of nuclear weapons and fissile

materials.

In broad terms, there are several shortcomings with

these efforts. First, the six program elements were not

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developed as part of a comprehensive integrated package.

The United States has neither a comprehensive nor an

integrated strategy for achieving progress in

denuclearization. The United States attaches high priority

to efforts that have the lower worth, e.g., the plutonium

disposition program, and little priority to some efforts that

have a higher worth, e.g., removing warheads from launch

ready status (“de-alerting”), and dismantling canned

subassemblies. Moreover, the United States attaches little

priority to achieving a data exchange with Russia in order to

ascertain the number of nuclear warheads, warhead

components, and fissile material stocks in the various

categories in Table 1. The United States does not know,

within plus or minus a few thousand, how many tactical

nuclear warheads Russia has retained in its arsenal.

Without a reliable data exchange, the United States cannot

measure or verify progress in denuclearization.

Let us now turn to an analysis of some of the specific

ongoing U.S.-funded denuclearization and nonproliferation

initiatives in Russia.

U.S. Nonproliferation Initiatives in Russia.

Since the collapse of the Soviet Union almost a decade

ago, the U.S. Government has initiated a variety of

Russian-based programs with the following objectives:

• Improve the security of existing stocks of fissile

materials in Russia to reduce the likelihood of theft and

unauthorized use;

• Reduce the total stocks of weapon-usable nuclear

materials; and,

• Provide alternative employment opportunities to

nuclear, chemical, and biological weapons experts to reduce

the likelihood that they would sell their expertise abroad.

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In addition, the ongoing programs provide transparency

with respect to nuclear weapon and other activities in

Russia.

The United States has been spending about $500 million

a year on the Russian safeguarding effort. The Bush

administration has initiated a “comprehensive review” of

these programs. I do the same here, beginning with a brief

summary of the principal ongoing initiatives.

Improving the Security of Fissile Materials.

There are several ongoing efforts, the main ones being as

follows:

• Russian Fissile Material Storage Facility at

Ozersk. Provides assistance in the construction of a large

storage facility at Ozersk (Chelyabinsk-65) and

construction of 10,000 special fissile material containers for

use in this facility. The construction of the first of two wings

is almost complete, and loading of this wing is scheduled to

commence in FY2002. When both wings are complete, the

facility will hold the fissile materials from approximately

12,500 warheads. Construction costs of the first wing were

capped by Congress at $460 million. Funded by DOD’s

Defense Threat Reduction Agency under the Cooperative

Threat Reduction (CTR) budget (FY2001, $57.4 million);

International Materials Protection, Control, and

Accounting (MPC&A). This is a program to install

improved security systems at civilian nuclear sites, naval

fuel and weapon sites, and nuclear weapon laboratory sites,

and to consolidate nuclear materials at fewer sites. Founded

by Department of Energy/National Nuclear Security

Administration (FY2001, $169.7 million; FY2002, $138.8

million);

Improve Security at 12 GUMO Nuclear Weapon

Storage Sites. Provides assistance to the Russian Ministry

of Defense’s 12th Main Directorate (12th GUMO) to

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improve security at nuclear weapon storage sites (other

than Russian Navy sites). Funded by DOD under the CTR

budget (FY2001, $89.7 million);

Improve Nuclear Weapon Transportation

Security. Provides assistance to the Russian Ministry of

Defense’s 12th GUMO to improve nuclear weapon

transportation security. Funded by DOD under the CTR

budget (FY2001, $14 million); and,

Pit Conversion and Fissile Material Packaging.

Provides assistance to the Russian Ministry of Defense’s

12th GUMO to facilitate packaging of fissile materials from

dismantled warheads for subsequent shipment to and

storage at the storage facility at Ozersk now under

construction. Funded by DOD under the CTR budget

(FY2001, $9.3 million).

These five initiatives all deserve support. A problem,

however, with respect to all of them is that the United

States (and possibly Russia) does not know how many

nuclear weapons and how much fissile material exist in

Russia, and the United States does not know where much of

it is stored. The United States has failed to make a high

priority effort to secure a bilateral data exchange on weapon

and fissile material inventories.

Referring back to the categories in Table 1, we see that

the United States has placed relatively high priority on

storage of plutonium and HEU in metallic form (i.e., at

Ozersk), but there is no joint program associated with some

efforts described in Table 1 that are of higher worth, e.g.,

accelerating disassembly of the warheads.

Reducing Stocks of Weapon-Usable Nuclear

Materials.

The principal ongoing efforts here are as follows:

• Highly-Enriched Uranium (HEU) Purchase

Agreement. A U.S.-Russian agreement whereby 500

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metric tons of HEU from Russian weapons are to be

blended down into low-enriched uranium (LEU) for

use as power reactor fuel, and the purchase by the

United States of the separative work unit (SWU), or

enrichment values, of the LEU. To date, just over 100

metric tons of the 500 have been sold and delivered to

the U.S. Enrichment Corporation (USEC), the

government appointed executive agent for the HEU

purchase agreement. DOE provides funds for

implementation of transparency agreements

associated with the blend-down of HEU into LEU in

Russia (FY2001, $14.6 million; FY2002, $14.0

million);

• Plutonium Disposition. Under this program, 34

metric tons of weapon-grade plutonium are to be eliminated

by both Russia and the United States by first converting it to

mixed plutonium oxide and uranium oxide (MOX) fuel and

then using the MOX fuel in nuclear power reactors, thereby

converting it into spent reactor fuel. Funded by

DOE/National Nuclear Security Administration (FY2001,

$56.5 million; FY2002, $62.0 million; less use of prior years’

balances, the totals are reduced to: FY2001, $41.5 million;

FY2002, $20.0 million); and,

• Plutonium Production Reactor Core

Conversion. An effort designed to assist Russia in

converting the three remaining dual-purpose (plutonium

and energy production) reactors to reduce or eliminate

weapon-grade plutonium production. There are three

options under consideration: converting the reactor cores to

LEU fuel; converting them to HEU fuel; and replacement of

the reactors with non-nuclear power plants. Funded by

DOD’s Defense Threat Reduction Agency under the CTR

budget (FY2001, $32.1 million).

There are two problems with the HEU Purchase

Agreement that should be rectified. First, the U.S.

Government has turned this program over to what is now a

private company, the U.S. Enrichment Corporation

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(USEC), which serves as the Government’s executive agent

for implementing the program. Under this arrangement, to

the detriment of the program, the profit motive of USEC has

become a higher priority than the denuclearization

objective of the United States. Second, the United States

does not know the quantity and disposition of Russian HEU,

so the worth of this effort is difficult to gauge.

The plutonium disposition program is an example of

misplaced priorities. It would be far more productive for the

United States to spend its diplomatic capital and taxpayer

funds on converting plutonium pits into plutonium “pucks”

(unclassified shapes) and putting the plutonium pucks

under international safeguards, certainly more productive

than trying to fund and construct a Russian MOX fuel

fabrication plant. The proposed MOX plant will not even

keep up with the current rate at which Russia is separating

new plutonium from dual-purpose plutonium production

reactors and from commercial power reactors. Moreover,

Russia has so few VVER-1000 reactors, it cannot convert

more than a few metric tons of plutonium into spent fuel

annually, even if a MOX fabrication plant were built in

Russia. Finally, a Russian MOX program will likely

increase proliferation risks in the long run.

The Plutonium Production Reactor Core Conversion

program has been stymied by the failure of Russia and the

United States to reach agreement on what the end point of

the conversion effort should be—use of LEU or HEU fuel, or

replacement of the three reactors. The proposal to convert

the reactor to HEU fuel is ill-conceived in that the

proliferation risks associated with the HEU fresh fuel are no

less than the risks associated with the separated

plutonium.

Alternative Employment Opportunities for Nuclear

Workers.

The principal ongoing efforts here are as follows:

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• International Science and Technology Center

(ISTC). This is an intergovernmental organization

established in 1992 by agreement between the European

Union, Japan, the Russian Federation, and the United

States. Headquartered in Moscow, ISTC provides weapons

scientists from CIS countries with opportunities for

redirecting their scientific talents to peaceful science. In

1999 there were 201 projects covering 17,815 participants

funded at $42.6 million, with the United States contributing

$13.2 million. The participants worked an average of 63

days on the ISTC funded projects, so the participation was

more like 4,800 full-time equivalents. The ISTC paid the

17,815 project participants $22.6 million in grant money,

which works out to an average salary of about $4,700 per

year ($20 per day).

• Initiatives for Proliferation Prevention (or IPP,

formerly called the Industrial Partnering Program).

This is a program to facilitate and promote employment and

economic development opportunities for displaced nuclear

weapon scientists and engineers. Efforts focus on

cooperative projects involving DOE laboratories and

research institutes in Russia, Ukraine, Kazakhstan, and

Belarus. Every dollar the U.S. Government provides for a

project is matched by industry. The federal contribution is

funded by DOE/National Nuclear Security Administration

(FY2001, $24.1 million; FY2002, $22.1 million);

• Nuclear Cities Initiatives (NCI). This is a program

of cooperation with the Russian Ministry of Atomic Energy

(Minatom), commercial entities, and local and state

governments to create civilian ventures in one of the ten

closed nuclear cities. Funded by DOE/National Nuclear

Security Administration (FY2001, $26.6 million; FY2002,

$6.6 million).

While these three initiatives have not prevented senior

Minatom and Russian Institute officials from providing

nuclear weapon related assistance to Iran, they are

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nevertheless useful and cost effective. This is particularly

the case with respect to the ISTC and IPP programs. The

NCI initiative is too new to have established a track record,

but it will likely suffer from the facts that (1) DOE and the

national laboratories have very limited expertise in

commerce, and therefore will have difficulty in identifying

potential commercial markets; and (2) the business must be

successful, particularly in Russia. All three programs,

ISTC, IPP and NCI, have effective measures in place to

prevent the misallocation of funds, and all provide useful

transparency at institutes where funded research is

conducted. Looking beyond the next few years, there are

better ways to accomplish the objectives of these programs.

As an alternative, the United States should consider

financing a program that encourages early retirement of

Russian workers.

All three ongoing programs cited above require the

identification of a scientific project, or alternative

employment opportunity, before the Russian participant

can receive financial support. None provide an incentive for

Minatom or its workers to shut down entire

weapons-related facilities, e.g., a fuel reprocessing or

chemical separation plant. To provide such an incentive, the

United States should consider establishing a trust fund to

pay for the early retirement of Russian nuclear workers.

The workers at targeted facilities would take early

retirement and be permitted to pursue other nonweapons

employment. The trust would not be required to provide

alternative employment projects as a condition for shifting

from weapons work.

The ten closed cities1 that host most of the Russian

nuclear weapons program have a total population of about

one million people. The total number of weapons workers in

these cities in 2000 was some 60,000-67,000, a number that

is projected to drop by about 50 percent over the next 5 years

as Minatom downsizes its nuclear weapon work force.2 If the

32,000 person projected work force (or projected work force

reductions) were to be underwritten at the rate the ISTC

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paid project participants in 1999 ($4,700 per year), the total

cost would be $150 million per year. Comparatively, this

represents 2.8 percent of the FY2002 DOE Stockpile

Stewardship Program budget.

Funding Denuclearization.

In January 2001, a DOE-appointed nonproliferation

task force co-chaired by Lloyd Cutler and former Senator

Howard Baker, Jr., concluded that:

Current nonproliferation programs of the Department of

Energy, the Department of Defense, and related agencies have

achieved impressive results thus far, but their limited

mandate and funding fall short of what is required to fully

address the threat. . . . The current budget levels are

inadequate and the management of the U.S. government’s

involvement is too diffuse.

A private initiative called the Nonproliferation Trust,

Inc. (NPT) offers an alternative source of substantial

funding to augment U.S. Government-funded security

efforts. Since Western governments have demonstrated

they are unwilling to invest the necessary resources to

adequately address the security problems in Russia, NPT’s

goal is to step into the breach by augmenting government

funds with private capital associated with nuclear spent

fuel management.

The Non-Proliferation Trust is a Delaware corporation

whose purpose is to foster global nuclear nonproliferation

plus environmental and humanitarian initiatives. NPT

proposes to raise $15 billion by taking title to 10,000 metric

tons of foreign (non-U.S. and non-Russian) nuclear spent

fuel and storing it in Russia. The project would require

$3.45 billion to safely manage the spent fuel, an amount

which could cover purchasing spent fuel storage casks,

constructing and managing a dry cask storage facility, and

transporting the fuel. The project would allocate more than

75 percent of the revenues—the remaining $11.55

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billion—to nonproliferation, environmental, and

humanitarian causes in Russia.

NPT currently plans to allocate the $11.55 billion as

follows:

To prevent the misuse of these funds, the monies would

be managed by three U.S.-based charitable trusts: the

Minatom Development Trust, the Russian Environmental

Trust, and the Russian Humanitarian Trust.

The NPT project is still in the conceptual stage. Much

work and additional negotiations are required to develop it

more fully. Moreover, the project cannot go forward unless

there is an agreement for cooperation on nuclear matters

between the United States and Russia.

ENDNOTES - CHAPTER 5

1. Sarov (Arzamas-16), Snezhnisk (Chelyabinsk-70), Ozersk

(Chelyabinsk-65), Sversk (Tomsk-7), Zheleznogorsk (Krasnoyarsk-26),

Novouralsk (Sverdlovsk-44), Zelenogorsk (Krasnoyarsk-45), Lesnoi

(Sverdlovsk-45), Trekhgornyi (Zlatoust-36), Zarechnyi (Penza-19).

2. Oleg Bukharin et al., Helping Russia Downsize Its Nuclear

Complex: A Focus on the Closed Nuclear Cities, Princeton: Princeton

University Press, June 2000.

114

Environmental Cleanup $ 3.0 billion

Fissile Material Security 1.5

Geologic Repository Siting 1.8

and Construction

Spent Fuel Escrow/Repository 0.5

Alternative Jobs for Nuclear 2.0

Weapon Workers

Regional Economic Support 0.5

Humanitarian (pensioners and orphans) 2.25

Total : $11.55 billion
CHAPTER 6

DEMILITARIZING RUSSIAN WEAPONS

SCIENTISTS: THE CHALLENGE

Mark Kramer

The aim of this chapter is twofold: (1) to explore the

threat of strategic proliferation posed by former Soviet

scientists, engineers, and technicians who design, build,

and maintain weapons of mass destruction (WMD); and (2)

to consider whether large-scale immigration of such

workers to the United States over the next 10 to 15 years

could help diminish that threat.

The chapter is divided into seven sections. The first

reviews the size of the Russian nuclear, chemical, and

biological weapons complexes and the approximate number

of scientists and engineers employed by each. The second

discusses the actual and potential brain drain from the

Russian scientific community and defense complex to

foreign countries after 1991. The third analyzes trends

regarding the entry of former Soviet scientists into the

United States in the 1990s. Whereas only a relatively small

number were admitted as immigrants, a larger, though still

not huge, number were allowed in for temporary work or

exchanges. The fourth briefly explains why U.S.

Governmental and private efforts to employ Russian WMD

scientists and engineers on civilian research projects within

Russia are likely to have only a negligible impact on the

longer-term threat of strategic proliferation. (In an

Appendix to this chapter, I have prepared a detailed

analysis supporting this conclusion.) The efficacy of these

115
programs is limited not by any inherent

shortcomings—though these have clearly played some

role—but rather by the sheer magnitude of the problem.

Even if the programs were perfectly designed and

implemented, their net contribution in all likelihood would

be meager.

The fifth shows why the private sector in Russia has not

been able to absorb more than a relatively small proportion

of former WMD personnel, a situation that is likely to

continue indefinitely unless much more drastic economic

changes take hold. The findings in this section reinforce the

conclusions of Matthew Partan in Chapter 7 of this book.

The sixth discusses the Russian government’s recent efforts

to curtail the brain drain from scientific research institutes

and defense enterprises, particularly the WMD complexes.

On one hand, the government has provided increased

funding for science and has taken other steps to improve the

conditions for research on nuclear weapons and other

military-related technologies as well as civilian scientific

projects. These measures have been designed to retain

existing personnel and to attract new talent, especially

younger scientists and engineers. On the other hand, the

government has sought to tighten laws and decrees that

severely restrict foreign travel by individuals who have had

access to “state secrets” and to restore Soviet-era curbs on

contacts between Russian and foreign scientists. Such

restrictions, though not yet fully implemented, will

inevitably hinder prospective attempts by Russian WMD

personnel to immigrate to the United States.

The concluding section of the chapter considers whether

the threat of strategic proliferation can be countered over

the long term by encouraging the immigration of thousands

of Russian WMD scientists and engineers to the West. A

solution of this sort would be highly desirable, but the

feasibility of it is open to serious doubt. Rather than

pursuing what would likely be a futile quest, the United

States would benefit most by promoting large-scale

exchange programs for Russian high school students. Such

116
exchanges would be eminently feasible and would have a

positive long-term effect on the human dimension of the

strategic proliferation challenge.

For reasons of space, documentation for this chapter has

been omitted from the published version. An expanded and

fully documented version of the chapter is available from

the author upon request.

RUSSIAN WMD EXPERTS

This section discusses the size of the Russian nuclear

weapons complex and then does the same for Russia’s

chemical and biological weapons industries.

Nuclear Weapons Complex.

When the Soviet Union collapsed in late 1991, it left

behind an enormous infrastructure for the development,

design, and construction of nuclear weapons. The Soviet

Ministry of Atomic Power and Industry had overseen more

than 150 enterprises and 1.1 million employees. From the

1940s through 1991, the weapons complex produced a total

of more than 1,200 metric tons of highly enriched uranium

and 150 metric tons of plutonium for use in some

55,000-60,000 nuclear warheads and bombs. The design

and construction of nuclear weapons had long centered

around ten “closed cities” (known in Russian as zakrytye

administrativno-territorial’nye obrazovaniya—closed

administrative-territorial entities) that were completely

off-limits to the public, geographically isolated (in most

cases), and omitted from public maps: Sarov (Arzamas-16),

Snezhinsk (Chelyabinsk-70), Ozersk (Chelyabinsk-65),

Seversk (Tomsk-7), Zheleznogorsk (Krasnoyarsk-26),

Novouralsk (Sverdlovsk-44), Zelenogorsk

(Krasnoyarsk-45), Lesnoi (Sverdlovsk-45), Trekhgornyi

(Zlatoust-36), and Zarechnyi (Penza-19). Different areas of

defense-related research were explored at the ten cities,

which employed a total work force of some 750,000. Roughly

150,000 to 160,000 of these workers were involved in the

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design, manufacture, and testing of nuclear explosives.

Sarov and Snezhinsk were the sites of the main weapons

design bureaus, and Sarov also contained the Avangard

weapons assembly plant. Other key weapons assembly

facilities were located in Lesnoi, Trekhgornyi, and

Zarechnyi. The remaining closed cities were responsible for

producing weapons components and fissile material.

The Russian nuclear weapons complex continued to

function at a robust level after 1991, despite a sharp

reduction in the operating budget of the Russian Ministry of

Atomic Energy (Minatom). As of early 2001, the nuclear

weapons research institutes and manufacturing facilities

still employed 125,000 to 130,000 people, a work force only

slightly smaller than during the Communist period. Of

these, at least 75,000 were working full-time on weapons

design, production, and testing, and the remainder were

responsible for support and administrative tasks. Even

though precipitous cuts were made in the procurement of

Russia’s conventional military hardware (85-90 percent),

the nuclear weapons industry was accorded a relatively

privileged status. The continued presence of many

thousands of former Soviet nuclear weapons specialists in

the ten closed cities impeded Minatom’s faltering attempts

to restructure and scale back the nuclear complex. The

ministry reported in the summer of 1999 that some 30,000

to 50,000 excess employees could not find alternative jobs if

they were laid off. Although Minatom has claimed that it

wants to reduce its current work force by almost two-thirds

as of 2004, there is as yet little reason to believe that tens of

thousands of excess employees will simply be laid off.

Overall, then, the nuclear weapons complex has

experienced less disruption than one might have expected.

The two key nuclear weapons design centers—the

Scientific-Research Institute of Experimental Physics

(VNIIEF) at Sarov and the Scientific-Research Institute of

Technical Physics (VNIITF) at Snezhinsk—have

maintained large staffs of scientists, engineers, and

technicians. According to official figures, VNIIEF as of 1999

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still employed as many as 24,000 people, while VNIITF still

employed 11,000, nearly the same number who worked

there during the 1980s. (The institutes were formally

designated “federal nuclear centers” in 1995.)

The relatively modest personnel cuts in the former

Soviet nuclear weapons complex have failed to mirror the

huge reductions in the conventional forces and defense

industries of Russia and other former Soviet republics. In

that sense, as both private and governmental organizations

in the West have stressed, Russia has been notably

reluctant to scale back its nuclear weapons industry from

the Cold War period. Scientists in the Russian nuclear

weapons complex continue to refine existing weapons and

components and to conduct research on new technologies for

future weapons.

The precise number of nuclear weapons employees in

Russia who possess specialized knowledge of critical

weapons designs or technologies is unknown, but the most

reliable evidence suggests that some 2,000 to 4,000 senior

nuclear scientists and engineers have been directly involved

in bomb design, production, and disassembly, and another

10,000 to 15,000 senior experts have been performing vital

ancillary functions connected with nuclear weapons

production. In January 1992 then director of the Russian

nuclear weapons program Viktor Mikhailov declared that

2,000 to 3,000 of the roughly 15,000 senior nuclear weapons

scientists in Russia were engaged in activities “of

paramount importance involving sophisticated

technologies.” He repeated these statistics in numerous

other interviews over the next several years. The same

figures were cited in mid-1996 by Vladislav Mokhov, a

senior official at the Sarov federal nuclear center. Estimates

by the U.S. Department of Energy (which oversees contacts

with the former Soviet nuclear weapons laboratories) and

other U.S. Government agencies are very similar to

Mikhailov’s and Mokhov’s figures. A classified National

Intelligence Estimate prepared by the U.S. intelligence

community in the early 1990s indicated that around 2,000

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senior specialists throughout the former Soviet Union

possess “intimate knowledge of nuclear weapons design.”

Likewise, a report issued by the U.S. Congressional Budget

Office in mid-1999 noted that, although 20,000 senior

“nuclear scientists and workers” in Russia pose

“proliferation risks,” only a relatively small fraction of these

(perhaps 15 to 20 percent) are involved in the most sensitive

work.

These various estimates confirm that the number of

senior nuclear weapons experts possessing truly sensitive

information is a much smaller subset of the total population

of scientists and engineers in the former Soviet nuclear

weapons complex. The number of employees who pose a

significant, but less acute, secondary threat is considerably

larger, but still meager in comparison with the size of the

post-Soviet defense complex, which employs at least a few

million workers. Hence, the number of Russian nuclear

weapons experts who could be recruited by Third World

countries for help on a fledgling weapons program is far

smaller than some Western observers had originally feared.

At the same time, the pool of senior weapons scientists is

large enough to keep Russia’s nuclear complex operating

indefinitely, provided that adequate resources are

available.

Chemical and Biological Weapons Complexes.

The Soviet Union amassed a stockpile of 40,000 metric

tons of chemical munitions, the largest in the world. These

weapons were developed and manufactured at 24 separate

facilities, including key production centers in Dzerzhinsk,

Novocheboksarsk, Slavgorod, Volgograd, and Zaporozh’e.

At the end of 1991, Russia inherited these facilities along

with thousands of scientists, engineers, and technicians

employed by the Soviet chemical weapons complex. A study

released in September 2000 by Republicans in the U.S.

House of Representatives claimed that “tens of thousands of

scientists and technicians” were working in Russian

120
chemical weapons facilities, but this estimate seems too

high. Although the precise number is not known, most

evidence suggests that several thousand

scientists—perhaps ten thousand in total—are still

working in Russia’s chemical weapons complex. This figure

is very large by world standards, but it is much smaller than

the number of scientists and technicians employed in the

Russian nuclear and biological weapons complexes.

The Soviet biological weapons program, code-named

Enzyme, was shrouded in secrecy from the time it was

launched in 1973. The Soviet Politburo, headed by Leonid

Brezhnev, issued a highly classified decree establishing

Biopreparat, a state pharmaceutical agency, which oversaw

the development of weapons using germs and viral agents.

The program continued to function (albeit at a reduced

capacity) after the Soviet Union collapsed, contrary to

initial assurances that it would be closed. Russian research

on biological weapons has been conducted at massive

facilities both close to and far from large urban centers.

Among the institutes responsible for the development of

weapons based on natural and genetically engineered

strains of bacteria and viruses are the State Research

Center of Virology and Biotechnology (VEKTOR) in

Koltsovo, the State Research Center for Applied

Microbiology at Obolensk, the State Research Center for

Toxicology and Hygienic Regulation of Biopreparations in

Serpukhov, and the Institute of Molecular Biology in

Moscow.

At their height, the Soviet chemical and biological

weapons (CBW) programs collectively employed over

70,000 scientists and technicians. In the early 1990s, after

the Russian government made limited cuts in the program,

the CBW complex continued to employ over 60,000 people,

though only about one-third of these possessed truly

sensitive knowledge. By the mid- to-late 1990s, after more of

the Soviet WMD infrastructure had been dismantled, up to

10,000 CBW scientists still posed a proliferation threat

according to a detailed study by Glenn Schweitzer of the

121
National Academy of Sciences. Schweitzer’s estimate is

compatible with figures provided in an April 2000 report by

the U.S. General Accounting Office (GAO), which notes that

5,000 senior CBW scientists in Russia could pose

“significant proliferation risks,” and that an additional

10,000 Russian workers possess skills relevant for weapons

development and production. Similar data can be found in a

recent report by Amy Smithson of the Henry L. Stimson

Center, who argues that 7,000 biological weapons scientists

and another 3,500 chemical weapons experts in Russia pose

a “high-risk proliferation concern.”

These figures for the Russian CBW industries, combined

with the estimates for Russia’s nuclear weapons complex,

give an idea of the potential for strategic proliferation. The

figures bear out estimates made in 1998 that at least 15,000

senior scientists and engineers in Russia are directly

involved in “production, delivery systems, and other aspects

of weapons of mass destruction,” beyond the 2,000-3,000

nuclear weapons design specialists who pose the greatest

threat of nuclear proliferation. Moreover, as Schweitzer’s

study shows, if other tasks of clear “proliferation concern”

are taken into account, the total number of Russian

scientists and engineers with valuable WMD expertise is

three to four times larger than the core 15,000-18,000.

Schweitzer maintains that a total of around 60,000 former

Soviet aerospace, nuclear, and chemical/biological weapons

specialists “developed and designed weapons of mass

destruction and their delivery systems”—thereby posing

the greatest threat of proliferation—from 1992 to 1996. This

figure, he argues, is largely unchanged today.

Identical estimates can be found in two recent GAO

reports and in the latest annual report from the Initiatives

for Proliferation Prevention (IPP), a program sponsored by

the U.S. Department of Energy that seeks to provide

employment for former Soviet WMD experts. The first of the

two GAO reports notes that roughly 60,000 of the one

million scientists, engineers, and technicians at Russia’s

4,000 scientific research institutes can be regarded as

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high-level WMD personnel, a figure that is also cited (with

breakdowns by WMD category) in the IPP document. The

other GAO report, released in May 2001, cites a range of

estimates by U.S. officials in Russia who believe that Soviet

WMD programs as of 1991 were crucially dependent on as

many as 75,000 highly-trained scientists and engineers,

most of whom continue to serve in those posts.

Thus, although the risk of WMD proliferation in the

former Soviet Union depends on the definitions used, it is

safe to conclude that the greatest danger is posed by some

60,000 to 75,000 specially trained scientists, engineers, and

technicians, nearly all of whom now reside and work in

Russia. Even if the upper end of this range is used, Western

countries could potentially absorb 75,000 experts and their

families without extreme difficulty. The emigration of these

personnel from Russia will be limited not by the West’s

absorptive capacity, but by obstacles within Russia itself.

RUSSIA’S SCIENTIFIC BRAIN DRAIN

The civilian side of Russian science and technology was

hit hard by the economic and political turmoil that engulfed

the former Soviet Union from the late 1980s through the

mid-1990s. Spending on science programs dropped by

nearly 45 percent in real terms during the final 2 years of

the Soviet regime, and it continued sharply downward in

1992. Soaring inflation, large budget deficits, and persistent

shortages of funding at scientific research institutes led to

sharp declines in researchers’ salaries (after adjusting for

inflation), delays in wage payments, poor upkeep of

facilities, and increasing obsolescence of laboratory

equipment.

The severity of financial constraints and the

deterioration of research facilities prompted a growing

number of scientists in Russia to pursue opportunities

outside their institutes, either at home (particularly in the

newly emerging private sector) or abroad (at universities,

research centers, and private companies). This

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development was not entirely unprecedented. Although

Soviet citizens normally were forbidden to travel abroad

(except to the Communist countries of Eastern Europe), the

USSR experienced a scientific brain drain in the 1970s

when a significant number of Jewish and Armenian

scientists were allowed to emigrate. This earlier brain

drain, however, was greatly eclipsed by the exodus that

began at the end of the Soviet era, when most of the

restrictions on foreign travel were lifted. Russia’s brain

drain in the 1990s was both external (with the departure of

scientists to overseas jobs) and internal (as scientists

abandoned their research and shifted into other sectors of

the economy). The depletion of scientific talent was

especially acute during the first 2 years after the collapse of

the Soviet Union.

Data on the post-Soviet brain drain are often unreliable,

but the scale and basic patterns of the phenomenon can be

gauged reasonably accurately from a number of recent

reports and surveys. All of these studies suggest that the

scientists who moved abroad during the last few years of the

Soviet regime included a disproportionate number of Jews,

ethnic Germans, and Armenians. Many of the scientists

were prominent researchers, and some were leaders in their

fields. Nearly three-quarters of those who left during this

initial wave continued their scientific research abroad at

either universities or research institutes. The large

majority (at least 80 percent) of the departing scientists

went to either Israel or Germany, though a significant

number subsequently moved to the United States. The

initial wave of migration accelerated in 1990, when nearly

800 scientists and 8,000 engineers from the Soviet Union

(many of whom had moved abroad in earlier years) came to

the United States. Another 2,200 scientists left the Soviet

Union in 1991. It is important to note, however, that only a

relatively small proportion of these scientists—no more

than 15 to 20 percent—applied for permanent residence

abroad. Most of those who left Russia at this point were

intending to return.

