[Senate Hearing 105-237]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 105-237


 
                  PROLIFERATION: RUSSIAN CASE STUDIES

=======================================================================


                                HEARING

                               before the

                SUBCOMMITTEE ON INTERNATIONAL SECURITY,
                  PROLIFERATION, AND FEDERAL SERVICES

                                 of the

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 5, 1997

                               __________

      Printed for the use of the Committee on Governmental Affairs


                      U.S. GOVERNMENT PRINTING OFFICE
 41-418cc                   WASHINGTON : 1997
_______________________________________________________________________
For sale by the Superintendent of Documents, Congressional Sales Office
         U.S. Government Printing Office, Washington, DC 20402


                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman
SUSAN M. COLLINS, Maine              JOHN GLENN, Ohio
SAM BROWNBACK, Kansas                CARL LEVIN, Michigan
PETE V. DOMENICI, New Mexico         JOSEPH I. LIEBERMAN, Connecticut
THAD COCHRAN, Mississippi            DANIEL K. AKAKA, Hawaii
DON NICKLES, Oklahoma                RICHARD J. DURBIN, Illinois
ARLEN SPECTER, Pennsylvania          ROBERT G. TORRICELLI, New Jersey
BOB SMITH, New Hampshire             MAX CLELAND, Georgia
ROBERT F. BENNETT, Utah
             Hannah S. Sistare, Staff Director and Counsel
                 Leonard Weiss, Minority Staff Director
                    Michal Sue Prosser, Chief Clerk
                                 ------                                

   SUBCOMMITTEE ON INTERNATIONAL SECURITY, PROLIFERATION AND FEDERAL 
                                SERVICES

                  THAD COCHRAN, Mississippi, Chairman
SUSAN M. COLLINS, Maine              CARL LEVIN, Michigan
PETE V. DOMENICI, New Mexico         DANIEL K. AKAKA, Hawaii
DON NICKLES, Oklahoma                RICHARD J. DURBIN, Illinois
ARLEN SPECTER, Pennsylvania          ROBERT G. TORRICELLI, New Jersey
BOB SMITH, New Hampshire             MAX CLELAND, Georgia
                   Mitchel B. Kugler, Staff Director
                Linda Gustitus, Minority Staff Director
                       Julie Sander, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Cochran..............................................     1
    Senator Levin................................................     2

                               WITNESSES
                         Thursday, June 5, 1997

Robert Einhorn, Deputy Assistant Secretary of State for 
  Nonproliferation, Bureau of Politico-Military Affairs, 
  Department of State............................................     4
William C. Potter, Director, Center for Nonproliferation Studies, 
  Monterey Institute of International Studies....................    18
Richard H. Speier, Independent Consultant........................    28

                     Alphabetical List of Witnesses

Einhorn, Robert:
    Testimony....................................................     4
    Prepared Statement...........................................     7
Potter, William C.:
    Testimony....................................................    18
    Prepared Statement...........................................    24
Speier, Richard H.:
    Testimony....................................................    28
    Prepared Statement...........................................    36


                  PROLIFERATION: RUSSIAN CASE STUDIES

                              ----------                              


                         THURSDAY, JUNE 5, 1997

                                     U.S. Senate,  
                Subcommittee on International Security,    
                     Proliferation, and Federal Services,  
                  of the Committee on Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:05 p.m., in 
room SD-342 Dirksen Senate Office Building, Hon. Thad Cochran, 
Chairman of the Subcommittee, presiding.
    Present: Senators Cochran and Levin.

              OPENING STATEMENT OF SENATOR COCHRAN

    Senator Cochran. The meeting of our Subcommittee will come 
to order. We appreciate the attendance of our witnesses today 
at this hearing which we are going to have today on the subject 
of Proliferation: Russian Case Studies, one in a series of 
hearing that we have been having looking into the issues 
involving proliferation of weapons of mass destruction, 
particularly nuclear weapons.
    In April, we had a hearing looking at the question of 
Chinese actions which we consider very serious in terms of 
their involvement in selling technologies, complete weapons 
systems, and generally being at the center of a world-wide web 
of proliferation, selling nuclear, biological and chemical 
weapons technology as well as ballistic and cruise missiles to 
other nations.
    Russia is also a key supplier of weapons of mass 
destruction technology and advanced conventional weapons to 
countries of concern to the United States.
    Moscow is in the process of constructing a nuclear reactor 
in Iran, and has reached agreement in principle to sell up to 
three additional reactors to Tehran. Russia has also agreed to 
sell two nuclear reactors to India, and press reports have 
surfaced on sales of ballistic missile technology to Iran and 
Iraq.
    While some of the specific Russian activities are 
classified, many of the details are available in the open 
press, and it is upon those open sources that we have relied 
exclusively in preparing for today's hearing.
    Russia's sales of weapons of mass destruction technology 
and advanced conventional arms take place in the context of 
severe economic and political stress in Russia. We know that 
workers are paid months late, or not at all. Crime is a very 
serious problem. There are severe housing shortages.
    So the combination of hunger, draft evasion, poor training, 
and aging equipment all plague the Russian military, which 
remains one of the world's largest. Russia's premier defense 
facilities have not been immune to disruptions.
    Recent press reports indicate strategic missile facilities 
have suffered repeated power cut-offs in recent months because 
electric bills were not paid. During late 1996, thieves 
reportedly disrupted communication to operational strategic 
rocket forces units on numerous occasion by mining copper and 
other metals from communications cables.
    In addition, late last year, the director of a prestigious 
Russian nuclear laboratory became so distraught over the dire 
conditions at his facility that he committed suicide.
    Despite the danger posed by transfers of sensitive million 
technology, Russia's cash starved nuclear and defense 
industries continue to pursue sales to rogue nations like Iran. 
It is unclear how much control central government officials 
have over these sales.
    Senior Russian officials have approved some deals, but 
Moscow appears unwilling or unable to halt other sales.
    At today's hearing, we will explore how our government has 
approached the problem, as well as whether the approach is 
effective. We will also explore Moscow's record of adherence to 
its international nonproliferation commitments, and what 
incentives and disincentives the United States should use to 
moderate Russia's proliferant behavior.
    Our witnesses today are well suited to address these 
issues. Deputy Assistant Secretary for Nonproliferation Bob 
Einhorn at the Department of State is with us. He will be 
followed by a panel consisting of Dr. William Potter, director 
of the Center for Nonproliferation Studies at the Monterey 
Institute for International Studies who will discuss nuclear 
proliferation; and Dr. Richard Speier, an independent 
consultant and expert on the subject of Russian ballistic 
missile proliferation.
    Secretary Einhorn, we appreciate very much your attendance, 
and before recognizing you though, I am going to yield to my 
good friend and colleague from Michigan, the distinguished 
Ranking Democrat on the Subcommittee, Carl Levin.

               OPENING STATEMENT OF SENATOR LEVIN

    Senator Levin. Thank you, Mr. Chairman. I want to join you 
in welcoming our witnesses today on the very important topic of 
Russian proliferation. And I want to commend you again for this 
series of very important and significant hearings, Mr. 
Chairman.
    I only wish that after I give these few remarks that I be 
able to remain, but I am unable to now, and so we will be 
following this hearing very, very carefully, however, because 
of the importance of this subject.
    Ever since the collapse of the former Soviet Union, we have 
faced a very serious challenge in preventing the proliferation 
of weapons of mass destruction, particularly nuclear weapons 
and their materials and chemical weapons. With great foresight, 
our former colleague, Senator Nunn, and Senator Lugar created 
the cooperative threat reduction program in 1991.
    This program, which is commonly referred to as the Nunn-
Lugar program, has made a significant difference in reducing 
the risk to the United States from the potential proliferation 
of former Soviet nuclear, chemical and biological weapons and 
materials.
    The Nunn-Lugar cooperate threat reduction program has 
permitted the complete de-nuclearization of three former Soviet 
republics, Ukraine, Belarus and Kazakstan, which emerged with 
the inheritance of thousands of former Soviet nuclear weapons 
on their territory.
    It has permitted the elimination of thousands of warheads 
and hundreds of missiles and their launchers. That means that 
those weapons cannot threaten us again, and that is a tangible 
and direct benefit to our security.
    The Nunn-Lugar program continues to reduce the threat to 
our country, but there remains much more to be done. I believe 
there are additional areas for cooperative threat reduction 
with Russia and the other states of the former Soviet Union, 
and I would note that at least one of our witnesses has some 
specific suggestions for how to expand that program to address 
additional proliferation threats.
    I hope that all of our witnesses will address the question 
of whether the Nunn-Lugar program can be improved or expanded 
to help reduce the most immediate and dangerous threats to the 
United States, and if so, how.
    Clearly, though, the Nunn-Lugar program cannot address all 
the proliferation problems that we face with respect to Russia, 
and this hearing is going to examine some of the other issues.
    But we are working on a bilateral basis with Russia on 
proliferation issues, and we have had some important successes, 
as well as some notable challenges and problems. We need to 
understand the situation to determine what else we should and 
can do to improve it.
    We should be trying to find out what works, and what will 
help.
    One of the problems that we face with respect to Russia and 
proliferation, as I believe our witnesses have either said or 
would agree, is that Russia appears not to be capable of fully 
knowing of or controlling proliferant behavior.
    This seems due in part to the inexperience of the new 
governing systems in Russia and of the economic incentives for 
public and private entities to earn cash in a financially dire 
situation.
    Lawlessness and disorder seem to be too prevalent there. 
That means that sometimes the Russian government may not know 
about or be able to effectively prevent proliferant behavior, 
which is all the more reason to improve the situation as we're 
trying to do.
    Russia needs to improve its ability and desire to root out 
and prevent proliferation. That may mean at times finding 
incentives for responsible behavior and disincentives for 
irresponsible behavior, whether at the government of private 
sector level.
    And it also means that we should help encourage reform and 
democracy in Russia. But finally, it means being careful to 
avoid actions that will worsen the situation and threaten the 
security of this Nation.
    So, Mr. Chairman, again I commend you for your initiative 
here and look forward to these hearings.
    Senator Cochran. Thank you very much, Senator.
    Secretary Einhorn, thank you again for being here. You may 
proceed.

  TESTIMONY OF ROBERT EINHORN, DEPUTY ASSISTANT SECRETARY OF 
   STATE FOR NONPROLIFERATION, BUREAU OF POLITICAL-MILITARY 
                  AFFAIRS, DEPARTMENT OF STATE

    Mr. Einhorn. Thank you, Mr. Chairman, for the opportunity 
to testify before the Subcommittee on the administration's 
nonproliferation agenda with Russia. And with your permission, 
I will submit my prepared testimony for the record and proceed 
with some brief opening remarks.
    Senator Cochran. Thank you very much. It will be included 
in full.
    Mr. Einhorn. Thank you, Mr. Chairman. Given the weapons of 
mass destruction and other sensitive technologies it inherited 
from the Soviet Union as well as its own international stature, 
Russia is clearly a key player in international efforts to 
prevent proliferation.
    Its cooperation is indispensable. Its failure to cooperate 
potentially very harmful.
    Frankly, Russia's recent nonproliferation record is mixed. 
It shares with us a strong security interest in preventing the 
spread of weapons of mass destruction and other destabilizing 
technologies.
    But the current situation in Russia, including powerful 
pressures to export, the evolving relationship between central 
governmental authorities and an increasingly privatized 
industrial sector, and a relatively new and unproven export 
control system has led to questionable exports in cooperation 
with some countries of proliferation, particularly Iran.
    On the positive side, Russia has been a supporter and key 
player in global nonproliferation regimes. For example, it 
strongly favored indefinite extension of the NPT, and the 
recent strengthening of the IAEA safeguard system to detect 
clandestine nuclear activities.
    It was a founding member of the Nuclear Suppliers Group, 
and of the Wassenaar Arrangement, and it joined the Missile 
Technology Control Regime in 1995. It has supported UNSCOM and 
IAEA efforts in Iraq. It signed the CTBT, the Comprehensive 
Test Ban Treaty, last fall.
    And while it has not yet ratified the Chemical Weapons 
Convention, its parliament says it will do so probably this 
fall, and has passed its chemical weapons destruction bill.
    Russia has also showed responsibility in cooperating with 
us to address the proliferation risks posed by the large stocks 
of nuclear weapons and fissile materials it inherited from the 
Soviet Union. Senator Levin has just mentioned a number of 
these efforts under the Nunn-Lugar program, just a few minutes 
ago.
    Under these programs, hundreds of bombs worth of Russian 
highly enriched uranium have been converted into fuel for U.S. 
nuclear power plants. With U.S. assistance, hundreds of tons of 
weapons usable material are now subject to upgraded security 
measures at over 40 Russian sites.
    The U.S. is helping build a storage facility at Mayak that 
will safely and securely house fissile materials from about 
12,500 dismantled Russian nuclear weapons. Russia is working 
trilaterally with the U.S. and IAEA to develop means of 
verifying that fissile materials declared excess to defense 
needs are not returned to nuclear weapons programs.
    U.S. and Russian law enforcement officials and scientists 
are coordinating their efforts to deal with the problem of 
nuclear smuggling. And through the International Science and 
Technology Centers, over 13,000 former weapons scientists are 
engaged in peaceful scientific projects that reduce the risk of 
their being lured away by proliferators.
    The difficulties we have had with Russia in the 
nonproliferation area have been in the area of exports to 
foreign countries. Russia recognizes the need to establish a 
strong export control system and has taken important steps in 
that direction with some U.S. assistance.
    But Russian export controls are new, and clearly they need 
further strengthening. And this still rudimentary control 
system is being severely tested by Russian exporters 
aggressively seeking to pursue market share and earn hard 
currency.
    Our concerns have applied largely to Russia's cooperation 
with Iran. We remain opposed to Russia's project to build a 
nuclear power reactor in Iran. Indeed, we're opposed to any 
nuclear cooperation with Iran.
    We've raised our concerns forcefully and persistently, and 
at the highest levels, and we believe that Moscow has limited 
the scope and pace of its planned cooperation. For example, 
Russia's leadership has ruled out the transfer of a gas 
centrifuge enrichment facility, heavy water moderated nuclear 
reactors, and other technologies that are directly useful 
militarily.
    Nonetheless, we will watch this carefully, and press for 
further curtailment.
    We are especially concerned about reports of cooperation by 
Russian entities with Iran on long range ballistic missiles. We 
take these reports very seriously. Iran's acquisition of a long 
range missile delivery capability, coupled with its continued 
pursuit of nuclear weapons and other weapons of mass 
destruction, would pose a grave threat to U.S. forces and 
friends, and to regional stability in general.
    We do not believe that Russia has transferred any long 
range missiles to Iran, but Iran is now not giving priority to 
importing complete missiles. Rather, it is actively seeking 
various types of technical assistance and cooperation that 
would enable it to produce its own long range missiles 
indigenously.
    We have raised this matter with Russia at the highest 
levels, including during President Clinton's recent meeting 
with President Yeltsin in Helsinki.
     The Russian leadership has told us that it does not 
support assistance to Iran's ballistic missile program. While 
we appreciate such assurances, we remain disturbed by the 
discrepancy between them and what reportedly is occurring.
    Given the far reaching implications of this issue, we will 
continue to pursue it at the highest levels.
    We are also concerned by reports that Russian entities may 
intend to transfer surface to air missiles to Iran. President 
Yeltsin pledged in 1994 that Russia would not enter into any 
new arms contracts with Iran, and would conclude existing 
contracts within a few years.
    In 1995, Vice President Gore and Prime Minister 
Chernomyrdin formalized that commitment. Any transfers to Iran 
of advanced anti-aircraft missile systems would be inconsistent 
with that agreement.
    We raised this issue with Russia in March at the Helsinki 
summit, and President Yeltsin reaffirmed his commitment to the 
1995 agreement. The U.S. has not determined that Russia has 
transferred to Iran any advanced missiles, although we continue 
to monitor this very carefully.
    In conclusion, Mr. Chairman, we believe the United States 
and Russia have a strongly shared security interest in 
preventing the spread of weapons of mass destruction, and other 
sensitive goods and technologies. But Russia's ability and 
determination to pursue its commitment to nonproliferation may 
sometimes be eroded by a combination of power economic 
incentives to pursue foreign markets, the evolving nature of 
state controls in Russia, and Russia's relatively new, 
understaffed, and still unproven system of export controls.
    Improved Russian economic performance and institutional 
reform will help alleviate these problems. But basic changes 
will not be achieved overnight.
    In the meantime, the Russian government must take effective 
steps to insure a more accountable and conscientious approach 
to export control, and it should better appreciate the risks of 
engaging in even seemingly benign cooperation with determined 
proliferators, such as Iran.
    Encouraging Russia to adopt a more effective and 
responsible approach to cooperation with third countries will 
remain one of the administration's highest nonproliferation 
priorities.
    We will continue to press our case at the highest levels. 
Pursuing our nonproliferation agenda with Russia will involve 
both incentives and disincentives, including the implementation 
of U.S. sanctions laws whenever applicable.
    However, the use of certain sticks, such as cutting off or 
curtailing our assistance programs to Russia, would only be 
counterproductive. Not only would they be unlikely to achieve 
our nonproliferation goals, they would also undercut key 
programs to promote democracy and market reform, as well as to 
insure that the process of disarmament takes place in a safe, 
secure and accountable a manner as possible.
    And, Mr. Chairman, if I could just return to a little old 
business for a few moments regarding Chinese export behavior, 
because we discussed this the last time I was before the 
Subcommittee. And at that time I noted that the administration 
was concerned by reports of Chinese entities exporting to Iran 
chemical precursors, chemical production equipment and 
technology.
    And I indicated at that time that we were actively 
considering these reports in light of U.S. sanctions laws. 
Since that time, and I am sure you are aware of this, Mr. 
Chairman, on May 21 the United States imposed trade sanctions 
under the Chemical and Biological Weapons Control and Warfare 
Elimination Act against five Chinese individuals, two Chinese 
companies, and one Hong Kong company for knowingly and 
materially contributing to Iran's chemical weapons program.
    I just wanted to update you and the Subcommittee on that 
development. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Einhorn follows:]

                   PREPARED STATEMENT OF MR. EINHORN

    Thank you for giving me the opportunity to testify before the 
Subcommittee on the challenges and opportunities we face in obtaining 
Russia's cooperation in the nonproliferation field. Preventing the 
proliferation of dangerous weapons and technologies is among the 
highest priorities of our foreign policy. Russia by virtue of the 
weapons of mass destruction and other military and technological 
capabilities it inherited from the Soviet Union as well as its own 
international stature will be a key factor in the success of worldwide 
nonproliferation efforts. My objective today is to provide you with a 
snapshot of where we stand with Russia on these issues.
    We have made progress with the Russians over the past four years on 
our nonproliferation agenda. Russia recognizes that preventing the 
spread of destabilizing arms and technologies can protect Russian 
security interests. Russia is a strong supporter of the global 
nonproliferation regime, and has worked constructively with us to 
reduce the proliferation dangers credited by the collapse of the Soviet 
Union. At the same time, the exigencies of a monetized, largely 
privatized economy which no longer operates on the basis of command 
resource allocations have underscored the importance of foreign sales. 
Moreover, the uncertain and evolving nature of state controls in Russia 
has increased opportunities for some ``grey markets'' sales. These 
factors have at times contributed to serious U.S. concerns about 
Russian exports of arms and sensitive technologies to third countries.
    On the positive side, Russia has been a supporter of, and often a 
key player in the global nonproliferation regimes.