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The exodus of Russian scientists increased after the

Soviet Union collapsed at the end of 1991. In May 1992, as

public concern about the external brain drain mounted,

Russian president Boris Yeltsin issued a decree authorizing

“emergency measures to preserve the scientific and

technological potential of the Russian Federation.” This

decree proved largely ineffective, however. The measures

proposed by Yeltsin, including tax breaks for key research

institutes and competitive funding for scientific research

grants, were hardly enough to offset the impact of the

country’s deepening economic problems. In both 1992 and

1993, roughly 3,000 Russian scientists went abroad for

extended periods, particularly to Germany, Israel, and the

United States. Physicists and mathematicians made up the

bulk of the outflow, and biologists and chemists accounted

for most of the rest. Fewer than half of the scientists who

moved to foreign countries during these years continued to

pursue scientific research, opting instead for more lucrative

alternatives. Although only a small proportion (around 8 to

10 percent) of the scientists who went abroad in the early

1990s intended to stay away permanently, the overseas

exodus from the civilian scientific institutes exacted a

significant toll. The problem was not so much the

magnitude of the external brain drain as the quality of those

who left. The emigrants included some of the most gifted

scientists, particularly those of the younger generation:

In purely quantitative terms, the scientists who moved

permanently abroad did not constitute a significant outflow.

But those who left included a disproportionate number of

talented, experienced, and highly trained young scientific

workers. . . . The emigration of scientists and talented young

researchers weakened the scientific potential of Russia and

threatened to result in the country’s loss of entire scientific

fields and schools, which were forced to “survive” with only a

narrow group of highly qualified scientific elites.

Even more worrisome from the Russian government’s

perspective was the internal brain drain. Thousands of

scientists moved into other sectors of the economy,

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especially private business. A recent study suggests that

the internal brain drain in 1992-1993 was at least five (and

perhaps ten) times greater than the external drain,

especially among younger scientists. A senior official in the

Russian Academy of Sciences, Aleksandr Andreev, claimed

in 1992 that 40 percent of Russia’s research physicists had

left the Academy’s institutes and research centers.

Although other sources indicate that Andreev’s figures are

too high, there is little doubt that a significant proportion of

the Russian physics community was depleted by the

internal and external brain drain.

Ominous though these trends were, they did gradually

abate. Some of the most talented Russian scientists, who

had received numerous offers from abroad, expressed their

determination to stay in Russia to uphold and strengthen

the country’s scientific traditions. A typical case was

Academician Aleksei Khokhlov, a distinguished physicist

specializing in nonlinear optics, who committed himself to

preserving the physics community in Russia:

On numerous occasions, [foreign universities] have proposed

that I move to the West. Although I value these offers, I realize

that I would not be able to live there. I want to develop science

here in Russia and to make a contribution to my own country.

This is where my roots are, and I cannot imagine myself living

outside Russia.

By the late 1990s, the external brain drain had sharply

diminished. Specialists in microbiology, genetics, and

computer science were still leaving the country, but far

fewer mathematicians, physicists, and chemists were

departing.

Recent data suggest that the annual number of Russian

scientists and engineers from civilian institutes who went

abroad for extended periods dropped from around 3,000 in

the early 1990s to roughly 1,000 in later years, a trend that

has been welcomed by the Russian government. In a

statement to the Russian Duma in November 1999, the

Russian minister of science and technology, Mikhail

126
Kirpichnikov, hailed the decrease in annual emigration. He

stressed that only 1.6 percent of the scientists who had quit

or been dismissed from their jobs in Russia were abroad at

that time. Although the rate of departures to foreign

countries rose in 1999 to 1,400 compared to an average of

1,000 in 1994-1998, this was a one-time increase sparked

mainly by the financial crisis of August 1998. (Moreover,

even though the number of scientists who moved abroad in

1999 was greater than in 1998, the exodus was well below

the levels of emigration in the early 1990s.)

The internal brain drain also slowed markedly by the

late 1990s. Most of the scientists who decided to leave their

institutes for other pursuits did so in the early 1990s, and

the ones who stayed were much less inclined to look for work

outside the Academy. The gradual settlement of wage

arrears for Academy employees in 1999-2001, and the

increased funding for science programs from 1999 on,

further reduced the likelihood that Russian scientists would

consider giving up their institute positions. The number of

scientific researchers in Russia rose in 1999 for the first

time since the mid-1980s, and the trend continued upward

in 2000 and 2001. Moreover, the number of graduate

students enrolling in physics, mathematics, astronomy,

chemistry, geology, and biology at Russian universities rose

steadily in the 1990s, offering hope that an abundance of

younger scientists would be available to fill posts at

research institutes and universities in coming decades.

Reverberations within the WMD Complexes.

The upheavals of the late 1980s and 1990s took their

greatest toll on Russia’s civilian scientific institutes and

non-nuclear defense plants, but the WMD complexes were

not wholly immune either. During the Communist era, the

living standards of nuclear weapons scientists were much

higher than those of the average Soviet citizen. The

privileged status of the closed cities continued for a while

after the demise of the Soviet Union, but it gradually

127
eroded. By mid-1994, the combined impact of ravaging

inflation and budgetary constraints was being felt

throughout the nuclear arms complex. In an interview in

September 1994, the director of the Avangard weapons

assembly facility in Sarov, Yurii Zavalishin, condemned the

Russian ministry of defense and ministry of finance for

“failing to turn over a huge amount of money they owe us.”

He said that his plant was “perhaps the only enterprise in

the [nuclear weapons] sector that is still able to pay wages

on a regular basis.” The highly publicized suicide of the

director of the VNIITF design center in Snezhinsk, Vladimir

Nechai, in October 1996 provided only the most vivid

confirmation of the hardships that arose at many weapons

facilities. In at least two cases, employees of the nuclear

weapons complex went on strike to demand the payment of

back wages. Scientists at CBW plants encountered similar

problems.

It is not surprising, then, that some of the WMD

specialists began to look for work outside their institutes or

even to think about moving overseas. Although very few

residents of the closed cities had any foreign contacts or

knew how to pursue opportunities abroad, surveys

conducted in mid-1992 revealed that 46 percent of the

scientists, engineers, and managers at nuclear weapons

facilities were interested in seeking positions outside

Russia. Among aerospace and missile experts, the level of

interest in working overseas was even greater, roughly 62

percent. Comparable surveys are not available for BW or

CW specialists, but it is safe to assume that they were at

least as interested as the nuclear weapons scientists in

going abroad. Although only a small number of the nuclear

weapons specialists (an average of 1 percent a year in the

1990s) actually ended up taking jobs abroad, the outflow of

these personnel in the first half of the 1990s provoked

anxiety in both Russia and the West.

Whether this anxiety was fully warranted is unclear. On

one hand, the surveys in 1992 revealed that the best and

most experienced nuclear weapons specialists were not

128
interested in working abroad. Although the situation was

quite different in the aerospace and missile sector where

some of the most capable experts were interested in going

overseas, the lack of interest among leading nuclear

weapons scientists was conducive to nonproliferation

efforts. On the other hand, if even a few of the key Russian

weapons scientists had moved to high-risk countries like

North Korea, Iraq, and Iran, the impact on nonproliferation

goals would have been grave. Scattered reports in the

Russian press and some Western newspapers about the

supposed presence of former Soviet WMD scientists and

engineers in a variety of Third World states—Algeria,

Brazil, Iran, Iraq, Libya, North Korea, Paraguay, South

Korea, Syria, and Venezuela—have never been verified by

any credible evidence. Although a report published by The

Russia Journal in April 1999 claimed that around 2,000

Russian weapons specialists were working in China, these

presumably were not WMD scientists but simply advisers

and technicians who were temporarily based in China to

facilitate Russia’s ongoing transfers of advanced

conventional armaments and military production

technology.

Even though reports about Russian weapons scientists

in Third World countries must be treated with great caution

and skepticism, one cannot entirely dismiss the possibility

that some departures to rogue states or the enlistment of

scientists by international terrorist organizations will

eventually occur. As discussed below, if projected

improvements in the working conditions for most scientists

in Russia are not sustained, the pool of scientific

researchers and technicians who are willing to emigrate

from the closed cities and other regions may grow. A

Russian expert on the brain drain estimated in 1997 that as

many as 8,000 scientists with experience in nuclear

technology and fissile materials were prepared to leave to

work abroad. This figure may not include any high-level

weapons scientists, but it is conceivable that at least a few of

these individuals possess expertise that would be helpful to

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a fledgling nuclear weapons program. Some countries of

great concern to the West have reportedly tendered offers to

Russian chemists and biologists as well as to nuclear

physicists. A front-page article in The New York Times in

December 1998 claimed that Iranian officials were

attempting to enlist Russian scientists for germ warfare

projects by offering salaries of up to $5,000 a month. Despite

persistent reports of such offers and despite the well-known

Russian-Iranian cooperation on the Bushehr nuclear power

plant, no hard evidence has yet emerged that any Russian

scientists have defected to Iran specifically to work on WMD

programs. Even so, the reported magnitude of these offers is

disconcerting in light of the fact that some scientists were

earning monthly salaries less than one-hundredth that

amount as late as 1996.

Nevertheless, the impact of the funding problems must

be kept in perspective. Since the late 1990s, many of the

problems have been rectified. The pay for nuclear weapons

scientists and engineers was sharply increased in both 1999

and 2000, as discussed below. Moreover, even when funding

shortfalls were especially severe in the mid-1990s, the rate

of emigration actually began falling, not increasing. The

importance of this trend was underscored by a survey of

hundreds of Russian nuclear weapons specialists and

ballistic missile scientists in 1999, which revealed that their

desire to emigrate had decreased sharply since the early

1990s. The results of the survey are presented in a study

published in 2001 by the Carnegie Endowment for

International Peace. The study indicates that the rate of

emigration from the ten closed cities increased from 1991 to

1996 and then began steadily dropping. Although an

average of about 1 percent of the total pool of surveyed

experts went to work abroad each year in the 1990s, the

large majority of the departures occurred in the first half of

the decade. In 1992, 46 percent of those interviewed at

nuclear weapons facilities expressed a desire to work

abroad, whereas only 9 percent expressed the same interest

in 1999—a fivefold decline. The surveys revealed the same

130
pattern at the ballistic missile facilities. Whereas 72

percent of respondents at ballistic missile plants in 1992

said they wanted to work abroad, only 25 percent expressed

that view in 1999.

The survey also showed that even among the weapons

experts who were still hoping to work abroad, very few were

actively taking steps toward that end. Only one-third of the

relatively small number of nuclear weapons specialists who

were willing to work abroad said they were actively looking

for foreign employment. Among missile experts who wanted

to work abroad, only one-fifth were searching for

employment. It is interesting to note, however, that some 21

percent of nuclear specialists and 42 percent of missile

specialists approved of or envied those who left Russia,

whereas only 16 percent of nuclear specialists and an equal

percentage of missile specialists held negative views of

emigrants. (About 60 percent of nuclear specialists and 42

percent of missile specialists claimed that their views were

neutral.) These statistics suggest that a considerable

minority of the researchers who have chosen to stay in

Russia’s closed cities might eventually think about seeking

work abroad. This would be likely especially if economic

conditions in the closed cities (and in Russia as a whole)

were once again to deteriorate. One of the key findings of the

survey is that 85 percent of respondents who wanted to

work abroad cited economic motivations. Only 15 percent of

the prospective emigrants indicated that they had purely

professional reasons for leaving.

One other key finding of the survey is that the actual

pattern of emigration by nuclear and missile specialists in

the 1990s was very similar to that of the larger scientific

community (as described above). Most of the weapons

specialists who applied for permanent residence when they

moved abroad went to Israel, Germany, or the United

States. For those who were still in Russia but were hoping to

work abroad, the most popular intended destination was

Western Europe (listed in 45 percent of definitive replies),

followed by North America (28 percent) and the Middle East

131
(10 percent), principally Israel. Missile specialists who

wanted to go abroad were most interested in seeking work

in Western Europe (79 percent), North America (63

percent), and Israel (9 percent). The countries most

frequently rejected by nuclear weapons specialists as

potential destinations were Iraq (59 percent), Pakistan (42

percent), Libya (33 percent), Iran (24 percent), North Korea

(16 percent), Israel (16 percent), India (13 percent), and

China (11 percent). Missile specialists who wanted to work

abroad were much less inclined to rule out any countries as

potential destinations, but 18 percent did not want to work

in Israel, 17 percent rejected China, 16 percent rejected

Pakistan, and 11 percent ruled out Iran.

These data suggest that, if there were a resurgence of

interest in emigration among Russian weapons scientists,

Western countries would have little to fear from it. Even the

very small number of Russian experts who might be willing

to work for hostile Third World regimes could undoubtedly

be induced to move to the West instead.

LIMITED EFFORTS TO ADMIT RUSSIAN

SCIENTISTS INTO THE UNITED STATES

The U.S. Government’s primary emphasis has been on

keeping former Soviet WMD scientists gainfully employed

in their own countries, rather than encouraging them to

move permanently to the West. The United States did,

however, take in a substantial number of civilian scientists

and technicians from Russia in the 1990s, perhaps as many

as 7,000, most of whom emigrated shortly after the demise

of the Eastern bloc. Other countries also received sizable

numbers of Russian scientific experts. The three that

absorbed the most in the early 1990s were Israel, Germany,

and Greece. According to Schweitzer, roughly 2,000 of the

5,000 “scientific emigrants” from Russia to the West in

1991-1994 were “active researchers.” It is unclear, however,

how many of these emigrants were involved in WMD

research or other defense-related projects.

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133

Source: U.S. Immigration and Naturalization Service, Statistical

Yearbook, Washington, DC, annual editions, 1991 to 1999. Official data

for FY2000 have not yet been tabulated.

na = not applicable.

* Figures are tabulated by country of birth.

** Of the five categories of employment-based preferences for

immigation to the United States, two are relevant to the topic of this

chapter. “Priority workers” fall into the first employment-based

category, known as EB-1 (first preference). EB-1 visas are for “persons

of extraordinary ability in the sciences, arts, education, business, or

athletics, outstanding professors and researchers, and certain

multinational executives and managers.” NB: The figures reported here

for FY 1992 through FY 1996 are for the whole of the former Soviet

Union (SU), not just for Russia. Unfortunately, the INS did not start

reporting separate data for EB-1 emigrants from Russia and Ukraine

until FY 1997.

*** This rubric designates the second of the five categories of

employment-based preferences for immigration, a category known as

EB-2 (second preference). EB-2 visas are for “professionals holding

advanced degrees and persons of exceptional ability in the sciences,

arts, and business.” The INS must determine that the “exceptional

ability” of an EB-2 immigrant will “substantially benefit the national

economy, cultural, or educational interests or welfare of the United

States.” NB: The figures reported here for FY 1992 through FY 1996 are

for the whole of the former SU, not just for Russia. Unfortunately, the

INS did not start reporting separate data for EB-2 immigrants from

Russia and Ukraine until FY 1997.

§ Figures for FY 1991 were reported only for the SU as a whole.

§§ In FY 1991 there was only one employment-based preference for

immigrant admissions, a preference granted to “professionals and

highly skilled workers.” A total of 32 individuals from the SU were

admitted within this category in FY 1991. The five-tiered system of

Table 1. Immigrant Admissions to the United States

from Russia and the Ukraine, 1991-99.
na = not applicable.

* Only aggregate figures for all former Soviet nonimmigrants are

available for the period FY 1991-93. The subsequent figures for Russia

and Ukraine are tabulated by country of citizenship.

** O-1 visas are for temporary visits by aliens who have displayed

“extraordinary ability in the sciences, education, business, or athletics.”

Several criteria must be met before an O-1 visa is granted. The INS

requires, among other things, “a written advisory opinion from a peer

group [or] a person designated by the group with expertise in the alien’s

area of ability,” “a copy of any written contract between the employer

and the alien,” “evidence that the alien has received a major,

internationally-recognized award, such as a Nobel Prize,” and evidence

of other extraordinary ability, possibly including membership in a

professional organization based on outstanding achievement,

“published material in professional or major trade publications,

newspapers, or other major media about the alien and his work in the

field,” “original scientific, scholarly, or business-related contributions of

major significance in the field,” “authorship of scholarly articles in

professional journals or other major media in the field,” and a record of

compensation and employment responsibilities commensurate with

those of extremely gifted and accomplished individuals.

*** H-1B visas are given to “aliens coming temporarily to perform

services in a specialty occupation, or as a fashion model of distinguished

merit and ability.” H-1B visas are divided into three categories: H-1B1,

H-1B2, and H-1B3. The large majority of H-1B visas for individuals

from Russia and Ukraine are H-1B1 visas, which apply to “an alien

coming temporarily to perform services in a specialty occupation.” A

134

Source: Data for FY1991 to FY1999 are from U.S. Immigration and

Naturalization Service, Statistical Yearbook, Washington, DC, annual

editions, 1991 to 1999. Data for FY 2000 were provided by INS and U.S.

Justice Department officials.
“specialty occupation” is defined as one involving “the theoretical and

practical application of highly specialized knowledge requiring

completion of a specific course of higher education.” Only a relatively

small number of Russians and Ukrainians qualify for H-1B2 visas (for

aliens “coming temporarily to perform services of an exceptional nature

relating to a cooperative research and development project

administered by the Department of Defense”) and H-1B3 visas (for

fashion models of distinguished merit). H-1B holders are permitted to

work in the United States for an initial period of 3 years, which, at the

employer’s request, can be renewed for a further three years.

§ J-1 visas are used for “educational and cultural exchange

programs” in “the fields of education, arts, and sciences. Participants

include students at all academic levels; trainees obtaining on-the-job

training with firms, institutions, and agencies; teachers of primary,

secondary, and specialized schools; professors coming to teach or do

research at institutions of higher learning; research scholars;

professional trainees in the allied and medical fields; and international

visitors coming for training, sharing, or demonstrating specialized

knowledge or skills.”

§§ No figure for O-1 visas is given here for FY1991 because the

category did not begin until FY1992. The figure given here for H-1B

visas in FY1991 actually refers to H-1 visas. Figures for H1-B visas

begin with FY1992.

§§§ The INS Statistical Yearbook for 1997 reports that “no reliable

data are available for 1997” for nonimmigrant admissions (p. 111). The

INS website (http://www.ins.gov) erroneously presents FY 1996 data as

the figures for FY1997.

Table 2. Nonimmigrant Admissions to the United

States from Russia and Ukraine, 1991-2000.

The U.S. Immigration and Naturalization Service (INS)

does not regularly provide disaggregated statistics on the

number of foreign scientists and engineers who move to the

United States, but several of the categories used by the INS

for immigrant and nonimmigrant admissions give an

indication of trends in the entry of scientists from Russia

and Ukraine. Tables 1 and 2 contain annual data for

immigrant and nonimmigrant admissions, respectively,

from both Russia and Ukraine. The trends for the two

countries are essentially identical. The number of

immigrants in relevant categories rose sharply each year

from 1991 to 1995, but declined just as precipitously from

1996 through 1999 (the most recent year for which data are

available). Assuming that scientists made up a relatively

135
stable percentage of the numbers in each category, the trend

depicted here tallies very well with the data presented

above on the brain drain from the former Soviet Union.

When the brain drain was increasing, the number of

scientists admitted as immigrants into the United States

also increased; and when the exodus of scientists from

Russia and Ukraine diminished, the volume of immigrant

admissions declined.

Even when the brain drain from Russia and Ukraine

was at its height, the number of former Soviet scientists who

moved permanently to the United States was not especially

large. Data compiled unofficially by the U.S. National

Science Foundation (NSF) indicate that 426 Russian

scientists and engineers received immigrant visas to the

United States in FY1993, and another 512 received such

visas in FY1994, an increase of roughly 25 percent. The

number of Russian scientists and engineers who

immigrated to the United States rose again in FY1995 but

then declined sharply in FY1996, FY1997, and FY1998 (the

latest year for which data are available). The difference

between the early 1990s and the late 1990s was striking.

Whereas more than 450 scientists and engineers a year

were emigrating from Russia to the United States in

FY1994 and FY1995, the number emigrating from the

whole of the former Soviet Union fell to under 200 annually

by the late 1990s.

The INS data for nonimmigrant admissions, shown in

Table 2, reveal a pattern quite different from that of

immigrant admissions. The number of Russian and

Ukrainian citizens entering the United States in the late

1990s for temporary work and exchanges, including

science-related programs, remained considerably higher

than it was earlier in the decade. In the two most relevant

categories—O-1 and H-1B admissions—the trend after

1993 was steadily upward, with the one exception of O-1

visas in 1996. In a third, somewhat more diffuse visa

category—for J-1 admissions—the trend was sharply

upward in the early-to-mid 1990s and relatively stable

136
thereafter. (Definitions of O-1, H-1B, and J-1 visas are

provided in the explanatory notes for Table 2.) The figures

for H-1B (temporary work) visas are especially useful in

highlighting the pattern of scientific entrants from the

former Soviet Union. Statistics compiled by the INS show

that roughly three-quarters of H-1Bs in 1998-2000 went to

scientists and engineers, predominantly those under 35

years of age. Computer experts, in particular, accounted for

55-60 percent of all H-1B recipients during this period.

Although Russia ranked far behind India and China—the

world’s two most populous countries—in the number of its

citizens who received H-1Bs, the surge of Russian visa

holders after 1993 elevated Russia to tenth place overall,

well ahead of countries like Brazil and Indonesia, whose

populations are of comparable size.

In short, the trends depicted in Tables 1 and 2 confirm

that even though only a relatively small and dwindling

number of scientists and engineers from the former Soviet

Union immigrated to the United States in the 1990s, a

substantial and growing number were admitted for

temporary research positions and scientific exchanges.

The U.S. emphasis on temporary rather than immigrant

admissions for former Soviet scientists has been driven

partly by the demand side, that is, the number of Russians

and Ukrainians applying for visas each year. As the number

seeking to immigrate to the United States has fallen, it is

not surprising that the quantity of immigrant visas

awarded has dropped. By the same token, as the number of

H-1B petitions for Russians and Ukrainians has risen, the

number (though not necessarily the proportion) of visas

approved has grown.

The U.S. emphasis on temporary admissions for Russian

scientists has been reinforced by changes in U.S.

immigration law in 1990, 1998, and 2000, which set stricter

limits and fewer exemptions for employment-based

immigrant admissions and which expanded the number of

H-1B nonimmigrant admissions. Under changes adopted in

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October 2000, scientists who are admitted on H-1B visas to

work for universities or nonprofit research centers are

exempted altogether from the newly increased ceilings for

H-1Bs.

The emphasis on temporary rather than permanent

admissions has also been partly due to the limited capacity

of prospective employers to absorb foreign specialists. By

the mid-1990s, many U.S. companies had reached a

saturation point, especially for mathematicians, physicists,

and chemists, some of whom had not been as rigorously

trained as their American counterparts. Only in a few select

fields, such as computer programming and biotechnology,

did the demand for foreign specialists persist, and even then

it was only for those who had been properly trained.

One final factor that shaped U.S. admissions policy

vis-à-vis Russian scientists (especially weapons scientists)

was the sensitivity of the issue for the Russian authorities.

The potential for bilateral friction on this matter was

evident as early as October 1992, when the U.S. Congress

approved the Soviet Scientists Immigration Act (SSIA), a

bill that enabled up to 750 former Soviet WMD scientists, as

well as their spouses and dependents, to qualify for

permanent residence in the United States under an

employment-based preference (EB-2), even if they had not

received an actual offer of employment. The SSIA triggered

a harsh response in Russia, where legislators and political

officials depicted it as an ominous “attempt by the United

States to open the floodgates for Russian defense

scientists.” Russian officials complained both publicly and

privately about the U.S. law and called for it to be rescinded.

Commentators in the Russian press voiced deep suspicion

and nationalist recriminations against “hostile foreign

powers... seeking to deprive our homeland of its secrets.”

They claimed that the United States was “exploiting our

country’s immense scientific resources for its own

mischievous ends.” The resulting backlash was precisely

the type of thing that U.S. officials had hoped to avoid.

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The irony of the Russian complaints is that they were

based on a misreading (or willful distortion) of the U.S.

legislation. The SSIA was never intended to be more than a

one-time measure. It was certainly not the start of a

systematic effort to induce many thousands of former Soviet

WMD scientists to resettle permanently in the United

States. No one in Congress or the executive branch ever

contemplated offering immigration visas to tens of

thousands of Russian weapons experts. On the contrary,

some members of Congress—particularly those from

districts in which the U.S. nuclear weapons laboratories

were located—had argued in early 1992 (when the SSIA was

first proposed) that the entry of even a small number of

former Soviet weapons scientists to work in the United

States would be undesirable:

At a time when America’s nuclear scientists are being laid off

by defense cuts because of the declining Soviet threat, the

United States Department of Energy is luring Soviet

scientists to work on nuclear fusion and space missile defense.

. . . We are now displacing our best and brightest American

scientists. What do the hundreds of American scientists at Los

Alamos, Sandia, Oak Ridge, and our other national

laboratories facing possible layoffs think of this practice? They

have been toiling against the Soviet bear for years. Because of

these scientists we won the cold war. What is their reward?

They may be fired and replaced by Russian scientists.

In part because of these complaints, congressional

sponsors of the SSIA repeatedly emphasized its limited

nature. When the House of Representatives took up the

legislation in the fall of 1992, the chief sponsor, Romano

Mazzoli, underscored the modest scope of the bill:

[The SSIA] waives a legal requirement, which is in the 1990

[immigration] law now, but waives it for only a 4-year period,

not permanently, and only for a total of 750 scientists.... [The

bill] raises no quotas nor ceilings on foreign workers. It only

opens the door slightly and somewhat facilitates for a limited

period of time and for a limited number of former Soviet

scientists their entry into the United States.

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Supporters of the SSIA also stressed that it was

“narrowly targeted to address a specific and highly unique

situation” and would be implemented “without cost to the

American taxpayer and without displacing anyone who has

been waiting to immigrate to the United States.” The

committee hearings and brief floor discussion left no doubt

that the legislation was designed to cover only a very small

percentage of Russian WMD scientists.

In practice, moreover, the SSIA turned out to be even

more limited than the sponsors had envisaged. The original

text of the bill had to be supplemented by interim rules

prepared by the INS in 1993 and 1995. After a lengthy

review process, the INS adopted a final rule in February

1997 that incorporated the 1995 changes. These

modifications, based on comments solicited by the INS,

clarified which categories of scientists and technicians from

the former Soviet Union were eligible to apply for

immigration visas under the SSIA. The initial draft rule had

defined eligible applicants as “scientist[s] or engineers . . .

who have expertise in chemical, biological, or other high

technology fields,” a broad description not limited to

weapons personnel. But the amended 1995 interim rule had

explicitly mentioned expertise in “a high-technology field

which is clearly applicable to the design, development, or

production of ballistic missiles, nuclear, biological,

chemical, or other high-technology weapons of mass

destruction” as a qualifying criterion. The INS

subsequently narrowed the scope of the rule to exclude

scientists and engineers who were not directly engaged in

strategic weapons projects. This revision left out all

nondefense scientists and technicians whose work was

potentially applicable to WMD programs. The INS

preserved these changes and others in the final 1997 rule,

but the impact of the guidelines was largely negated by the

agency’s failure to extend the cutoff date for petition

approvals beyond the original deadline of October 24, 1996.

Thus, contrary to the complaints voiced by Russian officials,

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the SSIA proved to have only a minuscule effect at best on

the Russian WMD complexes.

Even though Russian commentators had misconstrued

(or deliberately misrepresented) the SSIA, their adverse

response to the legislation was bound to cast a pall over any

further such efforts. Subsequent programs undertaken by

the U.S. Department of Energy (DOE) and other U.S.

Government agencies were aimed mainly at providing

employment for former Soviet weapons scientists and

engineers within their native countries, rather than

encouraging them to immigrate to the West. Although

roughly 60 Russian “technical specialists for nuclear

reactors” were “semi-permanently” relocated to New Mexico

in 1995 for work on the Topaz Project (a project to adapt

compact nuclear power plants for space vehicle propulsion),

the transfers were limited in number and did not spawn a

mass exodus of scientific and engineering talent from

Russia or the other former Soviet republics.

U.S. EFFORTS TO EMPLOY WEAPONS

SCIENTISTS IN RUSSIA

To minimize the likelihood that Russian WMD scientists

and engineers would be enticed by lucrative offers from a

hostile Third World country, the United States has

launched several initiatives to provide worthwhile

employment for highly-trained experts who stay in Russia.

This approach has been seen as a substitute for, not a

supplement to, the possible immigration of these scientists

to the West. After private U.S. organizations (the Carnegie

Corporation and the MacArthur Foundation) began

awarding research grants to former Soviet scientists in

1992-93, the U.S. Departments of Defense and Energy

embarked on a number of projects of their own. By 1995,

Russia had become the single largest beneficiary of U.S.

funding for programs encompassed by the International

Cooperation in Research and Development (ICRD) effort,

with particular emphasis on aeronautics and nuclear

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energy. The ICRD grants were separate from the money

appropriated for the Nunn-Lugar Cooperative Threat

Reduction (CTR) program and for a number of DOE and

State Department projects designed specifically to reduce

the strategic proliferation threat posed by Russian weapons

experts.

Many of the activities funded by the CTR and DOE, such

as the dismantling of strategic missiles and the installation

of protective devices and surveillance equipment at key

storage facilities in the former Soviet republics, have been

exceptionally valuable in helping to safeguard nuclear

weapons and components. The focus here is not on CTR as a

whole or on all DOE activities, but on the three specific DOE

and State Department programs that were set up in the

1990s for the express purpose of keeping former Soviet

WMD scientists gainfully employed: (1) the Science Centers

program, (2) the Initiatives for Proliferation Prevention,

and (3) the Nuclear Cities Initiative (NCI). These programs

were championed by the Clinton administration, but their

fate seemed to be in doubt when a new administration came

in under George W. Bush. Whatever uncertainty may have

existed, however, was dispelled in mid-December 2001

when President Bush declared that, far from eliminating

the programs, he would “expand efforts to provide peaceful

employment for scientists who formerly worked in Soviet

weapons facilities.” Although the administration

subsequently announced that it would merge the NCI with

the IPP, senior officials confirmed that the basic activities of

the two programs would be continuing and that funding for

the Science Centers would be increased.

The question addressed in the Appendix to this chapter

is whether these sorts of programs, taken together, can

provide permanent alternative sources of employment for

all or most of the Russian WMD experts within the next 10

to 15 years. Even if the answer is negative, the programs

may still be worth pursuing for other reasons (e.g., for

intelligence-gathering or to foster professional

camaraderie). For the purposes of this chapter, however,

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the only relevant concern is whether the programs can

generate long-term alternative employment for Russian

WMD specialists. The answer provided in the Appendix is

unambiguously negative.