     LRussia strongly supported indefinite extension of the 
Nuclear Nonproliferation Treaty and a recent agreement to give real 
teeth to IAEA safeguards, significantly expanding their reach to 
include access to information and locations that could be related to 
clandestine nuclear programs.

     LRussian assistance was critical to securing the adherence 
of Ukraine, Kazakstan and Belarus to the NPT as non-nuclear weapons 
states and in moving all nuclear weapons from these states to Russia.

     LAs a permanent member of the U.N. Security Council, it 
continues to abide by the Council's embargo on the sale of arms to Iraq 
and Libya, and supports UNSCOM and IAEA efforts to uncover Saddam 
Hussein's weapons of mass destruction and prevent the regeneration of 
those capabilities.

     LRussia is a founding member of the Nuclear Suppliers 
Group that coordinates international export controls on nuclear 
equipment, materials and technologies. Russia has also supported 
measures for strengthening NSG controls, most important, the adoption 
of a policy requiring full-scope safeguards as a condition for nuclear 
supply and establishment of a dual-use control regime.

     LIn 1993. Russia agreed to forgo the transfer of certain 
rocket technology to India and to abide by the Guidelines of the 
Missile Technology Control Regime. In August 1995, it was admitted to 
the MTCR.
     LAlso in 1995, Russia agreed not to enter into and new 
arms contracts with Iran and to conclude existing contracts within a 
few years. In connection with becoming a founding member of the 
Wassenaar Arrangement--a multilateral regime committed to increasing 
transparency and responsibility in connection with transfers of arms 
and dual-use goods and technologies.

    President Yeltsin in Helsinki reaffirmed Russia's commitment to 
ratifying the Chemical Weapons Convention. The Russian parliament has 
indicated that it will ratify the Convention, most likely sometime in 
the fall. In addition, Russia has recently enacted a law which provides 
the legal basis for the destruction of its chemical weapons stockpile 
and seems to be on a path which will eventually result in the 
destruction of the 40,000 tons of chemical munitions it acknowledges it 
holds.

     LRussia signed the Comprehensive Test Ban Treaty last 
fall, has stopped producing fissile material for nuclear weapons and 
has joined the U.S. in calling for negotiation of a Fissile Material 
Cut-off Treaty in Geneva.

     LRussia ratified the Biological Weapons Convention in 
1975. President Yeltsin, however, has acknowledged the existence of a 
decades-old, offensive biological warfare research program. He issued a 
decree on April 11, 1992 prohibiting any illegal biological weapons 
activity in Russia. Though we do not doubt his sincerity, we continue 
to be concerned that the offensive BW program has not been entirely 
eliminated.

    Russia has also taken important steps to address the proliferation 
risks posed by the large stockpile of nuclear weapons and fissile 
materials it inherited from the Soviet Union, in many cases working 
jointly, with the United States.

     LHighly enriched uranium from dismantled Russian nuclear 
weapons is being converted into commercial reactor fuel for use in U.S. 
nuclear power plants. Hundreds of weapons worth of uranium have already 
been transferred from Russia to the United States.

     LWith U.S. support Russia has expanded the program to 
improve security at facilities where fissile material is located to now 
over 40 sites. Hundreds of tons of weapons-usable nuclear material are 
now subjected to substantially upgraded security.

     LWith critical U.S. financial assistance, Russia is 
constructing a modern facility at Mayak for the safe, secure storage of 
fissile materials released from the dismantlement of nuclear weapons.

     LRussia has committed to disposing permanently of its 
surplus weapons plutonium, and is working with the U.S. and France to 
develop technologies for converting plutonium weapons components into a 
form suitable for final disposition and international verification.

     LRussia has furthermore ceased use of newly-produced 
plutonium for weapons purposes. The U.S. and Russia are negotiating a 
cooperative arrangement to convert Moscow's plutonium production 
reactors so they no longer produce weapons-grade material.

     LRussia is working trilaterally with the U.S. and the IAEA 
to develop means of verifying that weapons-origin and other relevant 
fissile materials declared excess to defense need are not returned to 
nuclear weapons programs.

     LRussian law enforcement officials and scientists are 
working with their American counterparts to share information on 
illicit nuclear trafficking and improve laboratory analysis of nuclear 
materials seized from smugglers.

     LThrough the International Science and Technology Centers 
and the Initiative for Proliferation Prevention, more than thirteen 
thousand former weapons scientists, the majority Russian, are engaged 
in peaceful scientific projects that reduce the risk they will be lured 
away by money from rogue or terrorist states.

    As it transforms its economy, Russia recognizes the need to 
establish an export control system comparable to those of other major 
industrial countries. It has committed to doing so in several 
international settings, has enacted the necessary legislation, and has 
set up the necessary internal mechanisms, including improved border 
controls and customs surveillance aimed at restricting unauthorized 
transfers of equipment and technology related to weapons of mass 
destruction. The U.S. and others are helping Russia in this effort. 
There are still major challenges ahead, however, particularly in view 
of the economic pressures facing Russian industry and the 
responsibilities placed on new, untested Russian institutions charged 
with implementing export controls.
    At times, however, Russia has demonstrated an unwillingness to 
forgo profitable transactions for the sake of nonproliferation. After 
the break-up of the Soviet Union, Russian market share of defense 
exports dropped precipitously, primarily because Russia could no longer 
afford to sell defense-related equipment at below market prices. Russia 
is actively seeking to replace those markets with clients willing and 
able to pay hard currency. In addition, Russian firms, sometimes 
operating with little or inadequate oversight from Moscow, are targeted 
by states seeking to circumvent the more restrictive export policies of 
the U.S. and Western Europe. We can expect Russian exporters to 
continue to pursue aggressively market share and hard currency through 
arms and technology.
    While economic incentives are the principal reason for the export 
of sensitive goods and technologies. Russia can see the political value 
such sales bring in firming up ties with regional powers such as China, 
India and Iran.
    We have followed carefully the recent expansion of Russian trade in 
arms and proliferation-sensitive technologies with a variety of 
recipients. In the case of the growing relationship between Russia and 
China, which has become Russia's number one customer for conventional 
weapons and military technology, the questions raised are not directly 
proliferation-related because China already possesses the relevant 
capabilities. Moreover, we do not question the right of either party to 
engage in legitimate defense cooperation. Instead, we believe it is 
important to focus on the implications of such cooperation for the 
stability of the Asia-Pacific region, a concern we have raised, and 
will continue to raise, on a case-by-case basis with the parties 
involved whenever we believe it to be warranted.
    Our proliferation-related concerns with Russian exports have 
applied largely to Russia's nuclear and missile cooperation with 
certain states, primarily Iran. Russia maintains that it confines its 
cooperation with Iran to areas that are not of proliferation concern 
and do not threaten others. We have raised with Russia reports that 
call into question these assurances.
    We remain opposed to Russia's nuclear cooperation with Iran, and 
have pressed Russian leaders at the highest levels to refrain from any 
such cooperation. Russia began construction of the first reactor at the 
Bushehr complex in 1995. While we remain opposed to the project, we 
have seen indications that Moscow has limited the scope and pace of its 
nuclear cooperation with Iran. President Yeltsin has stated that Russia 
will not provide nuclear technologies to Iran that are directly useful 
militarily including a gas centrifuge uranium enrichment facility. 
Russian leaders have also assured us that they would not supply Iran 
with a heavy water-moderated nuclear reactor. Such reactors raise 
particularly serious proliferation concerns because of their potential 
for plutonium production. We will continue to monitor this closely and 
will press Russian authorities on any reports we receive of cooperation 
between Russia and Iran in the nuclear field.
    We are especially concerned about reports of cooperation by Russian 
entities with Iran on long-range ballistic missiles. We take these 
reports very seriously. Iran's acquisition of a long-range missile 
delivery capability, coupled with its continued pursuit of nuclear 
weapons and other weapons of mass destruction, would pose a grave 
threat to U.S. forces and friends in the region, and to regional 
stability generally. Transfers would also be inconsistent with Russia's 
commitments to the MTCR, and could raise serious issues under U.S. 
sanctions laws. We do not believe that Russia has transferred any long-
ranged missiles to Iran. But Iran is now not giving priority to 
importing complete missiles. Rather it is actively seeking various 
types of technical assistance and cooperation that would enable it to 
produce its own long-range missiles indigenously. It is reports of such 
technical interactions between Iran and Russian entities that concern 
us. We have raised such reports with Russia at the highest levels, 
including during President Clinton's recent meeting with President 
Yeltsin in Helsinki. The Russian leadership has told us that it does 
not support assistance to Iran's ballistic missile program. While we 
appreciate such assurances, we remain disturbed by the discrepancy 
between them and what reportedly is occurring. Given the far-reaching 
implications of this matter, we will continue to pursue it at the 
highest levels.
    We are also concerned by reports that Russian entities may intend 
to transfer surface-to-air missiles to Iran. President Yeltsin pledged 
in 1994 that Russia would not enter into any new arms contracts with 
Iran and would conclude existing contracts within a few years. In 1995, 
Vice President Gore and Prime Minister Chernomyrdin made formal that 
commitment.
    At the time that the agreement with Prime Minister Chernomyrdin was 
reached, Russia informed us that one Kilo-class submarine was expected 
to be delivered to Iran, and that other old contracts including those 
for tanks, would be fulfilled. Prior to concluding the 1995 agreement 
we made certain that the contracts in the pipeline that would be 
concluded within a few years did not involve any new weapons systems, 
and would not alter the regional balance or compromise the ability of 
the U.S. and our allies to protect our mutual interests. Any transfers 
to Iran of advanced anti-aircraft missile systems would be inconsistent 
with the 1995 agreement. We raised this issue with Russia in March at 
the Helsinki Summit, and President Yeltsin reaffirmed his commitment to 
the 1995 agreement. The U.S. has not determined that Russia has 
transferred to Iran any advanced missiles, although we continue to 
monitor this carefully.
    In conclusion. Mr. Chairman, Russia has, for the most part, been a 
strong partner in the effort to prevent proliferation, as reflected in 
the constructive approach Moscow has taken on the international regimes 
as well as in the responsible manner with which it has dealt with the 
challenge of securing the fissile and other sensitive materials on its 
territory. The difficulties we have encountered have been in the area 
of questionable sales to certain countries of proliferation concern, 
particularly Iran.
    We believe the United States and Russia have a strongly shared 
security interest in preventing the spread of weapons of mass 
destruction and other sensitive goods and technologies. But Russia's 
ability and determination to pursue its commitment to nonproliferation 
may sometimes be eroded by a combination of powerful economic 
pressures, the evolving relationship between central governmental 
authorities and an increasingly privatized and export-dependent 
industrial sector, and a relatively new, understaffed, and still-
unproven system of export controls.
    Improved Russian economic performance and institutional reform will 
help alleviate these problems--but basic changes will not be achieved 
overnight. In the meantime, the Russian Government must take effective 
steps to ensure a more accountable and conscientious approach to export 
control. And it should better appreciate the risks of engaging in even 
seemingly benign cooperation with determined proliferators such as 
Iran.
    Encouraging Russia to adopt a more effective and responsible 
approach to cooperation with third countries will remain one of the 
Administration's highest nonproliferation priorities. We will continue 
to press our case at the highest levels, making clear that cooperation 
on nonproliferation matters is an essential element of the strong 
bilateral relationship both sides seek. Pursuing our nonproliferation 
agenda with Russia will involve both incentives and disincentives, 
including the implementation of our sanctions laws, whenever 
applicable. However, the use of certain ``sticks,'' such as cutting off 
or curtailing our assistance programs to Russia, would only be 
counterproductive. Not only would they be unlikely to achieve our 
nonproliferation goals: they would also undercut key programs to 
promote democratization and market reform, as well as to ensure that 
the process of disarmament takes place in as safe, secure, and 
accountable a manner as possible.
    Thank you, Mr. Chairman.

    Senator Cochran. Thank you very much for you testimony and 
your assistance to our committee's inquiry. I was particularly 
happy that you brought up the subject of the Chinese action, 
the action taken by our government in response to those sales.
    And immediately when I read the story I wondered whether 
there was any connection between that action and the hearings 
that we had held. Could you tell us whether we contributed to 
that?
    Mr. Einhorn. Well, I think, Mr. Chairman, the concern 
expressed by you and members of the Subcommittee was shared by 
us. We were all looking at similar facts, and I think we came 
to similar conclusions.
    Senator Cochran. I notice that the Chinese reaction was not 
unexpected in that they protested and disagreed with your 
conclusions that there was any government knowledge or 
participation or culpability at all in the exports. Have you 
developed any further facts since that public reaction from the 
Chinese government?
    Mr. Einhorn. No, we have not, Mr. Chairman. We hope to 
pursue this issue further with the Chinese government. we see 
the imposition of sanctions not simply in punitive terms. We 
see this action as a means of encouraging China to take firm 
steps to prevent these Chinese entities from engaging in such 
activity in the future.
    We hope to have the opportunity to work with the Chinese 
government to try to persuade them that it's in their interest 
to pursue such steps.
    Senator Cochran. In that connection, with Russia and the 
situation that you mentioned, you called our attention to and 
reminded us that Russia has joined the Missile Technology 
Control Regime in 1995, and one of the criteria for MTCR 
eligibility is establishing export controls, or a structure to 
maintain control over what is and is not being sold to 
potential proliferators.
    I know you mentioned that Russia's export control system is 
still young and there are immature structures and controls in 
Russia now. Is that one of the reasons why you think there have 
been exports of material, weapons material, technology, 
equipment to Iran that could be used in ways that seem to be 
violative of the provision of the Missile Control Technology 
Regime?
    Mr. Einhorn. I think perhaps there are a number of 
explanations, Mr. Chairman, but I think one of them clearly is 
that Russia's export control system is to this day inadequate 
to the task of controlling Russian firms adequately, especially 
in this area of missile technology.
    Senator Cochran. You mentioned Iran, and you mentioned in 
your statement a trading relationship in weapons that has 
developed between Russia and China. Are there other countries 
as well where Russia has to your knowledge been involved in 
selling either missile technology or systems or weapons of mass 
destruction or ingredients of them, elements of them that would 
concern us?
    Mr. Einhorn. Well, I could say--you mentioned weapons of 
mass destruction. I genuinely believe, and I think it is the 
administration's shared judgment, that Russia is not interested 
in seeing other countries acquiring weapons of mass 
destruction.
    Russians know that their security is not strengthened by 
the acquisition of these very destabilizing capabilities. So I 
think they have been quite careful in not providing weapons of 
mass destruction, chemical weapons, nuclear weapons and so 
forth.
    Where we have had disagreements with the Russian Federation 
is on the transfer of certain technologies, and we have 
differed on the contribution of that cooperation to sensitive 
weapons programs.
    The Bushehr reactor is a case in point. Here, the Russians 
agree to sell a thousand megawatt power reactor to Iran. They 
point out correctly that this reactor would be under safeguards 
of the International Atomic Energy Agency, and believe, the 
Russians, that there is little or no risk of this reactor 
project contributing to an Iranian nuclear weapons capability.
    We assess the situation differently. In our view, this is a 
large reactor project. It will involve hundreds of Russians 
being in Iran, hundreds of Iranians or more being in Moscow, 
being trained. And this large scale kind of project can provide 
a kind of commercial cover for a number of activities that we 
would not like to see--perhaps much more sensitive activities 
than pursuing this power reactor project.
    It also will inevitably provide additional training and 
expertise in the nuclear field for Iranian technicians. In our 
view, given Iran's intention to acquire nuclear weapons we do 
not want to see them move up the nuclear learning curve at all, 
and we believe this project would contribute to moving them up 
that curve.
    I think the Russians assess the situation somewhat 
differently. They believe that the expertise acquired in the 
course of this project would not be critical, or even important 
in contributing to Iran's aspirations to acquire nuclear 
weapons.
    Senator Cochran. I asked whether or not there were other 
countries where trading relationships existed, either with 
government firms or entities that would be subject to control 
and direction by the Russian government, or should be, in order 
to comply with the MTCR.
    Are there any such instances that you could tell us about?
    Mr. Einhorn. Well, there is an aggressive effort by Russian 
export organizations to find foreign markets for a variety of 
goods and technologies, arms as well as other kinds of 
sensitive technologies. Russia has looked to China as a market 
for arms sales.
    China is now the biggest purchaser of Russian arms. Russia 
is China's biggest supplier of conventional arms.
    Now, there is nothing wrong per se with international arms 
trade, with the effort to provide for legitimate defense 
requirements. And in the case of Russia-China trade, we are not 
talking really about a proliferation concern, because after 
all, China is a have country. It possesses these weapons of 
mass destruction capabilities.
    What is sometimes a basis for concern is when such transfer 
relationship involves items that might cause instability in a 
particular regional context--in this case, the Asia-Pacific 
region. And so we monitor this kind of trade relationship and 
on a case by case basis we raise our concerns with the parties 
involved.
    So China is clearly a country that has an active trading 
relationship with Russia.
    Also, India has been a traditional market for Russian 
goods. Before the collapse of the Soviet Union India was a 
major trading partner, and in the last few years Russia has 
been actively marketing its goods, including arms, in India.
    You made reference earlier in your opening statement to an 
attempt by Russia to sell two power reactors to India. We have 
opposed that sale. We have opposed it, frankly, less because we 
think that the transfer would contribute materially to India's 
nuclear weapons program than we think that the transfer would 
be inconsistent with Russia's commitments as a member of the 
Nuclear Suppliers Group.
    As a member of the so-called NSG, Russia has committed not 
to engage in nuclear cooperation with countries that do not 
have IAEA safeguards on all of their nuclear activities. India, 
of course, does not have safeguards on all of its nuclear 
activities.
    There is a provision in that commitment that says pre-
existing deals can go forward. Russia is attempting to 
grandfather an old 1988 U.S.S.R.-India, government to 
government agreement under that provision. In our view, this is 
not legitimately grandfathered.
    In 1988 there was no specific contract, no financial 
arrangements concluded. There are still no financial 
arrangements concluded. So we tell the Russians that this was 
not the kind of deal, pre-existing deal, that can be 
grandfathered, and that it should not go forward with this sale 
of two power reactors to India.
    So even though the transfer itself probably does not 
involve substantial proliferation risks, because we doubt that 
the Indians, who have their own access to unsafeguarded 
plutonium, would actually divert plutonium from the safeguarded 
reactors, we nonetheless have urged Russia not to go forward.
    But there are also other cooperative arrangements between 
Russia and India. And I believe you mentioned in your opening 
presentation Iraq.
    Senator Cochran. Yes.
    Mr. Einhorn. On Iraq, we believe that the Russian 
government scrupulously adheres to the current embargo against 
Iraq. There is a very comprehensive sanctions regime that is 
applied by the U.N. Special Commission and the IAEA against 
Iraq to prevent Iraq from regenerating its sensitive 
capabilities.
    We believe that the Russians have not, at the governmental 
level, sought to circumvent that embargo, those sanctions.
    Senator Cochran. Let me ask you about a specific incident, 
though, that occurred in November of 1995. I am told that 
Jordan intercepted a shipment of guidance components for long 
range inter-continental ballistic missiles destined for Iraq at 
the Amman airport.
    And you were asked about this at a committee meeting over 
on the House side, the National Security Committee on June 26th 
of last year, and you said we have no indication that the 
Russian government sanctioned this.
    Would this not be violative of the U.N. embargo, the U.N. 
Security Council embargo on Iraq following the Gulf War, and 
would it not also be a violation of the MTCR by Russia?
    Mr. Einhorn. You are correct, Mr. Chairman. Those 
gyroscopes, those guidance components that were found by UNSCOM 
should not have been sent to Iraq. This was clearly a violation 
of the embargo. The question is who is responsible for this 
violation.
    Nothing since the testimony that you cited has changed our 
conclusion that this was not an act by the Russian government, 
not a conscientious act. These were very sensitive pieces of 
equipment as you pointed out. They are guidance components for 
fairly long range strategic missile systems.
    So it's a very serious matter, and we still have not 
received a full report from the Russians on their investigation 
of how this happened. But what we do know of it leads us to the 
conclusion that this was a kind of black market action, a 
renegade action, and not the conscientious decision of Moscow.
    Senator Cochran. Are you satisfied that the Russians are 
undertaking a serious investigation to get to the bottom of 
this, and to find out who was responsible?
    Mr. Einhorn. We have no way to judge how thorough and 
conscientious the Russian investigation has been. I think by 
now they are overdue in reporting on the results of their 
investigation to UNSCOM, and we also would very much like to 
hear the results of that investigation and we have recently 
asked the Russians about it.
    Senator Cochran. Is there any provision in the MCTR or any 
of the other agreements that we have that would permit some 
other independent inquiry into this, to get to the bottom of 
it?
    Or does the sovereignty--the relationship of the Russian 
government to its own citizens and business activities and 
other entities prohibit anybody else from looking into it?
    Mr. Einhorn. Well, you are right, Mr. Chairman. The MTCR is 
a kind of voluntary, informal sort of regime. There is no 
enforcement authority. The closest we have in this case is the 
U.N. itself, and the U.N. Special Commission. And I am not 
privy to discussions that the UNSCOM chairman has had with 
senior officials in the Russian government about this case, but 
I think that is where the enforcement authority comes in.
    Because, after all, the U.N. Special Commission is 
implementing the will of the Security Council and its 
Resolution 687 on Iraq. I think that is where UNSCOM should be 
pursuing this strongly with the Russian government.
    Senator Cochran. And when you say UNSCOM, you are talking 
about the U.N. Special Commission? That's the acronym for that?
    Mr. Einhorn. That is correct, Mr. Chairman.
    Senator Cochran. And that is the group that includes us? 
The U.S. is a member of that commission, right? We have a 
representative at that commission, do we not?
    Mr. Einhorn. Well, the chairman is in effect an employee of 
the Security Council. He is currently, unless they have 
switched over, a Swede named Rolf Ekeus. The next one will be 
an Australian named Richard Butler.
    But these individuals are functioning as kind of 
international civil servants. The deputy chairman of UNSCOM 
happens to be an American.
    Senator Cochran. Are you satisfied with the progress that 
the U.N. Special Commission is making in cases like this to try 
to find out what the facts are when you suspect that there has 
been a violation of this regime?
    Should we try to do something that would provide another 
alternative if UNSCOM is not doing the job of getting all the 
facts out that you think should be brought out?
    Mr. Einhorn. Mr. Chairman, I think UNSCOM has done a heroic 
job in pursuing the will of the Security Council with Iraq. I 
think special praise needs to go to Rolf Ekeus for very 
courageous action in pressing the Iraqi regime.
    He has been under some personal threat and risk and has 
basically ignored that risk in pursuing his mandate from the 
Security Council. He has been tenacious, and the whole U.N. 
Special Commission has been tenacious.
    Where the fault lies is with Iraq and Saddam Hussein. They 
simply have not been prepared to cooperate fully, as they are 
obliged to do by the U.N. Security Council. Even today, after 
many inspections, many interrogations, it is the considered 
view of the U.N. Special Commission that Iraq continues to 
conceal an operational missile capability.
    We believe, our own people believe, and UNSCOM also 
believes that Saddam is hiding some number of Scuds, and UNSCOM 
also believes that the Iraqis may well be hiding warheads 
containing chemical and or biological munitions for those Scud 
missiles.
    So UNSCOM really deserves tremendous credit in continuing 
to go at the Iraqis on this. But Iraq deserves full 
responsibility for not making a full accounting.
    Senator Cochran. Has there been any contribution to the 
investigation that Russia is conducting by the UNSCOM staff or 
the regime that they manage at the U.N. Security Council?
    Mr. Einhorn. I am not aware of any, Mr. Chairman.
    Senator Cochran. Is there any evidence that Russia has 
prosecuted anybody or cited anybody or taken anybody to task in 
any way at all for this sale of these guidance components to 
Iraq--or the attempted sale to Iraq?
    Mr. Einhorn. I am not aware that they have taken any action 
against perpetrators of this act, but I am pretty confident 
that UNSCOM has not found additional cases of such smuggling of 
proscribed equipment from Russia to Iraq since then.
    Senator Cochran. Do you know what our administration is 
doing, whether any other departments of our government are 
involved in any activity that would contribute to the cessation 
of that kind of smuggling, or to the identification and 
prosecution of those who are responsible for violating the 
embargo that the U.N. Security Council has imposed on Iraq?
    Mr. Einhorn. Well, the U.S. Government has made a major 
effort to support the U.N. Special Commission and the IAEA. In 
the division of labor, the IAEA action team has responsibility 
for detecting elements of Iraq's former nuclear weapons 
program.
    We give strong support. We provide information, we provide 
material support for those efforts, to ferret out any evidence 
of proscribed activities or material. So it is a major priority 
in the nonproliferation field for us.
    Senator Cochran. There was another event that Vice 
President Gore discussed with Prime Minister Chernomyrdin when 
he was here in February. At least this was reported in the Los 
Angeles Times, where we had information that Russia had 
transferred SS-4 missile technology, including instructions on 
how to build the missile and components, to Iran.
    And Prime Minister Chernomyrdin, according to this article, 
denied that Moscow had authorized the sale, but acknowledged 
that the action would violate Russia's pledge not to initiate 
new arms sale to Iran.
    Do you believe that sale was sanctioned by the Russia 
government or was it an illicit or illegal transfer?
    Mr. Einhorn. Mr. Chairman, as I mentioned in my remarks and 
in my prepared statement, we take such reports of Russian 
entities assisting Iran's long range missile program very, very 
seriously.
    We follow up all of these reports, and naturally we have 
our own intelligence information about such activities. We have 
pressed the Russian leadership at the highest levels. And, as I 
mentioned, we have been told that it is not Russia's policy to 
assist Iran's long range missile programs.
    But the problem is this: there is a disconnect between 
those reassurances, which we welcome, and what we believe is 
actually occurring. There is a disconnect.
    We have raised this with the Russians. We have provided 
them information available to us to demonstrate that we know 
what we are talking about, and we have urged them to 
investigate seriously and to prevent any activity that would be 
inconsistent with what they state is their own national policy.
    Senator Cochran. Have we made any specific suggestion about 
how Russia could imposes a stricter export control regime over 
sensitive technology like this, or ballistic missile component 
parts and technologies like this? Are we trying to assist them 
in figuring out how to do a better job, if they say that is 
what their goal is?
    We are assisting them in dismantling nuclear weapons that 
had been targeted at us, and this is all well and good, but is 
there any kind of technical assistance program in the form of a 
structure or a regime, a control regime, that would do a better 
job dealing with these kinds of problems?
    Mr. Einhorn. Mr. Chairman, we have under the Nunn-Lugar 
program made funds available for export control assistance to 
Russia, and we have sought to interest the Russian government 
in a very serious technical exchange aimed at strengthening 
their capabilities in this area.
    And there has been some cooperation, but it has not gone 
very far, not because of a reticence on our part, but for a 
variety of reasons I think the Russian government is reluctant 
for us to be too closely engaged with them in this effort.
    I think there is a certain resentment, the perception that 
we are throwing our weight around, that they see this as kind 
of condescending on our part. And in part they may be 
embarrassed a bit at the rudimentary nature of their own export 
controls, and reluctant to expose that fully to us.
    For whatever set of reasons, they have been less willing 
than we have to engage in the kind of cooperation you suggest, 
which we fully support.
    Senator Cochran. You talked about Russian nuclear 
cooperation with India. Reports of missile deployments near the 
Pakistani-India border have been widely reported, and it occurs 
to me that given Russia's past history of transactions with 
India, weapons sales, generally, but in the nuclear program 
particularly, and China's closer relationship with Pakistan on 
the other hand, and the question about whether China has 
contributed to the development of nuclear weapons program in 
Pakistan, are we on the verge of a conflict here that could 
involve a Russia-India partnership competing with a Chinese-
Pakistani partnership? Do we have on our hands a nuclear 
weapons proliferation activity that could be destabilizing and 
contribute to an increase in tensions in that part of the world 
such that our security interests are at risk?
    Mr. Einhorn. Mr. Chairman, we share your concern about the 
prospects for nuclear and missile competition in south Asia. I 
think the world has evolved quite a bit since the days when 
there was a very tight alignment between the outside countries 
and the states of south Asia.
    I think China, even, is seeking to improve its relations 
with India and to adopt a more even-handed policy toward the 
two states of the subcontinent. Also, Russia, while it does 
have an arms transfer relationship with India, and a good 
relationship with India, is also seeking to broaden its 
relations.
    So I do not see the danger that outside powers will be 
drawn into any kind of conflict, but we are concerned that 
programs that are proceeding on both sides of the Indo-Pak 
border could lead to a destabilizing competition there.
    One of the most promising developments we have seen in a 
long, long time has been a resumption in recent months of a 
high level political dialogue between leaders of India and 
Pakistan. There has been a recent meeting in Male in the 
Maldives.
    A few months ago the Pakistani prime minister, Nuar Sharif, 
and the Indian prime minister, Mr. Gujural, had a positive 
meeting. And we're looking forward to additional steps toward 
reconciliation between the two countries.
    We hope that these reports about missile activities will 
not have the effect of disrupting what is the most promising 
trend we have seen in a long, long time.
    Senator Cochran. That is encouraging to hear. Let me ask 
you one other related question on that subject. Russia and 
other members of the Nuclear Suppliers Group in 1992 agreed not 
to sell nuclear technology or nuclear materials that could be 
used to develop nuclear weapons to any state which had not 
accepted full scope IAEA safeguards.
    The sale by Russia of the two nuclear reactors to India, 
which you mentioned, seems to violate that commitment. Does it, 
in your opinion, and has the administration attempted to 
develop a consensus among the other suppliers who make up this 
group about whether to do anything about it?
    Mr. Einhorn. As I mentioned earlier, Mr Chairman, we do not 
believe that Russia can legitimately regard this deal as 
grandfathered under the terms of this----
    Senator Cochran. I know that. But what are we going to do 
about it?
    Mr. Einhorn. Well, what we have done is raise this issue 
directly with the Russian government on a number of occasions 
as well as raise it with other partners in the Nuclear 
Suppliers Group, and suggest that they raise it with the 
Russians to express their disapproval.
    We have found no one, by the way, willing to support 
Russia's interpretation of the grandfather provision of the 
full scope safeguards commitment, and a number of our partners 
have approached the Russians directly on it.
    If there is a saving grace in this story, it is that 
prospects actually for consummating this nuclear deal may be 
small. The Indian government may not be prepared ultimately to 
devote the very substantial resources to purchasing two large 
power reactors from Russia.
    And so even though both Russia and India take a very 
defensive, nationalistic approach whenever challenged about the 
deal, I think the actual likelihood of this deal materializing 
is rather small.
    Senator Cochran. Let me simply wind up by saying that I am 
very pleased to hear you bring up the action that was taken by 
our administration with regard to the Chinese transfers of 
ingredients for chemical weapons by these Chinese exporters.
    I am hopeful that we will see in the future some 
determination about the identity of those in Russia who have 
been doing things that are just as dangerous to the rest of the 
world as what we see happening in China so that we can then 
impose sanctions, if not against the government, which you 
chose not to do in the case of China, then directly against the 
firms, thereby saying that we would not permit the purchase of 
any material or services or goods from these firms.
    I think that is the nature of the sanction that our 
government has imposed, specifically targeted to those 
businesses and those individuals. It seems to me that that's 
what we ought to be doing a better job of with regard to 
Russian proliferation activities and smuggling from Russia of 
prohibited weapons grade material, technologies into Iran or 
into Iraq--and specifically Iraq, in violation of the U.N. 
sanctions.
    Do you expect that we will be able to get enough 
information to be able to do something like that, and would you 
be able to tell the Committee that that would be the hope and 
the goal of this administration, to pursue sanctions and to 
pursue them in an aggressive way?
    Mr. Einhorn. Mr. Chairman, I can assure the Subcommittee 
that we will pursue very vigorously all information we have 
that Russian entities are acting in a way that is inconsistent 
with Russia's obligations.
    We have done that. We will continue to do that. We will 
continue to press the Russians to investigate, and where 
applicable, we will apply our laws.
    We have imposed sanctions on Russian entities on a number 
of previous occasions, and that is a tool available to us. But 
we need to get the facts, and we are pressing very hard on 
Russian authorities to try to get the facts.
    Senator Cochran. I appreciate your testimony and your being 
here, and your willingness to help us as we try to deal with 
this, and try to decide whether or not the laws that we have on 
the books are sufficient to protect our security interests in 
this proliferation area.
    Thank you very much, Secretary Einhorn.
    Mr. Einhorn. Thank you, Mr. Chairman.
    Senator Cochran. Our next witnesses are Dr. William Potter 
and Richard Speier, who will testify on Russia and missile 
proliferation.
    We appreciate very much your being here, and we want you to 
proceed with your presentation to the Committee. I want to 
first call on Dr. Potter, and then Dr. Speier.
    We have copies of your prepared testimony which we will 
have printed in the record in full, and we would encourage you 
to make whatever summary comments you think would be helpful to 
our understanding of these issues.
    Dr. Potter, we will start with you. You may proceed.