THE RUSSIAN PRIVATE SECTOR

Defense conversion and the transfer of displaced

scientific and technical personnel to new jobs pose

formidable challenges even for countries with highly

advanced market economies like the United States.

Although Silicon Valley and other private-sector

opportunities have absorbed large numbers of scientists

and technicians from U.S. Government weapons

laboratories, the process of downsizing the U.S. nuclear

weapons complex inevitably has been disruptive for many.

In Russia, the difficulty of finding opportunities for

displaced weapons scientists is incomparably greater. Yurii

Zavalishin, the director of the Avangard weapons assembly

plant, expressed dismay in 1994 that soon after his staff

“became actively involved in the state conversion program

and began working on a broad scale, the whole program

turned sour.” Although some of the former employees of the

Russian nuclear and missile complexes (mostly younger

people) successfully landed jobs in the fledgling private

sector or with foreign companies, the total number who

managed to do so was trivial compared to the number who

may be displaced over the next several years if much-needed

downsizing of the Russian WMD complexes proceeds as

forecast.

The lack of progress with defense conversion in Russia,

the poor business climate, and the many obstacles facing

aspiring entrepreneurs have stifled the emergence of a

private sector that could absorb thousands of WMD

scientists. Although one-third of Russian defense

enterprises had been “privatized” (i.e., turned over to

managers) by the mid-1990s, the rest were still owned

wholly or largely by the state. Even the nominally private

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defense firms were kept open mainly through state largesse.

Unlike in Hungary, Poland, Slovenia, the Czech Republic,

and other East-Central European countries where the rapid

growth of small business made up for the shortcomings of

large industry, no such engine of prosperity has been

available in Russia. Overweening government interference,

corruption, and criminality in Russia have thwarted

indigenous start-ups and deterred foreign investors from

entering. As a result, nothing remotely comparable to the

private-sector opportunities in the United States is likely to

exist in Russia for many years to come.

The scarcity of opportunities outside the weapons

complexes poses an onerous dilemma for Russian scientists

who face the prospect of unemployment. Most evidence

suggests that a greater number of the WMD personnel,

especially those under 45, would have been inclined to take

jobs in the private sector if the opportunities had been

available. According to recent data, some 70,000 scientists

working at Russian Academy of Sciences institutes—on

projects unrelated to WMD—left their positions for the

private sector after 1991. The bulk of this outflow, however,

occurred in the early 1990s, a pattern that was also evident

in the nuclear and missile complexes. The Carnegie

Endowment study indicates that a small but significant

number of weapons specialists began moving to the private

sector in 1992, but the outflow soon peaked—in 1993 for the

missile complex, and in 1996 for the nuclear weapons

industry—and then rapidly declined. Although some of the

scientists and engineers who left the defense complex for the

private sector fared well, others did not. By the end of the

1990s, as economic hardship and turmoil in Russia

remained acute (and showed no signs of abating in the near

future), the number of weapons scientists who were inclined

to venture into the private sector had greatly diminished.

It is unlikely that the situation will improve before the

projected cuts in the Russian WMD complexes are due to

take effect. Russian investment in technology

commercialization is less than $200 million a year, and

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foreign direct investment in science and technology in

Russia is still almost nil. The WMD specialists who are still

working in the Russian weapons complexes will therefore be

extremely reluctant to forsake their posts. The younger

scientists and engineers who were inclined to leave for

opportunities in the private sector have already done so,

and the remaining weapons personnel will find it especially

difficult to adapt to new lines of work.

OFFICIAL RUSSIAN EFFORTS TO FORESTALL A

NEW BRAIN DRAIN

Until very recently, the Russian government had sought

to forestall the emigration of key WMD scientists,

engineers, and technicians by imposing severe travel

restrictions on individuals who enjoyed access to “state

secrets.” This punitive approach is still in effect, but since

early 2000 the government has also increasingly tried to

offer a carrot (more attractive career opportunities) to go

with the stick. Although the stick will undoubtedly remain

crucial in preventing undesired emigration, the effort to

adopt a more nuanced, carrot-and-stick approach suggests a

recognition that the stick alone will not be effective over the

long run.

Proposals to Improve Russian Science

and the Weapons Complex.

Even before Vladimir Putin took over from Yeltsin as

Russian president at the end of 1999, he had displayed a

keen interest in bolstering Russia’s scientific research

capabilities, especially research on nuclear weapons and

other advanced military technologies. In late April 1999,

when Putin was Secretary of the Russian Security Council,

he played a crucial role in the Council’s adoption of a

classified directive authorizing sharp increases in the

salaries and benefits of nuclear weapons scientists and

engineers. At a news conference after the Council met,

Putin hailed the resolution as an “urgent measure” that

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would “ensure the stable functioning of the nuclear weapons

complex.” He expressed a similar view 4 months later,

shortly after he became prime minister. At a ceremony

marking the 50th anniversary of the first Soviet nuclear

bomb test, Putin declared that “Russia’s nuclear weapons

complex is the foundation of our country’s security,” and he

vowed that “the development and upkeep of the nuclear

weapons complex will remain the state’s highest priority.”

After gaining the presidency, Putin continued to

emphasize the need for major improvements in Russia’s

scientific prowess and weapons research. In a speech before

a group of scientific workers at the science research park in

Zelenograd in early February 2000, he called for “a

comprehensive reform of the scientific and technological

sphere,” attributing the problems in Russia’s scientific

establishment to past mismanagement and waste.

Although he lamented the earlier loss of highly trained

scientists and engineers, he declared that his policies would

prevent any further brain drain. A month later, Putin

abolished the Ministry of Science and Technology along

with several other federal agencies and replaced them with

a much larger Ministry of Industry, Science, and

Technology, which oversees a vast network of weapons

research and testing facilities. Putin’s choice of a

high-ranking official from the military-industrial complex,

Aleksandr Dondukov, to head the new ministry was a

further sign of the growing emphasis on weapons-related

research.

Putin highlighted this theme in two important speeches

in late March 2000 just before and just after he was formally

elected president on March 26. In the first speech, delivered

at the All-Russian Conference of Employees of the

Defense-Industrial Complex, he pledged that “defense

production, as a core part of the overall economy, will be the

driving force of industrial development.” In the second

speech before an enlarged session of the Minatom

Collegium in Snezhinsk, Putin promised to “strengthen

Russia’s nuclear weapons complex” and to ensure that “the

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significance of this complex, far from decreasing, will

increase exponentially.” He stressed that Snezhinsk and

the other nuclear weapons facilities would be at the heart of

his scientific research program:

We must make 100 percent use of the intellectual riches of [the

nuclear weapons] industry and must support its unique

collectives, laboratories, and scientific centers. They are the

source of innovative technologies for all of our industries, and

they are the resource for economic growth and for the

successful development of the country.

Putin returned to these points on numerous occasions in

both 2000 and 2001. In May 2000 he delivered a keynote

address before the general assembly of the Russian

Academy of Sciences, an annual event that Yeltsin had

always declined to attend. In his speech, Putin called for a

“comprehensive reform of the scientific-technical sphere”

that would enable Russia to “make maximum use of the

immense scientific and technical resources and

highly-trained personnel of the military-industrial

complex.” Three months later, he met with 20 senior

members of the Russian Academy of Sciences to discuss the

future of the Russian scientific establishment. Putin

decried the “brain drain that has eroded our state’s

potential in the world” and vowed to improve the conditions

for scientific research. In particular, he promised to devote

greater resources to areas vital for national security,

especially nuclear weapons and other high-technology

industries.

To reinforce this new approach, Putin’s ministers

provided more funding for science in 2000 than was actually

promised in the federal budget, a striking reversal of the

pattern in 1992-98, when outlays for science consistently

fell short of the projected level. The government also revised

the science budget for 2001, allocating an additional 820

million rubles toward salary increases for scientists, 800

million rubles to improve research facilities, 12.5 million

rubles to provide for scientists’ housing needs, and 80

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million rubles for other “retention efforts.” In addition,

Putin secured funding for a new state training plan for

scientific and engineering personnel, with particular

emphasis on the defense industry. As a further gesture of

support for the weapons complex, Putin pledged to confer

privileged tax and legal status on the “science cities”

(naukogrady), the 60 or so defense-oriented research

metropolises that had flourished during the Soviet era but

had fallen on hard times in the 1990s. Putin also proposed a

fourfold increase in grants for university science

departments engaged in weapons-related research and

30-40 percent increases in salaries for lecturers in those

departments. (Traditionally, Russian universities other

than Moscow State and Leningrad State had been much less

important than the Russian Academy of Sciences in

carrying out basic scientific research, but the research

activities of many of the universities were expanded

significantly beginning in 1997.)

Putin’s emphasis on the military applications of science

has caused anxiety among some Russian scientists, who

worry that the new policies are little more than a reversion

to the centralized, top-down system of the Soviet era. In

mid-2000, the St. Petersburg Association of Scientists

condemned the government’s alleged efforts to convert

science into a “branch of the military.” Even many of the

scientists who were more favorably disposed toward Putin’s

proposals were initially skeptical that the new rhetoric and

policies would be sustained over time. In the hope that a real

change was in the offing, they offered suggestions about how

to improve the situation in the near term. In public

interviews and discussions with senior officials, a number of

leading scientists complained that the government’s efforts

to provide housing and monetary incentives to retain

existing personnel and lure scientific researchers back to

Russia had been far too limited. They also stressed that the

recruitment of new scientific talent would depend on

ensuring career mobility as well as material inducements.

Although many scientists concurred with the government’s

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proposal to scale back the state’s role in civilian research

over time and to encourage large increases in private

investment, they warned that the scarcity of private capital

in Russia made it infeasible to proceed very quickly in this

direction.

These concerns were taken into account by the

government in its latest proposals for weapons-related

research and the compensation of nuclear scientists. In

August 2000, Putin issued a decree on “Urgent Measures of

Social Support for Specialists of the Nuclear Weapons

Complex of the Russian Federation.” The decree authorized

further increases in the salaries and pensions of all

scientists, engineers, and other personnel involved in the

“research, production, and disassembly of nuclear

weapons.” These new pay increases and the settlement of

earlier wage arrears ensured that nuclear weapons

scientists and engineers would be receiving salaries roughly

two to three times higher than average, along with generous

benefits. Two days after issuing this decree, Putin sent

Prime Minister Mikhail Kas’yanov on a highly publicized

visit to the VNIIEF nuclear weapons design center in Sarov.

During the trip, Kas’yanov pledged that the government

would upgrade the living standards and research conditions

of employees in the nuclear weapons complex. “The

development of science pertaining to nuclear weapons,”

Kas’yanov declared, “is one of the main objectives for

Russia.”

The government’s efforts to bolster the scientific prowess

of the weapons complex continued in 2001. As the year

began, the Sarov and Snezhinsk nuclear research centers

announced that they would be embarking on new

state-funded defense projects and providing additional pay

increases for essential personnel. Other key weapons

facilities made similar announcements, and the

government proposed extra funding for new military

research activities. In the spring of 2001, Putin established

a Science Council under his direct supervision to “choose the

priorities for scientific research” in Russia and to facilitate a

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“reversal of the brain drain” by encouraging the “best

scientific personnel to come back” to their homeland. When

the Science Council advises Putin how “the state should

support fundamental science and applied science,” it is

supposed to give particular weight to defense-related

programs in “cutting-edge areas on which the future of the

country depends.”

Putin’s emphasis on the link between scientific research

and military production was reinforced in October 2001

when he upgraded the ministry of industry, science, and

technology and tied it directly to the defense complex. In an

unexpected move, Putin replaced the existing minister of

industry, science, and technology, Aleksandr Dondukov,

with Ilya Klebanov, a deputy prime minister who had been

overseeing the roughly 2,000 military-industrial

enterprises in Russia. Although Klebanov was removed

from his post as deputy prime minister in February 2002

(largely because of political infighting), he was able to

combine the two posts long enough to ensure that the

ministry of industry, science, and technology (or, more

likely, a successor body controlled by the Russian Security

Council) would be responsible for overseeing a long-awaited

overhaul and upgrading of the weapons complex. A draft

program to this effect, released in March 2001, envisaged

the establishment of 36 conglomerated “corporations” as

conduits between the government and the large array of

defense plants. Many observers expected that this program,

like numerous others over the past decade, would come to

naught. But now that Klebanov’s position has been

strengthened and the science establishment has been

effectively subordinated to the defense complex, the

prospects for meaningful change may be greater, especially

if economic growth continues and the federal budget

remains in surplus.

Until the Russian economy is drastically reformed (a

process that is still in its early stages) and free-market

institutions are firmly in place, the conditions for scientific

research in Russia will remain precarious. But if Putin’s

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proposals to revive the country’s scientific and technological

capabilities can be converted from rhetoric into sustained

action, they will clearly benefit the defense complex.

Whether that will be good or bad from the West’s

perspective remains to be seen.

Recruitment and Retention of Younger Weapons

Scientists.

To ensure that the WMD complexes remain vigorous in

the future, Putin has sought to increase the number of

young, highly trained scientists and engineers who

undertake weapons work. The influx of younger scientists to

the weapons facilities had dropped significantly in the first

half of the 1990s, primarily because the collapse of the

Soviet Union led to the breakdown of the centrally planned

higher education system in Russia, which traditionally had

channeled many of the best young scientists from leading

universities (the Moscow Institute of Physics and

Engineering, the Moscow Institute of Physics and

Technology, Moscow State University, Leningrad State

University, etc.) to the WMD complexes. Similar problems

arose during this period with the recruitment of newly

trained engineers. In the past, most of the engineers

employed in the nuclear weapons complex had been

educated at the seven specialized universities (branches of

the Moscow Institute of Physics and Engineering) and 18

technical schools in the closed cities that were run by the

Soviet Ministry of Medium Machine-Building (and later by

Minatom). Funding shortfalls of nearly 75 percent at the

Minatom universities and technical schools from 1992 to

1997 deterred prospective students from enrolling. The

result was a further reduction in the flow of freshly trained

specialists to the WMD complexes. Initially, this trend did

not pose a serious problem for staffing levels within the

weapons complex—a survey by Minatom in early 1999

found that over 90 percent of key positions and areas of

expertise in the nuclear weapons industry were filled—and

indeed some cuts in the supply of new personnel were

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needed to facilitate the projected downsizing of the nuclear

complex. Nonetheless, a continued failure to attract

sufficient numbers of younger scientists and engineers

would pose grave long-term problems for the weapons

facilities. Hence, one of Minatom’s chief priorities since the

late 1990s has been to step up the recruitment of younger

scientists and engineers and to retain those who have

recently joined the nuclear weapons facilities.

The goal of encouraging younger scientists to enter the

defense complex has also been a constant theme of Putin’s

policies and statements. In May 2000, he called for a

“national program to draw young people to science,” an

allusion to the possible restoration of an educational system

that would allocate fresh scientific talent to military

research. In late November 2000, at Putin’s behest, the

government convened a special meeting to discuss how to

ensure that younger scientists would pursue research

careers within Russia, especially in the defense complex.

Several of the participants warned that unless sweeping

measures were taken, younger scientists would

increasingly seek to enter the commercial sector or, even

worse, to immigrate to the West. The reduced flow of young

scientists into the weapons complex, according to those

present, was posing a “threat to [Russia’s] security.” The

minister of education, Vladimir Filippov, expressed

particular concern that “the United States has set a target

to attract specialists in the field of science and the defense

industry, which includes a special quota for Russian

experts. If we do not take urgent steps, we will be working

for another country’s defense.” These concerns helped spur

Putin’s proposals to quadruple the funding for

defense-related research at universities and to improve

opportunities available to younger scientists.

Other steps to recruit young scientists and engineers

have been taken by Minatom itself, notably through its

sponsorship of events for groups of younger experts, its

allotment of greater funding to the specialized universities

and technical schools in the closed cities, and its success in

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obtaining draft exemptions for young specialists who make

their careers in the nuclear weapons complex. Beginning in

1999, the section for young people in Russia’s Nuclear

Society (a professional organization closely affiliated with

Minatom) sponsored and participated in periodic scientific

conferences and annual youth congresses for freshly

recruited experts working in the nuclear complex. In March

2000, a group of younger scientists and engineers employed

at VNIIEF formed a youth council, which is intended to

represent the interests of some 1,500 younger experts at the

nuclear center. With Minatom’s approval, similar councils

have been set up at other nuclear facilities.

The upgrading of the specialized universities has been

facilitated not only by increased funding for training and

laboratory equipment, but also by the establishment of

generous scholarships to attract bright students. Since the

late 1990s, several dozen scholarships have been awarded

each year to students at all seven universities. Another

important development has been the creation of special

departments and divisions in which courses are taught by

senior scientists and engineers from the local nuclear

weapons facilities. The degree program takes 6 years to

complete, but, beginning in the third year, students are

given the opportunity to pursue apprenticeships and to use

laboratory equipment at the weapons facilities. Further

training is available in 29 postgraduate science and

engineering programs, with an enrollment of around 450 a

year.

These improvements, and the increased enrollments

that have resulted, have been reinforced by Minatom’s

ability to secure draft exemptions for younger employees of

the nuclear weapons complex. Because severe hazing and

other abuses in the Russian army remain pervasive, many

young people in Russia have been eager to avoid

conscription. At Minatom’s urging, Putin issued a decree in

November 2000 granting exemptions from military service

to hundreds of young scientists and engineers at the Sarov,

Snezhinsk, Lesnoi, and Trekhnogornyi nuclear weapons

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facilities. The exemptions remain in effect as long as the

beneficiaries continue to work full-time in the weapons

complex. This privilege offers a major incentive for talented

young people to pursue careers either at weapons facilities

or, under a separate decree, at civilian nuclear plants.

All these developments have led to a significant increase

in the number of young specialists who are entering the

weapons complex. After reaching a low point in the

mid-1990s, the number of new employees recruited by

Minatom rose to 2,000 in 1998, dipped to 1,500 in 1999, and

then rose back above 2,100 in both 2000 and 2001. Although

certain problems persist at Minatom’s educational facilities

and many young people in the closed cities are still seeking

to move elsewhere, the dire predictions that some observers

(including some senior Minatom officials) made in the

mid-1990s about the growing dearth of fresh talent for the

nuclear weapons complex seem less relevant since the late

1990s. For the time being, a gap remains in the lower-level

staffing of the weapons facilities—a gap that resulted from

the greatly reduced inflow of younger scientists and

engineers in the first half of the 1990s—but there is ample

reason to believe that this gap can be overcome if

recruitment stays relatively buoyant and Minatom

proceeds with a restructuring of the nuclear complex.

Travel Restrictions and Curbs on Foreign Contacts.

Of all the factors that limited the brain drain from

Russian WMD facilities to foreign countries over the past

decade, perhaps the most important was the existence of

travel restrictions. The restrictions were first imposed

during the Soviet period and were reaffirmed in the 1990s

by Russian legislation, government directives, and

presidential decrees. Under these measures, the Russian

government is able to forbid individuals who have had

access to “state secrets” from leaving the country for a period

of 5 years after their last contact with such information. The

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government is also entitled, at its own discretion, to extend

the period for as long as deemed necessary.

Legal restrictions on the foreign travel of weapons

specialists had been in place from the moment the Soviet

WMD programs were set up, but the dissolution of the

Soviet Union in December 1991 raised the question of what

to do about those restrictions. For decades, foreign travel for

all Soviet citizens had been severely limited and controlled

by the state, but in May 1991 the Soviet parliament

approved a measure titled Law on the Order of Departure

from and Entry into the USSR of Citizens of the USSR,

which significantly liberalized the earlier travel regime.

Because the Russian Federation initially lacked its own law

governing the entry and exit of citizens, the Russian

government simply extended the Soviet law, which

remained in effect until the Russian parliament finally

passed a new law in mid-1996. A resolution adopted by the

Russian government in late January 1993 reaffirmed and

tightened the Soviet law’s restrictions on “individuals who

are privy to state secrets.” The resolution stipulated that

organizations intending to send employees abroad on

official business had to check first with the state security

apparatus to determine whether there were “grounds for

temporary restrictions on the [employees’] right to leave the

Russian Federation.” This provision applied to all

employees of the WMD complexes, and the coverage was

broadened through amendments to the resolution in 1993

and 1995, which explicitly empowered the head of the

Kurchatov Institute (a leading nuclear physics research

institute) and the director of Biopreparat (the BW

pharmaceutical firm, which had been converted into a

“joint-stock company”) to restrict the foreign travel of their

employees as well, in consultation with the state security

organs. No maximum duration was set for these

restrictions.

The limitations on foreign travel were tightened further

in July 1993, when the Russian parliament adopted a

long-awaited measure titled Law on State Secrets. The law

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replaced (or in some cases supplemented) Soviet-era

legislation that had been extended via a Russian

presidential decree in January 1992. Article 5 of the new

law and the more detailed provisions of a subsequent “List

of Items of Information Classified as State Secrets” make

clear that all technologies, components, and procedures

connected with “weapons of mass destruction, that is,

nuclear, chemical, biological, or other weapons of great

destructive force,” are state secrets “of special importance”

(osoboi vazhnosti), the highest level of classification. (A

three-tiered classification system is laid out in Article 8 of

the Law on State Secrets and in the more elaborate rules of

classification adopted by the Russian government in

October 1995. Under these rules, classified information is

deemed to be “secret,” “top secret,” or “of special

importance”—a division that is broadly similar to the

secrecy categories used during the Soviet era.) The

expansive definition of “secrets” in the law allows the

security organs to prevent vast numbers of people,

including all weapons scientists and engineers, from going

abroad.

The most severe restrictions on travel by WMD

specialists are laid out in Article 24 of the Law on State

Secrets, which requires anyone working with information

“of special importance” to forfeit “the right to go abroad until

after a period specified in the [employee’s] labor contract.”

Labor contracts for weapons specialists include detailed

provisions forbidding disclosure of classified information

and a special provision compelling each employee to “agree

to a partial, temporary restriction of my rights, including

the right to travel abroad for a period of _____ years,” with

the precise length of this period determined by the

employee’s rank and duties. The contracts stipulate that

even if the employees lose or relinquish their access to state

secrets, they must continue to abide by the obligations they

“voluntarily undertook,” including their acceptance of

restrictions on all foreign travel.

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In principle, the limitations apply only to travel outside

the country, but in practice the leeway for key WMD

specialists to move around within Russia is also still tightly

controlled. During the Soviet era, employees of the closed

cities were not permitted to travel anywhere (even to other

Soviet cities) unless they received official permission. After

1991, the ban on traveling and moving to other cities was

supposed to have been eased, but in practice it remains in

effect, as Vladislav Mokhov, a senior nuclear weapons

physicist at Sarov, emphasized in mid-1996:

I work on secret projects and am therefore restricted. . . . But if

I could choose my place of residence [within Russia], I would

never have stayed here [at Sarov]. Unfortunately they would

not let me leave. If given a choice, most of us theoreticians

would go to Moscow.

Enforcement of the travel restrictions is provided for in

Article 20 of the law, which authorizes the Russian

president to establish an Interdepartmental Commission

for the Protection of State Secrets, a body with

“extra-departmental powers” to coordinate all activities

needed to “protect state secrets.” Yeltsin issued a decree in

November 1995 that formally set up the Interdepartmental

Commission and another decree in January 1996 that

specified the organization and functions of the Commission,

including its role vis-à-vis foreign travel. The powers of the

Commission and other agencies to limit travel are laid out in

greater depth in the Federal Law on the Procedure for

Exiting and Entering the Russian Federation, which took

effect in August 1996. The law grants wide discretionary

authority to the state security organs and the Commission

to prevent individuals who have had access to state secrets

from leaving the Russian Federation. Under Article 15,

anyone who has had access to secrets “of special

importance” and has “signed a labor contract providing for

the temporary restriction of his right to exit from the

Russian Federation” can be denied the right to leave Russia,

no matter what the purpose of the intended trip. The law

thus further codified the basic restrictions described by

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Yurii Tumanov, the first deputy director of the Sarov

nuclear weapons center, in April 1995:

People involved in secret research must go through a rigorous

screening by the Federal Security Service [FSB] if they want to

travel abroad. The FSB determines the extent of their

knowledge of state secrets. Those who are most closely involved

in secret research are not permitted to take private trips abroad.

. . . Scientists who are privy to information of special importance

are not allowed to go abroad even as members of official

delegations unless they receive personal permission from the

minister of atomic energy.

The initial length of the restriction is 5 years from the

time of the employee’s most recent contact with classified

information “of special importance,” and the

Interdepartmental Commission is permitted to extend the

term for at least another 5 years.

Some of the weapons scientists who have applied to leave

Russia either temporarily or permanently were granted

permission to do so, but those whose requests were denied

were informed by the “internal security organs”—under

Article 16 of the Law on the Procedure for Exiting and

Entering—of the date of the denial, the registration number

of the case, and the full name and legal address of the

organization principally responsible for the denial.

Unsuccessful applicants are given the right to appeal the

restrictions before an Interdepartmental Commission for

the Consideration of Appeals by Citizens of the Russian

Federation in Regard to the Limitation of Their Right to

Exit from the Russian Federation. This appeals commission

was set up via a government resolution in March 1997 as a

direct replacement for the Interdepartmental Commission

for the Consideration of Appeals by Citizens of the Russian

Federation Relating to the Denial of the Issuance of a

Foreign Passport and Temporary Restrictions on Travel

Abroad, which had been established by a government

directive in March 1993. The new commission is obliged to

respond to all appeals within 3 months.

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The regulations for the appeals commission stipulate

that it must supply the Interdepartmental Commission for

the Protection of State Secrets with an applicant’s pertinent

travel documents whenever there is “a need to extend the

period of restriction on a citizen’s right to exit from the

Russian Federation beyond 5 years as provided under [the

citizen’s] labor contract.” The Interdepartmental

Commission on State Secrets must then issue a ruling on

whether the information to which the applicant had access

was truly “of special importance.” If the appeal is turned

down, the individual can appeal it further in a court of law.

In the meantime, however, anyone who has been denied

permission to leave the country must immediately

relinquish his or her passport and all other travel

documents “for safe keeping to the state body that issued

the passport.”

This appeals procedure, cumbersome though it is, was

used surprisingly often in the mid-1990s by scientists who

were denied permission to leave the Russian Federation

because they had been privy to state secrets “of special

importance.” From June 1994 to June 1995, the appeals

commission (known informally as the Ivanov Commission

after its chair, Igor Ivanov, who was then a first deputy

foreign minister) heard appeals in 198 such cases. The

commission rejected 16 of the appeals and, in each case,

imposed an additional period of up to 4 years on the initial

travel restriction. The appeals procedure has been invoked

less frequently since the late 1990s, primarily because of the

sharp drop in the number of scientists seeking to leave the

country. The lower incidence of appeals is also partly due to

the increasing likelihood that appeals will be rejected. As

the appeals commission became more stringent in its

rulings, it deterred potential applicants from even trying.

Violations of the law on the right to leave the Russian

Federation are punishable by up to 10 years of

imprisonment, the same sentence that is meted out for

violations of the travel provisions in the law on state secrets.

Western legal scholars and government officials, as well as

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human rights groups in both Russia and the West, have

argued that the Russian laws are excessively broad and

open-ended, and that the severity of the restrictions

inevitably circumscribes the rights of scientists who pose no

threat of strategic proliferation. The potential for abuse was

underscored by a case in 1999 involving Raisa Isakova, a

former scientific researcher at a secret institute in Omsk

who had held a Grade 2 security clearance. Isakova had long

been active in the local Jewish community, and in March

1999 she applied for permission to travel to Israel. After

several weeks of delay, the Federal Security Service (FSB)

warned her that unless she signed a compromising

statement against the Jewish Agency in Russia (a

nongovernmental organization that promotes immigration

to Israel), her application for an exit visa would be turned

down. Isakova was the head of the local branch of the Jewish

Agency in Russia, and she refused to sign the statement.

Her application was then rejected, and she was informed

that she would not be able to receive a visa until at least

December 2005. She appealed the decision, pointing out

that numerous other researchers from her institute with the

same level of security clearance had been permitted to

travel abroad. In September 1999 the appeals commission

ruled that she could reapply for a visa in January 2003

(rather than December 2005), but it did not overturn the

denial of her application.

Isakova’s experience is one of several cases that reflect

the government’s increasing determination to curtail

foreign travel by individuals who have had access to state

secrets. (The Isakova case is also indicative of the

persistence of official anti-Semitism, but that is another

matter.) The potential for abuse by the Russian authorities

has sparked wide concern among scholars, human rights

advocates, and legal specialists in both Russia and the

West. Some have argued that the restrictions are not only

repressive, but counterproductive for the Russian

government itself. According to this view, the emigration of

certain individuals who were denied the right to leave could

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actually have proven beneficial to Russia by reducing the

potential for discord at home.

These sentiments, however, are not shared by senior

FSB officials who, in early 1996 when the law on the right to

exit the Russian Federation was being debated, claimed in

interviews with the Russian news media that restrictions

on emigration of Russian scientists are crucial to protect the

Russian state from foreign subversion. As one official put it,

“Anyone who has had access to state secrets... must forfeit

the right to travel abroad, except on official business. Such

measures are needed to ensure that hostile forces will not

compromise our security.”

This draconian view has been endorsed by high-ranking

officials in Russia’s military-industrial complex, who have

even complained that the current laws on state secrets and

emigration are too lax, a view that Putin himself expressed

at Zelenograd in February 2000. In November 2000, amid

controversy surrounding the arrest and trial of the retired

American intelligence officer Edmond Pope, several

prominent Russian weapons scientists sent an open letter to

the leaders of the Russian government and judiciary

alleging that measures to permit greater openness and

freedom of travel were endangering the country’s scientific

establishment and compromising state secrets. The

scientists echoed Putin’s call for more stringent laws that

would ward off “hostile encroachments” on Russian science.

They asserted that “the proper balance between secrecy and

openness” had shifted too far in favor of the latter and that

“court hearings [connected with appeals of travel

restrictions] are depriving the [Russian] state of the right to

defend itself against breaches of its security resulting from

the disclosure of state secrets.” The scientists stressed that

the increased freedom of travel both into and out of Russia

was allowing foreigners to take unfair advantage of Russian

scientists:

Russia has a lot of things in the military, technical, and

scientific areas to be proud of and a lot to protect against

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uninvited “guests.” These guests try to exploit our openness, our

economic difficulties, and the mercenary interests of certain

representatives of the military-industrial complex to obtain

Russian know-how and state-of-the-art technologies for next to

nothing.