     TESTIMONY OF WILLIAM C. POTTER, DIRECTOR, CENTER FOR 
 NONPROLIFERATION STUDIES, MONTEREY INSTITUTE OF INTERNATIONAL 
                            STUDIES

    Mr. Potter. Thank you, Mr. Chairman for the opportunity to 
address this Committee on the very important issue of the post-
Soviet nuclear proliferation challenge.
    This is the fifth time in the past 6 years that I have 
prepared testimony on this theme for Congress, and as in the 
past there remain more proliferation dangers than I can review 
in the time allotted to me.
    As you are aware, the main technology barrier to nuclear 
weapons proliferation, both for state actors and for 
subnational terrorists organizations, has been the difficulty 
of obtaining weapons usable fissile material.
    I do not think there is any doubt that this barrier has 
been eroded as a consequence of the collapse of the Soviet 
Union and the increased vulnerability to diversion of the 
successor states' vast inventory of nuclear weapons and 
inadequately safeguarded stocks of highly enriched uranium and 
plutonium.
    I believe that the Nunn-Lugar Cooperative Threat Reduction 
Program has made a major difference in containing many 
proliferation risks in the region. Having said that, however, I 
believe that other serious dangers do remain and are deeply 
rooted in the very different economic, political and social 
conditions in the former Soviet Union.
    As such, I believe they are unlikely to be resolved until 
considerably more progress is made in stabilizing the economy 
and in restoring public trust in governmental institutions, law 
and social justice.
    Unfortunately, I doubt if these changes will occur quickly, 
and as a consequence, I believe that the United States will 
continue to face a variety of nuclear threats from the former 
Soviet Union for the foreseeable future.
    Given the time constraints before us, I think rather than 
enumerate the many remaining proliferation challenges that one 
could identify, I would rather focus on several of those which 
are less obvious and have received less attention. I will then 
identify a number of specific steps that the U.S. Government 
might take to mitigate the risks that I have identified.
    The first challenge that I would like to highlight, and one 
that I don't believe has received adequate attention, is the 
risk posed by the presence of nuclear material outside of 
Russia.
    In November of 1994 it was widely assumed that with the 
successful conclusion of Project Sapphire the United States had 
removed the last substantial quantity of highly enriched 
uranium from Kazakstan. That now is known not to be the case.
    Rather, in late 1995, Kazakstan notified the IAEA that some 
205 kilograms of highly enriched uranium remained at its 
nuclear research site in Semipalatinsk. Although the weapons 
useable portion of that batch of material finally was removed 
to Russia this past fall, the unanticipated discovery of a 
cache of hundreds of kilograms of weapons useable material is, 
I believe, a useful reminder that we probably can expect to 
find further undeclared quantities of highly enriched uranium 
in the non-Russian successor states.
    Likely locations include Georgia, Kazakstan, Uzbekistan, 
Belarus, Ukraine and Latvia, all of which either have or had 
research reactors fueled with highly enriched uranium.
    The second challenge, I believe, is for us to anticipate 
future cases of illicit nuclear trafficking. Although the West 
has generally been very lucky regrading nuclear leakage from 
the former Soviet Union, despite rather sensationalist 
headlines to the contrary, I don't think that we can count on 
that situation persisting.
    In my prepared testimony, I identify four confirmed cases 
in which more than minuscule quantities of highly enriched 
uranium and plutonium have been exported from the former Soviet 
Union, another three cases in which HEU or plutonium were 
diverted from Russian nuclear facilities, but were seized prior 
to export, and an additional four cases of diversion or export 
that were of proliferation concern but for which we do not have 
quite as much hard evidence.
    Rather than go over those points, I simply refer interested 
parties to the appendices of my prepared paper. But I would 
like to draw just one or two conclusions from those cases.
    Perhaps most striking about the proliferation--significant 
cases involving seizures of material is that much of the 
material appears to have been fresh fuel for naval propulsion 
reactors. It's also the case that most of the suppliers of this 
material appear to have been insiders working at nuclear 
research institutes, or naval bases, or having previously 
worked as such facilities.
    Now, if the good news is that there have been relatively 
few cases, I think we also have to be concerned about several 
caveats, one being how confident should we be that we have 
simply not detected other cases that have transpired; and, 
second, I think we have to be concerned about the lesson from 
the missile area that may be applicable in the nuclear realm--
and here I am referring to the case that you already raised 
with Secretary Einhorn where the U.N. Special Commission on 
Iraq clearly has evidence which indicates that strategic 
gyroscopes from dismantled Russian SLBMs were shipped to Iraq.
    I would also add as a concern similar indications that 
there may be Ukrainian-Iraqi missile contacts and contracts. In 
addition, I would point to what I believe are disturbing and 
continuing largely unregulated trade by the post-Soviet States 
in nuclear related dual use materials, such as zirconium and 
beryllium.
    These activities in an environment of nuclear material 
plenty but nuclear worker poverty caution against attaching too 
much importance to the apparent lull in reported seizures of 
proliferation significant material in Europe.
    I would also like to call attention to the challenge that 
we face in the sphere of nuclear terrorism. To date, little 
U.S. nonproliferation assistance to the ex-U.S.S.R. has been 
directed specifically to reducing terrorist threats at NIS 
nuclear facilities.
    These threats pertain not only to the seizure of nuclear 
material, but also to attacks on or sabotage of civilian 
nuclear power plants and spent fuel storage sites. I would like 
to emphasize that these are not hypothetical threats.
    In 1992, for example, an employee of the Ignalina nuclear 
power plant in Lithuania planted a virus in the plant's 
computer system that could have led to a major accident. The 
same plant, in November of 1994, received two bomb threats, one 
of which involved organized crime, and led to the shutdown of 
the facility.
    More recently, a disenchanted employee of the Severodvinsk 
submarine facility, whose salary had not been paid, threatened 
to blow up a shop containing two nuclear reactors.
    Although Russia has taken some steps to heighten security 
at civilian nuclear plants, particularly in the wake of the 
conflict in Chechnya, most civilian nuclear facilities remain 
deficient in such basic defensive elements as intact perimeter 
fences, more than token armed guards, vehicle barriers, 
surveillance cameras, metal detectors at entrances and control 
cages.
    Unfortunately, these gaps in perimeter defense are 
compounded by an approach to the terrorist threat that is 
fixated on Chechens. As the assistant director of a major 
Russian nuclear research center told me not long ago, there is 
little concern about perimeter defense against terrorists 
since, ``Chechens look different than us, and would be 
recognized before they could get close to the site.''
    Even if they were recognized, it's problematic if much 
force could be marshalled quickly at the scene. Indeed, I would 
argue, and I don't say this facetiously, heavy fire power is 
much more visible at most banks, night clubs and fur stores in 
the former Soviet Union than at many nuclear facilities.
    And I say that having visited seven or eight such nuclear 
sites in the former Soviet Union.
    If security of fissile material is suspect at nuclear 
facilities in the former Soviet Union it's even more vulnerable 
in transport. These are problems that in part are due to the 
generic difficulty of safeguarding nuclear material or warheads 
compounded by the frequency with which fissile material is 
moved, both between facilities in Russia and also within 
facilities.
    At one nuclear facility that I visited last year near 
Moscow, for example, it was apparent that all transportation to 
and from that site involving fissile material was accomplished 
with a single truck, one which would appear to be an inviting 
target for a terrorist or criminal group.
    Safeguarding transport of fissile material within many 
large nuclear complexes in Russia also is a serious problem 
given the frequency with which the material is moved about, in 
some instances on uncovered or unescorted hand carts. The 
weapons that I observed happened to be black rather than red, 
but I think the image was nevertheless telling.
    As troubling for nonproliferation efforts as nuclear 
smuggling are indications that in recent years Russia and the 
other post-Soviet States have pursued imprudent state-
sanctioned exports of nuclear technology equipment and nuclear 
related dual-use commodities.
    You have already noted the difficulties associated with 
Russian contracts to provide nuclear assistance to Iran, to 
assist in the development of China's nuclear program, and also 
to build two 1000 megawatt power reactors in southern India.
    I share your concern particularly with the Indian deal 
because I believe if it is implemented, it definitely would be 
at odds with Russia's full scope safeguard commitments. Perhaps 
in the question and answer period I can provide a little more 
detail which would suggest how Russia in fact has revised its 
own internal nuclear export regulations to take account of this 
Indian export generated grandfather clause. Initially their 
regulation did not have this caveat in place.
    High level political commitment to export controls also has 
been slow to materialize in Ukraine and the Baltic States, 
which only recently began to develop meaningful export control 
procedures and expertise. There have been a number of cases 
involving these states, for example, in which sensitive, dual-
use nuclear items were either exported in violation of 
establish export control procedures, or due to the absence of 
such regulations.
    Unfortunately, from the standpoint of nonproliferation, 
improving export controls remains a low priority, not only for 
Russia, but for most, if not all, of the post-Soviet States.
    Finally, with respect to my short list of proliferation 
challenges, is the need to enhance the security of sub-
strategic nuclear weapons in Russia. It is typically assumed in 
the West that notwithstanding shortcomings in the civilian 
nuclear sector, that physical security is high in the military 
domain.
    Although it may be higher in the military realm than at 
most civilian sites, I would argue that the situation is not 
good, and in fact is apt to deteriorate further before it gets 
better. Most vulnerable to theft are older sub-strategic 
nuclear weapons that are relatively small in size and lack 
permissive action links to protect unauthorized use.
    The security of sub-strategic nuclear weapons in Russia 
today is compromised by a number of things, including the lack 
of adequate storage facilities to handle the influx of 
warheads, by the continuing turmoil, and economic hardship, and 
general malaise within the armed forces.
    I am particularly concerned about the vulnerability of 
theft of these sub-strategic systems by disgruntled past or 
present Russian Special Operations (Spetsnaz) soldiers who were 
trained to use atomic demolition weapons, and may have special 
knowledge or even access to nuclear weapons storage depots. 
Tactical weapons for aircraft pose particular risks since they 
are not kept at better guarded central storage sites.
    The problem of sub-strategic nuclear weapons is magnified 
by Russia's growing reliance on nuclear arms as its 
conventional forces deteriorate. I think this dependency is 
reflected in Russia's abandonment in 1993 of its no first use 
nuclear policy, and in the open discussion among prominent 
Russian military and defense industry figures of the need to 
develop a new generation of nuclear munitions for tactical and 
battlefield use.
    The dangers in this shift of emphasis are compounded 
because of Moscow's reliance on a launch-on-warning nuclear 
strategy and by the deterioration of Russia's early warning 
system, large portions of which existed in other post-Soviet 
States.
    Having identified some of the problems, let me turn briefly 
to some steps that might be taken to reduce those difficulties. 
First, I believe the United States should seek to reduce the 
quantity of fissile material which must be protected and the 
number of sites where fissile material is stored.
    As part of a program of consolidation and elimination, I 
would recommend that the U.S. should undertake to negotiate the 
purchase of all highly enriched uranium known to reside at 
research facilities in the non-Russian successor states.
    Given the relatively small, but nevertheless significant, 
quantities of weapons useable material at sites in Belarus, 
Georgia, Kazakstan, Latvia, Ukraine and Uzbekistan, that I 
calculate to be slightly under 200 kilograms of highly enriched 
uranium, a uranium buy up approach to the non-Russian republics 
represents, I believe, a low cost, high return nonproliferation 
strategy.
    To the extent that HEU is actually being used by research 
facilities, the United States also should provide the small 
amount of money needed to convert the research reactor to run 
on low enriched uranium.
    Parenthetically, I might note the principal obstacle to 
this HEU purchase plan is not resistance on the part of the 
successor states, but rather is the difficulty of gaining 
inter-agency agreement in the United States. This difficulty is 
a direct product of the inter-agency battles that were waged 
during the ultimately successful operation of Project Sapphire.
    My second recommendation is to expand CTR cooperation in 
the area of reactor security. Nuclear power plants in the 
Soviet Union were not designed to confront current terrorist 
threats which could lead to catastrophic accidents with global 
consequences.
    More attention should be given under the Nunn-Lugar program 
to enhanced reactor security as a part of a large effort to 
strengthen international and national nuclear safeguards. At a 
minimum, current physical protection efforts need to be 
coordinated with work to upgrade the safety and security of the 
four dozen nuclear power reactors currently operating in five 
post-Soviet States.
    My third recommendation is to pursue negotiated constraints 
on sub-strategic nuclear weapons. As you know, nuclear weapons 
of a non-strategic variety have not figured prominently in the 
arms control and disarmament agenda since the important Bush 
and Gorbachev initiatives in the fall of 1991. It is precisely 
this category of nuclear weapons that poses the greatest risk 
in terms of vulnerability to theft, and/or unauthorized use. A 
number of steps need to be taken, including the codification in 
a legally binding treaty of the 1991 Bush-Gorbachev 
declarations on the withdrawal of sub-strategic weapons.
    Finally, more attention must be given to sustaining those 
important nonproliferation initiatives that already have been 
begun in the former Soviet Union.
    I believe it is vital to U.S. national security to continue 
to support the Cooperative Threat Reduction Program. It is now 
time, however, to confront the problem of sustainability and 
the issue of facilitating the rational transfer of 
responsibility for physical protection and material control 
activities from the United States to the NIS and especially to 
Russia.
    A step in the right direction, I believe, is the recently 
established safeguards training center in Obninsk, Russia which 
will reinforce indigenous physical protection efforts by 
educating a new generation of specialists who will serve as 
both practitioners and instructors. Much more, however, needs 
to be done to create incentives in the post-Soviet States to 
foster indigenous safeguards efforts and to sustain those 
activities once they have begun.
    Unfortunately, an influx of money alone will not solve that 
problem. A sustained educational effort is required to change 
attitudes and to instill a new nonproliferation and safeguards 
philosophy or culture. This is a task, I believe, for which 
non-governmental organizations are particularly well suited to 
perform.
    Let me conclude, therefore, by calling for much closer 
cooperation between the U.S. Government and the non-
governmental community in the provision of such educational 
assistance and in the pursuit of mutual nonproliferation 
objectives.
    Thank you.
    [The prepared statement of Mr. Potter follows:]

                    PREPARED STATEMENT OF MR. POTTER

            the post-soviet nuclear proliferation challenge
Nature of the Problem
    The main technical barrier to nuclear weapons proliferation, both 
for state actors and sub-national terrorist organizations, has been the 
difficulty of obtaining weapons-usable fissile material. There is 
little doubt that this barrier has been eroded as a consequence of the 
collapse of the Soviet Union and the increased vulnerability to 
diversion of the successor states' vast inventory of nuclear weapons 
and inadequately safeguarded stocks of highly-enriched uranium (HEU) 
and plutonium.
    The Nunn-Lugar Cooperative Threat Reduction program has made a 
major difference in containing many proliferation risks in the region. 
Other serious dangers, however, remain and are deeply rooted in the 
difficult economic, political, and social conditions of the post-Soviet 
States. As such, they are unlikely to be resolved until progress is 
made in stabilizing the economy and restoring public trust in 
governmental institutions, law, and social justice. These changes will 
not occur quickly, and the United States will thus continue to face a 
variety of nuclear threats from the former Soviet Union for the 
foreseeable future.
    Given severe time constraints, rather than enumerate the many 
remaining proliferation challenges, I will focus on several that are 
less obvious and have received inadequate attention. I will then 
propose specific steps the U.S. government should take to mitigate 
these risks.
Don't Assume that the Problem Outside of Russia Has Been Solved
    In November 1994 it was widely assumed that with the successful 
conclusion of Project Sapphire, the United States had removed the last 
substantial quantity of HEU from Kazakstan. That now is known not to be 
the case. Rather, in late 1995, Kazakstan notified the International 
Atomic Energy Agency that 205 kilograms of HEU remained at its 
Semipalatinsk nuclear research site. Although the weapons-usable 
portion of that batch of material finally was removed to Russia in Fall 
1996, the unanticipated discovery of a cache of hundreds of kilograms 
of weapons-usable material is a useful reminder that we probably can 
expect to find further undeclared quantities of HEU in the non-Russian 
successor states. Likely locations include Georgia, Uzbekistan, 
Belarus, Ukraine, and Latvia--all of which have (or had) research 
reactors fueled with HEU.
Anticipate Future Cases of Illicit Nuclear Trafficking
    The West has been extremely lucky regarding nuclear leakage from 
the former Soviet Union. Despite frequent sensationalist headlines to 
the contrary, it appears to have avoided an influx of militarily 
significant nuclear goods from the ex-USSR. Since the collapse of the 
Soviet Union, one can identify only four confirmed cases in which more 
than minuscule quantities of HEU or plutonium have been exported from 
the former Soviet Union, and another three cases in which HEU or 
plutonium were diverted from Russian nuclear facilities, but were 
seized prior to export. At least four additional cases of diversion 
and/or export are of proliferation concern, but do not as clearly meet 
the standard of unambiguous evidence with respect to either independent 
sources to corroborate the diversion, or the size or enrichment level 
of the material. (See Appendices One and Two for a summary of the 
important characteristics of these cases).
    Perhaps most striking about this set of proliferation-significant 
cases is the preponderance of seizures involving definite or possible 
fresh fuel for naval propulsion reactors. Most of the suppliers of 
material in these cases appear to have been ``insiders,'' working at 
nuclear research institutes or naval bases, or having previously worked 
at such facilities. None of the seizures to date provide any evidence 
of having a nuclear weapon's origin.
    One must be careful, however, about drawing conclusions from this 
small body of confirmed diversion and/or export cases. First, one 
legitimately may ask, ``How confident should we be that proliferation-
significant exports of NIS origin material have simply escaped 
detection?'' Given the underdeveloped state of export controls in the 
former Soviet Union outside of Russia and the virtual absence of any 
barriers to movement of sensitive goods and material between Russia and 
the other CIS states, it is entirely possible, although not proven, 
that significant amounts of nuclear material and technology already may 
have exited Russia via a number of southern routes (e.g., through the 
Caucasus or Central Asia).
    In addition, while there is no hard evidence that nuclear 
proliferants have illegally provided HEU or plutonium from the ex-USSR, 
there is indisputable evidence that would-be proliferants have been 
able to acquire key missile system components of Russian origin. The UN 
Special Commission on Iraq, for example, has documents which indicate 
that strategic gyroscopes from dismantled Russian SLBMs have been 
shipped to Iraq. Similar concerns exist regarding Ukrainian-Iraqi 
missile contacts and contracts. Also disturbing is the continuing, 
largely unregulated trade by the post-Soviet States in nuclear-related 
dual-use materials such as zirconium and beryllium. These activities 
and an environment of nuclear material plenty but nuclear worker 
poverty, caution against attaching too much importance to the apparent 
lull in reported seizures of proliferation-significant material in 
Europe.
Take Measures to Reduce the Threat of Nuclear Terrorism
    To date, little U.S. nonproliferation assistance to the former 
Soviet Union has been directed specifically to mitigating terrorist 
threats at NIS nuclear facilities. These threats pertain not only to 
the seizure of nuclear material (or even larger and less secure stocks 
of chemical weapons agents), but also to attacks on or sabotage of 
civilian nuclear power plants and spent fuel storage sites.
    These are not hypothetical threats. In 1992, for example, an 
employee of the Ignalina Nuclear Power Plant in Lithuania planted a 
virus in the plant's computer systems that could have led to a major 
accident. The same plant in late 1994 received two bomb threats, one of 
which involved organized crime and led to the shutdown of the facility. 
More recently, a disenchanted employee of the Severodvinsk submarine 
facility whose salary had not been paid threatened to blow up a shop 
containing two nuclear reactors.\1\
---------------------------------------------------------------------------
    \1\ For a more detailed discussion of these and other terrorist 
incidents in the former Soviet Union, see Oleg Bukharin, ``Upgrading 
Security of Nuclear Power Plants in the Newly Independent States,'' The 
Nonproliferation Review (Winter 1997), pp. 28-39.
---------------------------------------------------------------------------
    Although the Russians, in response to the Chechen conflict, have 
taken some steps to heighten security at civilian nuclear power plants, 
most civilian nuclear facilities are deficient in such basic defensive 
elements as intact perimeter fences, more than token armed guards, 
vehicle barriers, surveillance cameras, metal detectors at entrances, 
and control cages. Unfortunately, these gaps in perimeter defense are 
compounded by an approach to the terrorist threat that is fixated on 
Chechens. As the assistant director of one major Russian nuclear 
research center told me not long ago, there is little concern about 
perimeter defense against terrorists since ``Chechens look different 
than us'' and would be recognized before they could get close to the 
site. Even if they were recognized, it is problematic if much force 
could be marshaled quickly at the scene. Indeed, heavy firepower is 
more visible at most banks, nightclubs, and fur stores in the former 
Soviet Union than at many nuclear facilities.
    If security of fissile material is suspect at nuclear facilities in 
the former Soviet Union, it is even more vulnerable in transport. This 
problem results from the generic difficulty of safeguarding nuclear 
material (and warheads) in transit, compounded by the frequency with 
which fissile material is moved between facilities in Russia, the lack 
of sufficient dedicated nuclear transport vehicles, and less than clear 
lines of organizational responsibility for protecting material in 
transit. At one major nuclear facility near Moscow, for example, all 
transportation of HEU to other facilities is accomplished with a single 
truck--one that would appear to be an inviting target for a terrorist 
or criminal group. Safeguarding transport of fissile material within 
many large nuclear complexes in Russia also is a serious problem given 
the frequency with which significant amounts of material is moved 
daily, often on uncovered or unescorted handcarts.
Discourage State-Sanctioned Exports
    As troubling for nonproliferation efforts as nuclear smuggling are 
indications that in recent years Russia and other post-Soviet States 
have pursued imprudent, state-sanctioned exports of nuclear technology, 
equipment, and nuclear related dual-use commodities.
    In Russia, a tendency to emphasize profits over nonproliferation is 
evident in contracts to provide nuclear assistance to Iran, in 
agreements to assist the development of China's nuclear program 
(including provision of reactors and a uranium enrichment plant), and 
in plans to build two 1000 MWe VVER-type reactors at Koodankulam in 
southern India. The Indian deal, if implemented, is particularly 
serious as it would be at odds with Russia's pledge to insist upon 
full- scope safeguards (i.e., international safeguards on all 
facilities) as a condition of nuclear export.
    High-level political commitment to export controls also has been 
slow to materialize in Ukraine and the Baltic states, which only 
recently began to develop meaningful export control procedures and 
expertise. There have been a number of cases involving these states, 
for example, in which sensitive dual-use nuclear items were exported 
either in violation of established export control procedures or due to 
the absence of such regulations. Unfortunately, from the standpoint of 
nonproliferation, improving export controls remains a low priority 
issue for most of the post-Soviet States.
Enhance the Security of Sub-Strategic Nuclear Weapons
    It typically is assumed in the West that, notwithstanding 
shortcomings in the civilian nuclear sector, physical security is high 
in the military domain. Although security at military facilities 
probably remains much higher than at most civilian sites, the situation 
is not good and is apt to deteriorate further before it gets better. 
Most vulnerable to theft are older sub-strategic nuclear weapons that 
are relatively small in size and lack ``permissive action links'' 
(PALs) to protect unauthorized use.
    The security of sub-strategic nuclear weapons in Russia today is 
compromised by the lack of adequate storage facilities to handle the 
influx of warheads and by the continuing turmoil, economic hardship, 
and general malaise within the armed forces. Sub-strategic nuclear 
warheads are particularly vulnerable to theft by disgruntled past or 
present Russian Special Operations (Spetsnaz) soldiers, who are trained 
to use atomic demolition weapons and may have special knowledge of and 
even access to nuclear weapon storage depots. Tactical nuclear weapons 
for aircraft pose special risks since they are not kept at central 
storage sites.
    The problem of sub-strategic nuclear weapons in Russia is magnified 
by Russia's growing reliance on nuclear arms as its conventional forces 
deteriorate. This dependency is reflected in Russia's abandonment in 
1993 of its no-first use policy, and in the open discussion among 
prominent Russian military and defense industry figures of the need to 
develop a new generation of nuclear munitions for tactical and 
battlefield use. Some advocates of tactical nuclear weapons go so far 
as to contemplate Russian abrogation of the 1987 INF Treaty. The 
dangers in this shift of emphasis are compounded because of Moscow's 
reliance on a ``launch-on-warning'' nuclear strategy and by the 
deterioration of Russia's early warning system.
What Is to Be Done?
    There is no shortage of good recommendations about what needs to be 
done to address these urgent proliferation problems, and a number of 
these suggestions actually have been adopted as U.S. policy. Let me 
suggest several additional steps that might be taken: \2\
---------------------------------------------------------------------------
    \2\ An extended list of policy recommendations is provided in two 
recent publications: John M. Shields and William C. Potter, eds., 
Dismantling the Cold War: U.S. and NIS Perspectives on the Nunn-Lugar 
Cooperative Threat Reduction Program (Cambridge, MA: MIT Press, 1997), 
especially pp. 385-405; and Proliferation Concerns: Assessing U.S. 
Efforts to Help Contain Nuclear and Other Dangerous Materials and 
Technologies in the Former Soviet Union (Washington, D.C.: National 
Academy Press, 1997).
---------------------------------------------------------------------------
1. Purchase all HEU from Non-Russian Successor States
    The United States should seek to reduce the quantity of fissile 
material which must be protected and the number of sites where fissile 
material is stored. As part of a program of consolidation and 
elimination, the U.S. should undertake to negotiate the purchase of all 
HEU known to reside at research facilities in the non-Russian successor 
states. Given the relatively small, but nevertheless significant, 
quantities of weapons-usable material at sites in Belarus, Georgia, 
Kazakstan, Latvia, Ukraine, and Uzbekistan, a uranium ``buy-up'' 
approach to the non-Russian republics represents a low cost, high 
return nonproliferation strategy.
    To the extent that HEU actually is being used by research 
facilities (as is the case at the Institute of Nuclear Physics in 
Uzbekistan), the United States also should provide the small amount of 
money needed to convert the research reactor to run on low-enriched 
uranium. Plans for such conversion already have been drawn up by 
Russian engineers and could be implemented at some sites in three-four 
months at about $1 million per reactor. Parenthetically, the principal 
obstacle to the HEU purchase plan is the difficulty of gaining 
interagency agreement in the United States. This difficulty is a 
product of the interagency battles that were waged during the 
ultimately successful operation of ``Project Sapphire.''
2. Expand CTR Cooperation in the Area of Reactor Security
    Nuclear power plants in the Soviet Union were not designed to 
confront current terrorist threats which could lead to catastrophic 
accidents with global consequences. More attention should be given 
under the Nunn-Lugar Cooperative Threat Reduction program to enhance 
reactor security as part of the larger effort to strengthen the 
national nuclear safeguards system. At a minimum, current MPC&A efforts 
need to be coordinated with work to upgrade the safety and security of 
the four dozen nuclear power reactors currently operating in five post-
Soviet States.
3. Negotiate Constraints on Sub-Strategic Nuclear Weapons
    Nuclear weapons of a non-strategic variety have not figured 
prominently in the arms control and disarmament agenda since the Bush 
and Gorbachev initiatives in the fall of 1991. Yet it is precisely this 
category of nuclear weapons that poses the greatest risk in terms of 
vulnerability to theft and early and/or unauthorized use.\3\ A number 
of steps need to be taken, including the codification in a legally 
binding treaty of the 1991 Bush-Gorbachev declarations on the 
withdrawal of sub-strategic weapons.\4\
---------------------------------------------------------------------------
    \3\ On this point, see Bruce Blair, ``Testimony Before the 
Subcommittee on Military Research and Development, U.S. House of 
Representatives Committee on National Security,'' March 13, 1997.
    \4\ These steps are elaborated on by the author in ``Unsafe At Any 
Size,'' Bulletin of the Atomic Scientists (May/June 1997), pp. 25-27 
and 61.
---------------------------------------------------------------------------
4. Focus on Sustainability
    I believe it is vital to U.S. national security to continue to 
support the Cooperative Threat Reduction Program. It is now time, 
however, to confront the problem of sustainability and the issue of 
facilitating the transfer of responsibility for MPC&A activities from 
the United States to the NIS, and especially Russia.
    A step in the right direction is the recently established MPC&A 
training center in Obninsk, Russia, which will reinforce indigenous 
MPC&A efforts by educating a new generation of specialists who will 
serve as both practitioners and instructors. Much more, however, must 
be done to create incentives in the post-Soviet States to foster 
indigenous safeguards efforts and to sustain those activities once they 
have begun.
    An influx of money alone will not solve the problem. A sustained 
educational effort is required to change attitudes and to instill a new 
nonproliferation and safeguards philosophy or culture. This is a task 
for which nongovernmental organizations (NGOs) are particularly well 
suited to perform. Let me conclude, therefore, by calling for much 
closer cooperation between the U.S. government and NGOs in the 
provision of such educational assistance and in the pursuit of mutual 
nonproliferation objectives.

APPENDIX ONE--CHRONOLOGY OF PROLIFERATION-SIGNIFICANT CASES OF DIVERSION
                OF PROBABLE FSU-ORIGIN HEU AND PLUTONIUM                
Date of Diversion:           May-September 1992                         
Date of Seizure:             October 9, 1992                            
Amount:                      1.538 kg of HEU in the form of UO2         
Description of Material:     HEU (90% enrichment level)                 
Point of Origin:             Luch Scientific Production Association,    
                              Podolsk                                   
Point of Seizure:            Podolsk, Russia                            
                                                                        
Date of Diversion:           July 29, 1993                              
Date of Seizure:             August 1993                                
Amount:                      1.8 kg of enriched uranium                 
Description of Material:     HEU (approximately 36% enrichment level)   
Point of Origin:             Andreeva Guba Fuel Storage Area, Russia    
Point of Seizure:            Andreeva Guba                              
                                                                        
Date of Diversion:           November 27, 1993                          
Date of Seizure:             June 1994                                  
Amount:                      4.5 kg enriched uranium                    
Description of Material:     HEU (approximately 20% enrichment level)   
Point of Origin:             Fuel Storage Area 3-30, Sevmorput Shipyard 
                              near Murmansk                             
Point of Seizure:            Polyarny (near Murmansk, Russia)           
                                                                        
Date of Diversion:           ?                                          
Date of Seizure:             May 10, 1994                               
Amount:                      5.6 grams Pu-239                           
Description of Material:     99.78 pure Pu-239                          
Point of Origin:             ?                                          
Point of Seizure:            Baden-Wuertemberg (Tengen), Germany        
                                                                        
Date of Diversion:           ?                                          
Date of Seizure:             June 13, 1994                              
Amount:                      800 milligrams                             
Description of Material:     HEU (enriched to 87.7 %)                   
Point of Origin:             ?                                          
Point of Seizure:            Landshut, Germany                          
                                                                        
Date of Diversion:           ?                                          
Date of Seizure:             August 10, 1994                            
Amount:                      560 grams of mixed-oxide of plutonium and  
                              uranium (363 grams of Pu-239)             
Description of Material:     Mixed-Oxide (MOX) fuel                     
Point of Origin:             Institute of Physics and Power Engineering,
                              Obninsk (?)                               
Point of Seizure:            Munich, Germany                            
                                                                        
Date of Diversion:           ?                                          
Date of Seizure:             December 14, 1994                          
Amount:                      2.72 kg of HEU in the form of UO2          
Description of Material:     HEU enriched to 87.7% U-235                
Point of Origin:             Obninsk (?)                                
Point of Seizure:            Prague, Czech Republic                     
                                                                        


    APPENDIX TWO--ADDITIONAL CASES OF POSSIBLE PROLIFERATION CONCERN    
Date of Diversion:           1992                                       
Date of Seizure:             May 1993                                   
Amount:                      Approximately 150 grams of HEU implanted in
                              beryllium                                 
Description of Material:     HEU                                        
Point of Origin:             Institute of Physics and Power Engineering,
                              Obninsk                                   
Point of Seizure:            Vilnius, Lithuania                         
                                                                        
Date of Diversion:           March 1994                                 
Date of Seizure:             June 1994                                  
Amount:                      3.05 kg of HEU                             
Description of Material:     HEU (approximately 90%-U-235) in the form  
                              of UO2                                    
Point of Origin:             Electrostal                                
Point of Seizure:            St. Petersburg, Russia                     
                                                                        
Date of Diversion:                                                      
Date of Seizure:             January 1995                               
Amount:                      Less than 1 kg of HEU                      
Description of Material:     HEU enriched to 87.7% U-235 in the form of 
                              UO2                                       
Point of Origin:             Obninsk (?)                                
Point of Seizure:            Prague, Czech Republic                     
                                                                        
Date of Diversion:                                                      
Date of Seizure:             March 1995                                 
Amount:                      6 kg of HEU enriched to about 20% U-235    
Description of Material:     HEU (20% enrichment level)                 
Point of Origin:             ?                                          
Point of Seizure:            Kiev, Ukraine                              
                                                                        


    Senator Cochran. Thank you very much, Dr. Potter.
    When I was introducing our witnesses as I opened the 
session today, I did not mention that Dr. Speier had been in 
the administration and helped develop our missile technology 
control regime, participated in monitoring that, and is an 
expert in nuclear nonproliferation issues as well, having 
served in the government until 1994 when he retired and became 
an independent consultant.
    We appreciate very much your participation in our hearing 
today. You may proceed.