The Pope case inspired many other officials to express

similar views. The deputy leader of Putin’s Unity faction in

the Russian Duma, Frants Klintsevich, condemned the

“devil-may-care attitude to the defense of state secrets” and

demanded that the freedom of travel—both within Russia

and outside it—be restricted. The chair of the Duma’s

subcommittee on security and disarmament, Vitalii

Sevastyanov, denounced the “imperfections and flaws in the

Russian laws on state secrets” and called for “tough

measures” to prevent the compromise of “technologies

developed by generations of Russian scientists and the

defense industry—technologies that are the national

treasures of Russia.” Although Sevastyanov’s remarks were

directed mainly against foreigners operating within Russia,

he stressed that the emigration of Russian weapons

scientists was posing an equally dire threat. The alleged

“danger” resulting from the emigration of Russian scientists

was emphasized even more explicitly in the Russian press,

which decried the FSB’s supposed failure to halt the brain

drain and the concomitant leakage of Russian military

technology. In a typical case, a commentator in the widely

circulated daily Moskovskii Komsomolets accused Western

nonprofit foundations—specifically naming Soros,

Carnegie, Fulbright, MacArthur, Friedrich Ebert, and

Eurasia—as well as the ISTC and the U.S. Agency for

International Development of being “sieves” that were

luring unemployed Russian scientists to the West.

Even before the Pope case erupted, there were ample

signs that the brief period of relatively free emigration in

the early 1990s had given way to much tighter restrictions.

Siegfried Hecker, who was instrumental in setting up the

Russian-American nuclear laboratory contacts in early

1992 when he was director of Los Alamos National

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Laboratory, recently noted that by the late 1990s “the

nuclear defense sector [in Russia had] experienced a

significant reversal of the openness we found in the early

1990s. The rise in the presence and power of the Russian

security services was felt by all nuclear installations.” As far

back as October 1995, a detailed set of instructions

approved by the Russian government on the procedures for

granting access to state secrets had required all Russian

citizens holding security clearances to undergo new

background checks if they got married, had a close relative

who moved abroad, or experienced other changes in their

lives. In subsequent years, the FSB tended to construe this

provision as expansively as possible. In 1998 Susan

Eisenhower wrote that her husband, the well-known

Russian planetary scientist Roald Sagdeev, had recently

been subjected to “an extensive and thorough background

check” after his passport expired. Sagdeev had formerly

held security clearances, but the reason he was forced to

undergo a background check was simply that he had been

traveling back and forth between Russia and the West.

Eisenhower noted that in recent months Sagdeev had found

“border control” in Russia to be “much tighter” than in the

early 1990s, and that he had heard from scientists working

in the nuclear weapons and missile complexes that they too

were “under far greater scrutiny” and were “restricted in

their travels” and deprived of “the right to keep a passport

for foreign travel in their possession.”

The increasing severity of the travel restrictions

inevitably took its toll. The Carnegie Endowment survey

revealed that, by 1999, nuclear weapons scientists were

citing “administrative restrictions” and a lack of money as

the two main obstacles to working abroad. Many of the

scientists argued that “the authorities do everything to

prevent a person from going abroad” by “imposing

conditions . . . and putting obstacles in the way.” The tighter

restrictions on foreign travel were by no means the only

factor that led to a sharp drop in the rate of emigration after

the early to mid-1990s, but they clearly played a crucial role.

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Because Russian weapons scientists knew they had to

overcome formidable barriers before they could leave the

country, they often sensed that it was better not to try. The

small number who did apply to travel abroad were often

turned down.

Moreover, the clampdown on scientists eventually

extended beyond the tightening of travel restrictions to

include limitations on all foreign contacts, even the most

innocuous ones. In May 2001, the presidium of the Russian

Academy of Sciences issued a directive outlining “Measures

to be Taken by the Russian Academy of Sciences to Prevent

Damage to the Russian Federation.” The directive required

the Academy’s “special departments” (osobye otdely) and

institute directors to “exercise constant control over trips

abroad by Academy of Sciences researchers who have access

to state secrets,” to “tighten control over the researchers’

submission of reports about their trips abroad,” and to

compel researchers to disclose any projects they were

pursuing with foreign scientists, any grants they might seek

from abroad, any articles they published in foreign journals,

any visits they might host by foreign scientists, and any

other contacts they might have with foreigners. The

information was to be collected and transferred periodically

to “appropriate officials” in the government.

Controls of this sort had been in effect during the Soviet

era, but most of them were lifted after the Soviet Union

disappeared. The rationale for restoring them, according to

the government and senior Academy officials, was to

“protect state secrets” and prevent any “leakage of scientific

information.” One of the vice presidents of the Academy,

Gennadii Mesyats, argued that “it is of immense importance

to preserve our know-how” in the defense sector. He claimed

that the “increased freedom of contacts with foreign

visitors” had posed serious risks:

Many Russian scientists [in the 1990s] went abroad to earn

money, and the directors of scientific research institutes, if only

reluctantly, began selling off the results of projects that were

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not attracting investors within Russia. As a result, not only

was the [earlier policy of] total control over foreign contacts

lost. For a while these contacts were not subject to any control

at all. The leakage from the country of information about

promising scientific developments took on a catastrophic

nature in some places.

Mesyats and other senior Academy officials also insisted

that the revived controls were no different from those

supposedly in effect in the United States and other Western

countries. The Academy’s chief press representative, Igor

Milovidov, argued that “it is a universally customary

practice to report to your boss” about contacts with

foreigners, and Mesyats added that he had “frequently been

on official trips to the United States, and they have a very

tough secrecy regime....I know that U.S. scientists also

inform their bosses about absolutely everything. There is

nothing underhanded here [in Russia]. No! This is normal.”

Although it is true that scientists at U.S. weapons

laboratories and other highly sensitive facilities are obliged

to keep their superiors informed of foreign contacts,

Mesyats is wide of the mark in suggesting that expansive

controls like those in Russia, applying to civilian and

weapons scientists alike, would or could be adopted in the

United States.

The crackdown on civilian scientists, combined with the

Russian government’s decision in September 2001 to

establish a new Agency for the Protection of State Secrets

that will “impose tighter limits on information security,”

suggests that the ever more stringent controls on weapons

scientists are unlikely to be eased anytime soon. The

increased salience of the FSB under Putin, and the Russian

news media’s and government’s growing obsession with

allegations of “foreign espionage” against Russia, imply

that the trend, if anything, is likely to be toward even

stricter, not looser, control over the travel and foreign

contacts of weapons scientists. Should this prove to be the

case, it may well derail any notion of encouraging these

scientists to immigrate to the West.

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CONCLUSIONS

Several points that emerge from the analysis above have

a bearing on U.S. policy vis-à-vis Russian weapons

scientists.

First, compared to the sharp reductions in Russia’s

output of conventional weapons, Russian facilities for the

production of WMD have been only modestly scaled back.

Even now, more than a decade after the collapse of the

Soviet Union, most of the infrastructure for the Soviet

nuclear weapons and CBW complexes is still in place. A very

large group of highly trained weapons scientists and

engineers—numbering tens of thousands—are still

employed at Russian WMD facilities and are still engaged in

weapons-related work.

Second, the departure of Russian civilian scientists in

the early 1990s—either to foreign countries or to nonscience

jobs within Russia—took a toll on Russian scientific

prowess, but the brain drain did eventually subside. By the

late 1990s, far fewer scientists were seeking to emigrate.

Within the WMD complexes, the brain drain phenomenon

was much less acute, contrary to Western fears in 1991 that

the demise of the Soviet Union would spawn a mass exodus

of senior weapons scientists to Third World countries

pursuing WMD programs. In reality, only a minuscule

percentage of highly trained weapons experts actually left,

especially after the early 1990s. The best of the nuclear

weapons scientists were never interested in working

abroad, and recent surveys have shown that very few other

senior WMD specialists nowadays are inclined even to think

of moving overseas.

Third, the United States has accepted some civilian

scientists from the former Soviet Union as permanent

residents (mostly in the early 1990s), but has made no effort

to induce former Soviet weapons specialists to immigrate en

masse to the West. Instead, U.S. policy has been geared

mainly toward providing meaningful employment for

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Russian and Ukrainian WMD experts in their native

countries. The only modest exception came in 1992 with the

Soviet Scientists Immigration Act (SSIA), which was

intended to cover only about 1 percent of the WMD

scientists in Russia who were of greatest proliferation

concern. The SSIA was subsequently hindered by

administrative delays and was a source of tension with

Moscow. The problems that arose with the SSIA militated

against any larger-scale attempts to encourage the

immigration of former Soviet WMD scientists to the West.

Fourth, U.S. and other Western efforts to provide

alternative employment for the most highly trained WMD

scientists in the former Soviet Union have been

well-intentioned, but have not achieved the desired effect.

The scale of the problem is much too large for any of these

programs to have any meaningful impact. (This would be

the case even if the U.S. programs were well designed. The

DOE’s dubious judgments about certain matters greatly

compound the problem.) Only a relatively small percentage

of high-level Russian weapons scientists have actually

taken part in the Western-sponsored projects, and the

overwhelming majority of the participants have devoted

only a small percentage of their time to the projects. During

the rest of their time, the Russian scientists have continued

to perform weapons-related work. Once the outside projects

are over, the scientists have returned full-time to their

WMD work. The Western programs thus have not

provided—and cannot provide—a permanent alternative

source of employment for tens of thousands of highly trained

Russian WMD specialists. Indeed, there is even a risk that

the Western programs have inadvertently become a subsidy

for the Russian WMD complexes, helping to keep them

operating at a robust level.

Fifth, the private sector in Russia has absorbed some

former weapons scientists, but it is hardly a panacea. Even

in Western countries, defense conversion is extremely

difficult. In Russia, the problems are immeasurably greater

not only because the country was so highly militarized

167
under the Soviet regime, but also because efforts to reform

the Russian economy have been so disappointing. Moreover,

even if the private sector in Russia were thriving (which is

not yet the case, especially outside Moscow and St.

Petersburg), it is unlikely that most of the highly trained

WMD scientists would be well-suited to enter it. The

younger scientists who could adapt more easily to the rigors

of a private labor market have already left, and the senior

specialists who are still working at WMD facilities would

have inordinate difficulty in adapting.

Sixth, the Russian government’s recent attempts to

upgrade Russia’s scientific capabilities, especially in the

defense sector, may mean that the long-anticipated

restructuring and downsizing of the Russian WMD

complexes will be delayed or reduced in scope. Despite

Minatom’s projections of sizable layoffs in the nuclear

weapons complex over the next several years, recent trends

suggest that a large number of the senior weapons scientists

can count on keeping their jobs for a substantial time to

come, especially if the Russian economy continues to grow

and the Russian federal budget remains in surplus. The

stepped-up recruitment of younger weapons scientists also

implies that WMD facilities will be operating at a robust

level well into the future.

Seventh, restrictions on the travel of Russian weapons

scientists have contributed to the sharp decline of interest

among scientists in the prospect of working abroad. The

laws on state secrets and on exit and entry, and the stern

implementation of those laws by the FSB, pose a

formidable—indeed almost insuperable—barrier for any

senior WMD scientist who might seek to emigrate.

Awareness of these obstacles would likely deter a would-be

emigrant from seriously pursuing the option. Illegal

emigration cannot be ruled out altogether, but there is no

reason to believe that it would occur on anything more than

a trivial scale, if that. Very few Russian weapons scientists

are inclined any longer to think about working abroad (even

legally, not to mention illegally), and they are certainly

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aware of the severe penalties for those convicted of violating

the laws on state secrets and on exit and entry.

Eighth, neither Yeltsin nor Putin displayed any

willingness to permit freer travel by WMD specialists. The

debate in Russia was settled early on in favor of those who

believe that a brain drain—especially one involving

weapons scientists—is inherently a negative phenomenon.

In the early 1990s, a small number of Russian officials,

notably the minister of science, technology, and higher

education, Boris Saltykov, were willing to countenance

scientific immigration to the West because they believed

that it ultimately would prove beneficial for Russia.

Saltykov claimed that leading scientists would go abroad

temporarily and would return to Russia having been

“enriched by the experience and skills of the best

laboratories in the world.” This line of argument, whatever

its merits, never attracted any appreciable support. The

dominant view among Russian officials, journalists, and

political commentators was that a further exodus of civilian

scientists—not to mention the departure of highly trained

weapons experts—would be detrimental to Russia’s

interests and should therefore, to the extent possible, be

prevented. Although a small number of WMD scientists

were sent abroad on temporary assignments (including

possibly to Iran), the Russian government gave no

indication that it would allow many thousands of highly

trained weapons specialists to move permanently overseas.

All of these considerations present a sobering outlook for

any prospective U.S. effort to encourage the immigration of

roughly 60,000 senior Russian WMD specialists to the

West. If judged in terms of desirability, the option of

promoting immigration to the West would clearly be the

route to go. Tens of thousands of key weapons scientists,

engineers, and technicians are still at their posts in Russia,

where they have been helping to sustain the Russian WMD

complexes through troubled times. To the extent that

Russia would be a lot better off—and would pose a much

smaller potential threat to U.S. interests—if it drastically

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scaled back its nuclear weapons complex and did away with

its CBW facilities, the continued presence of these tens of

thousands of highly trained weapons experts in Russia is

detrimental for the West. Up to now, the Russian

government has been unwilling to dismantle its WMD

infrastructure, and recent trends suggest that this aversion

is likely to persist. The only reliable way to ensure that

Russia would have to make drastic cuts in its WMD

facilities is by permanently removing the most important

researchers and engineers who work at those facilities—an

outcome that immigration to the United States would

achieve. The opportunities that the newly arrived

specialists would be given in the United States would, in

principle, eliminate any possible incentive they might have

to consider working for a country like Iran or Libya. Despite

the tightening of U.S. immigration procedures in the wake

of the September 2001 terrorist attacks, the option of

bringing many thousands of former Soviet WMD experts to

the United States would be well worth pursuing if it seemed

likely to succeed.

But if judged in terms of practicality, the notion of

encouraging large-scale immigration to the West is dubious.

Six fundamental problems would hinder any such effort.

First, the decline of interest in emigration among

weapons scientists, as evidenced both in surveys and in the

sharp drop in emigration since the early 1990s, would be

difficult to reverse. Although a major change of policy by the

West might persuade some Russian weapons scientists that

they should seriously pursue the option of emigration, the

majority are unlikely to be convinced. It is even conceivable

that a conspicuous effort to foster a brain drain to the West

would spark a nationalist backlash among WMD scientists

and deter them from even considering the prospect of

working abroad or leaving their weapons posts.

Second, it is extremely unlikely that the Russian

government would go along with such an effort or would fail

to attempt to prevent it. Saltykov’s sentiments (cited above)

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did not win out. Even the limited provisions of the SSIA

sparked a good deal of acrimony in Moscow. The severe

travel restrictions and controls that have been adopted over

the past several years are indicative of the Russian

authorities’ desire to retain the country’s senior weapons

personnel. Putin’s recent statements merely underscore

that point. It is almost inconceivable that Western countries

could circumvent the administrative and legal barriers

posed by the Russian government. The situation facing the

Russian government today vis-à-vis its WMD experts is

fundamentally different from the position of Germany after

World War II. When Germany was under the control of

allied occupying forces in the mid-to-late 1940s, the

victorious powers enjoyed free rein to induce (or, in the

Soviet case, compel) Germany’s leading weapons scientists

to move abroad. Russia’s relationship with the outside

world today is in no way comparable. Western countries

have no direct say in Russia’s internal affairs, and the

Russian authorities can take whatever steps they want to

prevent highly trained WMD scientists from leaving.

Although such measures might not prove flawless, there is

little reason to believe that a massive outflow of senior

weapons experts could occur against the Russian

government’s will.

Third, if an effort to encourage large-scale emigration

proved only partly successful, the result might be decidedly

negative for U.S. interests. The brain drain issue has been

politically volatile in Russia and has been manipulated by

anti-reformist forces to discredit reform-minded,

pro-Western officials. In the 1990s, numerous

commentators in Moscow argued that Russian scientists

were being “exploited by the West” as “cheap labor” and

“sources of information about the latest research

developments” in Russia. These complaints would

undoubtedly increase and become more virulent if the U.S.

Government made a conspicuous effort to induce tens of

thousands of Russian WMD experts to immigrate to the

United States. The ensuing damage to U.S.-Russian

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relations might be grave enough to prompt the Russian

government to cease cooperating in key areas such as CTR,

the Materials Protection, Control, and Accounting program,

and the Missile Technology Control Regime. Russian

leaders not only would be disinclined to defer to U.S.

demands (e.g, on nuclear exports to Iran and Cuba), but

might even seek to put up an active challenge to the

West—possibly by offering assistance to North Korea or

Iraq. Were this to be the case, the net result from a

nonproliferation standpoint would be deleterious.

Fourth, in all likelihood an emigration drive that was

only partly successful would have a counterproductive effect

on the Russian WMD complexes. Presumably, the weapons

scientists and engineers who would move from Russia

would be those who had long been inclined to look favorably

upon the West. They would leave behind many of their

former colleagues who had always been deeply suspicious of

U.S. intentions. Surveys of nuclear weapons and aerospace

specialists have shown that a majority of those who want to

stay in Russia are hostile to the West or at least are

mistrustful. Such sentiments would undoubtedly intensify

if the United States began actively luring away a large

number of Russian weapons experts. The WMD scientists

who would remain in Russia would undoubtedly want to

expand (rather than downsize) the country’s weapons

facilities and to provide assistance to anti-Western clients

such as Iran. By the same token, these scientists would be

averse to the contacts and cooperative programs that

Russian weapons scientists pursued with their American

counterparts from 1992 on. Most likely, all such activities

would come to a halt.

Fifth, even if a large-scale emigration drive proceeded

and tens of thousands of Russian scientists flocked to the

West, Western governments could not be certain that the

people leaving were truly those of greatest proliferation

concern. The U.S. Government does not know precisely who

the most senior WMD specialists in Russia are. As the GAO

recently pointed out, U.S. efforts to promote alternative

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employment for key weapons personnel in Russia have had

to rely on the Russian government’s own judgments about

the people who should be targeted:

[T]he State Department cannot independently verify the

weapons experience of the senior scientists it has employed.

The State Department relies on the scientists’ national

governments to certify that the senior weapons scientists

listed as participants in a project proposal actually have

sufficient expertise to pose a proliferation threat.

Hypothetically, if large-scale immigration to the West

were occuring and U.S. intelligence officials and weapons

scientists were given a chance to debrief the immigrants,

they presumably could make a reasonably good judgment

over time about the qualifications of the people who were

being let in. Nonetheless, there would always be some

residual concern that many of the best weapons scientists

and engineers had secretly stayed in Russia.

Sixth, even if all these obstacles could be surmounted

and Russian WMD specialists and their families moved en

masse to the United States, serious questions would arise

about what to do with the new immigrants. Limited

numbers of foreign scientists and technicians could be

accommodated quickly either in the private sector or at

universities and research institutes, but an influx of tens of

thousands (many of whom would not know English) would

far exceed the capacity to absorb them, at least in the near

term. Language barriers alone would pose a major obstacle

to fruitful employment, as would the limited applicability

(or potential irrelevance) of their skills to functions

unconnected with the Soviet WMD complexes. Some of the

specialists might be willing to take jobs outside their areas

of expertise, but others would undoubtedly be averse to the

notion of abandoning their traditional fields of work. If

suitable posts for them were not soon available, they might

eventually seek to leave. Presumably, the U.S. Government

would need to establish a comprehensive monitoring system

that would give prompt notice if former Soviet WMD experts

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decided to move back to Russia or to a Third World country.

Such a system, even if practical, would be difficult to sustain

over time unless the movements of the scientists were

sharply circumscribed, a task that would itself be daunting.

Even in Germany during the early post-war years, when all

residents (not just weapons scientists) had to seek

permission from the allied occupation authorities to travel

abroad, the Western powers occasionally let down their

guard, enabling highly trained military scientists and

technicians to emigrate illegally from Germany to

Argentina. The challenge of enforcing a comparable system

for Russian WMD experts would be at least as formidable.

In all these respects, there seems to be little to no

prospect that large-scale immigration to the West by highly

trained Russian WMD scientists, engineers, and

technicians is at all feasible either now or over the next 10 to

15 years. The immigration of senior personnel to the

West—especially if it occurred with the Russian

government’s assistance—would be highly desirable, but in

practical terms, the whole notion seems fanciful. The

likelihood is that tens of thousands of key nuclear,

biological, and chemical weapons experts will remain in

Russia indefinitely and will continue to pose a threat of

strategic proliferation, both horizontal and vertical.

*****

These conclusions may seem to offer little reason for

hope, but in fact there are certain steps that could markedly

improve the situation over the long term. In particular, a

greatly expanded program of student exchanges would be

far more practical and effective than anything that has been

done up to now (or is likely to be done) vis-à-vis Russian

WMD experts. Not only would a large-scale student

exchange program encourage democratization in Russia

and provide a sounder basis for Russia’s ties with the West,

it also could indirectly ameliorate the human dimension of

the strategic proliferation threat. Unfortunately, student

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exchanges thus far have played only an insignificant role in

U.S. policy, despite the hopes of Senator Bill Bradley in the

early 1990s when he put together the Freedom Support Act

(FSA), which provided democracy assistance to Russia. An

initial $20 million was allocated under the FSA to a

Secondary School Exchange Program (later known as the

Future Leaders Exchange Program, or FLEX). Although

the FSA also provided $30 million for exchanges of

undergraduates and graduate students, the high school

exchange program was deemed especially important

because it would involve adolescents, whose outlooks and

behavioral patterns would not yet be firmly congealed.

Bradley expected that some 15,000 to 20,000 Russian high

school students a year would attend school in the United

States and that many thousands of others would be enrolled

each year in Western Europe. Exchanges of that magnitude

over a decade or two would have exposed a large cohort of

young people in Russia to the values, mores, and

institutions of democratic capitalism.

But, as things worked out, only a tiny fraction of the

projected number of Russian high school students actually

came to the United States via FLEX and other programs.

From 1993 to 2001, a total of just 4,415 high school students

from Russia—and another 6,076 from the rest of the former

Soviet Union—attended American schools under the

auspices of FLEX. This means that, during the first 9 years

of FLEX, fewer than 500 Russian high school students a

year took part in the program. Worse still, the annual

number of Russian high school students involved in FLEX

was much lower by the late 1990s than it had been earlier in

the decade. From 621 students in 1993 and 744 in 1994, the

annual number fell to 305 by 1999—less than 1/50th of the

initial target. The number enrolled in West European

schools each year was even smaller.

The meager scale of the high school exchanges has been

due partly to linguistic barriers. Although a large and

growing number of Russian high school students know at

least some English (or German), the language requirement

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necessarily limits the applicant pool. In addition, many

Russian high school students have been deterred from

applying because their schools in Russia will not permit

them to receive academic credit for the work they do

overseas. FLEX has also been impeded by the difficulty of

informing prospective applicants about the exchanges, a

problem that is especially acute outside Moscow. The

number of Russian high school students in outlying regions

who enjoy regular (or even sporadic) access to the Internet is

woefully inadequate. Hence, many Russian students are

simply unaware of the opportunities available to them.

Serious though these problems may be, they

undoubtedly could be surmounted if the United States were

to devote increased resources to the effort. But a more

daunting obstacle is posed by the one-sided nature of the

high school exchanges. Very few American high school

students have been willing to enroll in Russian schools for

even a semester, not to mention a full year. Part of the

problem is that only a scant number of American high school

students can speak Russian. Although proficiency in

Russian is not mandatory for certain short-term high school

exchange programs, it obviously is required for participants

in the main long-term program for American high school

students—the Semester High School Exchange Program,

which brought a total of 55 American students to Russia

from 1993 through 2001 (an average of about six students a

year). Even if language barriers did not exist, many

American students would probably be hesitant about

applying for a semester-long (or year-long) exchange

program in Russia. Among other things, they (and their

parents) would likely be concerned that a prolonged stay in

Russia could pose risks for their health and well-being.

Although a sizable number of American undergraduates

and graduate students do pursue studies or field research in

Russia, the high school exchanges envisaged under the FSA

have been exchanges mostly in name. The absence of

genuine exchanges has clearly circumscribed the number of

Russian participants.

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This problem may not be amenable to a direct solution,

but potentially there is a way to get around it. If the student

exchange programs were redesigned so that American high

school, undergraduate, and graduate students were treated

as a single category, the pool of students who could be paired

with Russian high school students would be much larger.

The exchanges would not be strictly one for one, but they

would be far closer to genuine exchanges than in the 1990s.

The same principle could be adopted by Canada, Britain,

Australia, Germany, and other Western countries for their

own student exchanges with Russia. The aim would be to

expand the annual number of Russian high school

participants to the thousands originally envisaged.

If indeed some 15,000 to 20,000 Russian high school

students a year were to attend school in the United States

and thousands of others were enrolled in other Western

countries, the benefits would be immense. The Russian

students would receive a first-hand look at democratic

procedures, civic initiatives, and a market economy. Upon

returning to Russia, they could try to replicate in their own

society what they had seen and experienced abroad. They

also could encourage many of their fellow students to take

part in exchanges and to seek greater exposure to the West.

A massive expansion of the high school exchanges would be

particularly valuable over the longer term, as the number of

alumni of the program rose into the hundreds of thousands.

Such a trend would give a much-needed boost to

U.S.-Russian relations and would facilitate the introduction

of democratic norms and capitalist institutions in Russia,

providing an alternative for young people who might

otherwise have gone to work in Russia’s WMD facilities.

Although student exchanges are certainly not a panacea,

they seem to offer the best long-term option for coping with

the human dimension of the strategic proliferation threat in

Russia.

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CHAPTER 6

APPENDIX

EFFORTS BY WESTERN GOVERNMENTS AND

ORGANIZATIONS TO EMPLOY RUSSIAN WMD

SPECIALISTS

This appendix is a supplement to the fourth section of my

chapter. It explains why the programs established by

Western governments and organizations over the past

decade to employ Russian WMD experts in nonmilitary jobs

cannot provide long-term alternative employment for more

than a very small fraction of the total pool of WMD

specialists in Russia. A fully documented version of this

appendix is available from the author upon request.

Science Centers Program.

The International Science and Technology Center

(ISTC) was established in Moscow in November 1992 by the

United States, Japan, Russia, and the European Union

(EU), with an initial commitment of $75 million. A

Ukrainian counterpart of the ISTC, the Science and

Technology Center in Ukraine (STCU), was set up by the

United States, Sweden, Canada, and Ukraine a year later.

The main purpose of the two centers is to employ WMD

scientists in “Science Projects” and “Partner” programs. The

Science Projects are solicited directly by the ISTC and

STCU, whereas the Partner projects are solicited by foreign

businesses, scientific institutes, nongovernmental

organizations (NGOs), and government agencies, working

in coordination with the ISTC or STCU. Teams of scientists

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from research institutes in the former Soviet Union (FSU)

carry out the requisite work.

From 1992 through the end of 2000, a total of 590 science

center projects involving 431 research institutes in the FSU

received a total of $329 million. The large bulk (more than

85 percent) of this money was provided by the ISTC, which

approved another 141 projects in 2001 for an additional

$34.7 million. Roughly half of the funding for the two science

centers has come from the United States (initially via the

CTR program, and since 1995 mainly through the State

Department), and most of the rest has been provided by the

EU and Japan. The foreign businesses, laboratories,

governments, and NGOs that fund the science center

Partner projects are supposed to be able to send untaxed

monetary contributions and duty-free shipments of capital

equipment to researchers and their institutes in the FSU. In

Russia, however, the nontaxable provisions have been

difficult to enforce. Although the ISTC established

individual bank accounts for grant recipients to prevent

taxes from being assessed, the Russian government has

levied taxes on ISTC capital purchases.

The science centers may provide a temporary diversion

from WMD work, but their ability to create long-term

alternative employment for Russian weapons experts is

almost nil. The ISTC’s Annual Report for 2000 claimed that

21,275 “scientists and their technical team members” in the

FSU received payment for at least 1 day of work on ISTC

projects in 2000, but the report also noted that the average

number of days spent by team members on the projects was

only 59. This figure is put into even starker perspective by a

recent GAO report, which reveals that approximately half of

the former Soviet scientists taking part in science center

activities in 2000 spent a total of no more than a few days on

their projects. Only about 3 percent of the participants

devoted nearly all of their time to the projects, and even in

those cases, the outside work ceased once the projects

ended.

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There is little reason to believe that the ISTC will be

better able to secure permanent placements for Russian

scientific workers over the next 10 to 15 years. Very few of

the current ISTC projects appear sustainable over the

longer term. One of the leading American experts on the

program acknowledged in March 2001 that only five of the

current projects—on synthetic neural networks, water

quality monitoring, leak detection monitoring,

titanium-nickel alloys, and early warning sensors for

nuclear power plants—offer any hope of commercial success

in the future. Not a single one of these projects, however, has

yet been commercialized.

The ISTC program has been plagued by a number of

other serious problems, especially the persistent

indications that Russian scientists receiving ISTC support

are continuing to pursue weapons research. The ISTC

charter explicitly prohibits funding for defense-related

projects, but, as the GAO recently noted, “the project

agreements do not prohibit the scientists from continuing to

work on research for their institutes including, in Russia,

research related to nuclear weapons.” Even if the ISTC did

try to ban all weapons research (something the Russian

government would never accept), such a ban would be very

difficult to enforce. As the GAO pointed out, the science

centers “cannot track what the scientists are doing while

they are not working on the projects or after the projects

end. . . . [T]here is no formal way to monitor what other

research these scientists are performing or for whom they

are performing it.” In an earlier (1999) report, the GAO had

presented disturbing evidence that many of the ISTC

recipients were conducting weapons-related research when

they were not working on the funded projects. There is little

reason to believe that the situation has changed since then,

particularly because so many of the Russian scientists

spend so little time on the ISTC projects.

These considerations have spurred some analysts to

warn that the ISTC cannot prevent foreign governments or

terrorist groups from enlisting the aid of Russian weapons

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scientists. The ISTC, they argue, is unable to halt the

sharing of information over the Internet or “moonlighting

by modem.” Moreover, rogue states could try to set up front

businesses in Russia or Ukraine that would approach

weapons scientists working on ISTC projects. Other

concerns have been expressed about the misappropriation

of funds from collaborative projects and the development of

dual-use products under ISTC auspices that could later be

incorporated into weapons programs.

To the extent that the ISTC projects are allowing

Russian weapons scientists to spend only a limited amount

of time on ISTC work while devoting most of their time to

weapons research, the ISTC money can be seen, at least to

some extent, as a subsidy for the Russian WMD complexes.