     TESTIMONY OF RICHARD H. SPEIER, INDEPENDENT CONSULTANT

    Mr. Speier. Thank you, Mr. Chairman. It is an honor to 
testify on recent Russian actions affecting missile 
proliferation. In addition to my full statement which you have 
put into the record, Mr. Chairman, with your permission I will 
submit a recent policy brief distributed in the last week by 
the Nonproliferation Policy Education Center that gives an 
independent view on the same matters that I will be discussing.
    Senator Cochran. That's good to have, and we appreciate it. 
It will be included in the record. Thank you.
    [The information of Mr. Speier follows:]
                    RECKLESS RUSSIAN ROCKET EXPORTS
        A Nonproliferation Policy Education Center Policy Brief
Introduction
    Whatever one might say about the vitality of U.S.-Russian security 
cooperation, Russian missile proliferation is still an embarrassment. 
In fact, not more than a week after the White House announced its 
agreement with President Yelstin over what kinds of theater missile 
defenses the Anti-Ballistic Missile (ABM) Treaty of 1972 allows, 
Israeli Prime Minister Netanyahu protested Russia's transfer of the 
means to make a 1,250 mile-range Russian-designed rocket to Iran.\1\ 
These missile exports, along with others to Armenia, Iraq, Syria, 
China, India, and Brazil, all fly in the face of Moscow's repeated 
pledges to the U.S. and others to adhere to the Missile Technology 
Control Regime. More important, they track the Administration's 
repeated failure to employ U.S. nonproliferation sanctions laws to 
deter such behavior or to suspend U.S. government-sanctioned space 
cooperation and satellite transfers to Moscow. If Congress takes its 
laws and Russian missile proliferation seriously, it should act both to 
eliminate existing loopholes that encourage Executive inaction and to 
condition future U.S.-Russian space commerce on Russia living up to its 
nonproliferation obligations.
---------------------------------------------------------------------------
    \1\ See Martin Sieff, ``Albright OKs Saddam's Ouster, Washington 
Times, March 27, 1997, p. A13.
---------------------------------------------------------------------------
Russia's Missile Nonproliferation Promises
    Communist Russia first publicly pledged to uphold the objectives of 
the Missile Technology Control Regime (MTCR) in June of 1990. Five 
months later, however, it was caught violating this pledge in sharing 
missile production technology for development of an entire upper rocket 
stage with India. This promoted imposition of U.S. missile 
proliferation sanctions in May of 1992.\2\ Two years later, after 
securing Moscow's pledge to stop lending India missile production 
assistance, the Clinton Administration made the Russian Republic an 
adherent to the MTCR late for purposes of U.S. law. In exchange for 
nearly $1 billion in U.S. commercial and government-to-government space 
cooperation through the year 2000, Russia claimed it had renegotiated 
its space cooperation with India to exclude transfers that would 
violate the MTCR. Finally, satisfied that Moscow had created an 
effective legal system of export controls, the White House sponsored 
Moscow's formal entry into the MTCR in 1995.
---------------------------------------------------------------------------
    \2\ See Andrew Lawler, ``U.S. Sanctions Imposed; Indian Deal With 
Russia Still On,'' Space News, May 18-24, 1992, p. 14.
---------------------------------------------------------------------------
It's Proliferating Performance
    Clearly, the White House has tried to give Moscow every positive 
incentive not to help other nations acquire missiles. Yet, throughout 
President Clinton's tenure, Russia has been caught exporting extremely 
sensitive missile technology and hardware. Thus, just one month after 
U.S. officials got Russia to agree to stop lending India missile 
production assistance, Moscow was caught air-shipping North Korean SCUD 
missile launchers and other components to Syria.\3\ This, in turn, was 
followed a month later with Russia's transfer of its most advanced 
missile technology to China. Under a 5-year defense cooperation 
agreement with China, Russia sent solid rocket fuel technology, mobile 
missile know-how, large liquid rocket engines, missile guidance and 
multiple warhead hardware and technology and hundreds of Russian 
missile experts to help the PRC develop its own version of Russia's 
highly accurate, intercontinental SS-25 missile.\4\
---------------------------------------------------------------------------
    \3\ See John P. Hannah, ``How Russia Still Abets Mideast Terror,'' 
The Wall Street Journal, September 15, 1993.
    \4\ See John J. Fialka, The Wall Street Journal, October 14, 1993, 
p. A12 and Martin Sief, The Washington Times, November 12, 1993, p. 
A16.
---------------------------------------------------------------------------
    Nor did Russia end its missile assistance to India. Having agreed 
in July of 1993 to stop helping India build cryogenic rockets, Moscow 
insisted that it needed until November of 1993 to renegotiate its 
Indian contracts. Russia did this but, in addition, it sent New Delhi 
blueprints (something MTCR clearly prohibits) along with at least four-
fifths of the related production technology to build the engines. Then, 
six months after Russia's self-imposed November deadline, U.S. 
contractors negotiating space launches with Salyut/Krunichev in Moscow 
found the Russians working with six-foot high, high-fidelity mockup of 
the Indian rocket that Russia was supposed to have cut off missile 
production assistance to. According to the Russians, this detailed 
model was being used to teach Indian scientists precisely how to launch 
their rockets.\5\
---------------------------------------------------------------------------
    \5\ See Vivek Raghuvanshi, ``Russia, India Discuss Cryogenic 
Contract,'' Space News, November 15-28, 1993; ``Export Saga,'' Aviation 
Week, October 25, 1993, p. 19; and House Committee on Science, Space 
and Technology staff Memo to Congressman Sensenbrenner, ``Potential 
Russian Violations of the Missile Technology Control Regime, August 1, 
1994.
---------------------------------------------------------------------------
    Unfortunately, Russia's transfers of missile technology did not end 
here. A year later, in late May of 1995, the White House waived missile 
proliferation sanctions against Russia for helping Brazil with the 
casings on a large rocket known as the VLS project. Administration 
officials explained this missile misdeed away claiming that the 
Russians agreed to this sale before it promised the United States not 
to conduct such trade. After talking with the Brazilians, though, U.S. 
officials learned that Russia had helped Brazil on many more components 
than the rocket casings and that the cooperation had been going on for 
some time.\6\
---------------------------------------------------------------------------
    \6\ R. Jeffrey Smith, ``U.S. Waives Objection to Russian Missile 
Technology Sale to Brazil,'' The Washington Post, June 8, 1995, p. A23.
---------------------------------------------------------------------------
    The next Russian missile misdeed to hit the press was its attempted 
missile guidance shipments to Iraq, which Jordanian authorities 
interdicted in November of 1995. Since Desert Storm, the U.N. 
resolutions have prohibited all military trade with Iraq. Yet, on 10 
November, 30 crates containing 115 Russian-made gyroscopes from 
dismantled intercontinental-range missiles were air shipped from Russia 
aboard an Royal Jordanian aircraft to Amman. These components were 
destined for Karama, Iraq's missile development center. At first, the 
Russians denied any involvement. Then, U.S. State Department officials 
admitted that the Russians did ship the gyroscopes but claimed that the 
shipment was ``aberrational,'' that, again, Russian authorities 
``tried'' but could not find the Russian perpetrator of the sale.\7\
---------------------------------------------------------------------------
    \7\ See R. Jeffrey Smith, Washington Post, December 15, 1995, p. 
A30 and James Bruce, Jane's Defence Weekly, January 3, 1996, p. 3.
---------------------------------------------------------------------------
Iran and Armenia: Moscow's Latest Missile Customers
    Perhaps the most frightening act of Russian rocket recklessness was 
first reported in early February: It was caught selling Iran the means 
to produce a SS-4, a 1,250 mile-range missile that could reach all of 
Saudi Arabia and Israel.\8\ This missile can carry a 4,400 pound 
warhead but is so inaccurate, it is only useful for delivering nuclear 
or biological warheads.
---------------------------------------------------------------------------
    \8\ See Robin Wright, ``Russia Warned on Helping Iran Missile 
Program,'' The Los Angeles Times, February 12, 1997 and Barbara Opal, 
``Israelis Say Russia Aids Iran's Quest for Missiles,'' Defense News, 
February 10-16, 1997, p. 1; and Bill Gertz, ``Russia Disregards Pledge 
to Curb Iran Missile Output,'' The Washington Times, May 22, 1997, p. 
A3.
---------------------------------------------------------------------------
    U.S. officials learned of this deal only when General Amos Gilad, 
director of research for Israeli military intelligence visited 
Washington just days before Russian Prime Minister Vicktor Chernomyrdin 
was to meet with Vice Present Gore February 6. The timing was hardly 
accidental. The Israelis could have briefed their U.S. counterparts 
privately at any time. Instead, they chose to wait until just before 
the Gore-Chernomyrdin meeting in a fashion that the Administration 
could not ignore. First, the Israeli delegation briefed the area desks 
at State and Defense; then, the delegation briefed the various U.S. 
intelligence agencies; and then the House and Senate intelligence 
committee staffs. Finally, as news of their briefings leaked to the 
press, the Vice President demanded a briefing.
    Vice President Gore did, in fact, bring the SS-4 deal to Prime 
Minister Chernomyrdin's attention. The Prime Minister, though, denied 
that his government authorized the sale. He did admit that this deal 
would violate Boris Yeltsin's 1994 pledge not to engage in further arms 
sales to Iran. More important, the transfer presents a serious security 
threat to the entire Middle East and is a clear violation of the MTCR.
    Finally, there's Russia's recent sale of missiles to Armenia. In 
this case, Russia sold eight Scud-B launchers with enough missiles--24 
to 32--to ``complete demolish,'' (in the words of the Chairman of 
Russia's Duma Defense Committee), Armenia's Azerbaijani foes in 
Baku.\9\ Although these transfers continued as late as last year, 
Russian officials claim that they were only able to confirm them early 
this winter. Washington officials, meanwhile, privately are raising 
doubts that any ``transfer'' technically took place. The Scud missile 
systems, they note, after all, were on Armenian soil under Soviet 
control prior to their actual sale.
---------------------------------------------------------------------------
    \9\ See Nikolai Novichkov, ``Russia Details Illegal Deliveries to 
Armenia,'' Jane's Defence Weekly, April 16, 1997 and Glen E. Howard, 
``Oil and Missiles in the Caucasus,'' The Wall Street Journal, May 14, 
1991, p. A22.
---------------------------------------------------------------------------
What's to Be Done?
    Under U.S. law, adherents and formal members of the MTCR cannot be 
sanctioned for missile exports unless they allow the MTCR guidelines to 
be violated and fail to make an earnest effort to prosecute the 
perpetrators. The law also requires sanctions only when a proliferator 
has acted ``knowingly.'' These provisions, in effect, have been used by 
the Executive to serve as a blanket exemption for Russia from 
sanctions.\10\ Thus, repeatedly, Administration officials have argued 
that Russia did not authorize or ``know'' of the missile misdeeds 
identified or that they have been unable to identify the perpetrators 
or are in the mist of disciplining some lower-level official. This has 
prompted justified calls for tightening up existing nonproliferation 
sanctions laws.\11\ The Administration, instead, has focused on 
diplomacy. Last fall, U.S. officials shared a detailed list of current 
troublesome Russian missile transactions with Moscow officials in hopes 
that they would stop these deals. So far, the Russians have admitted 
nothing and it's unclear if they have stopped any of these deals.
---------------------------------------------------------------------------
    \10\ See Testimony of Henry Sokolski, ``America's Fight Against 
Strategic Weapons Proliferation: Why and How We Can Do Better,'' Senate 
Armed Services Committee, Subcommittee on Acquisitions and Technology, 
March 27, 1966.
    \11\ See, e.g., the initial findings of The Nonproliferation Policy 
Reform Task Force, ``Nonproliferation Policy Reform: Enhancing the Role 
of Congress'' (Washington, DC: The Nonproliferation Policy Education 
Center, June 1996).
---------------------------------------------------------------------------
    Clearly, if we are serious about our security, we need to do 
better. It's too late for the Executive to undo the harm Russian 
missile proliferation has already done. But Congress can make sure 
Russia has an interest in stopping future proliferation. In fact, the 
U.S. has considerable leverage if it chooses to use it: Most of 
Russia's cash-earning space launches are of U.S.-made satellites that 
require U.S. export licenses. In addition, the U.S. continues to fund 
much of Russia's participation in NASA projects. Together, these 
activities are worth hundreds of millions of dollars annually in hard 
currency to Russia's space industry. These space firms are the ones 
whose technology is being sold and who are closest to those doing the 
proliferating.
    The pros and cons of tying future approval of U.S. export licenses 
and funding of Russian participation to the absences of more missile 
misdeeds are likely to be taken up in planned hearings of the Senate 
Governmental Affairs Subcommittee on International Security, 
Proliferation and Federal Services. Such oversight comes none too soon. 
The U.S. backed Russia's membership into the MTCR and offered it space 
cooperation.because the White House claimed Moscow had finally 
established a sound system missile technology export controls. If there 
is no such system, we need to know. Certainly, the last thing we would 
want is for U.S. space commerce and cooperation to subsidize more 
missile proliferation.

                     RECKLESS RUSSIAN ROCKET EXPORTS                    
                                                                        
                                                           White House  
                                                         Action Taken to
    Russian Missile                                        Enforce U.S. 
        Misdeed            Administration Assessment         Missile    
                                                            Technology  
                                                          Sanctions Law 
                                                                        
Air ships North Korean  Tel erector launcher units may         NONE     
 SCUD launchers to       have been mistaken by Russians                 
 Syria (8/93)            to be trucks                                   
Sells China mobile,     Russia made these transfers as         NONE     
 multiple-war-head,      an MTCR adherent and so is                     
 high-accuracy solid     legally exempt from US                         
 and liquid missile      sanctions. Acting against                      
 technology to           Beijing would jeopardize U.S.-                 
 modernize its aging     China relations                                
 strategic rocket                                                       
 forces (1993)                                                          
Russian rocket builder  Shown evidence of Russia's             NONE     
 says it's still         continued missile assistance                   
 lending India space     to India and warned it could                   
 launch integration      jeopardize $100's of millions                  
 tech (6/94) despite     in U.S.-Russian space                          
 MTCR and Russia's 7/    cooperation, White House tells                 
 93 pledge not to give   House Space Committee Chairman                 
 India missile           (9/94) CIA will ``look into                    
 production assistance   the matter''                                   
Washington Post         Waived U.S. missile sanctions          NONE     
 reports Russia has      against Brazil and Russia                      
 been helping Brazil     (citing US national security                   
 build a large rocket    interest), admitted both into                  
 (6/8/95)                the MTCR because of their                      
                         creation of a ``sound''                        
                         systems of nonproliferation                    
                         export controls                                
Ships intercontinental- Shipment of gyroscopes was an          NONE     
 range ballistic         ``aberrational'' action.                       
 missile guidance sets   Russian efforts to find who                    
 to Iraq. Jordan         was responsible are                            
 interdicts ship-        inconclusive                                   
 shipment (11/95)                                                       
Sells Iran 1,250-mile   Administration official is             NONE     
 range missile           quoted in Los Angeles Times                    
 production technology   explaining that the transfer                   
 (96-97)                 may have been ``beyond the                     
                         control of the government'' (2/                
                         12/97)                                         
Sells Armenia 8 Scud-B  Administration officials claim         NONE     
 missile launchers       that there may have been no                    
 with 24-32 missiles     ``transfer'' since the Scud                    
 (through late 1996)     systems were in Armenia under                  
                         Soviet control prior to the                    
                         sale. Russian officials claim                  
                         that they were only able to                    
                         confirm these sales recently                   
                                                                        