There is even a risk, as the GAO acknowledges, that

“financing certain [ISTC] projects could help sustain a

weapons institute infrastructure in the former Soviet Union

by keeping institutes in operation that might [otherwise]

have curtailed their research functions for lack of funds.” If

indeed the ISTC is inadvertently keeping some of the

Russian WMD facilities in business, the negative

consequences of the ISTC may outweigh any of the center’s

gains.

Even if some of these problems can be remedied in the

future, enough obstacles have emerged to cast doubt on the

value of the ISTC in ensuring that former Soviet weapons

scientists will be able to take permanent jobs outside the

defense complex.

Initiatives for Proliferation Prevention (IPP).

The IPP, a program launched in 1994 (under a different

name) by the U.S. Department of Energy, promotes

partnerships between research institutes in the FSU and

members of the U.S. Industry Coalition (USIC), an alliance

of private American companies. Beginning in 2002, the IPP

will be expanded to encompass the activities of the NCI,

which is being merged with the IPP. From 1994 to 2001, the

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IPP established a total of more than 400 projects at 171

research institutes in the FSU. Of these projects, roughly 85

percent were in Russia, though only about a quarter of them

were in the nuclear closed cities. When the IPP started, 70

percent of its funding was earmarked for the employment of

nuclear weapons scientists, and 30 percent was to be used

for CBW researchers. In practice, however, well over 70

percent of funded projects have involved nuclear-related

institutes, and most of these have been outside the ten

closed cities. (In 2000, for example, 26 of the 29 newly

approved projects involved nuclear-related facilities,

whereas only three involved biological institutes.) Because

the IPP recently changed its guidelines to stipulate that

“reasonable [FSU] institute openness and access are a

requirement of receiving funding,” it is unclear how feasible

it will be in the future to set up projects in the closed nuclear

cities or at the main CBW institutes.

For several years after 1994, the IPP was plagued by

egregious administrative deficiencies, most of which have

now been corrected. The deficiencies were highlighted in a

February 1999 GAO report, which disclosed that relatively

little of the money allocated to IPP projects had actually

reached scientists in the FSU. The remainder of the

funding—some 63 percent—had been spent in the United

States on oversight and implementation costs. The GAO

also discovered that the number of scientists receiving

funds was sometimes unknown, and that IPP officials could

not always confirm that the programs were targeting the

institutes and researchers for which they were intended. In

addition, the GAO found that a substantial number of

Russian participants were using their IPP projects to

pursue “dual-use technologies” that could be adapted later

on for military purposes, and it revealed that some of the

scientists at DOE laboratories who were responsible for

overseeing IPP projects were unaware of the amount of

funding their Russian counterparts had received. In at least

one case cited by the GAO, not a single Russian scientist or

engineer was employed at the institute that was being

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funded. In another case, the Russian institute had failed to

spend any of its IPP funding on scientists’ salaries and had

used the money instead for “overhead, travel, computers,

and Internet access.”

The public disclosure of these shortcomings (and the

controversy that ensued) prompted major reforms. The

head of the IPP was replaced, and important administrative

safeguards were adopted. Beginning in 2000, at least 60-65

percent of IPP funding was supposed to be allocated directly

to projects in Russia, rather than to administrative

expenses in the United States. In addition, the IPP

increased the stringency of the multi-stage review

conducted by the Inter-Laboratory Board (ILAB, a body

consisting of experts from ten DOE national laboratories

and DOE’s Kansas City plant) to ensure that new projects

conform to the program’s goals. In particular, the ILAB

adopted stricter criteria to guard against the dual-use

phenomenon. The IPP also established an accounting and

auditing system to ensure that funds are transferred to the

proper recipients and are used for the intended purposes.

The focus of the program has shifted as well. Whereas the

IPP originally envisioned a three-phase life cycle for most

projects—a start-up period supported by government

funding (Thrust 1), joint capital investment by government

and private sources (Thrust 2), and full privatization

(Thrust 3)—the program since 1999 has concentrated

primarily on phases two and three. The IPP thus has

implemented all of the recommendations proposed by the

GAO in its 1999 report.

Significant though these improvements have been, the

ability of the IPP to provide permanent nonmilitary

employment for large numbers of Russian WMD experts is

and will remain inadequate. As Siegfried Hecker, the

long-time director of Los Alamos National Laboratory,

recently observed, “The scale of the [IPP] has never been

commensurate with the magnitude of the problem.”

Although the IPP in recent years has sought to promote

commercialization efforts and cost-share partnerships with

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private corporations, this effort as of late 2001 had yielded

little by way of long-term employment opportunities—a

mere eight projects that support only 294 permanent jobs,

most of which are not filled by highly trained WMD experts.

None of these eight ventures involves spinoffs of the major

nuclear weapons institutes or CBW facilities. Although IPP

officials claim that a few other cost-shared projects also

“have good prospects of commercial success” in the years

ahead, there is in fact relatively little that can be

accomplished in the absence of sufficient capital investment

from Russia’s private sector. The net commercialization

results have been—and undoubtedly will continue to

be—minuscule compared to the enormous number of

Russian WMD experts who need to be absorbed.

The daunting scale of the problem would overshadow the

IPP’s achievements under the best of circumstances, but the

situation is made even worse by certain aspects of the

program. According to official data, a total of 10,874

scientists and engineers from the FSU have taken part in

IPP projects from 1994 through the start of 2002. However,

many of these participants have never actually been

involved with WMD programs. The IPP has no ironclad

way—even with the help of U.S. intelligence agencies—to

ensure that the right people are actually taking part in its

projects. Under recent IPP guidelines, “new project

proposals must list the [former Soviet] scientists and

engineers, along with the nature of their involvement in

weapons of mass destruction work during Soviet times.” But

IPP officials have no independent means of corroborating

this information. Although the IPP officially “expects that a

preponderance of [Russian and FSU] staff involved in

IPP-funded projects” will have worked at one time or

another on WMD programs, the phrasing of this guideline

contains two glaring loopholes: First, “expecting” something

is not the same as “requiring” it. Second, there is no way to

tell whether the IPP’s “expectation” has been met unless one

assumes that the information provided by the Russian

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institutes and Minatom is correct—an assumption that is

dubious at best.

As for the Russian IPP participants who have been

engaged in WMD work, the large majority have returned

full-time to weapons research after their IPP projects were

completed. Indeed, even when Russian WMD experts have

been working part-time on IPP projects, they have

continued to be actively involved with WMD programs. This

arrangement is explicitly permitted under the IPP’s

General Program Guidance:

Given that IPP projects may not always employ Russian

nuclear weapons scientists and engineers full time, it is

possible that these specialists may work on nuclear

weapons-related activities of the Russian Federation while

not engaged on IPP projects.... Scientists and engineers still

employed in Russian nuclear weapons facilities are not

precluded from working on IPP-funded projects.

Whether such activities are compatible with the

underlying purpose of the IPP is, however, far from clear.

Doubts about the matter were expressed in late 2001 by the

GAO, which, after noting that former Soviet weapons

experts who are employed part-time on IPP projects “often

continue to work at former Soviet WMD research

institutes,” warned that “aiding such scientists... could

create new risks for U.S. national security.” The GAO also

emphasized that efforts to “assess the impact of [U.S.] aid”

on the Russian WMD complexes have been stymied by

“Russia’s reluctance to provide U.S. officials with full access

to relevant sites and materials.” Thus, even if the

dimensions of the problem were not so overwhelming, the

IPP may inadvertently be making things worse by

subsidizing experts who continue to work on WMD

programs.

On balance, then, despite notable improvements in the

IPP since 1999, its role in countering the threat of strategic

proliferation is questionable. The IPP may prove more

effective than the Science Centers program (which is

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limited to grant-making), but there is no reason to believe

that the IPP can foster permanent alternative jobs for tens

of thousands of Russian WMD experts over the next 10 to 15

years. The magnitude of the problem is too vast, no matter

how well the IPP is run.

Nuclear Cities Initiative (NCI).

The NCI, another program run by DOE, was founded in

September 1998 as a Russian-American partnership.

Beginning in 2002, the NCI will be folded into the IPP. As

the name implies, the NCI was supposed to “assist the

Russian Federation in its announced intention of reducing

the size of its nuclear weapons complex” and to “promote

nonproliferation goals through redirecting the work of

nuclear weapons scientists, engineers, and technicians in

the Russian closed nuclear cities.” Together with officials

from Minatom, the NCI developed five strategies to achieve

these goals: the development of city-by-city plans for

downsizing; the development of local infrastructure; the

facilitation of the transition from weapons research to

commercial research; training and other community

resource development activities; and the leveraging of funds

and general encouragement of investment.

During the 4 years of its existence, the NCI established

several projects each in Sarov, Snezhinsk, and

Zheleznogorsk, the three closed nuclear cities that were

initially targeted. Two International Development Centers,

two Open Computing Centers, and two Nonproliferation

Centers were set up, and some very limited commercial

ventures were initiated or expanded. In total, however, only

100 new jobs were created for Russian scientists and

engineers, a result that even supporters of the NCI

described as “paltry.” Part of the problem was that only 30

percent of the $16 million allocated to the NCI during its

first few years was actually spent in Russia. The rest went

toward administrative and other costs in the United States.

Even if the funding had been several times greater and more

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of it had been spent in Russia, it is not at all clear that the

NCI would have fared any better. A number of

circumstances inherently limited the value of the initiative.

First, DOE and the U.S. nuclear laboratories were

not—and are not—well suited to promote commercial

development, particularly among Russian weapons

scientists who lack any tradition of entrepreneurialism. A

recent analysis of the IPP showed that U.S. Government

funding had not gone toward projects that respond to “the

technology innovation needs of Western industry.” DOE’s

handling of the NCI was even more dismal. A GAO report on

the program in mid-2001 highlighted DOE’s inability to

promote commercial activity in the closed cities, citing,

among other examples, the undue emphasis given to

community development:

DOE officials told us that community development activities

are needed to help make the cities more attractive to potential

Western investors. However, none of the [private] industry

officials whom we talked to during the course of our audit

indicated that they would be more likely to invest in the

nuclear cities because of municipal and social improvements.

The GAO report also noted that “the most successful

commercial effort we observed in the nuclear cities”

involving former weapons scientists was a computer

venture in Sarov that was “undertaken without U.S.

Government assistance.”

Second, the Russian government’s priorities for the NCI

were never really conducive to U.S. nonproliferation goals.

In particular, the Russian authorities prevented the NCI

from extending to facilities that were of genuine

proliferation concern. Siegfried Hecker, the former director

of Los Alamos, recently acknowledged that the NCI “was

handicapped from the beginning” because “the Russian

government insisted, and the U.S. Government agreed, to

restrict [the NCI’s] activities only to the “ ‘open’ parts of the

closed cities,” meaning the portions outside the fences of the

nuclear weapons institutes. Conflicts over this matter, and

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the two sides’ diverging views of the best projects to pursue,

spawned what Hecker described as “an atmosphere of

increasing hostility and mistrust between the Russian and

U.S. Governments” from 1998 on.

Third, even after the key WMD facilities were excluded

from the program at Moscow’s insistence, the Russian

government prevented NCI officials and potential foreign

investors from gaining adequate access to other parts of the

closed cities. The Russian authorities kept the number of

visits to a minimum, required long lead-times (at least 45

days and sometimes several months) for approval of visits,

limited the size of the visits to no more than a few people,

and prohibited any access to a large number of facilities.

Many requests for visits were simply turned down. The

result was that NCI personnel were unable to maintain

adequate supervision over projects, and prospective

investors were deterred from even considering most

ventures.

Fourth, even if the NCI projects had been impeccably

designed and structured, there were many barriers in the

closed nuclear cities—and in Russia as a whole—to

commercial success (beyond the uncertainty about access

just described). The geographic and economic remoteness of

most of the cities was itself a major obstacle to development.

To be viable over the longer term, the projects eventually

would have had to receive sizable loans from Russian banks

or direct foreign investment. Yet, even now, despite recent

improvements in the Russian economy, almost nothing has

been done in Russia to transform the banking sector into a

viable institution that will function as banking systems do

in the West. In the absence of key features of a market

economy—a sound financial infrastructure, solid

guarantees of property rights, and reliable means of

enforcing contracts—foreign investors would have been

extremely reluctant to commit funds to Russian-based

ventures, even if physical access to the sites could have been

assured. Hence, NCI projects were bound to encounter the

189
same sorts of problems that bedeviled the

commercialization efforts of the IPP.

Thus, there is no reason to believe that the merger of the

NCI with the IPP will increase the IPP’s ability to provide

permanent alternative employment for many thousands of

Russian WMD scientists and engineers. At best, the NCI

amounted to what the GAO described as “a subsidy program

for Russia... rather than a stimulus for economic

development.” At worst, the NCI may actually have helped

keep the Russian nuclear weapons complex larger than it

should be. Russian officials acknowledged in 2001 that

“most of the scientists receiving [NCI] funds continue to

work on Russia’s weapons of mass destruction programs.”

Oles Lomacky, the executive director of the ISTC from 1995

until 1997, warned that it was a “fantasy” to believe that “if

you give Russian scientists enough money, they will stop

doing what they were doing before, which was designing

weapons.... [T]he same people who were designing bombs

in the Soviet era are still there.” Lomacky added that “our

objective ought not to be maintaining the nuclear cities”

through the NCI; instead, the United States should promote

“opportunities for these [bomb designers] to do other things

somewhere else.”

Although only some of the NCI’s activities will be

continued under the auspices of the IPP (the other activities

will simply be terminated), it is conceivable that the merger

will be a net detriment for the IPP. The risk of the NCI all

along, as a U.S. Congressional Budget official warned in

1999, was that it would simply “create expectations of

long-term assistance and thereby reduce any incentives for

[Russian nuclear scientists] to find work in the commercial

sector,” leaving the United States in the position of

supporting “Russian scientists and engineers who continue

to design and build nuclear weapons.” That is clearly

something that IPP officials will want to avoid.

Even if the merger can be handled smoothly, the only

question for the purposes of this chapter is whether the

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transfer of NCI activities to the IPP will significantly

increase the likelihood that the IPP can generate

permanent, non-military jobs for the 60,000 or so

highly-trained WMD scientists, engineers, and technicians

who are of greatest proliferation concern. There is no basis

for concluding that this will be the case.

Nongovernmental Efforts.

The Civilian Research and Development Foundation

(CRDF), a semi-private American venture set up by the U.S.

Government in 1995, is supposed to arrange collaborative

research projects between scientists in the United States

and the former Soviet Union. One of the major aims of the

CRDF is to fund civilian R&D projects that will help

weapons scientists in Russia’s closed cities leave the defense

sector and focus on civilian pursuits. To date, however, the

organization’s accomplishments have been negligible. The

CRDF Closed Cities Program funded 19 projects in Sarov

and Snezhinsk from 1996 to 2000, but the amount of

investment ($275,000) was too small to create any

permanent new jobs. Moreover, none of the ventures proved

commercially viable.

Most of the other U.S. and West European non-profit

foundations that have supported Russian science have dealt

exclusively with the civilian institutes. In the early 1990s,

foreign foundations provided an extremely important boost

to scientific research in Russia. The MacArthur

Foundation, the Fulbright program, and the Carnegie

Corporation launched pioneering efforts, and other

American foundations soon followed suit. In 1993 the

Russian Academy of Sciences received more funding from

the International Science Foundation (ISF, an organization

established in late 1992 by the American billionaire George

Soros) than from the Russian government. During the 4

years of the ISF’s existence, from 1993 through 1996, the

foundation provided roughly $130 million for scientific

research in the former Soviet Union. As late as 1995, up to

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one-third of all money for civilian science in Russia and

Ukraine was still coming from foreign organizations and

foundations, including the ISF. Professional scientific

societies in the United States, including the American

Astronomical Society, the American Physical Society, and

the American Mathematical Society, launched separate

fund-raising efforts in the early 1990s for their Russian

counterparts and transferred tens of thousands of scientific

periodicals and books free of charge to Russian scientists

and research institutes.

Similar efforts were made in Western Europe (especially

Germany) by professional organizations and non-profit

foundations such as the Friedrich Ebert Stiftung, the

Volkswagen Stiftung, and the Konrad Adenauer Stiftung.

In May 1993 the European Union established the

International Association for the Promotion of Cooperation

with Scientists from the New Independent States of the

Former Soviet Union (INTAS). With an initial annual

budget of $27 million and a mandate to “promote

cooperation with scientists” from the former Soviet Union

until at least the end of 2002, INTAS was able to support a

wide range of activities throughout the 1990s.

Since 1995, the level of foreign foundation support for

scientific activities in Russia has declined, but funding from

abroad (including money from Western private companies)

remains crucial for scientific research in Russia. As of 1999,

some 16.9 percent of gross expenditures on R&D in Russia

came from foreign sources, well above the level of just a few

years earlier. Although Western foundations have shifted

most of their emphasis from individual grants (which were

heavily funded in the early 1990s) to basic support for

research institutes and science education, a number of key

grant programs are still operating. Foreign funding is likely

to remain extremely important even though the future of

some activities (especially the International Soros Science

Education Project, a successor to the ISF) was temporarily

thrown into doubt in 2001 when the second part of Russia’s

new tax code took effect. Under the guidelines

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accompanying the code, a 35.9 percent “social tax” was to be

imposed on individual grants. The Soros Foundation had to

go through a lengthy appeal process to secure an exemption

from the tax, which otherwise would have placed a crippling

burden on the science education project.

Even though important grant-making programs for

Russian scientists are likely to continue under foreign

auspices, and even though a number of closely related

activities have been set up, including a program launched

by the MacArthur Foundation in 1997 to fund basic

research and higher education in Russia (a program

subsequently funded as well by the Carnegie Corporation of

New York and overseen by the CRDF), these projects have

no direct bearing on scientists, engineers, and technicians

in the Russian defense complex. Indirectly, a few of the

programs may offer a fallback option—albeit only a limited

and transitory one—for some of the scientists and engineers

who might choose (or be forced) to leave the weapons

complex, but the total amount of funding available is much

too small to accommodate more than a handful of them over

the long term.

Initiatives by American aerospace corporations to

collaborate with Russian enterprises could provide an

alternative source of employment for a small number of

weapons scientists (though not necessarily those working

on WMD programs). The Boeing Corporation established a

research center in Moscow in 1993 and now employs 500

workers in seven Russian cities. The company recently

signed an agreement with the Russian Aerospace Agency to

collaborate on space research, rocket launch technologies,

and the development of a short-range jetliner. Lockheed

Martin has undertaken joint research and development

projects with other Russian enterprises such as the Vavilov

Institute, the Skobeltsin Nuclear Physics Institute, the Ioffe

Physics-and-Technology Institute, Khrunichev Industries,

and the Yakovlev Central Design Bureau. The collective

impact of private sector collaborations such as these on the

employment of former weapons scientists (exclusive of the

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activities of members of the U.S. Industry Coalition and

other corporate participants in U.S. Government programs)

is unclear, but at best their role in providing new jobs for

WMD experts will be minor.

194
CHAPTER 7

DEFENSE CONVERSION:

HOW FAR CAN RUSSIA EXPAND SMALL

AND MEDIUM ENTERPRISES?

Matthew Partan

While numerous barriers have hampered the growth of

the small and medium enterprise (SME) sector in Russia,

this sector has the potential to help curb proliferation of

strategic weapons and technology from Russia. The

long-term development of a more significant SME sector in

Russia would help provide alternative employment

opportunities, reduce excess military-oriented research and

development (R&D) capacity, increase nonweapon export

revenues, and encourage broader economic reforms and

nondefense enterprise growth. These potential

contributions are particularly important, given the

continuing Russian government focus on large defense

enterprises, the weak record of new job creation in Russia,

and the failure of defense industry conversion efforts. This

chapter considers the major barriers to SME growth,

examines factors supporting such growth, and offers a

range of suggestions for how Western policies can help the

Russian SME sector develop so as to play a positive role in

reducing strategic weapons proliferation from Russia. In

the U.S. approach to such barriers, of course, care must be

taken to avoid dismantling those that, while discouraging

Russian SME growth, also discourage proliferation

activities.

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After a period of rapid growth in the early 1990s, the

Russian SME sector has stalled and is less than one-fifth

the size of comparable SME sectors in other advanced

economies. The most powerful barriers include:

• Institutional and administrative burdens (excessive

tax, bureaucratic corruption, regulatory burdens, lack of

effective government support or unemployment safety net);

• Resource and demand constraints (inadequate access

to start-up capital or other financing, low investment,

barriers to market entry that favor large incumbent

businesses, depressed domestic demand, unequal market

competition);

• Personal and societal views (negative views of

entrepreneurs, resentment, risk-averse technologists,

passivity, preference for large-scale/high-end projects, fear

of uncertainty);

• Managerial approaches (focus on old bureaucratic

methods, focus on state support, lack of effective new

ownership, low turnover, lack of skills to identify markets);

and,

• Structure of defense R&D in Russia (labor-intensive,

lack of integration, state support and hidden subsidies for

large enterprises, lagging technology development, lack of

marketability).

Nevertheless, there are some positive factors that may

be exploited to promote SME sector growth, particularly in

market niches such as information technology, offshore

programming services, medical equipment, and consulting

where there is access to foreign markets and funding.

There are lessons from past cases and experiences in

other transition economies to help guide Western policies

and assistance programs in more effectively encouraging

the emergence of a larger Russian SME sector, thus helping

discourage proliferation:

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• Emphasize market-driven commercialization and

focused business services; recognize that many market

areas tend to be medium-tech instead of high-tech, and that

the early involvement of Western private sector partners

can be critical;

• Establish clear program goals and evaluation

guidelines; avoid projects and enterprises that do not meet

initial viability criteria;

• Focus support on local and regional programs that

have proven most effective (a number of regions in Russia

have demonstrated effective SME growth using local

programs); and,

• Reduce the emphasis on short-term assistance to

employees at incumbent or state enterprises (encouraging

personnel to leave those incumbent enterprises will be

critical in achieving long-term SME sector growth and

reducing excessive focus on continuing military work).

Introduction.

This chapter investigates how efforts to encourage

entrepreneurial activity in Russia’s defense scientific and

production sector could serve as part of a long-term strategy

to reduce the proliferation of strategic weapons and

technology from Russia. In particular, I look at the potential

for expanding the SME sector in Russia, and consider the

impacts this may have on Russian proliferation behavior.

While entrepreneurial activity is broader than the SME

sector, the growth and status of SMEs are critical indicators

of the activities of entrepreneurs in creating new jobs and

innovative technology in many transition and advanced

economies, and can serve as a good measure of the scale of

entrepreneurial activities in the Russian economy.

The proliferation of strategic weapons and technology

from Russia is driven by many factors that are not affected

by the SME sector, but growth in the SME sector can have

197
significant impacts on both the capabilities and the

incentives for individuals and enterprises to proliferate

weapons and technology.1 Given the strong Russian

government focus on large enterprises as the core of

Russian defense industry, as well as the weak job creation

in the Russian economy and the failure of efforts to convert

or restructure Russia’s defense industry towards civilian

applications, it would appear that an expansion of the SME

sector may help reduce Russian proliferation by the

following means:2

• Providing alternative employment opportunities for

defense sector technical specialists and other personnel;

• Reducing excess military-oriented industrial and

scientific capabilities;

• Increasing Russia’s ability to earn revenues through

activities other than exporting raw materials or military

capabilities;

• Encouraging stronger economic reforms and

enterprise growth in areas not related to the military; and,

• Reducing the influence of the defense sector in

government policymaking.

However, it is important to recognize that some types of

expanded SME activities may dismantle existing barriers

to proliferation and brain drain, thus harming

nonproliferation efforts.

While the small business sector has been a significant

source of innovation and new job creation in many

successful transition and advanced economies, this sector

is simply too small to play a comparable role in Russia

unless major steps are taken to expand it. The Russian

SME sector remains much smaller than those in many

other transition economies or Western countries. For

example, the share of gross domestic product (GDP)

produced by the SME sector is 5-6 times larger in mature

198
market economies than in Russia.3 The successful

transition economies of Poland, Hungary, and the Czech

Republic also have much more significant SME sectors than

Russia, with over one million SMEs in Poland, and 500-700

thousand in Hungary and the Czech Republic. The

relatively small size of the Russian SME sector is shown in

Table 1 (based on 1997 data). In addition to being

undersized, the Russian SME sector is very geographically

concentrated. About a third of all Russian SMEs are located

in just Moscow and St. Petersburg alone.

The SME sector did not exist at all in the Soviet period.

All enterprises were entirely state-owned, and the concept

of private business was not accepted until the economic and

legal reforms of the late 1980s.5 While the SME sector in

Russia grew rapidly after private enterprises were legalized

in 1990-91, growth of this sector stalled in Russia after

1994, with the decline in the number of people employed by

small firms reflecting a worsening climate for such firms.6

In fact, the number of small businesses in Russia that

specialize in R&D reportedly fell by 60 percent in the period

1994-97. The proportion of small businesses specializing in

R&D fell from 8.2 percent of all SME in 1994, to 5.1 percent

in 1997.7 While trade and service sectors in Russia have

seen the emergence of widespread SME activity, small

businesses have not played a significant role in the R&D,

technology-intensive, or defense-related areas.

199

Country Number of

SMEs

(thousands)

Number of

SMEs per

1,000

Population

Employment

by SMEs

(millions)

Percentage

of Total

Employment

SME Share

of GDP

(Percentage)

Japan 6,450 49.6 39.5 78 52-55

EU 15,770 45 68 72 63-67

U.S. 19,300 74.2 70.2 54 50-52

Russia 844 3.6 - 5.7 8.3 13 10-11

Table 1. Relative Size of SME Sectors.4
BARRIERS TO ENTREPRENEURIAL ACTIVITY

IN THE DEFENSE SECTOR

An enormous number of barriers have limited the

growth of entrepreneurial activity and the SME sector in

Russia, and many of these limiting forces are particularly

strong in defense-related sectors. These factors have

contributed to the current situation where large businesses

and institutes continue to dominate the defense sector,

while the existing SME sector remains too small to play a

significant role in creating new jobs. In fact, many

conditions for SMEs worsened during the 1990s, and

continue to be problematic today.

Institutional and Administrative Constraints.

Factors such as excessive tax, bureaucratic corruption,

regulatory burdens, lack of government programs to

promote SMEs, lack of adequate intellectual property rights

(IPR) protection, and lack of an effective unemployment

safety net have severely hampered the development of

entrepreneurial activities and the SME sector in Russia.9

These factors have combined to distort the emerging

Russian market and hinder the emergence of

entrepreneurial small business. There are literally

hundreds of state bodies involved in oversight and

regulation of SMEs at all levels of the economy.10 For

200

1991 1992 1993 1994 1995 1996 1997 1998 1999

Number of

Firms

(thousands)

268 550 875 896 877 842 861 868 890

Number of

Full-time

Employees

(thousands)

8,480 8,995 6,269 6,515 6,208 6,292

Number of

Part-time

Employees

(thousands)

6,677 4,926 2,352 2,124 1,194 970

Table 2. Russian SME Sector Employment, 1991-98.8
example, inadequate protection of IPRs has led to a

situation where an estimated 90 percent of the software

applications used in Russia are pirated (vs. under 30

percent in the United States), thereby significantly limiting

the ability of the new software industry to develop profitable

domestic markets in Russia.11 The fact that Russian state

institutions often have partial patent rights over the work of

their personnel further complicates the IPR situation for

prospective private enterprises.

The tax system disadvantages small firms due to the

onerous compliance burden (maintaining records,

declarations, dealing with multiple tax organizations) and

excessive rates. Administrative barriers include the

numerous registration, licensing, and reporting procedures

imposed on small businesses by multiple levels of

authorities and administrative bodies. The need to obtain

licenses and administrative permissions from numerous

bureaucratic offices provides fertile ground for corruption.

In addition, surveys report that 75-80 percent of SME

managers complain of being subjected to threats and

coercion from criminal groups. Many large enterprises

continue to play significant welfare support roles, meaning

that the large ministries, scientific research institutes, and

producers have an advantage over smaller enterprises in

providing social benefits such as housing, access to health

care facilities, etc.12

Russian government support programs and IPR

protections for SMEs are ineffective. While many Russian

and international studies have pointed to the problems

caused by the numerous administrative barriers to SMEs

and while many Russian government programs and

regulations have declared support for dismantling these

barriers, it appears that these problems have, in fact,

worsened during the past decade. There is a widespread

perception that while some tax incentives for SMEs were

instituted in 1990-95, the Russian central and regional

governments have not taken enough action to build a

support framework or provide funding sources for small

201
businesses or R&D activities since the mid-1990s. As

happens all too often in Russia, the laws passed in support

of SMEs have not been implemented, and many government

initiatives have not been adequately funded.

In addition, Western assistance programs that seek to

address proliferation concerns have primarily focused on

large state organizations, thus encouraging scientists and

specialists to retain their ties with these organizations.

Many of the plans being developed to revive the Russian

R&D sector or overall economy itself still focus on the

largest enterprises and top-down approaches. The Russian

government and many industry analysts have discussed

converting the military-industrial complex into a

scientific-industrial complex, but they still focus on doing

this by reviving the largest enterprises and funding new

large conglomerates, not by focusing on the needs of

SMEs.13

Resource Constraints.

The inability to access sufficient financial resources to

support and expand new businesses has hampered the

Russian SME sector. These barriers include insufficient

banking and financing sources, low levels of investment,

and the practice of banks providing funds based on personal

connections or a preference for funding export operations.14

The poor investment climate in Russia has discouraged

foreign direct investment (FDI), which has been valued at

under 1 percent of Russian GDP, compared to over 7 percent

in Poland and even higher in other advancing economies.

Even Western programs to provide loans have not

focused on technology start-ups, and often disburse most of

their funds to businesses in the service and retail trading

sector. For example, U.S. funding provided to the European

Bank for Reconstruction and Development’s Russia Small

Business Fund (as part of the U.S. Nuclear Cities Initiative)

has been disbursed largely to the trading sector, where most

loan recipients do not have employees linked to scientists.15

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The domestic Russian banking sector is not well developed

and has been reluctant to invest in the military sector

outside the largest export-supported enterprises. Thus,

SMEs lack access to adequate start-up capital, and are often

forced instead to rely on personal resources, family, friends,

and criminal structures.

Demand Constraints.

Many Russian SMEs have a hard time finding markets

for their goods and services because they face dominating

state and large businesses, foreign competition in

higher-technology areas, and overall depressed domestic

demand.16 SMEs face significant barriers to entry in many

market areas due to hidden subsidies, administrative

measures, and distorted prices that all favor large existing

businesses. Russia still has far to go to develop a competitive

market economy, and there are distortions in much

economic activity that limit the ability of entrepreneurs and

SMEs to find domestic markets. In addition to the depressed

demand, the lack of information about market demand has

led to waves of excess competition as multiple enterprises

seek to produce similar products, ignorant of the others’

activities.17

Barriers to entry created by numerous hidden subsidies,

administrative measures, and distorted prices that still

support large state-owned, or former state enterprises,

make it difficult to start up new private firms even if they

are more productive than the existing firms.18 Market

distortions that stem from efforts to address social concerns,

corrupt practices, and the lack of information continue to

raise barriers to SME and prevent equal competition. A

1999 McKinsey report argues that the unequal market

competition conditions “tend to favor low productivity

incumbents, protecting them from takeovers and

productive new entrants.” 19

203
Personal and Societal Views.

There are deep-seated personal views and beliefs

pervasive in Russian society that have limited the growth of

entrepreneurial activity and SME business activities,

particularly in the defense-related sector. At the personal

level, many scientists and defense technologists who could

start up SMEs tend to be risk-averse, older, and ill-adapted

as entrepreneurs.20 These potential entrepreneurs often

display such attributes as passivity, a reluctance to stand

out from the herd, fear of job instability in new small

companies, and a preference for more “interesting”

high-tech R&D instead of commercial projects. The history

of failure when individuals in the military-industrial or

R&D sector seek to start new enterprises without having

high-level connections has also added to personal

reluctance to leave the relative stability of large or

state-funded organizations to undertake new

entrepreneurial ventures. Even some entrepreneurs, who

have set up relatively well-paid teams of Russian computer

programmers to provide outsourcing support for U.S. and

other Western companies, report that they have difficulty

finding Russian programmers who want to work on these

projects because they view them as less interesting and less

challenging work than their military-related or scientific

work.21 In addition, many would-be entrepreneurs have a

pronounced preference for large projects, often seeking to

start with expensive large-scale projects instead of the

smaller, incremental approach favored in the West.22

At the societal level, public opinion polls reflect an

uncertain and ambivalent attitude towards

“entrepreneurs,” who are often seen as shady and dishonest,

and sometimes resented for their apparent wealth. Surveys

report common resentment of private wealth and private

business, and negative attitudes towards entrepreneurs

and spin-offs from state organizations.23

While the passivity of many Russians in terms of

accepting the conditions within which they live and not

204
acting to take control to change those conditions may

hamper the development of entrepreneurial activities, such

passivity can also serve to restrict some types of

proliferation activity. For example, surveys of specialists

working in key Russian nuclear and missile facilities in

some of Russia’s closed cities have found that a basic

passivity has helped keep these specialists from acting to go

abroad or sell their skills to foreign customers.24

Managerial Approaches.

Many managers in the military-industrial sector have

been conditioned to be risk-averse, conservative, focused on

maintaining large payrolls, and wed to using old methods,

cronyism, and appeals for state support instead of

restructuring their enterprises or moving away from

reliance on government orders. Privatization of industry

has not led to effective control by new owners who would

promote market-oriented entrepreneurial approaches, and

the defense R&D sector is much less privatized than the

production sector.25 Instead, enterprise managers have

gained increased power to push for state support, but have

not become accountable to profit-driven imperatives or

outside owners. There has been low turnover in

management. By one estimate, as little as a 5 percent

change per year has occurred in enterprise management.26

Military-industry managers have been conditioned to be

risk-averse, conservative, and tolerant of bloated payrolls.

They are skilled at bureaucratic infighting, and most are

not inclined to be entrepreneurs. These traits persist today

for many managers.27 Their tendency has been to build

bigger groups (financial-industrial groups, holdings, etc.)

rather than to fully pursue independent spin-offs or SMEs.

The partial shift in ownership at many enterprises has not

led to effective new ownership control, and has allowed the

legacy directors to assume greater control in many cases.

This has contributed to their becoming less responsive to

the state, pursuing instead their own parochial interests. In

205
addition, many managers continue to believe that state

defense orders will revive, so they hold out for the benefits

from that eventuality. Recent funding increases under the

Putin administration, increased funding from Minatom for

nuclear weapons enterprises, and the promises of more to

come have worsened this problem. Managers often see

commercial work as temporary, and seek short-term

projects to help tide them over until government funds

arrive.28

Most mangers lack the skills and ability to identify

market opportunities. For example, the RAN USA and

Canada Institute operated several programs with

Pepperdine University in the United States to provide

business training to over 100 managers from large Russian

military-industrial enterprises, but the business plans

those managers developed after receiving training were not

implemented because they did not identify viable areas of

demand in the Russian market.29

The defense sector managers are gradually being forced

to change their approaches as their environment changes.

By the late 1990s, it became apparent from periodic

observer visits to Russian military R&D and production

facilities that those organizations doing relatively well tend

to have the most dynamic and assertive directors, in

addition to having access to foreign markets for their

goods.30 The organizations whose directors or senior staff

are still focused on the Russian government for support and

guidance tend to be doing much poorer, but have still

managed to survive, often as shells to provide some basic

support for their personnel. Nevertheless, government

support policies through the mid-to-late 1990s, for example,

providing credits to help military-industrial enterprises in

the worst shape, encouraged a continuation of sluggish

managerial behavior. Whereas managerial behavior bent

upon exploiting the old system worked relatively well in the

early 1990s, it appears that the macroeconomic situation

and market then became “more rewarding to qualified

enterprise management” such that the quality of

206
management has now become more important in

supporting enterprise success than it was earlier.31

Structure of Defense R&D Sector.

Despite hopes that the massive Soviet defense R&D

sector would serve as a powerful source of innovation and

technology capabilities to power a new high-tech industrial

sector in Russia, efforts to convert this sector have largely

failed. Overall, the Russian defense R&D sector has lost

much of its technological competitiveness, as the lack of

funding for R&D over the past decade, in addition to the

relative inactivity of high-tech companies and SMEs, has

taken its toll.

The R&D sector suffers from many of the same problems

as those afflicting overall military industry, and faces many

of the Soviet legacies such as excessive size, labor-intensive

approach to research, extreme centralization, and

geographic concentration.32 The defense R&D sector

accounted for 70-80 percent of all Scientific Research

Institute (NII) and R&D work, covering about one million

personnel working in the science-related area at the start of

the 1990s.33 The Soviet approach led to separation of

research, development, and production in separate

organizational entities (NII, Design Bureaus [KB],

Scientific Associations [NPO], Production Associations

[PO]), and the breakdown of strict centralized Soviet

controls has made this lack of integrated R&D chains

particularly troublesome. While production associations

and enterprises had a high degree of vertical integration in

terms of production inputs, the clear separation of research

facilities from the production sphere has hampered the

sector’s ability to move new innovations to the production

stage. Moreover, it is very difficult to get a good picture of

innovation in the defense R&D sector because official

statistics leave many issues untouched. Much of the

innovative activity has occurred in the unofficial areas of

the economy.34

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The Russian military-industrial sector continues to be

dominated by large enterprises, and small businesses have

played a negligible role in defense research, design,

development, and production. Indeed, the Russian

military-industrial sector retains many of the

characteristics that encouraged large enterprises, e.g., the

advantage of size in giving enterprises influence, pressure

for self-sufficiency in material inputs.35 The Soviet-era

orientation towards very large enterprises continues in the

military-related scientific-research community, the

production community, and others. A 1997 study found that

large defense sector enterprises employing over 5,000

people performed better and were more successful in

retaining their core capabilities than smaller firms.36 More

recent studies of the situation after the 1998 crisis found

that mid-sized companies (500 to 2,000 employees) did well,

but that small enterprises did worse in both surveys.37

Directors of R&D organizations found that their position in

the system was improved as their organizations grew solely

in terms of numbers of employees or size of budgets, while

profit margins were not even known, let alone considered.

The artificial pricing system used through the early 1990s

and the continuing system of hidden state subsidies have

hindered the ability of the military-industrial sector to

adjust in the transition to a market economy by making it

almost impossible to calculate market values for inputs or

products in much of the sector.

Many analysts argue that Russian fundamental

research is of high quality, but that Russian capabilities are

weak in applied R&D oriented towards creating civilian

products with commercial potential. Most Russian

technology is not internationally competitive, and Russia

has a history of conducting R&D with little attention to cost

or marketability considerations.

Russian technical experts do not have experience in

market-driven R&D. Indeed, the vast majority of R&D

personnel today still seek to sell technology-push

capabilities-driven projects, instead of market-pull projects.

208
They market and propose what they know and have, but

these capabilities are usually not what the commercial

market wants. Almost any U.S. businessman today who

visits Russian R&D facilities will come back with huge

numbers of proposals regarding which scientists seek to

find funding for their pet projects, regardless of the fact that

no market demand conceivably exists.38 It still remains to be

seen how much commercial potential Russian defense

technologies have, so Western-supported programs that

focus on the commercialization of Russian lab technologies

are taking a partial, ultra-cautious approach. This is not

the path to a large-scale solution to the problem and is

bound to provide only limited results.

In addition, there is a clear Russian government

orientation towards large enterprises in the defense sector,

with the Russian government giving preference in domestic

arms contracts to large Russian firms that sell their

weapons systems abroad because it views this ability to sell

weapons on the global market as a key indicator of the firms’

economic viability.39 The Putin administration has placed

increased emphasis on expanding arms sales as a critical

source of revenues to fund military R&D programs, as well

as fill state coffers and fund military-industrial enterprises

themselves.40 Current Russian government plans to

restructure the defense sector call for merging many

enterprises to create 30-40 even larger holding companies

that will further expand industrial conglomerates that

dominate defense industry.41

Security Restrictions.

Restrictive security regulations and pressures on

employees who have worked in secure military-industrial

facilities hinder the ability of these employees to create new

SMEs. Access to international donors, technical exchanges,

and travel abroad can all be restricted by the security

organs. These restrictions have become stronger in the

recent past, with a resurgence of FSB campaigns against

209
interactions with foreigners—including accusations that

joint ventures are Western espionage efforts, and new

Russian Academy of Science instructions requiring

scientists with access to classified materials to report all

contacts with foreign colleagues to the security

departments. Even specialists who are no longer employed

at military-related facilities have reported being subject to

visits from security personnel who seek information and

even press for bribes in exchange for noninterference in

prospective new business ventures.42 As with many

administrative barriers in Russia, the existence of security

regulations often simply serves as a means for bureaucratic

officials to extort additional payments from those complying

with the regulation.

FACTORS PROMOTING ENTREPRENEURIAL

ACTIVITIES

While numerous powerful forces have limited SME and

entrepreneurial activities in Russia, the list of factors that

encourage such activity is much shorter.

Economic Need.

The basic failure of the government to provide for the

economic needs of most military-industrial enterprises has

encouraged specialists to look elsewhere for work, and has

begun to encourage the enterprises themselves to

restructure and undertake more entrepreneurial activities.

While a centralized large-scale approach to planning

economic programs still dominates in many organizations,

the absolute decline in conditions in much of the

military-industrial sector serves to promote new

approaches, if only out of desperation. It is estimated that

the number of employees in military-related R&D

organizations, e.g., NII, had fallen by 60-70 percent by the

end of the 1990s, and many specialized design teams had

fallen apart.43 In 1992-94 alone, during the first wave of

employee departures, overall employment in science fell

210
over 20 percent.44 Numerous Russian defense R&D

organizations have been hollowed out because many of the

most capable, younger, active employees have gone, leaving

behind the bureaucratic shells with too many managers and

older staff who are often the least entrepreneurial.45 The

average age of workers in the military-industrial sector has

risen from 47 years in 1996 to 58 years in 2000.46

The lack of government funding, investment, or market

profits for the defense sector can encourage new

approaches. Total R&D expenditures fell over tenfold in the

1990s, and the share of military R&D in official Russian

defense expenditures fell from 18.6 percent in 1990 to 3-4

percent in the late 1990s.47 This decline in R&D has

occurred in the context of the collapse in military output of

Table 3. Relative Military and Civilian Outputs of the

Russian Military-Industrial Sector (1991=100).

In part due to the lack of centralized funding and failure

of large-scale conversion efforts, many military-industrial

enterprises allowed for the creation of internal spin-offs,

and some of these have gone on to become viable SMEs

working in technology areas. While there was a lot of

activity in the early-to-mid 1990s, most enterprise efforts to

produce more technology-intensive industrial and

consumer goods were not successful—these markets were

211

* - projected.

the Russian defense complex without any corresponding

increase in civilian output from the defense complex (see

Table 3).48
dominated by imported goods.49 The slight increases in

overall output of the military-industrial sector in 1999

(Table 3) came as the demand for domestic consumer

durables such as refrigerators, washing machines, and

televisions rose, and as the foreign competition was priced

out of the low-end market in the aftermath of the August

1998 crisis. 50

While insufficient central funding has encouraged many

military-industrial enterprises to seek new approaches, the

economic need has been sharpest in sectors of low

proliferation concern, such as those producing many basic

conventional weapons like tanks, rifles, etc. The industrial

sectors of most concern to the West in terms of proliferation

potential—the nuclear and missile industries—have been

relatively well funded, and are increasingly better funded

today.

Work Force Characteristics.

The Russian population is highly educated and

technologically innovative. Universities and institutes in

Russia have been producing highly skilled engineers,

scientists, and other R&D specialists for decades. The

numbers and percentages of young people enrolled in

technical education fields continue to be among the highest

in the world.51 The early boom in the expansion of the SME

sector showed the existence of an entrepreneurial spirit in

many Russians, despite the historical record of a statedominated society, as the flow of active, entreprenurialminded specialists out of the defense sector provided critical

skills to the new economy. Many of the initial SME

managers in the early 1990s were technical specialists from

the R&D sector, and they have paved the way for others to

potentially follow.

Nevertheless, younger specialists are not entering the

defense field, and admissions at most military-technical

institutes have fallen. Banking and trade have been two of

the leading sectors attracting talented young specialists

212
away from their training at prestigious technical institutes.

Young people are not pursuing educational programs that

would lead them into the defense R&D or industrial sector.

By the mid-1990s, senior officials at prestigious

military-technical institutes, R&D associations, and

production facilities echoed the common refrain that the

“Nike effect” was draining their organizations as the

brightest youngsters left to seek their fortunes in the new

economy, buying and selling sneakers or other imported

consumer goods.52 Throughout the 1990s, increasing

numbers of students at some of the most prestigious

institutes, e.g., Bauman, either were leaving their studies

early to go work in other areas or were applying their skills

in commercial structures instead of for R&D purposes.53

Market Niches.

There are relevant market niches where SMEs have

begun to play increasingly significant roles, in such sectors

as software programming, medical equipment, consulting

services, etc. The ability of SMEs to respond flexibly to

changing market conditions and quickly enter new business

areas gives them certain advantages over the large

established enterprises that still dominate most existing

market sectors. The information technology (IT) and

computer programming sector are examples of a new

business area where SMEs have led the way in developing

new capabilities, enterprises, and markets. For example, it

is estimated that the offshore programming sector in Russia

may be able to expand at rates from 20-50 percent per year

to meet international demand for such services. This sector

currently generates under $100 million in revenues per year

in Russia, compared to over $6 billion in India, as part of a

global market that is anticipated to grow to over $1 trillion

per year by 2008. A 1999 McKinsey study found that

productivity in the Russian IT project services sector was 72

percent of the productivity of the comparable sector in the

United States, which was the highest productivity level in

any of the industry sectors evaluated in the study.54

213
Nevertheless, it is interesting to note that Russian

companies working in this area face many of the

characteristic barriers to SMEs in Russia, including the

reluctance of Russian defense-sector programmers to work

on more mundane commercial programming tasks even

though the pay is significantly better than for work on

military-industrial projects, the hindrances of working

within security restrictions, low domestic demand, lack of

skilled managers, administrative and regulatory

challenges, lack of experienced marketing support, and the

lack of Russian government support programs.55

There are some military-related technology and

industry sectors where Russian capabilities remain highly

competitive and where small business activities have

become visible. Russian technological capabilities perhaps

remain most competitive in areas such as aerospace,

materials science, computer science, optics, and sensor

technologies. Some of these industry sectors saw small

businesses emerge in the defense area during the 1990s to

compete on the basis of quality and price—examples can be

found in areas such as avionics, navigation, software, radio,

and personnel protection.56

Access to Foreign Markets and Funding.

A wide range of Western donor organizations, led by the

EU TACIS, USAID, and EBRD programs, but more recently

including the U.S. IPP, NCI, and other programs, have

provided significant assistance for SME development in

Russia. In many regions, these international donors have

provided more funding for SME support than have Russian

government programs. While hundreds of millions of

dollars have been provided in funding, technical assistance,

loan guarantees, etc., it is difficult to evaluate the impact

these programs have had on job creation.57 There are many

programs and support organizations active, but

international assistance programs too often are not based

on preliminary research or tailored to meet specific needs in

214
the regions of Russia where they operate. There is

continuing uncertainty about the sustainability of many

programs started with international funding since most

SMEs lack the resources to pay for the training and

assistance provided by these programs. Nevertheless, broad

programs such as the Morozov Project, Russian Agency for

SME Support, Technopark Association, and others have

had significant impacts in helping to expand the Russian

SME sector. The expanded knowledge of foreign markets

and funding sources developed over the past decade has

encouraged the creation of SMEs that can obtain funding.

Indeed, access to foreign capital or markets is a major

indicator of the health of enterprises—regional and

national studies have found that most industry leaders

have links to international markets or finances.58 Foreign

funding has played a major role in supporting innovative

firms in the aerospace, nuclear, and software industries.59

Unfortunately, some of the international programs

aimed at nonproliferation have had the unintentioned

consequence of encouraging weapons scientists to remain

affiliated with the defense institutes in order to be eligible

for funding under those programs. In addition, as we have

noted, most of the scientists who receive funding under

programs such as ISTC or NCI continue to work on WMD

development programs at state defense facilities and

receive state salaries.60 For example, apparently almost

three-quarters of the Russian weapons scientists who

received funding from the ISTC in 2000 continued to work

at least 60 percent of full-time levels at their other jobs

while receiving ISTC support.61 While programs aimed at

providing research grants to weapons scientists may help

reduce potential short-term proliferation activities by

meeting scientists’ needs to earn a living, these programs

continue to support the further development of Russia’s

advanced military and WMD capabilities. This perpetuates

the long-term proliferation problem by helping Russian

military scientists retain their skills and retain

215
employment at the large Russian defense sector R&D

enterprises.

As one researcher has noted, programs such as the ISTC

were originally intended as short-term measures to provide

employment for weapons scientists until the Russian

economy developed to provide alternative employment for

them.62 This initial expectation was ill-founded: a decade

has passed, and the expected job creation has not occurred.

The result has been that Western aid programs are helping

Russian weapons scientists retain their military skills, and

thus prolonging the potential proliferation situation. For

example, a study by Tikhonov reports that 97 percent of the

weapons scientists who moonlight to earn foreign stipends

say that this work helps them maintain their core job skills,

while only 16 percent of those scientists who moonlight for

Russian employers say this.63 Other programs such as the

NCI, which are aimed at new job creation, have met only

limited success in creating new jobs, and most of the

Russian scientists involved continue their Russian

state-funded WMD development work. Programs should be

restructured to encourage aid recipients to leave their

employment at state enterprises.

SUGGESTIONS FOR WESTERN ASSISTANCE

PROGRAMS

What can be done to encourage the development of the

SME sector in Russia and harness entrepreneurial activity

to reduce proliferation? Unfortunately, current trends are

troubling because the barriers to SMEs are strong and

growing, and the facilitating factors are weak. SMEs are

primarily active in lower-tech areas, and thus are not as

attractive to Russian technologists as military work. The

Russian government has demonstrated a strong orientation

on increasing the size of large industrial groups, both in

military industry and the general economy, and not on

supporting the SME sector.

216
At the broadest level, the distorted regulatory

framework is one of the most significant barriers to the

development of a more robust SME sector, yet this is also

one of the most difficult problems to address. The

problematic investment climate has discouraged FDI or

even Russian domestic investment in capital projects.

Russia’s legislative framework regarding property rights,

taxation, and labor relations needs to be improved, and

enforcement must be improved across the board. While

providing targeted tax privileges for science and technolgy

SMEs has not been a standard practice in Western

programs, some analysts argue that this type of approach is

critical in Russia due to the large and complex tax burden

placed on SMEs. An improved economic situation with

reduced institutional, administrative, resource, and

demand constraints on SMEs would clearly help, but this is

a daunting task—systemic reform of the entire Russian

economic and regulatory system would be required to

address these problems. Nevertheless, at a more limited

level, there are a number of ways that Western assistance

programs can be modified to help improve the situation

somewhat.

Emphasize Market-Driven Commercialization

and Business Services.

One of the largest challenges facing many would-be

Russian entrepreneurs and scientists is to shift their focus

from a technology-push capabilities-driven approach to a

market-pull approach. Business and market training,

specific market-oriented business services, and the

participation of Western industry partners can help

prospective SMEs take this market-pull approach. Aid

programs also need to focus on market needs and

commercialization, and have clear exit strategies that

emphasize sustainability. Comparative experiences in

other transition economies such as Poland and the Czech

Republic have shown that initiatives that shift away from

217
high-tech efforts and are reoriented towards medium- or

low-tech market demand can achieve significant success.64

A common thread in many success stories is the direct

and early involvement of U.S. or Western industry partners

who provide a clear market-oriented approach. Examples

include Boeing’s Moscow Design Center (which has grown

to employ about 650 engineers, scientists, and computer

specialists), a U.S. industry software venture in

partnership with VNIIEF nuclear weapons lab in Sarov

(which has grown to have about 100 former weapons

scientists under contract), Motorola and Intel software labs

in Russia, and offshore software development companies

such as VDI (which has 225 programmers working in its

Russian operations for U.S. customers).65 These are cases

where there was little or no involvement of governmentsponsored assistance programs. In fact, such governmentled programs can sometimes under-perform compared to

private-sector initiatives. For example, while the Sarov

Open Computing Center (OCC) created with funding from

the NCI program has had some success, most of the work

conducted to date has been for the OCC staff to build up

their skills or for LANL, yet LANL has reportedly not

directly benefited.66 This program is now actively seeking

industry partners and potential customers, and recognizes

that commercialization is the largest challenge facing the

NCI.

In contrast, many international assistance programs

have been slow to emphasize commercialization and

industry involvement. The U.S. Department of Energy

(DOE) IPP program, which was criticized for insufficient

focus on commercialization, increasingly shifted to a model

focused on industry participation in the late 1990s with

promising results, and the ISTC has done the same with its

Partners Program begun in 1997.67 Similarly, the DOE

Nuclear Cities Initiative, European Nuclear Cities

Initiative, and RANSAC-initiated Nuclear Complex

Conversion Consortium are examples of recent steps in this

direction, but much more progress needs to be made

218
towards commercialization and market-oriented programs.

Programs must be clearly focused on market demand,

avoiding the common approach of focusing on finding U.S.

partners for existing Russian products and technologies.

U.S. programs could work to focus on market areas where

Russian SME products would have a clear market demand.

Some examples include supporting the development of

Russian SMEs to produce nuclear materials protection,

control, and accounting (MPC&A) equipment or specialized

technologies for environmental clean-up at DOE

sites—these are areas with clear markets in Russia and the

United States, involving products that would satisfy U.S.

security interests.68

Successful policies to support SMEs have also focused on

reducing the barriers they face by linking education and

entrepreneurship, and by providing services and office

space to SMEs. While training programs, business centers,

and technoparks can help get SMEs started, the training is

often too general or theoretical to be of concrete assistance,

and most technoparks are more akin to display halls rather

than business incubators.69 Russian surveys have found

that generally the retraining programs offered by many

Western aid programs involving generic business skills or

direct application of Western approaches are seen as

ineffective in helping recipients work within the Russian

economic system.70 Focused programs involving specific

technical assistance and business consulting services are

much better received, and programs to enhance the

marketing skills of Russian defense technologists would be

most valuable.

Market forces have led most of the employees who have

left military industry to go to work in relatively low-tech

sectors such as services, trade, and simple consumer goods

production. Entrepreneurs looked to those sectors to make

money in the 1990s in Russia, not to technology sectors.

While some skilled workers and researchers have moved

into companies where they use mathematical and computer

skills in areas such as computer programming, banking,

219
and finance, most new enterprises have not focused on these

areas. For example, while a study of the commercialization

of military R&D capabilities in Tomsk Oblast found a high

level of such activity by the mid-1990s, the most successful

new enterprises did not seek to apply or develop high-tech

products.7 1 Instead, many of the most successful

experiences with the commercialization of militaryindustrial R&D capabilities in Tomsk Oblast were oriented

towards clear areas of domestic Russian market demand

(usually in consumer goods). One of the most successful new

enterprises that the Rubin Submarine Design Bureau

began in the 1990s, in addition to its work in support of

diesel submarine sales to India and elsewhere, was a

business center and the Hotel Neptune, where personnel

from the design bureau worked as clerks and service

personnel. Workers at the hotel report with satisfaction

that, despite initial hesitation about leaving the scientific

field, their wages are higher than those of the colleagues

they left behind at Rubin’s design facilities.72 Many oft-cited

successes, such as the Leninets joint venture with Gillette

to produce razors, are also examples of projects where

Russian organizations have moved into less-technically

advanced commercial areas instead of seeking to apply their

R&D capabilities.

Establish Clear Project Goals and Evaluation

Guidelines.

As GAO reports and others have suggested, foreign aid

programs should have clear project evaluation and approval

guidelines, requiring applicants to demonstrate such things

as commercial viability and the involvement of industry

partners.73 This is made difficult by the continuing poor

economic climate and distortions in market mechanisms,

which make it difficult to evaluate economic viability of

enterprises or identify niches of potential economic

growth.74 Donor programs should not over-reach in terms of

goals for developing sustainable business enterprises. That

may not be possible in some locations, such as Russia’s

220
closed cities. Some U.S. programs such as NCI and DEF

have disbursed funds before establishing clear program

evaluation and approval guidelines tailored to Russian

conditions, and have failed to carefully select recipients of

assistance. Unfortunately, NCI programs serve as

examples of how the lack of clear project goals and criteria

can undermine the effectiveness of well-oriented

programs.75 In addition, program activities should be

tailored to take account of each enterprise’s economic

condition, skill sets, etc. Some enterprises are not viable

candidates for support. Their financial situation, physical

plant, lack of basic competencies, management problems, or

ties to military work may make them inappropriate

candidates to receive support, and no amount of Western

financial or consulting support would make them viable.

Focus on Regional and Local Level Programs.

Regional and local level programs have proven to be

most effective in meeting the needs of small businesses, and

encouraging the development of critical partnerships

between SMEs and local authorities.76 Local initiatives are

often the most cohesive and coherent, and do not overreach

or turn into enormous centrally-focused industry support

efforts. Some SME support programs at the regional level

have achieved significant success in developing positive

environments for SME expansion, including programs in

areas previously dominated by large military-industrial

enterprises. For example, local programs in Zhukovskiy

(centered on TsAGI), Tomsk, and Zelenograd are some of

the ones that have apparently been able to build coherent

support communities to encourage broader development of

SMEs.77 As thousands of personnel left TSAGI in the early

1990s, local employment services encouraged the creation of

over 2,000 SMEs that have helped to create over 60 percent

of the new jobs in the area. Similarly, an Entrepreneurship

Development Department in the Zelenograd region

promoted the creation of over 3,000 SMEs with business

incubator support, finance programs, and training

221
programs. By 1997, about 25,000 people were employed in

these SMEs, absorbing some of the 40,000 workers whose

numbers in the local microelectronic industry were reduced

in the mid-1990s. Another local initiative in Tomsk, the

Tomsk Business Partnership, has built on the region’s

positive record of SME support to provide both specialized

training and consulting services for SMEs and increased

access to investment capital.

Reduced Focus on Short-Term Assistance to

Employees at Large or State Enterprises.

Western nonproliferation programs should shift their

focus to working with and promoting SMEs and small

business consortiums, instead of remaining tied to the large

defense sector R&D institutes and industrial enterprises.

Encouraging specialists to move to the private SME sector

can help reduce the capabilities base of the Russian defense

sector, thereby reducing its influence in Russian affairs and

reducing the excessive capabilities that seek markets. To

encourage this, international donor programs should shift

their focus to industry-focused or Russian domestic-style

orders, and move away from short-term grants. In addition,

major assistance and collaborative programs can better

reduce some proliferation concerns by focusing on working

with Russian SMEs rather than large enterprises.

Unfortunately, some programs such as that for

international space cooperation have served to provide

significant funding to Russia’s large state-run space R&D

enterprises, helping them increase salaries and attract

skilled young specialists, yet not being able to prevent the

proliferation of missile technologies from those enterprises

to countries such as Iran. The organizational health and

skill sets of specialists at some key Russian missile facilities

are better than that at many nuclear weapons enterprises,

in part due to the foreign funding provided through

international space cooperation projects.78 For example, in

contrast to the situation at most other defense sector

enterprises, wages are relatively high and the proportion of

222
younger specialists is growing at the Energiya Corporation,

which has been heavily involved in the international space

station project. While numerous other international

assistance programs developed to promote the growth of

Russian SMEs have played a positive role by providing

short-term grants or free business support services, their

long-term sustainability is uncertain once foreign funding is

reduced.

Unfortunately, some productive short-term responses to

the immediate problems affecting Russia’s defense

scientists, such as the grant programs run by the ISTC and

others, have been continued beyond their initial scope due

to ongoing economic problems in Russia. In effect, these

types of programs encourage the recipient scientists to

retain their ties to state-run defense R&D institutes in

order to remain eligible for funding. At the same time, many

of the scientists continue working on defense-related

projects, such that the grants support the continued

maintenance of Russia’s military-related technical skills

and institutes. For example, while the U.S. programs to

engage Russian biological weapons scientists in

nonmilitary projects have discouraged these scientists from

proliferating their skills, these programs, by aiding

institutions and subsidizing equipment, may also have

served to sustain the scientists’ relevant military skills and

enhance a possible long-term reconstitution threat.79

Compared to other SMEs, those working in the scientific

area have the highest percentage of people who have

retained their full-time jobs with their previous employers

while taking a second job in a small business, with only 30

percent of those working in science-related SMEs doing so

on a full-time basis.8 0 This issue raises serious

considerations for planning assistance programs because

short-term assistance to personnel likely to remain

employed at the state organizations may prolong or worsen

the longer-term proliferation problem. Programs focused on

research grants and finding support for Russian

capabilities generate only short-term benefits, rather than

223
the longer-term benefits that can be obtained by

market-focused programs that encourage SME growth.