    Mr. Speier. Mr. Chairman, we are fortunate to be living in 
a time of world peace, but what kind of a peace is it? Ambrose 
Bierce, the great American cynic, defined peace as ``a period 
of cheating between two periods of fighting.''
    Mr. Chairman, there is a system of international rules and 
procedures called the Missile Technology Control Regime. The 
purpose of the MTCR is to limit the proliferation of missiles 
capable of delivering mass destruction weapons. Twenty-nine 
nations are now formal members of the MTCR. They include 
Russia.
    But it appears that there is some cheating going on. Is 
Russia cheating? If so, what should we do about it? I shall 
address these questions by first summarizing the key rules of 
the MTCR, then recent Russian actions, and then implications 
for policy.
    The MTCR is a non-treaty arrangement that has been in 
effect for 10 years. To understand its key rules, I must ask 
you, Mr. Chairman, to understand one phrase of MTCR jargon--
Category One systems.
    Category One systems are unmanned delivery vehicles that 
can send a 500 kilogram payload to a range of 300 kilometers. 
Category One systems are rockets and unmanned air vehicles, 
such as cruise missiles, but of any kind--civilian or military, 
as long as they meet the 500 kilogram, 300 kilometer 
parameters.
    Category One systems also include technology, production 
equipment and certain major components. Category One systems 
include Scud missiles, as well as those of greater capability. 
Category One systems are the target of the MCTR's rules for 
export restraint.
    Given this bit of jargon, the MTCR has three key rules. 
First, there is a strong presumption to deny exports of 
Category One systems, regardless of purpose. On the rare 
occasions when they are exported, the supplier government, and 
not just the recipient, must take responsibility for ensuring 
end use.
    Second, there is a strong presumption to deny exports of 
any missile intended for the delivery of mass destruction 
weapons regardless of its range of payload. This denial rule 
extends to every item controlled by the MTCR, as long as that 
item is intended for the delivery of nuclear, biological or 
chemical weapons.
    And, third, there is a flat prohibition against exporting 
complete production facilities, or complete production 
technology, for Category One systems. In a nonproliferation 
regime, it makes no sense to create new suppliers of the most 
sensitive items.
    The United States, since late 1990, has supplemented these 
rules with legislated sanctions against foreign actions that 
contribute to the proliferation of Category One systems.
     These sanctions have encouraged export restraint by some 
governments, but by law the sanctions do not apply to transfers 
approved by any of the governments of the 29 members of the 
MTCR.
    Given these rules of the MTCR, I shall now summarize 
relevant actions by Russia, starting in 1993, the year that 
Russia formerly agreed to abide by the guidelines of the MTCR.
    Nineteen hundred ninety three--Russia was faced with U.S. 
sanctions for the export of Category One rocket engines and 
their production technology to India.
    So it made a deal with the U.S. Russia agreed in July, 1993 
to halt the transfer of the technology, and to abide by the 
rules of the MTCR without yet becoming a full member of the 
regime. In return, the U.S. agreed to make Russia a space 
station partner, and to allow U.S. satellites to be launched by 
Russian rockets.
    But Russian transfer of rocket engine technology continued 
to go to India, although it was supposed to have ceased. It 
continued for another 6 weeks, until all aspects of the 
agreement were formally in place, resulting in the transfers 
being 60 to 80 percent completed.
    1994--there are no public reports of Russian Category One 
exports in that year. But the U.S. Government is concerned 
about Russian activities involving China, India, Iran, Libya, 
North Korea and Syria.
    So the U.S. refuses to approve full Russian membership in 
the MTCR. The criteria for MTCR membership, as you yourself 
mentioned, Mr. Chairman, include the ability to control 
missile-related exports, and the actual cessation of actions 
inconsistent with the MTCR.
    1995--the U.S. catches Russia aiding Brazil in the 
development of a Category One space launch vehicle, but the 
U.S. waives the imposition of sanctions. Instead, the U.S. 
agrees to support full Russian membership in the MTCR, 
presumably because Russia has met the criteria for membership.
    In August 1995, Russia becomes a full member. One month 
later, in September, a Russian lieutenant general states 
publicly that if NATO expands eastward, Russia will export 
nuclear and missile items to Algeria, India, Iran and Iraq.
    Two months after that, in November, the missile guidance 
systems that we have already discussed, salvaged from missiles 
with ranges of thousands of kilometers, are transferred from 
Russia to Iraq.
    U.S. officials, as we've just heard, say that this transfer 
may not have been authorized by the Russian government, but we 
are still waiting for the results of an investigation.
    1996--in January, well connected Russians renew the threat 
to link U.S. behavior to Russian restraint in missile exports. 
In February, some 6 months after Russia has joined the MTCR, an 
official of the Russia Duma Defense Committee states that if 
NATO expands eastward, Russia will export missiles to China and 
India.
    By February, Russian firms are concluding contracts to help 
Iran produce ballistic missiles. In May, the U.S. protests to 
Russia and Ukraine over talks to supply China with SS-18 ICBM 
technology.
    During this year, some unspecified entity in Russia makes 
an illegal export--so called by the chairman of the Duma 
Defense Committee--of eight Scud launchers and 24 to 32 Scud 
missiles to Armenia.
    Mr. Chairman, it is one thing to talk about loose nukes, 
where individuals may attempt to steal small quantities of 
plutonium in their coat pockets. But it is quite another thing 
to envision loose Scuds, where dozens of complete missiles and 
their launchers are illegally spirited out of Russian control.
    Nineteen hundred ninety seven--Israeli officials report 
that Russia is helping Iran to produce SS-4 type missiles, and 
to test an SS-4 rocket engine. SS-4s have a range on the order 
of 2,000 kilometers, and transfers of their production 
technology are banned by the MTCR.
    Moreover, SS-4s can only be effective with mass destruction 
payloads.
    Israel also reports that Russia is willing to stop these 
transfers if Israel will enter an economic deal with Russia. In 
spite of this quid pro quo offer, a senior U.S. source 
speculates that the transfer may be beyond the control of the 
Russian government.
    U.S. officials say, however, there is even stronger 
intelligence on other Russian Category One transfers to Iran, 
specifically transfers of Scud missile production technology, 
which are also banned by the MTCR.
    Mr. Chairman, if these reports are substantially accurate, 
Russia has exported Category One missiles and has exported 
missile items intended for the delivery of mass destruction 
weapons, in spite of the MTCR's strong presumption to deny such 
exports.
    Russia may have exported complete Category One production 
technology to Iran, in spite of the MTCR's flat prohibition 
against doing so. Russia is either incapable of controlling 
such exports, or is unwilling to control them, or both, in 
spite of such capability and willingness being key criteria for 
membership in the MTCR, and key elements of the 1993 U.S.-
Russian agreement for space cooperation.
    The policy implications are four fold.
    One, space cooperation. Because Russia has violated the 
1993 bargain, the U.S. is no longer obligated to keep Russia as 
a space station partner or to allow Russian launches of Western 
satellites.
    Two, MTCR membership. Because Russia has failed to fulfill 
key criteria for MTCR membership, continued Russian membership 
is no longer in the interest of the regime. The regime has no 
procedures for expelling a member, but it may be appropriate 
for Russia itself to leave the regime until it is capable of 
and willing to abide by its rules.
    Three, sanctions. Because Russia is a member of the MTCR, 
current U.S. law largely exempts it from missile related 
sanctions. But Congress may want to consider whether such 
sanctions are necessary to change the cost-benefit calculus of 
Russian exports.
    One way to apply sanctions would be to require Presidential 
certification of Russian behavior consistent with the MTCR. 
Such certification could be a prerequisite for the continuation 
of space cooperation with Russia or other trade in MTCR-
controlled items between the U.S. and Russia.
    And, four, intelligence. Because a key assumption of 
National Intelligence Estimate 95-19 was that Russia would not 
egregiously violate the MTCR, the conclusion of that NIE, that 
North America would not face missile threats from additional 
nations before the year 2010, needs to be reassessed.
    The NIE described exports from countries such as Russia as 
a ``wild card,'' and the independent panel reviewing the NIE 
criticized the assumption of Russian compliance. The fact is 
that the Russian behavior I have described blows the NIE 
assumptions to smithereens.
    Mr. Chairman, the U.S. and Russia have a great many common 
interests. Moreover, the Russian Federation is not a monolith. 
For these reasons it is important to target U.S. actions 
against those Russian entities benefitting from missile 
proliferation. It is important not to link other, completely 
separate elements of our relationship to missile 
nonproliferation issues.
    But having said this, we are faced with 4 years of reports 
of Russian missile proliferation. We cannot afford to tolerate 
cheating against basic rules of international security. We need 
remedial action.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Speier follows:]

                PREPARED STATEMENT OF RICHARD H. SPEIER

    It is an honor to testify before the Committee this afternoon on 
the relationship between recent actions of the Russian Federation and 
missile proliferation. Of course, the views I will express are my own 
and not necessarily those of any organization with which I am 
affiliated.
    We are fortunate to be living in a time of world peace. But what 
kind of a peace is it? Ambrose Bierce, the great American cynic, 
defined peace as ``a period of cheating between two periods of 
fighting''.
    I spent ten years of my government career working on a set of 
export control rules and procedures to limit the proliferation of 
missiles capable of delivering weapons of mass destruction. These rules 
and procedures are called the Missile Technology Control Regime--or 
MTCR. Twenty-nine nations are now formal members of the MTCR. But it 
appears that there is some cheating going on.
    Is Russia cheating? If so, what should we do about it? I shall 
address these questions by first summarizing the key rules of the MTCR, 
then outlining a chronology of recent actions by the Russian 
Federation, and then examining the implications for policy.
The MTCR
    The MTCR is a non-treaty arrangement that has been in effect for 10 
years. To understand its key rules I must ask the Committee to 
understand one phrase of MTCR jargon, ``Category I systems.'' Category 
I systems are unmanned delivery vehicles capable of sending a 500 
kilogram payload to a range of 300 kilometers. Category I systems 
consist of rockets and unmanned air vehicles of all kinds--civilian and 
military, as well as their technology, their specially designed 
production equipment and certain major components, such as rocket 
engines and complete guidance systems. Civilian as well as military 
systems are covered because such items as space launch vehicles and 
reconnaissance drones are interchangeable with ballistic missiles and 
cruise missiles. The founders of the MTCR set the parameters for 
Category I systems at 500 kilograms and 300 kilometers because 500 
kilograms is the weight of a relatively unsophisticated nuclear warhead 
and 300 kilometers is the strategic distance in the most compact 
theaters where nuclear-armed missiles might be used. Category I systems 
include Scud missiles as well as those of greater capability.
    Category I systems are the target of the MTCR's rules for export 
restraint. But other, dual-use items are also controlled by the MTCR--
so-called Category II items, such as rocket fuels, composite materials, 
and lesser components--because they can contribute to missiles capable 
of delivering weapons of mass destruction.
    The MTCR has three key rules:
    First, there is a strong presumption to deny export approval for 
Category I systems. On the rare occasions when Category I systems are 
exported, the supplier government--and not just the recipient--must 
take responsibility for ensuring the end use. This presumption of 
denial applies to all systems of Category I capability, regardless of 
purpose.
    Second, there is also a strong presumption to deny export approval 
for any missile--regardless of range and payload--or for any Category 
II item if the item is intended for the delivery of mass destruction 
weapons. This presumption of denial applies to intentions, regardless 
of the capabilities of a missile.
    And third, there is a flat prohibition against exporting complete 
production facilities or complete production technology for Category I 
systems. In a non-proliferation regime it makes no sense to create new 
suppliers of the most sensitive items.
    All members of the MTCR agree to abide by these rules. But the 
United States, since late 1990, has supplemented these rules with 
legislated sanctions against foreign entities that contribute to the 
proliferation of Category I systems. These sanctions have been 
effective in encouraging export restraint by some governments. But, by 
law, the sanctions do not apply to transfers approved by any of the 29 
members of the MTCR.
    So these are the key rules of the MTCR: (1) a strong presumption to 
deny exports of Category I items, regardless of purpose; (2) a strong 
presumption to deny exports of other items if they are intended for the 
delivery of mass destruction weapons; and (3) a flat prohibition on the 
export of complete production facilities or technology for Category I 
systems.
Chronology of Russian actions
    Now I shall summarize relevant actions by the Russian Federation 
starting in 1993, the year that Russia formally agreed to abide by the 
guidelines of the MTCR. I will be happy to share with Committee staff 
the basic data that I used.
    Two caveats are necessary before I outline this chronology: First, 
I must emphasize that this chronology is drawn exclusively from reports 
in the public domain. These reports suggest a clear pattern of Russian 
behavior, but I cannot guarantee their accuracy. If the Committee 
wishes to pursue this matter, I understand it will have access in a 
closed hearing to the agencies in the Executive Branch responsible for 
intelligence and for negotiations with Russia.
    Second, when we talk about actions of the Russian Federation, we 
must remember that Russia is still getting its act together and that it 
is certainly not a monolith. Some elements of the Russian government 
may disapprove of specific exports--or may not even know about them. 
The entity benefiting from an export may be acting independently, may 
be the winner in a split decision by the government, or may be carrying 
out a coordinated government policy. So, although the MTCR makes the 
Russian government responsible for missile-related exports, actual 
government control may or may not be in place.
    1993. Russia, faced with U.S. sanctions for the export of Category 
I rocket engines and their production technology to India, agrees in 
July to halt the transfer of the technology, to limit the export of 
hardware, and to abide by the rules of the MTCR without yet becoming a 
full member of the regime. In return, the U.S. agrees to make Russia a 
partner in the space station project and to allow satellites with U.S. 
components to be launched by Russian rockets. This U.S. concession is 
reckoned to be worth hundreds of millions of dollars to the Russian 
space program. But Russian transfer of rocket engine technology to 
India--which is supposed to have ceased--is reported to continue for 
another six weeks until all aspects of the agreement are formally in 
place, resulting in the transfers being 60-80 percent completed.
    1994. There are no public reports of Russian Category I exports. 
But the U.S. government is concerned about Russian activities--
including Category II exports to China, India, and Libya; the Russian 
transport of missile equipment from North Korea to Syria; and reports 
of Russian missile experts in such countries as China, North Korea, and 
Iran. For these reasons the U.S. refuses to approve full Russian 
membership in the MTCR. The criteria for MTCR membership have never 
been made public. But official U.S. testimony states that they include 
the ability to control missile-related exports and the actual cessation 
of actions inconsistent with the MTCR.
    1995. The U.S. catches Russia aiding Brazil in the development of a 
Category I space launch vehicle but waives the imposition of sanctions. 
At the June Gore-Chernomyrdin meeting, the U.S. agrees to support full 
Russian membership in the MTCR--presumably because the U.S. believes 
that Russia has met the criteria for membership. In August the other 
members also approve, and Russia becomes a full member. One month 
later, in September, a Russian Lieutenant General is quoted in the 
Russian press as saying that, if NATO expands eastward, Russia will 
export nuclear and missile items to Algeria, India, Iran, and Iraq. Two 
months after that, in November, Russian missile guidance equipment--
salvaged from submarine-launched ballistic missiles with ranges in the 
thousands of kilometers--is transferred to Iraq. U.S. officials say 
that this transfer may not have been authorized by the government of 
the Russian Federation.
    1996. In January, well connected Russians renew the threat to link 
U.S. behavior to Russian restraint in missile exports. In February, 
some six months after Russia has joined the MTCR, an official of the 
Russian Duma Defense Committee states on the record that, if NATO 
expands eastward, Russia will export missiles to China and India. By 
February, Russian firms are concluding contracts to help Iran produce 
liquid-fueled ballistic missiles. Starting in May the U.S. protests to 
Russia and Ukraine over discussions with China to supply SS-18 ICBM 
technology--a possible violation of the START I Treaty as well as of 
MTCR pledges. During this year, some entity in Russia makes an 
``illegal'' export--so termed by the Chairman of the Duma Defense 
Committee--of eight Scud launchers and 24 to 32 Scud missiles to 
Armenia. Mr. Chairman, it is one thing to talk about ``'loose nukes'', 
where individuals may attempt to steal small amounts of plutonium in 
their coat pockets. But it is quite another thing to envision ``loose 
Scuds'', where dozens of complete missiles and their launchers are 
illegally spirited out of Russian control.
    1997. Israeli officials, speaking on the record, report that Russia 
is helping Iran produce SS-4 type missiles with a range on the order of 
2000 kilometers. SS-4's are banned by the INF Treaty, and transfers of 
their production technology are banned by the MTCR. Because of the 
inaccuracy of these missiles, they can only be effective with mass 
destruction payloads. Israel reports Russian transfers of SS-4 
components as well as production technology and announces an Iranian 
test of an SS-4 rocket engine. Israel also reports that Russia is 
willing to stop these transfers if Israel will enter economic 
arrangements advantageous to Russia. The U.S. is reported to raise 
these matters with Russia at a Gore-Chernomyrdin meeting. In spite of 
the Israeli reports of a Russian quid-pro-quo offer, a senior U.S. 
source speculates that the transfer may be ``beyond the control'' of 
the Russian government. And unidentified U.S. officials say the 
intelligence on these transfers is weaker than the intelligence on 
other Russian Category I transfers to Iran--specifically, transfers of 
Scud missile production technology, which are also banned by the MTCR.
Implications for policy
    I shall now discuss some policy implications that follow if these 
reports are substantially accurate.
    If the reports are true, Russia has exported Category I missiles 
and has exported missile items intended for the delivery of mass 
destruction weapons in spite of the MTCR's ``strong presumption to 
deny'' such exports. If the reports are true, Russia may have exported 
complete Category I production technology to Iran in spite of the 
MTCR's flat prohibition against doing so. If the reports are true, 
Russia is either incapable of controlling such exports or is unwilling 
to control them--or both--in spite of such capability and willingness 
being key criteria for membership in the MTCR and key elements of the 
1993 U.S.-Russian agreement for space cooperation.
    If the reports are true, the policy implications are as follows:
    (1) Space cooperation. Because Russia has violated the 1993 bargain 
under which the U.S. has agreed to make Russia a partner in the space 
station project and to approve Russian launches of Western satellites, 
the U.S. is no longer obligated to continue this space cooperation.
    (2) MTCR membership. Because Russia has failed to fulfill key 
criteria for MTCR membership, continued Russian membership is no longer 
in the interest of the regime. Membership criteria are important 
because, once in the regime, a member can cause mischief through access 
to information exchanges, a veto on regime decisions, increased access 
to missile-related technology, and protection from U.S. sanctions. The 
regime has no procedures for expelling a member. But international 
security--with or without Russia in the regime promotes Russian 
national security. So it may be appropriate for the Russian Federation 
itself to leave the regime until it is capable of and willing to abide 
by its rules.
    (3) Sanctions. Because Russia is a member of the MTCR, current U.S. 
law exempts from sanctions those Russian entities making exports 
approved by the Russian government. Congress need not open up the 
question of whether sanctions should apply to MTCR members other than 
Russia. But with respect to Russia, the Congress may want to consider 
whether such sanctions are necessary to change the cost-benefit 
calculus of Russian exports. One way to apply sanctions would be to 
require Presidential certification of Russian behavior consistent with 
the MTCR. Legislation could require that the President make such a 
certification before the U.S. can approve the continuation of space 
cooperation with Russia or imports or exports of MTCR-controlled items 
from or to Russia.
    (4) Intelligence. Because a key assumption of National Intelligence 
Estimate 95-19 was that Russia would not egregiously violate the MTCR, 
the conclusion of that NIE--that North America would not face missile 
threats from additional nations before the year 2010--needs to be 
reassessed. The NIE described exports from countries such as Russia as 
a ``wild card'', and the independent panel reviewing the NIE criticized 
the assumption of Russian compliance. The fact is that the Russian 
behavior that I have described blows the NIE's assumptions to 
smithereens.
    Mr. Chairman, the U.S. and Russia have a great many common 
interests. Moreover, the Russian Federation is not a monolith. For 
these reasons, it is important to target U.S. actions against those 
Russian entities benefiting from Russian contributions to missile 
proliferation. It is important not to link other, completely separate' 
elements of the U.S.-Russian relationship to missile non-proliferation 
issues.
    But, having said this, we are faced with four years of reports of 
Russian missile proliferation. We cannot afford to tolerate cheating 
against basic rules of international security. We need remedial action.