Improve SME Access to Finance Sources.

As noted, the lack of access to financial resources is one of

the key barriers continuing to hamper the development of

the SME sector in Russia. Many successful OECD SME

support programs have focused on providing finance

instruments such as specialized banks and loan guarantee

programs for SMEs. These programs need to be

application-driven, with merit-based evaluations leading to

provision of small seed capital to SMEs seeking to start new

enterprises or upgrade capabilities. For example, the Fund

for Small Enterprise Development Assistance in Science

and Technology has provided subsidized loans to many

SMEs, but it handles only about $4 million in loans a year.81

There is justifiable reluctance on the part of some donors to

provide finance programs until the macroeconomic policy

environment and governmental regulatory systems are

improved, but focused OECD and other programs provide

examples of how such programs can be successfully

implemented even without macroeconomic policy

improvements.

Beware of Dismantling SME Barriers that

Discourage Proliferation.

On a final cautionary note, it is important to recognize

that under some conditions, some of the factors that

discourage entrepreneurial activity also serve to discourage

some types of proliferation. For example, while security

restrictions, administrative barriers, lack of financing, and

the passivity of many Russians are all factors that hamper

the expansion of the SME sector in Russia’s closed cities,

these same factors also hamper potential access to these

cities by undesirable foreign actors and restrict the

movement of individual weapons specialists out of those

closed cities. Commercial trade activity by companies that

224
have rented space in newly-accessible buildings associated

with Russian nuclear weapons facilities has increased the

degree of poorly-regulated trade in the immediate proximity

of facilities and materials of proliferation concern.

Programs to encourage the creation of consulting groups

and firms by weapons scientists can help them develop

business skills for commercial work, but also provide them

with mechanisms they could use for proliferation of their

military skills. Thus, those proposing programs to promote

the expansion of entrepreneurial activity and the SME

sector need to consider this duality when seeking to reduce

some of the barriers that SMEs face. This subject is

discussed further in the Appendix to this chapter.

ENDNOTES - CHAPTER 7

1. This issue is discussed in more detail in the Appendix to this

chapter.

2. While there has been significant demilitarization, there has not

been any significant conversion. The decline in military output has not

led to the productive reallocation of freed-up resources to boost civilian

production. See John S. Earle and Ivan Komarov, Measuring Defense

Conversion in Russian Industry, Stockholm, Sweden: Stockholm School

of Economics SITE, 1998, pp. 4-5, available online at www.hhs.se/site/

Publications/workingpapers/workingpapers.htm; Kevin O’Prey, A

Farewell to Arms? Russia’s Struggles with Defense Conversion,

Washington, DC: The Brookings Institution, 1995, pp. 12-14. Many U.S.

programs aimed at assisting in the conversion of the Russian defense

industry also met with little success. For example, high-profile

programs such as the U.S. DSWA-run Fast Four conversion effort and

the Defense Enterprise Fund (DEF) expended significant funds but

largely failed to achieve their objectives. See U.S. General Accounting

Office (USGAO), Cooperative Threat Reduction: Status of Defense

Conversion Efforts in the Former Soviet Union, Washington, DC:

GAO/NSIAD-97-101, April, 1997; Matt Bivens, “Investing,

Pentagon-Style,” Moscow Times, April 4, 2001; Sergey K. Kolpakov,

“The Era of East-West Joint Ventures,” in Vlad E. Genin, ed., The

Anatomy of Russian Defense Conversion, Walnut Creek, CA: VEGA

Press, 2001.

3. Comparisons across countries and time periods are hampered by

differing definitions of “small” and “medium” sized firms. In Russia,

225
legal and regulatory changes in 1995-96 changed the definitions for

“small business,” reducing size limits for some sectors from 200 to 100

employees for industry and construction (the maximum size is 60 for

R&D, 30 in trade and services, etc.) and requiring that the share of

ownership by entities outside the company (governments, NGOs, other

legal entities) be less than 25 percent. The Russian definition of a

“medium” business is one having 100 to 300 employees. See Leonid

Polishchuk, Small Business in Russia: Institutional Environment,

Publication No. wp240, University of Maryland, College Park: Center

for Institutional Reform and the Informal Sector, 2000; S. A. Smirnov,

Maloye Predprinimatel’stvo: Obshchestvennaya podderzhka I sodeystvie

rasvitiyu, Moscow: TOO KONTUR, 1999, pp. 45, 73; Resursnyy Tsentr

Malogo Predprinimatel’stva (RTMP), Rossiskoye maloye

predprinimatel’stvo v tsifrakh, Moscow: RTMP, 2000, available online

at Docs.rcsme.ru/rus/RC/statistics (hereafter RTMP, 2000a); OECD

Centre for Co-operation with the Economies in Transition (CCET),

Entrepreneurship and Small Business in the Russian Federation, Paris:

OECD CCET/DT(9811), February 20, 1998, section 1.3. In the EU,

SMEs are defined in terms of employment as having less than 250

employees.

4. Polishchuk and Smirnov note the number of SMEs fell to 3.6 per

1000 population in Russia after the 1998 crisis.

5. Controls on private enterprise were loosened somewhat during

the period of Gorbachev’s rule and perestroika. The 1988 Soviet Law on

Cooperatives opened the door for internal spin-offs within state

enterprises, and many entrepreneurs made use of this law to open small

consumer-oriented cooperatives.

6. While official employment figures do not include firms in the

underground economy or firms that under-report to avoid taxes, this

omission is offset by the inclusion of nonperforming and “shell” firms set

up for other reasons, so that some analysts feel the official numbers are

a reasonable reflection of the actual situation. See Polishchuk; and

OECD CCET (1998), esp. section 1.3. Surveys have also recognized the

stalled SME sector. See Theodore Gerber, The Development of

Self-Employment in Russia, Program on New Approaches to Russian

Security, PONARS Memo no. 186, 2001, available online at

www.fas.harvard.edu/~ponars.

7. See OECD CCET, p. 35, on innovative SMEs; and Polishchuk,

section 3.1. Most SMEs in Russia are in the trade sector (43 percent of all

SMEs in 1996), construction (17 percent), and industrial production

(metal working, light industry, wood manufacturing, food industry, 15

percent), while scientific services make up only 6 percent of the total.

226
While innovative businesses are not registered in Russian statistics, it

is estimated that in 1996 some 40,000 firms were involved in creating

new production methods or new technologies, with 4,000 of those

dealing with scientific services.

8. Kommersant, 3/16/00, as cited in Polishchuk, p. 4; OECD CCET,

esp. section 1.5.

9. This section draws on Polishchuk’s excellent survey of SME, as

well as Gonchar; RTMP, 2000a; RTMP, Issledovaniye

administrativnykh bar’yerov, Moscow: RTMP, 2000, September

available online at www.rcsme.ru (hereafter RTMP, 2000b); OECD

Centre for Private Sector Development (OECD CPSD), Forum on

Entrepreneurship and Enterprise Development: Report on Meeting of

Working Party I on Institutional Framework for Entrepreneurship,

Paris: OEDC, March 1998.

10. See analysis in RTMP, 2000b.

11. McKinsey Global Institute, Unlocking Economic Growth in

Russia, chap. 3, “Software” section, and exhibit 13, 1999. Available

online at mgi.mckinsey.com/mgi/russian.asp.

12. O’Prey, p. 20.

13. For example, see discussion in Stanislav Menshikov, “Stsenarii

razvitiya VPK,” Voprosy Ekonomiki, July 1999, on approaches in the

scientific-industrial complex.

14. See N. Tsagolov, presentation at January 20, 1999, conference

on “Obsuzhdeniye problem kommertsializatsii NIOKR,” sponsored by

ECAAR-Russia, on commercialization of R&D (NIOKR); Nonna

Barkhatova, “Russian Small Business, Authorities and the State,”

Europe-Asia Studies, June 2000.

115. See U.S. Government Accounting Office, Nuclear

Nonproliferation: DOE’s Efforts to Assist Weapons Scientists in Russia’s

Nuclear Cities Face Challenges, Washington, DC: GAO-01-429, May

2001, p. 21 and Appendix III.

16. Gonchar, p. 19; Barkhatova; and Polishchuk.

17. This has been particularly problematic in the defense sector, as

enterprises have sought to “convert” only to find too many firms chasing

small market niches. See Yevgeny Kuznetsov, ed., Learning to

Restructure: Studies of Transformation in the Russian Defense Sector,

227
BICC Paper no. 3, Bonn: Bonn International Center for Conversion,

1996, Part I.

18. McKinsey Global Institute, as cited in Gonchar, p. 20.

19. McKinsey Global Institute, p. 6, evaluated how continuing

government subsidies and dominance of well-connected large legacy

enterprises hinder the growth of potentially productive new companies.

20. Judith B. Sedaitis, “Commercializing State-Owned R&D: A

Russia-United States Comparison,” and Andrew J. Aldrin, “Defense

Enterprise Adaptation in St. Petersburg,” in Commercializing High

Technology: East and West, Judith B. Sedaitis, ed., New York: Rowman

& Littlefield Publishers, 1997, cite these factors, suggesting that they

may help account for why Scientific Research Institutes (NII) have been

less open to reorganization and new approaches than Design Bureaus

(KB), and why KBs have been less open to restructuring than Scientific

Production Associations (NPO) and Production Associations (PO).

21. CENTRA project experiences; see also Ross Kerber, “To Russia

With Cash,” Boston Globe, May 7, 2001.

22. For example, see discussion in David M. Bernstein, “Toward

Cooperative Ventures with Russian Defense Enterprises,” in Vlad E.

Genin, ed., The Anatomy of Russian Defense Conversion, Walnut Creek,

CA: VEGA Press 2001, p. 670.

23. For example, see Barkhatova.

24. Valentin Tikhonov, Russia’s Nuclear and Missile Complex: The

Human Factor in Proliferation, Washington, DC: Carnegie Endowment

for International Peace, 2001, pp. 55-57, or online at www.ceip.org/npp.

25. Gonchar, p. 29; Polischchuk; and Leonid Ya Kosals, Rozalina R.

Ryvkina, and Michael D. Intriligator, “Russia’s Defense Enterprises:

Between the State and the Market,” in Vlad E. Genin, ed., The Anatomy

of Russian Defense Conversion, Walnut Creek, CA: VEGA Press, 2001,

argue that privatization has not provided effective new owners.

26. O’Prey, p. 48.

27. Ibid., pp. 61-68, notes the resistance of defense industry

managers to change, and their continuing ability to stifle alternative

developments, as one of the major reasons for the failure of conversion

and reform in the Russian defense sector.

228
28. See comments of Clifford Gaddy and Glenn Schweitzer in Glenn

Schweitzer and Lev Tocheny, “Nuclear Perestroika: Techno-Business in

Russia’s Atomic Cities,” presentation at MIIS Center for

Nonproliferation Studies seminar, February 23, 2001, available online

at ransac.org/new-web-site/ccc/nuclear_perestroika.doc. For example,

VNIITF created the SPEKTR joint stock company for commercial

projects, but recent reports indicate that most VNIITF workers have

been recalled back to the lab because the lab director wanted a larger

defense work force to ensure more Minatom funding. For a presentation

on job creation in the closed cities, see Sharon Weiner and Oleg

Bukharin, “Job Creation Efforts by the Closed Cities,” at RANSAC

Workshop on New Perspectives on the Future of the Russian Nuclear

Weapons Complex, held December 19, 2000, available online at

ransac.org/new-web-site/ccc/dec_workshop.doc.

29. See L. Konareva, presentation at January 20, 1999, conference

titled “Obsuzhdeniye problem kommertsializatsii NIOKR,” sponsored

by ECAAR-Russia, on commercialization of NIOKR.

30. Some examples of such organizations include Leninets Holding

Company, Rubin Marine Design Bureau, Ioffe Robotics NII.

31. Gonchar, 1998, p. 49.

32. Gonchar, 1997; Menshikov, 1999b; Earle & Komarov, p. 12,

citing Glukhikh. See Yu. V. Perevalov, et al., Konversiya I

restrukturizatsiya oboronnogo kompleksa: regional’nyye problemy I

perspektivy, Yekaterinburg: Institut ekonomiki UrO RAN, 1998, p. 5;

Menshikov, 1999b, on size of defense R&D sector.

33. For example, see Gansler, 1997; and Sedaitis, 1997.

34. Gonchar, 1997, has undertaken valuable work to compile official

and unofficial data to help get a better picture of this activity, while

Gansler, 1997, and Aldrin, 1997, have written on the separation of NII,

KB, NPO, etc.

35. O’Prey, pp. 16-21; Kosals, et al., 2001, note the continuing

dominance of large firms in defense sector.

36. Gonchar, p. 49; Harley Balzer, “Dismantling Russia’s

Technotopia: Six Ministries in Search of an Industrial Policy,” in Judith

B. Sedaitis, ed., Commercializing High Technology: East and West, New

York: Rowman & Littlefield Publishers, 1997.

37. Leonid Kosals, “Retsept Vyzhivaniya Oboronnogo Komplksa”

[“A Prescription for Survival of the Defense Complex”], Nezavisimaya

229
Voyennoye Obozreniye, January 28–February 3, 2002, as cited in

Gonchar, p. 49.

38. CENTRA personnel visits; Menshikov, 1999b.

39. For example, see Gonchar, pp. 16ff.

40. Gonchar; Aleksey N. Shulunov, “Symptoms of Paralysis,” in

Vlad E. Genin, ed.,The Anatomy of Russian Defense Conversion, Walnut

Creek, CA: VEGA Press, 2001, p. 345; and others estimate that arms

exports make up about 60-70 percent of all Russian defense industry

military sales. For example, Gonchar, Figure 8, shows that in 1998 arms

exports accounted for up to 84 percent of the military output of the

aerospace sector and 59 percent of the shipbuilding sector.

41. See, for example, the Deputy Prime Mnister Klebanov initiative

as reported in V. Zmeyushchenko and Ye. Titova, “The New Line of the

Defense Industry,” Profil 5/7/01, as cited in Foreign Broadcast

Information Service (FBIS)-CEP20010507000275, 2001; Dmitriy

Safonov, “Military-Industrial Complex Is In for Revolutionary

Upheavals,” Izvestiya, March 29, 2001, in FBIS-CEP 20010329000312,

on defense industry reforms; statements of Directors of the Russian

Armaments Agencies in “The Defense Complex’s Today and Tomorrow,”

Krasnaya Zvezda, December 23, 2000, as cited in FBISCEP20010103000217; and Alan Cullison, “Merger Mania Hits Russian

Economy, and Anti-Monopoly Minister is Smiling,” Wall Street Journal,

June 6, 2001.

42. Author interviews with remote sensing and information

technology specialists who previously worked on classified projects in

Moscow-based institutes, 1999, 2000, and 2001.

43. Tikhonov, Russia’s Nuclear and Missile Complex: The Human

Factor in Proliferation, Washington, DC: Carnegie Endowment for

International Peace, 2001, Section 6, or online at www.ceip.org/npp. It

is estimated that 6 to 10 million people worked in Russia as part of the

Soviet defense industrial sector in the late 1980s, but that by 1994 this

was down to 4.5 million people, falling to 3-4.5 million in 1995, and then

2.7 million in 1997. See Gonchar as cited in O’Prey, p. 45; Menshikov;

Earle and Komarov, p. 12, citing Cooper, Glukhikh, and others;

Shulunov, p. 387. Noting that the number of inventions has fallen

significantly, see Arkadiy Yarovskiy, “Brain Drain: The Loss of

Intellectual Capital,” in Vlad E. Genin, ed., The Anatomy of Russian

Defense Conversion, Walnut Creek, CA: VEGA Press 2001, p. 388.

44. Earle and Komarov, citing official Russian government data.

230
45. Author interviews with Department heads at MFTI, Bauman,

ITMO, and ex-LETI in 1992, 1995, and 1996. See also Gonchar, p. 37.

46. Putin speech of March 21, 2000, in Nizhny Novgorod, Economic

Reform: The Case of Nizhniy Novgorod Oblast, Paper 14, Bonn,

Germany: Bonn International Center for Conversion, May 2000,

available online at www.bicc.de/info/briefs.html.

47. Menshikov, “Stsenarii razvitiya VPK,” Voprosky Ekonomiki,

July 1999.

48. Gonchar, pp. 44-45ff. Within this overall decline, some sectors

stand out as having relatively high continuing military production—in

1999 the shipbuilding sector’s military output was still at 50 percent of

its 1991 level, space was at 41 percent, and military output in the

nuclear and radio industries was at 34 percent of the 1991 level. In

contrast, military output in 1999 was under 15 percent of the 1991 level

in the electronics, communications, and aircraft industries.

49. Gonchar, 2000.

50. Kosals, et al., 2001.

51. For example, see World Bank/UNESCO data as reported in

American Chamber of Commerce in Russia, Whitepaper on Offshore

Software Development in Russia, 2001, pp. 9-12, www.amcham.ru,

which notes continuing high enrollment in science programs and

international recognition that Russian technical students continue to

attract in international competitions, etc.

52. Author interviews with MFTI, St. Petersburg Electrotechnical

University and other directors in 1994-96.

53. For example, interview with ex-Ioffe First Deputy Director

Grigor’yev, 1994.

54. McKinsey Global Institute, 1999, Software chapter.

55. American Chamber of Commerce in Russia; Kerber, 2001.

56. For example, Gonchar, p. 53, points to companies such as

Russkaya Avionica, Kronshtadt, Transas, and others.

57. Numerous studies have reviewed international aid programs,

but find it difficult to quantify results. For example, see OECD CCET,

1998, section 3.6.

231
58. Gonchar, 1998, p. 40.

59. For example, see Gonchar, 2000, p. 44.

60. U.S. General Accounting Office, Biological Weapons: Effort to

Reduce Former Soviet Threat Offers Benefits, Poses New Risks,

Washington, DC: GAO/NSIAD-00-138, April 2000. USGAO, 2001, notes

some of the problems the NCI has encountered in its start-up phase, and

the lack of clear plans or assessment measures to ensure that funded

projects meet program objectives of job creation.

61. Calculated from data published in the ISTC Annual Report, 200,

p. 7.

62. Tikhonov, “The Nuclear Brain Drain Coninues,” Moscow Times,

May 15, 2001.

63. Tikhonov, Russia’s Nuclear Missile Complex, 2001, p. 75.

64. For example, see studies by Bernstein, 2001; Gansler, 1997; and

assessment of USAID New Business Development Program activities,

1993-1997, in International Labour Organization, a report on business

development services in Russia. International Labour Organization,

2000, available online at www.ilo.org/public/english/employment/

ent/papers/russia.htm.

65. See Kerber, 2001; USGAO, 2001, p. 44; McCullough, 2001.

66. USGAO, 2001, p. 16; U.S. Department of Energy (USDOE)

Nuclear Cities Initiative Program Plan, Washington, DC: USDOE

National Nuclear Security Administration, 2000, available online at

nci.nn.doe.gov. Ascribe News 2001, “New York Engineering Software

Firm Signs Contract with Computer Center in Russian Closed Nuclear

City,” March 30, 2001, notes a recent NCI success with the signing of an

$84 thousand contract to provide computer modeling support for a U.S.

company.

67. For example, see USGAO, 2000; USGAO, 2001, for criticism of

IPP; and ISTC, 2000.

68. These ideas have been generated by RANSAC programs, as in

Bukharin, Bunn, Luongo RANSAC report, 2000, and are being pursued

by the Identification Technologies Company based in Snezhinsk that is

getting support from the DOE NCI—this is an example of a high-tech

market niche for Russian SMEs.

232
69. Vadim Radayev, presentation at January 20, 1999, conference

titled “Obsuzhdeniye problem kommertsializatsii NIOKR,” [Discussion

on Problems of Commercializing R&D] sponsored by ECAAR-Russia,

held at the Institute of International Economic and Political Research

(IMEPI), Russian Academy of Sciences.

70. For example, see Gonchar, 1998, chap. 5, surveys from Nizhny

Novgorod Oblast.

71. Radayev, 1999a, reports on OECD-funded study in Tomsk

Oblast. See also Maksim Masharuyev, “Technology Offers

Opportunities in Tomsk Oblast,” BIZNIS Bulletin, March 2001, on

technology opportunities in Tomsk Oblast.

72. Author’s discussions during several visits to Rubin and stays at

their Hotel Neptune in the mid-to-late 1990s.

73. USGAO, 2001.

74. Discussed in Gonchar, 1998.

75. USGAO, 2001.

76. OECD CCET, 1998; and OECD CPSD, 1998.

77. OECD CCET, 1998, chap. 3. Also see Alan Moseley, “The Tomsk

Business Partnership,” in Eurasia Foundation, May, 2001, on Tomsk.

78. Tikhonov, 2001a. See also Michael Eisenstadt, “Russian Arms

and Technology Transfers to Iran: Policy Challenges for the US,” Arms

Control Today, March 2001, for discussion of Russian organizations

allegedly assisting Iran missile program.

79. See USGAO, 2000.

80. OECD CCET, 1998, p. 36, Table 6.

81. Ibid., chap. 3, contains numerous examples of such programs,

but many of them are small, not coordinated, and not focussed on R&D

or projects coming out of the defense sector.

233
CHAPTER 7

APPENDIX

POTENTIAL IMPACTS OF SME EXPANSION

ON PROLIFERATION

At the most basic level, any supply-side strategy to

reduce the proliferation of strategic weapons and

technology from Russia can seek to eliminate Russian

capabilities of concern, or to discourage those in Russia who

possess those capabilities from proliferating them.

Demilitarization leading to the total elimination of

advanced Russian R&D or production capabilities in a

certain military-technical area would eliminate Russia’s

ability to proliferate in that area, but it is not clear that it is

possible or advisable to seek such a total degree of

demilitarization.1 While some military-related assets and

capabilities can be reduced or eliminated within a relatively

short time span, other assets are more durable or easily

reconstituted. For example, military-industrial and R&D

capabilities can decline rather quickly when core teams of

personnel break up, production equipment ages or is put to

other uses, or military scientists and technical personnel

begin working on civilian projects and begin to lose their

cutting-edge skills.2 Nevertheless, some core WMD

knowledge can remain of proliferation concern for decades

even if the specialists are not actively developing or using

the related skills, and it is highly unlikely that Russia will

forfeit or lose its ability to produce advanced strategic

weapons.

Thus, we need to consider what types of activities,

conducted by whom, should be addressed in order to

discourage Russian proliferation of key capabilities or

235
weapons systems abroad. For example, while the

proliferation of operational weapons systems requires that

the Russian government sell weapons from its stockpiles or

that enterprises produce these weapons, the proliferation of

scientific-engineering expertise simply requires individuals

who possess specialized knowledge and are willing to

provide it to foreign customers. While a full explication of all

the factors that can encourage proliferation behavior by

Russian state bodies, enterprises, groups, and individuals is

beyond the scope of this chapter, it is important to identify

these domestic factors in order to consider how an

expansion of Russian entrepreneurial activities may affect

them.

At the central government level, Russian proliferation

activities are encouraged by such factors as the pursuit of

strategic national interests, hard currency earnings, and

alliance relations. At the ministry or enterprise level,

weapons proliferation may allow organizations to maintain

core production capabilities or skills, earn higher profit

margins than in alternative activities, avoid restructuring

or retooling, retain influence, pursue parochial interests,

and take advantage of existing marketing capabilities. At

the individual level, weapons proliferation can enable

military-industrial directors, staff, and scientists to

continue activities they know and like, earn money, avoid

the need to seek new employment, retain influence, and

follow belief systems. The motivating factors above are not

independent of each other—some are interrelated—but

they are distinct enough to be treated as separate drivers of

proliferation activity. Many of these powerful domestic

factors can act to encourage continued Russian proliferation

activities even in the face of international opposition,

control regimes, or significant demilitarization at home.

How could expanded entrepreneurial activity affect the

factors that encourage proliferation behavior by the

Russian government, enterprises, or scientists and other

individuals? A summary of these influences, with each

rated from minimal to significant, is shown in Table A-1. At

236
the state level, Russia’s perception and pursuit of its

national interests or alliance relations are unlikely to be

affected by an expansion in SME entrepreneurial activities.

It is conceivable that a major expansion of the SME sector in

Russia could shift the sources of influence in the Russian

political system, give new actors a greater voice, and lead to

a revision in how the Russian government perceives its

national interest, thereby reducing the attractiveness of

weapons proliferation for Russian policymakers, but these

eventualities must be considered highly unlikely. Thus, an

expanded SME sector would have insignificant impact on

these factors that promote proliferation. Similarly, the

government’s incentive to export arms in order to earn hard

237

Table A-1. Potential Impacts of SME Expansion.

Level Factors Encouraging Proliferation Potential Impacts of

Expanded SME

Sector

Government Leaders view arms sales as being in the

national interest and a tool to support

alliance relations

Minimal

Leaders view arms sales as an effective

way to earn hard currency

Minimal

Government seeks to put excess military

industrial and technical capacity to use

Moderate

Ministry/

Enterprise

Organizations seek to maintain core

military-related production capabilities

and skills.

Minimal

Traditional military-industrial views and

organizations are influential within the

government

Moderate

Organizations view arms sales as a good

way to increase revenues and profits,

provide employment for personnel,

maintain influence, and avoid need to

convert or restructure.

Moderate

Access to foreign arms markets is aided by

active and experienced marketing

organizations.

Moderate

Individual Workers have ideological beliefs about

supporting recipient governments or

nonstate groups

Minimal

Workers enjoy and feel competent in

military work.

Moderate

Workers view military work as best way to

earn money, remain employed, and retain

social position.

Significant
currency will not be directly affected by an expansion in

entrepreneurial activities, unless this expansion leads the

Russian government to be more concerned than it would be

otherwise about Western sanctions in response to Russian

proliferation activities. Potentially the largest impact that

expanded entrepreneurial activities might have on

proliferation drivers at the government level would be if the

expansion of SME activities reduced the need to find

alternative uses for excess military-industrial and

technological capacities. In this way, expanded SME

activities could moderately reduce incentives for the

Russian government to proliferate for this reason.

At the ministry or enterprise level, an expansion in

entrepreneurial activities can have somewhat greater

impacts because it would directly address some of the key

factors that encourage proliferation by actors at this level.

For example, a robust SME sector could reduce the

influence of the traditional military-industrial complex, and

thus reduce the ability of these ministries or enterprises to

successfully advocate foreign arms sales. Similarly,

expanded entrepreneurial activities could provide

alternative sources of employment and profits for

enterprises, but are likely to reduce the attractiveness of

arms sales in this regard only if the large organizations

believe they can remain influential and in control as SME

activities increase. An active SME sector could also develop

better access to critical foreign markets, thus providing

alternative market access to that provided by

Rosoboroneksport. Nevertheless, it is hard to envision how

an expansion in SME activities would reduce the incentives

for industrial ministries or their production enterprises to

export weapons abroad in order to maintain core military

production capabilities and skills or to retain their

influence.

In terms of individual scientists and other personnel, an

expanded SME sector could have major impacts in reducing

the importance of proliferation drivers that act at this level.

A flourishing SME sector could provide alternative sources

238
of employment, salaries, and social influence to reduce

individuals’ reliance on military-related work supported by

foreign arms sales revenues. While some job positions in the

SME sector can provide interesting and challenging work

for technical personnel, this may have only a moderate

impact on reducing the attractiveness of military-related

work because many SME positions in Russia are likely to be

in lower-tech sectors or involve work that individuals find

less intellectually interesting than their previous work in

defense R&D. Finally, at this level it is unlikely that SME

activities will reduce the role of ideological beliefs in

promoting arms sales, but this is probably a rather minor

driver of proliferation activity.

Thus, as indicated in this overview, it is likely that an

expansion in Russia’s SME sector can play a role in reducing

proliferation activity in Russia, but there are also

significant factors encouraging proliferation that would not

be affected by an expanded SME sector.

ENDNOTES - APPENDIX

1. Many Russian analysts and officials are concerned that Russia’s

military-technical capabilities are declining to such low levels that they

may fail to support Russia’s stability and basic national interests. For

example, Tikhonov, 2001a, argues that the lack of skilled technical

personnel and industrial capacity in the nuclear weapons and power

sector may threaten Russia’s ability to safely manage its nuclear

weapons stockpiles or nuclear power industry.

2. Personnel who shift to work on civilian projects often lose their

technical qualifications because the civilian work is less advanced than

the military work. For example, Russian military-industry directors

have noted in interviews that work to design, weld, and produce civilian

tankers is simpler and less demanding than the work involved in

producing submarines.

239
CHAPTER 8

TURNING THE NEXT GENERATION

OF RUSSIAN WORKERS AWAY

FROM WEAPONS WORK

Thomas Riisager

Since the early 1990s, U.S.-Russian cooperative

nonproliferation programs have been bent upon reducing

the size of Russia’s nuclear complex by finding alternative

employment for tens of thousands of workers currently

employed as weapons specialists. These programs are

helping demilitarize Russia but will fail to achieve their

stated goal so long as future generations of scientifically

talented Russians are more attracted to working in the

defense complex than in the private sector. The forces that

push younger Russians towards state employment, after

all, are the same forces that make it practically impossible

for older generations—the focus of Nunn-Lugar

programs—to transition out of weapon work.

Certainly, channeling Russian youth away from

employment in these facilities is worth pursuing now.1 Over

a third of Russian university students recently surveyed

would consider working at a nuclear industry enterprise in

a closed city. More troubling still, over 60 percent of the best

students would actually prefer to work at a state

enterprise.2

In this chapter, I examine four principal obstacles to

attracting these younger workers to the private sector. The

first is the prevalence of corruption in Russia, which

241
increases the costs of starting and maintaining businesses,

and discourages the foreign investment enterprises need.

The second is that Russians still lack an entrepreneurial

work ethic, which is caused in part by the third obstacle, an

overbearing management style prevalent in Russia.

Finally, Russia’s current laws and institutions hinder

attracting young workers to the private sector because,

instead of fostering economic growth, they have up until

recently been totally at war with private business.

Although serious, these problems can be overcome. In

fact, multinational corporations with business concerns in

Russia have developed several successful methods of

training their Russian employees to work within Western

business norms. These corporations discovered that their

younger local hires, when exposed to a Western work

culture, are less inclined to cheat or steal, eagerly seek out

responsibility, and have developed a more sophisticated

view of modern business. They found that Russians over 35

years of age, however, do not adapt as readily and require

special management. These corporations’ experience

suggests a number of specific recommendations for how to

reform future nonproliferation programs, including

increased emphasis on business and academic exchanges

with the United States and Europe, and legislative changes

the Russian government can make to ease the burden on

small and medium sized enterprises.

Corruption Cripples Russia’s Private Sector.

The prevalence of corruption is arguably the biggest

obstacle to entrepreneurial development in Russia. Paying

for Mafia protection and bribing corrupt officials greatly

increase the costs of starting and maintaining even the

smallest enterprise. On a larger scale, crime in Russian

business contributes to negative stereotypes about Russian

workers and discourages foreign investment needed to

expand the private sector.

242
The propensity towards corruption has historically been

high in Russian culture and is generally an accepted part of

life. Its prevalence has been attributed to both the state’s

inability to enforce laws and the average Russian citizen’s

desperation for survival.3 Corruption in Russia can be

traced to the Czarist era when peasants were largely left to

police themselves through a form of lynch law known as

samosud, or self-judging. In samosud, actions that

threatened the security or the social order in the community

were punished very severely.4 On the other hand, crimes

against outsiders or the Crown, for example, tax dodging,

were accepted, as they had no immediate negative impact

on the community. The state disliked the idea of peasants

policing themselves, but it lacked the legitimacy and

resources to enforce laws across such a vast country.5

Meanwhile, within the state’s own organs, low-paid civil

servants were actually expected to supplement their

incomes by kormlenie, or feeding off of their jobs, whether by

accepting bribes, running private businesses on the side, or

appropriating state assets.6 Thus developed a culture of

acceptable criminality.

Instead of putting an end to this corruption, the

Revolution of 1917 only broadened its scope. The

Communist Party relied on criminal groups to bypass

bottlenecks and shortages in the hopes of meeting

production demands. Soviet citizens, too, were forced to

turn to crime in order to survive, whether by selling goods on

the black market or stealing goods from the state.7

Given Russia’s past, it is not surprising that what is

considered corrupt by Western standards is business as

usual in that country. For example, there is a nearly

universal practice in Russian businesses to maintain two

sets of financial books: the first set contains accurate

account records for in-house use only; the second set of

numbers reflects a much lower profit margin for the benefit

of tax reporting. The rationale is a throwback to samosud,

where evading taxes, though illegal, was not “wrong.”

Among Russian businessmen, this practice is not only

243
acceptable, it is expected. Accountancy staff that process

these records are usually aware of the illegality, but seldom

question the morality of doctoring the books, much less the

long-term negative impact.

Corruption’s effect on business in Russia is very serious.

Daily business practices lack the required transparency to

attract investors. In the 21st century, a potential investor

expects a company’s financial records to present a fair and

accurate picture of the enterprise’s financial status and

market competitiveness. Since the decision to invest in a

company is largely based on these reports, opacity or lack of

confidence in their legitimacy will adversely affect that

decision.

PricewaterhouseCoopers estimates that Russia loses

about $10 billion in direct foreign investments a year due to

its high opacity index.8 Arthur Haigh, PricewaterhouseCooper’s managing partner, said in an interview with

Kommersant Daily that Russia’s integration into the world

economy and the attraction of much needed investment may

accelerate, but only if the management of Russian

companies begins to practice the principles of good

corporate governance.9

Corruption is prevalent at all levels of business. A recent

example at an international accountancy firm in Moscow

illustrates this point. To be certified, an accountant must

pass a series of rigorous exams. If an accountant fails, he or

she will most likely be dismissed from the firm. During a

recent exam, one of the examinees was found to be cheating

and was confronted with the evidence by his superiors.

Neither embarrassed nor disturbed by the accusation, he

admitted to the cheating, and expressed surprise only when

he learned that he was being fired as a result. The

employee’s reaction concerned the expatriate staff, which

promptly arranged interviews with the other trainee

accountants about the incident. The interviews showed that

the locally hired staff viewed cheating on tests as acceptable

behavior and felt that being fired for it was overly severe.10

244
Getting caught cheating was simply a matter of not

cheating well enough.

Such stories are rampant among companies with

business concerns in Russia, further strengthening the

negative stereotype of Russians as untrustworthy

employees and business partners. Although this anecdotal

evidence seems to prove otherwise, the problem is not based

on an inherent lack of honesty or integrity by Russians, but

is simply a matter of differing cultural definitions of what is

acceptable. History and necessity have created a quite

different set of norms for Westerners as compared with

Russians, but until Russian work culture adopts the

business norms of the industrialized Western nations, this

stereotype will continue to pose an obstacle to Russia’s

proper integration into the world economy.11

The Russian Work Ethic’s Traditional Lack

of Entrepreneurialism.

The Russian work ethic evolved in a command economy,

not a developed free market system, and the Russian

worker has had little time to adapt to the end of

communism.12 The employee’s place in the Russian work

culture and the role of the employer, therefore, are viewed

differently than in the West. A reasonable employment

situation by Western standards, in terms of job security and

benefits, would not meet the expectations of a Russian

accustomed to the labor process of the Soviet planned

economy.

For over 70 years, the Soviet citizen could count on a

minimal, but secure, standard of living. Health care and

education were provided free of charge by the state, and

every citizen was guaranteed employment.13 According to

Soviet law, it was, in fact, a crime not to be employed.14 Full

employment in the Soviet system allowed the government

to pass social welfare responsibilities to individual

enterprises, which provided housing, food, daycare, and

other benefits. The monetary portion of income was far less

245
important to the survival of the employees than these

subsidies, since low wages were offset by price controls that

made the necessities of life available to the majority of the

population at prices they could afford.15

In this system, after completing a state-sponsored

education, a citizen would be placed in a position chosen on

the basis of current labor needs and his or her skills. Once

employed, the citizen could count on having that job

indefinitely. If a worker found himself or herself

“unemployed,” his or her last employer (and not the state)

would be responsible for paying any unemployment benefit.

Changing enterprises was virtually a risk-free venture for

the worker; he or she would be able to move on to a different

company after completing the mandatory service term.

Separate enterprises were, after all, only different faces of

the same entity—the state.16

Although the socialist system collapsed in 1991, its effect

on the Russian work culture persists. Russian workers still

expect their employer to provide meals, transportation,

housing, and daycare. Despite the enormous costs involved,

many enterprises continue to do so. Under the Soviet

system, the employer was not an equal and independent

member in a negotiated labor contract, but an integral and

permanent part of the worker’s life. Employment itself was

more than just a right; it was one’s obligation and umbilical

cord to the state.

All Russian citizens felt the impact of the Soviet system’s

collapse. However, for the tens of thousands of weapon

specialists in closed cities around Russia, the system has

actually changed very little. Their employer is still the

state, and the most important part of their remuneration is

not the wage, but the social benefits, most notably housing.

Underpaid and underemployed as a result of Soviet-like

labor hoarding by the institutes, these individuals lead lives

not radically different from those experienced during the

Soviet years.

246
This minimal but secure standard of living must be oddly

comforting to those who know no other economic system.

Confined to the defense industrial complex, the weapon

specialists are still guaranteed housing and a stable income.

Furthermore, many believe that in time there will be future

contracts that will reinvigorate the institutes. Moonlighting

in an evening job or accepting grants from Western

nonproliferation programs serves as an additional financial

cushion that further discourages them from leaving the

defense sector.17 If a weapon specialist leaves the institutes,

he loses not only his housing and financial security, but also

his professional identity.

Under these circumstances, employment in the defense

sector is considered more stable and secure than in the

private sector. Unless Russian work attitudes and

behaviors adjust to a market economy and there is a clear

incentive, Russians, old and young alike, will not view

employment in the private sector as a desirable alternative.

Top-Heavy Russian Management Style.

The typical management structure in Russia is

top-heavy, inflexible, and inefficient. Not only does this

adversely affect the profitability of the enterprise, it creates

an environment unconducive to the development of

employees’ entrepreneurial skills. Enterprises in Russia

tend to be centered on a dominant individual instead of a

board of directors or an abstract concept such as a mission

statement. A general manager tends to be highly involved in

every aspect of the enterprise’s activity. Authority and

responsibility are rarely delegated to the members of the

management team, who have little opportunity to exercise

or develop leadership or decisionmaking skills. Nor do they

seek out extra responsibility. Because the general manager

micromanages all daily operations, he has little time to

strategize or develop other business opportunities.18

According to Andrew Cranston, a partner at KPMG

Moscow,19

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The lack of responsibility and autonomous management

structure creates a very inefficient situation; workers are afraid

to take decisions and a general manager’s time is wasted on

details. It is the rule rather than the exception to see queues of

workers, including mid-level and higher-level managers,

waiting hours in front of the executive director’s door to ask even

the most trivial questions.

Management consultants report that the majority of

their Russian clients suffer from gross inefficiency due to a

weak mid-level management structure, and often advise

their clients to adopt the Western model of organizational

management.

The top-down directive style carefully spells out the

employee’s duties and leaves little room for individual

initiative. Lack of a mission statement or clear concept of

what the company is trying to achieve often leaves the

worker without direction or incentive to make additional

efforts. Even with this direction, the average Russian

employee could not count on any additional rewards for his

efforts. In such a system, there is little reason for workers to

assume ownership of their job or any initiative at all.20

The belief that one can better one’s situation through

dedication and hard work, and that the reward received will

be proportional to the amount of effort expended, is deeply

ingrained in the Western work ethic. Workers in

industrialized countries, in this sense, are basically

entrepreneurs who sell their skills and services by contract

to the highest bidder and constantly look to move up either

within their current enterprise or with another employer.

The concept that one can better one’s position through hard

work and dedication is stunted in Russian enterprises by

the top-heavy management style along with a lack of basic

entrepreneurial skills, initiative, self-motivation, and the

ability to see the broader picture.

248
Russia’s Past Laws at War with Private Business.

Until recently with passage of new laws, Russia’s

outdated labor code discouraged enterprises in Russia from

creating more jobs and preserved rigidity in the labor

market by imposing on the employer Soviet-era obligations

that dramatically increased labor costs.21 For example,

Russian workers were ensured a minimum of 4 weeks of

annual paid leave in addition to the ten national holidays,

plus unlimited paid sick leave at a rate of 60-100 percent of

salary.22 Heavy compensation for overtime was also

stipulated by the code.23 Maternity leave in Russia was very

liberal compared to that in most Western countries,

providing as long as 3 years per child. These statutory

requirements often crippled small- and medium-sized

businesses.

The dismissal process favored the employee to the

detriment of the enterprise. Under the old labor code,

terminating employment was a very difficult and complex

process for the employer.24 Most companies found it

necessary to seek costly legal consultation before

undertaking action due to the detailed requirements.

Further contributing to the risk faced by employers in the

hiring process, trial periods could not exceed 3 months and

in some cases were forbidden completely.25 An enterprise in

Russia was therefore reluctant to create new jobs due to the

possible costs and difficulties in dismissing non-performers.

The Russian tax rules were also complex and confusing,

laying a heavy burden on small- and medium-sized

enterprises. As a result, these enterprises either evaded

paying taxes or delayed paying as long as possible.26 Tax

collection, already inadequate, was further degraded by

opacity in the private sector, as discussed previously. This

reduced revenue in turn adversely affected the Russian

government’s ability to develop adequate social safety nets,

sinces the system was funded by the payroll tax.

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Throughout 2001, President Vladimir Putin and the

Duma addressed many of these problems through

significant economic reforms, including changes to Russia’s

social security and tax regulations.27 In addition, on

December 31, 200l, Putin signed a new, improved labor code

into law.

The extent to which these reforms will be implemented

and enforced remains to be seen. Employers may take

advantage of eased restrictions on dismissing staff, but will

they be eager to report all their earnings to the tax

collectors? More important, the Russian worker, as we have

seen, is not used to a labor market in which an employee’s

value is based on performance. Will the workers accept the

new conditions, or will they seek out organizations that still

provide Soviet-era privileges—for instance,

state-sponsored military and nuclear industries?

A final concern is Russia’s continued lack of consistent

and fair enforcement of the legal protections. This

deficiency affects every aspect of Russian society and

creates considerable problems for business. Many potential

investors have an understandable lack of confidence in the

Russian judiciary system’s ability protect their interests.

Also, the laws that would protect property rights are either

nonexistent or very complex, and in any case unfavorable to

foreign ownership.

Practical Experience Points to Elements

of a Solution.

When looking for ways to overcome the obstacles caused

by Russian nonentrepreneurial work culture, one will find

the experience of multinational corporations useful. These

organizations have been doing business in Russia and

employing Russians since well before the collapse of the

Soviet Union. Competitive modern corporations cannot

afford the inefficiency and inflexibility inherent in Russian

enterprises, nor are they willing to tolerate corruption. At

the same time, they rely heavily on locally hired staff. As a

250
result, they have devised several methods of addressing

these concerns.

Multinational corporations have acknowledged that, in

addition to the cultural differences, there are also

generational differences among Russian workers, so that

management style must be adapted to each generation

accordingly. The first generation of Russian workers is

composed of individuals over the age of 35, commonly

referred to as the “Soviet generation,” i.e., those

acculturated to Soviet labor process. The Soviet generation

shows great difficulty in adapting to the new working

environment. Accustomed to a top-heavy management

style, they require strong leadership and close supervision.

But with clear-cut direction and explanation of what is

expected of them, they have proven to be very hard workers

within the scope of their duty description. Initiative, too,

never seems to develop to a significant degree in this age

group. Multinational corporations have found that this

generation never truly feels comfortable with

decisionmaking and tends to defer all but the most trivial

decisions to management.28 Unlike most indigenous

Russian enterprises, multinational corporations with

prestigious names and high salaries can attract top

candidates and usually pass over members of the Soviet

generation in favor of younger Russians.29

Younger Russian workers are generally much more

adaptable than their “Soviet” counterparts, although their

cultural background still plays an important role in the way

they work.30 Multinational corporations maintain a high

percentage of expatriate staff to act as mentors to the local

staff. These Western mentors not only help their Russian

colleagues to learn their trade, but also expose them to the

standards of a different work ethic. Often-times, this

exposure is all that is required for the local hire to adapt

successfully. The local hires remain uniquely Russian in

regards to work culture, but learn to adopt critical elements

of the Western culture that increase their entrepreneurial

skills.

251
A similar approach is to send the Russian employee on

assignment to a branch of the company in a Western

country for periods of up to a year. Besides immersion in the

Western work culture, this tactic has the added benefit of

increasing the employee’s foreign language skills.

These simple approaches have been successful in

producing employees who see the big picture and

demonstrate initiative and decisionmaking skills.

Multinational corporations found that once these cultural

issues have been addressed, the positive aspects of the

Russian work culture can be put to use to a greater extent.

These aspects, coupled with their excellent tradition of

education, can make Russians valuable employees.31

Where Do We Go from Here?

Although the U.S. Government can immediately

improve the effectiveness of its cooperative threat reduction

programs by focusing on younger Russians, in the long run

the best way to assure Russian demilitarization and

nonproliferation is for the Russians themselves to get

serious about creating a strong globally integrated market

economy. To do this, the Russian government must finish

creating a coherent legal framework in which business can

prosper and ensure that future generations of Russians are

adequately prepared to do business—Western style.

Specifically,

• U.S.-Russian nonproliferation programs must

focus less on the existing cohort of weapons

specialists and more on prospective weapons

workers. Towards this end, more research needs to be

conducted to answer several questions. Who is most likely to

consider work in the military and nuclear complexes more

attractive than in the private sector? How large are future

cohorts of weapons specialists likely to be? What factors do

individuals consider when deciding which career field is

more attractive? What alternatives exist that fulfill their

252
expectations? What kind of programs would encourage

them to choose careers in the private sector?

• Business and academic mentorship program

opportunities involving training in Western

countries need to be offered to Russian scientists and

engineers under the age of 35. In these programs,

specific Russians should be matched to individuals from the

West on the basis of academic or business compatibilities.

The Westerners would act as mentors whose advice could be

sought at any time, not just during a series of visits lasting 6

months to a year. The mentors themselves would need to be

from the private sector. The program would have two

phases—calibrated to the age and professional development

of the Russian enrolled, as follows:

 Academic Phase. Russian science and

engineering university students should train for a year in

the country of their mentor. It is important to the success of

this project that the hosting university accepts only a small

number of Russians involved in the program at any one

time. These students would be encouraged to work

part-time to begin exposure to the Western work ethic.

 Business Phase. Russians under 35 and those

who have already completed their studies should be

matched up with professionals of similar background

currently working with private Western companies. The

program would start with either a 6-month or year-long

paid working placement with the mentor’s company. The

placement would not only expose Russians to the Western

work ethic, but also allow them to see firsthand how their

own skills can be applied to the commercial market. Several

short visits would be scheduled on a regular basis to

maintain the contacts and maximize exposure.

• The Russian government must create a

business-friendly environment. Current legislation

must be simplified and reflect the requirements of a market

economy. Property ownership laws must be clear and

253
defended equally under Russian law. The tax system must

be simplified, and the burden on small and medium sized

enterprises lightened. Finally, the new labor code must be

enforced to ensure that rules of dismissal are made more

lenient for the employer.

The Potential for Change.

Taking these steps will not be easy for Russia, but there

are historical precedents indicating that cultural exchanges

with the West can have a tremendously beneficial impact.

In the 17th century, Russia was isolated from Western

Europe and struggling through a period of stagnation. Peter

the Great realized that, for Russians to pull themselves into

the modern world, they needed to orient towards the West.

Military and business practices were drawn on from

Sweden, Prussia, and the Netherlands. Russians were sent

out to learn Western skills, which they did without

abandoning their own traditions or customs. The process of

Westernization not only pulled Russia out of obscurity, but

also ushered in Russia’s Golden Age.3 2 Through

reexamining current U.S.-Russian nonproliferation efforts

and maximizing cross-cultural exchanges, over the next 2

decades there is good reason to hope that the following

improvements can be achieved:

• A greater percentage of younger Russians, now armed

with the skills to succeed, will chose to work in private

business over the public sector.

• Of the existing cohort, 75 percent will have left

Russia’s military and nuclear complex though natural

attrition, and their numbers will not be replaced.

• The anti-American sentiment in Russia will decrease,

which will help avoid or resolve future conflicts.

• There will be an increased cause for foreign

investment, which will strengthen the Russian economy

254
without the state becoming more of a threat to global

security.

ENDNOTES - CHAPTER 8

1. In fact, individuals who have been acculturated to the Soviet labor

process have a very difficult time transitioning to a market economy,

and have little chance of becoming successful businessmen. Those who

have the skills and motivation to do so, already have, regardless of any

government program. In any case, within the next 2 decades over 75

percent of these weapons specialists will be past the age of retirement.

Valentin A. Tikhonov, Russia’s Nuclear and Missile Complex,

Washington, DC: Carnegie Endowment For International Peace, 2001,

p. 73.

2. Ibid., p. 74.

3. Mark Galeotti, “Crime, Corruption and the Law,” in Russia after

the Cold War, eds., Mike Bowker and Cameron Ross, Harlow, England:

Pearson Education Limited, 2000, p. 137.

4. Lesser offenses resulted in fines paid to the village elder, often in

the form of vodka.

5. C. Feirson, “Crime and Punishment in the Russian Village,”

Slavic Review, Vol.46, No.1, 1987, pp. 55-69.

6. W. Clark, Crime and Punishment in Soviet Officialdom, London

and New York: Armonk, 1993, pp. 31-35.

7. Leonid Brezhnev, while Soviet premier, was reported to have

said, “No one lives on wages alone. I remember in my youth we earned

money by unloading freight cars. So, what did we do? Three crates or

bags unloaded and one for ourselves. That is how everybody lives . . .”

8. In PricewaterhouseCoopers’ opacity index report released in

April 2001, Russia was next to last of 35 countries reviewed. Only China

has more negative factors for doing Western-style business.

9. Arthur Haigh, interview in Kommersant-Daily, January 26, 2001.

See http://www.pwcglobal.com/ru/eng/ins-sol/issues/01-02-26_ah.

html.

10. During subsequent interviews, the management made it clear

what standards the employees needed to abide by. Since then, they have

had no further incidence of cheating.

255
11. Haigh.

12. Alastair McAuley, “Social Policy and the Labor Market in Russia

During Transition,” in Joan M. Nelson, Charles Tilley, and Lee Walker,

eds., Washington, DC: National Academy Press, 1998, p. 223. See

http://www.nap.edu/html/transform/contents.htm.

13. Ibid.

14. This remained law in the Russian Federation until 1991.

Ekonomika i zhizn’, No.22, 1991.

15. McAuley.

16. Ibid.

17. Matthew Partan, “Defense Conversion: How Far Can Russia

Expand Small and Medium Enterprises?” Chapter 7; and Mark

Kramer, “Demilitarizing Russian Weapons Scientists: The Challenge”

Chapter 6; both in the present volume.

18. Andrew Cranston, Partner, KPMG Moscow, interview by

author, March 2001.

19. KPMG Moscow provides accounting and management

consultancy services to all sizes of Western and Russian-owned

enterprises across Russia. This exposure gives it a unique perspective of

the actual business climate in Russia.

20. Paddy Wright, Human Resources partner, KPMG Moscow,

interview by author, March 2001.

21. Russia’s previous labor code hadn’t changed much since 1971

and was actually only a slightly modified version of the Soviet labor

code.

22. Price Waterhouse, Doing Business in the Russian Federation,

New York: Price Waterhouse World Firm Services BV, 1997.

23. Ibid. The workweek is set at 40 hours over a 5- or 6-day week,

and the legislation is also specific about permitted working hours.

24. Ibid.

25. For employees under the age of 18 and for recent graduates of

universities, institutes, and vocational training institutions.

256
26. James Leitzel, “Rule Evasion in Transitional Russia,” in Joan M.

Nelson, Charles Tilley, and Lee Walker, eds., Washington, DC: National

Academy Press, 1998, p. 118.

27. Andrew Jack, “Moscow Ushers in Reform of Labour Law,”

Financial Times, London, January 5, 2002.

28. Cranston.

29. Ibid.

30. Wright.

31. Ibid.

32. Geoffrey Hosking, Russia: People and Empire, 1552-1917,

London: HarperCollins, 1997, pp. 75-120.

257
ABOUT THE CONTRIBUTORS

STEPHEN J. BLANK has been Research Professor of

National Security Affairs at the Strategic Studies Institute

of the U.S. Army War College since 1989. Prior to this

appointment, Dr. Blank was Associate Professor for Soviet

Studies at the Center for Aerospace Doctrine, Research, and

Education of Air University at Maxwell AFB. He earned his

M.A. and Ph.D. in Russian history from the University of

Chicago. Dr. Blank has published over 170 articles on

Soviet/Russian military and foreign policies. His most

recent book is Imperial Decline: Russia’s Changing Role in

Asia (1997), which he coedited with Professor Alvin

Rubinstein of the University of Pennsylvania. Dr. Blank is

also the author of a study on the Soviet Commissariat of

Nationalities, The Sorcerer as Apprentice: Stalin’s

Commissariat of Nationalities (1994), and coeditor of The

Soviet Military and the Future (1992).

THOMAS B. COCHRAN is Senior Scientist with the

Natural Resource Defense Counsel (NRDC), and Director of

the NRDC’s Nuclear Program. He initiated NRDC’s

Nuclear Weapons Databook Project and a series of joint

nuclear weapons verification projects with the Soviet

Academy of Sciences, including the Nuclear Test Ban

Verification Project and the Black Sea Experiment. Dr.

Cochran wrote The Liquid Metal Fast Breeder Reactor: An

Environmental and Economic Critique (1974), and was

coeditor/author of the Nuclear Weapons Databook, Volume

I: U.S. Nuclear Forces and Capabilities (1984); Volume II:

U.S. Nuclear Warhead Production (1987); Volume III: U.S.

Nuclear Warhead Facility Profiles (1987); Volume IV: Soviet

Nuclear Weapons (1989); and Making the Russian Bomb:

From Stalin to Yeltsin (1995). He has also published

numerous articles and working papers, including those in

SIPRI Yearbook chapters, Arms Control Today, and The

Bulletin of the Atomic Scientists. He was Assistant

259
Professor of Physics at the Naval Postgraduate School from

1967 to 1969, Modeling and Simulation Group Supervisor of

the Litton Mellonics Division, Scientific Support

Laboratory, from 1969 to 1971, and Senior Research

Associate at Resources for the Future from 1971 to 1973. Dr.

Cochran received his Ph.D. in physics from Vanderbilt

University.

ARIEL COHEN is a well-known area expert on Russia, the

New Independent States (NIS), and Central and Eastern

Europe. He is currently the Research Fellow in Russian and

Eurasian Studies at the Heritage Foundation and manages

a policy research program on Russia, NIS, and Central

Europe. Dr. Cohen has expertise on energy politics in the

Middle East and the Caspian Sea region, rule of law, legal

reform, international organized crime and corruption,

democracy development, and public diplomacy. He

frequently testifies before Congressional committees and

appears regularly on CNN, NBC, Fox, and BBC-TV. He

serves as a commentator for United Press International and

Voice of America weekly TV and radio shows, and writes as

a guest columnist for the Washington Post, USA Today,

Wall Street Journal, Journal of Commerce, Investor’s

Business Daily, and Washington Times. Dr. Cohen authored

Russian Imperialism: Development and Crisis (1996). He

has served as an adjunct faculty member at Georgetown

University and at several West Coast universities.

MURRAY FESHBACH is a Research Professor of

Demography and a faculty member of Georgetown

University’s Center for Russian, Eurasian, and East

European Studies Program (CEREES). He is author of

Ecocide in the USSR and Ecological Disaster and the

editor-in-chief of The Environmental and Health Atlas of

Russia. Dr. Feshbach served as Chief of the USSR

Population, Employment, and Research and Development

Branch of the Foreign Demographic Analysis Division (now

the Center for International Research) of the U.S. Bureau of

the Census. He was a Fellow at the Kennan Institute of the

Woodrow Wilson International Center for Scholars. In

260
addition, upon the State Department’s request he served as

the first Sovietologist-in-Residence in the Office of the

Secretary General of NATO, Lord Carrington, in Brussels,

Belgium, from 1986 to 1987. Dr. Feshbach received his A.B

in history from Syracuse University, an M.A. in history from

Columbia University, and a Ph.D. in economics from

American University.

MARK KRAMER is the Director of the Harvard Project on

Cold War Studies and a Senior Associate at the Davis

Center for Russian Studies at Harvard University. He has

taught at Harvard, Yale, and Brown Universities and was

formerly an Academy Scholar in Harvard’s Academy of

International and Area Studies and a Rhodes Scholar at

Oxford University. He has worked extensively in newly

opened archives in Russia, Germany, Poland, the Czech

Republic, Slovakia, Hungary, Bulgaria, Ukraine,

Lithuania, Latvia, and several Western countries. He wrote

Crisis in Czechoslovakia, 1968: The Prague Spring and the

Soviet Invasion and is completing books titled From

Dominance to Hegemony to Collapse: Soviet Policy in

East-Central Europe, 1945-1991 and Soldier and State in

Poland: Civil-Military Relations and Institutional Change

After Communism. He also has edited The Collapse of the

Soviet Union and was the American editor and translator of

The Black Book of Communism. He has written more than

100 articles on a variety of issues, including the Soviet and

post-Soviet armed forces, the structures of Soviet and

post-Soviet foreign policymaking, nuclear proliferation,

post-Communist economic reform in East-Central Europe,

social policy in East-Central Europe, civil-military relations

in East-Central Europe, and the global arms trade.

MATTHEW A. PARTAN is a Senior Research Analyst at

CENTRA Technology, Inc., with over 15 years of experience

as a specialist in Russian studies, nonproliferation, and

national security policy analysis. Dr. Partan manages

CENTRA’s ongoing work addressing threats posed by the

potential smuggling of nuclear weapons or materials from

the former Soviet Union. He oversaw CENTRA’s

261
cooperative research program with Russian scientists that

was conducted under the auspices of the Department of

Energy Initiatives for Proliferation Prevention

(IPP)/United States Industry Coalition (USIC) program.

Dr. Partan has written company reports assessing issues

related to the proliferation of advanced conventional

weapons from Russia and other former Soviet states,

regional security dynamics in Eurasia, and the status of

Russian defense industry, and has published materials on

issues related to military reform, industry, and strategy in

the former Soviet Union. Prior to joining CENTRA, he was a

John M. Olin Fellow at the Center for International Affairs,

Harvard University, and a Research Assistant at the MIT

Defense and Arms Control Program. Dr. Partan has a Ph.D.

in political science from MIT and a B.S. in physics from

Harvard University.

THOMAS RIISAGER is the Albert Wohlstetter Fellow of

Russian Studies at the Nonproliferation Policy Education

Center. Before joining NPEC, Mr. Riisager worked for

Michael Page International, an accountancy recruitment

firm based in London, as a consultant to multinational

corporations and Russian businesses operating in the

former Soviet Union. He served in the U.S. Army Military

Intelligence Corps as a Soviet order of battle specialist and

has interpreted for joint U.S.–Russian military activities

and translated documents from Russian and German across

a wide variety of topics for a number of public companies

and institutions, including the World Health Organization.

Mr. Riisager obtained his master’s degree in Interpreting

and Translating (Russian and German) from the University

of Bath (UK) in 1998, and is a graduate of the United States

Military Intelligence School and the Defense Language

Institute.

HENRY D. SOKOLSKI is Executive Director of the

Nonproliferation Policy Education Center and teaches

graduate courses on proliferation at Boston University’s

Institute of World Politics. From 1989 to 1993, he served as

Deputy for Nonproliferation Policy in the Defense

262
Department and in the Secretary of Defense’s Office of Net

Assessment. Prior to this, Mr. Sokolski served as senior

military legislative aide to Senator Dan Quayle and as

energy and nuclear legislative aide to Senator Gordon

Humphrey. He was a proliferation consultant to the

National Intelligence Council and served as a member of the

Central Intelligence Agency’s Senior Advisory Board and on

the congressionally-mandated Commission to Assess the

Organization of the Federal Government to Combat

Proliferation of Weapons of Mass Destruction.

263
U.S. ARMY WAR COLLEGE

Major General Robert R. Ivany

Commandant

*****

STRATEGIC STUDIES INSTITUTE

Director

Professor Douglas C. Lovelace, Jr.

Director of Research

Dr. Steven Metz

Editors

Mr. Henry D. Solkolski

and

Mr. Thomas Riisager

Director of Publications

Ms. Marianne P. Cowling

Publications Assistant

Ms. Rita A. Rummel

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Composition

Ms. Kimberly A. Rockwell