    Senator Cochran. Thank you. Dr. Speier for your interesting 
testimony and for your suggestions about the possible steps 
that we can take to do something more effective about getting 
compliance with the obligations under the MTCR.
    Let me ask Dr. Potter a couple of questions in connection 
with the testimony that he gave us about the security issue. 
Dr. Potter, you focused on that, and the problem of having 
weapons grade nuclear material available in such a widespread 
region outside the Soviet Union. You named five or six 
different nation-states now, including Latvia, I think, where 
this material is now located.
    Is the list that you give us an effort to identify areas 
where these nuclear materials can be easily stolen or at risk 
of being stolen? Or is this just a list of those places where 
nuclear material is available, but has a varying degree of 
security surrounding it?
    Are these all high risk in terms of secured areas or not? I 
want to be sure I understood what you were telling us.
    Mr. Potter. I think the first point to make is that it 
clearly is the case that the overwhelming bulk of weapons 
useable material is located in Russia. But having said that, it 
is also the case that there is a significant quantity that 
resides outside of Russia.
    My point is that if I were a would be proliferator, would I 
necessarily go to the place where there was the most material, 
or would I turn to the place or places where the material was 
most accessible. I think in part the answer is the latter, and 
I can identify then some specific places where the material 
outside of Russia is not adequately safeguarded.
    The U.S. Government has been concerned for some time about 
a small quantity of weapons useable nuclear material in Tblisi, 
Georgia. We have had discussions with the Georgian government 
and with the Russian government about how to get that material 
out of the country, but to date, without any demonstrable 
effect.
    Unfortunately, there is also material that is weapons 
useable in other states that I mentioned--Belarus, Kazakstan, 
Ukraine, Uzbekistan and Latvia. The vulnerability of that 
material varies from country to country.
    My basic thesis is that rather than continuing to invest a 
large amount of money in trying to make secure those limited 
number of facilities where there are discrete amounts of 
material known to be present, it makes more sense to remove 
that material as a nonproliferation measure.
    My calculation is that there is about 191 kilograms--let's 
say slightly under 200 kilograms of material that is known to 
exists in these states. My center has had discussions with the 
directors of some of these nuclear facilities who are quite 
prepared to see that material taken from them if they are 
compensated in some fashion for the material.
    They are also quite prepared to see the reactors modified 
to run on low-enriched uranium which would not constitute a 
significant proliferation threat.
    So I think while this will not solve the problem at large, 
namely with respect to Russian material, it may help us to 
reduce the proliferation threats that nevertheless are real, 
and, I would argue, to date have not received sufficient 
attention.
    Senator Cochran. One of the reasons, we are told, that some 
of these rogue states are slow in their ability to develop 
nuclear weapons capability is the difficulty and the cost of 
producing the fissile material.
    Iran is embarking, it seems to be, it's reported by many--
upon a planned effort to build nuclear weapons.
    Would not they get nuclear weapons quicker if they were 
able to steal or purchase fissile material from Russian 
facilities, or other facilities that are unsecured outside of 
Russia, which you talk about? Could they successfully obtain 
fissile material in this way, do you think?
    Mr. Potter. I think your question really directs attention 
to the great problem caused by the inadequate state of security 
of nuclear facilities in the former Soviet Union, the fact that 
there is such a tremendous quantity of material in the post-
Soviet States.
    I can respond specifically to the efforts that I am aware 
of involving Iran, and at least one of the post-Soviet States, 
namely, Kazakstan. We do know, and the U.S. Government to the 
best of my knowledge is well acquainted with, Iranian interests 
in nuclear material that was located in Kazakstan, at least 
since 1993.
    Some of this information is related to the so-called 
Project Sapphire, the successful effort to take out some 600 
kilograms of HEU from the Ulba Metallurgy Plant in Ust-
Kamenogorsk, Kazakstan.
    One of the things that Americans who were involved in 
Project Sapphire discerned was that in a room next to the room 
holding the highly enriched uranium in Ust-Kamenogorsk were a 
number of canisters that had Tehran addresses on them.
    I have been told that the American Government believes that 
these canisters were filled with the dual use nuclear related 
material beryllium which was produced in great quantities at 
Ust-Kamenogorsk. This example suggests that there was at least 
contact between the Iranian government and this Kazakstan 
nuclear facility which had a large quantity of highly enriched 
uranium.
    It's also known that Iran was very much interested in the 
Aktau nuclear power facility, which is on the Caspian Sea, 
across from Iran. That as early as 1993, the Iranian government 
was interested in establishing a consulate at Aktau where the 
fast breeder reactor is located.
    This is significant, among other things, because 
approximately one ton of plutonium exists on site at this fast 
breeder reactor facility. And what is significant about this, 
in addition to the quantity, is that the material is in low 
irradiated form, that is, it doesn't have the radiation barrier 
that is typical in most spent fuel.
    There has been assistance provided by the U.S. Government 
to try to safeguard this material, but it's also the case that 
there is a major Iranian presence at this particular port 
facility. In fact, there is cooperation proceeding between Iran 
and Kazakstan to develop a harbor in Aktau.
    So, these would be at least two examples in which it 
appears as if Iran has sought to establish contact in locations 
of the former Soviet Union where nuclear material was present. 
It would suggest the possibility of their acquiring material, 
although I have no information that they have been successful 
in actually acquiring any material that would be of use from 
the standpoint of the development of a nuclear weapon.
    Senator Cochran. There has been a report in the Washington 
Times that Iran is using its civilian nuclear power program as 
a cover for acquiring technology and expertise that is 
necessary to enable it to build nuclear weapons.
    And also we are told in the same report, this was in 1994, 
that Iran was about eight to 10 years away from fulfilling that 
objective, but that the timetable could be shortened with 
foreign assistance.
    I assume that foreign assistance is the kind of assistance 
that would include Russia's sale of a reactor and working with 
technicians and scientists in Iran to develop an alleged 
civilian nuclear power program in Iran.
    Do you agree with that assessment, or do you have the 
background to tell us, in your opinion, whether you think that 
is on target with what the facts are, and whether or not the 
sale and participation by Russia in the Iran nuclear power 
program has weapons proliferation consequences?
    Is this a violation of the NPT, for example, in your view, 
and what should we be doing to try to insure compliance with 
NPT?
    Mr. Potter. I think the issue of whether or not the 
Russian-Iranian nuclear deal constitutes a violation of the NPT 
turns upon the belief on the part of the Russian government 
that Iran is in fact intent upon pursuing a nuclear weapons 
program.
    If, in fact, the Russian government does not believe that 
Iran is pursuing a nuclear weapons program, then as a member in 
so-called ``good standing'' with the NPT, with international 
safeguards in place, there is nothing that legally precludes 
Russian provision of nuclear assistance to Iran.
    In fact, some would argue that under Article IV of the NPT, 
a state has some obligation to provide nuclear assistance if a 
party is in fact in good standing under the NPT.
    I think the problem though is not so much the provision of 
power reactors that would use low enriched uranium, but rather 
is the assistance that Iran will get, and, in fact, is getting 
with respect to building a nuclear infrastructure. We are 
talking about personnel training, particularly training that is 
taking place in Russia.
    Unfortunately one might note that to some extent Russia 
here is carrying on where the U.S. left off in the training of 
Iranian nuclear specialists.
    I think that what is important for the U.S. to do to try to 
redress this problem is to pursue a two-track policy. On the 
one hand we need to continue to try to persuade Russia to stop 
nuclear cooperation with Iran, not because it is necessarily 
illegal, but because it's imprudent. It doesn't serve Russia's 
interests. It does not serve the international community's 
interests.
    We also have to persuade Russia to require much more 
transparency over the different nuclear activities with which 
it's associated in Iran, and to try to create more stringent 
safeguards in that country.
    We also have to insist upon the return of the spent fuel to 
Russia that will be generated by these nuclear reactors. It 
would be very dangerous for the spent fuel to remain on site 
where it could be reprocessed by Iran.
    We need to encourage Russia to require Iran to accept more 
stringent IAEA safeguards, such as the so-called 93 plus 2 
safeguards agreement, which includes environmental sampling 
which would make it much more difficult for Iran to utilize it 
civilian nuclear program for covert weapons purposes.
    Senator Cochran. Thank you very much. Let me turn to Dr. 
Speier, and ask a few questions about the MTCR. You pointed out 
that Russia had not really lived up to its MTCR commitments.
    I was going to ask you if, based on your knowledge of the 
things that have been done by Russia in terms of selling and 
transferring missile technology to Iran and Iraq, do you think 
this is solid evidence that would justify our inviting them to 
withdraw--which was one of your four suggestions--from MTCR?
    What would that really accomplish, though? Isn't it better 
to have Russia under the tent and working with them, possibly 
being influenced by consensus among other nations, as well as 
the U.S., to change or modify its behavior, rather than to 
undergo the possible public embarrassment or humiliation or 
whatever would be attendant to being expelled, in effect--even 
though you say there's no way to expel a member, though asking 
them to withdraw is sort of the same thing.
    In other words, I am questioning whether or not that might 
be an effective way to obtain a change or modification in 
behavior. It seems to me that a more productive way of dealing 
with that would be to try to get at the facts more, and 
conclusively identify who is really actively involved in these 
violations.
    Is it the Russian government itself condoning what they 
know to be prohibited behavior under the MTCR, and if it is, 
should we do something to show our displeasure? Cancelling 
space station cooperation, not allowing them to send up our 
satellites on their vehicles, space vehicles, for example?
    What is your reaction to that?
    Mr. Speier. Those are very good questions, Mr. Chairman. 
First of all, with respect to my certainty of the transfers 
that I have reported on, as my full statement attempts to make 
clear, I have been drawing exclusively on information in the 
public domain.
    And I understand that this Subcommittee will have the 
opportunity to have a briefing from the appropriate members of 
the intelligence community.
    Senator Cochran. That is correct. We do intend to have that 
session as well.
    Mr. Speier. And I defer to whatever facts they have agreed 
on.
    With respect to your very prescient question about the best 
way to influence Russia, whether it is really better to ask 
them out of the MTCR, or to keep them in there, there are a 
number of advantages to MTCR membership that unfortunately 
provide opportunities for mischief making.
    A member is a part of very extensive and very sensitive 
information exchanges among the other members that suggest 
opportunities to exploit--to exploit the market that no one 
else is attempting to enter.
    Membership also gives one a right of veto over changes in 
the regime. Membership, according to the practices of some 
members, and the proposals, some proposals that are actually in 
Congress right now, membership entitles one to greater access 
to missile technology.
    And finally, membership, as I mentioned, protects the 
member from the imposition of U.S. sanctions.
    Now, the question is, given the apparent inability or 
unwillingness of Russia to enforce the regime, do we want 
Russia to have these advantages? Is there much that Russia 
could be doing in the way of missile trade that she isn't 
already doing?
    Those are some of the questions that I believe one would 
ask in addressing the issue of membership.
    Senator Cochran. You mentioned the transfer of Scud 
missiles and launchers from Russia to Armenia--I think you did.
    Mr. Speier. Yes.
    Senator Cochran. This was back in 1994 to 1996, and there 
is an indication that a former defense minister--well, the Wall 
Street Journal reported this--Minister Grachev approved the 
sale or transfer of more than a billion dollars worth of 
conventional arms to Armenia from 1994 to 1996, including 32 
Scud-B ballistic missiles and eight associated launchers. This 
was all in the Wall Street Journal.
    That transfer seems to have clearly violated Moscow's 
commitment to abide by the guidelines of the MTCR as well. The 
question that this raises, along with the other reports, the 
Washington Times report that we talked about, to Iran, is it 
plausible that the Russian government, given all these facts, 
itself was not aware of these activities?
    That is almost conclusive evidence that in order to comply 
with the provisions of U.S. law, our government would be 
obligated to impose some kind of sanctions against Russia.
    Is there no sanction provision at all associated with the 
obligations of the MTCR?
    Mr. Speier. First of all, with respect to the transfer from 
Russia to Armenia of the Scud missiles, according to the actual 
statement of the chairman of the Duma Defense Committee, that 
transfer took place in 1996, at the tail end of this 1994-1996 
period, took place in 1996, months after the Russians had 
formally joined the MTCR.
    Could the Russian government have been unaware of this 
transfer? That is the assertion of the chairman of the Duma 
Defense Committee, that it was an illegal transfer.
    Is the U.S. obligated to impose sanctions, or does it have 
the authority to impose sanctions? There is one case in which 
one can impose missile related sanctions on an MTCR member. And 
that is if the transfer was not authorized by the member 
government and if the member government takes no steps to 
prosecute the entities that did make the transfer.
    So if the Russian government sits on its hands in the case 
of a transfer like the one to Armenia, or a transfer like the 
one of the guidance systems to Iraq, then one could impose 
sanctions under existing law. There is that authority.
    Senator Cochran. What is your reaction to the exchange that 
I had with the Deputy Assistant Secretary of State about doing 
a more aggressive job of investigating to get to the bottom of 
who is responsible, what entities are involved in transferring 
these prohibited weapons and elements of weapons to Iraq and 
Iran, so that we can target some sanctions as we have done in 
the case with China, now, as an example of our seriousness, and 
the fact that we consider these very serious violations of the 
MTCR, and we are not going to tolerate this kind of action by 
Russian businesses, individuals, or the government?
    What other options do we have for doing a better job of 
getting the facts, or causing Russia to do a better job of 
getting the facts?
    Mr. Speier. Mr. Chairman, I think what we are talking about 
is the question of the cost/benefit calculus of these exports. 
If there is a penalty to making these exports, then they are 
less likely to be made than if they get a free ride.
    Unfortunately, the recent record of the application of 
missile related sanctions that are authorized by our law has 
not been very strong. For the first 2 years of the law, from 
the end of 1990 to the end of 1992, missile related sanctions 
were imposed five times in 2 years.
    In the next 4 years, they have only been imposed twice, in 
4 years. One of those sanctions was a no-brainer against a 
transfer between North Korea and Iran. The other sanction was 
against China in 1993, and within a few months of the 
imposition of that sanction, 90 percent of the force of it was 
withdrawn by a Commerce Department interpretation that the 
sanctions did not apply to U.S. satellites launched on Chinese 
launch vehicles.
    So we really have not been too active in missile related 
sanctions in recent years. If we were, we might see a different 
behavior on the part of these exporters.
    I think certainly if we make it clear that the 1993 
bargain, where Russia would abide by the MTCR in return for 
space station and launch cooperation, if we make it clear that 
we take that very seriously and that it is in jeopardy as a 
result of this kind of behavior, there will be a great premium 
on the Russian aerospace firms and entities to avoid these 
kinds of exports.
    Senator Cochran. I got the impression from the former 
witness that there are a lot more smuggling activities going on 
between Russia and Iraq than have been publicly reported up to 
this point.
    We know about the guidance components that were intercepted 
in Amman, Jordan, that were being shipped from Russia to Iraq, 
in violation of the United Nations Security Council sanctions.
    And we know that Russia is saying that it is investigating 
that, but we have had no report on the results of that 
investigation. It seems to me, and I am not an expert on what 
kind of authority this UNSCOM group has, but it seems to me 
that in order to make it an effective enforcer of U.N. 
sanctions that there has to be some investigative arm, there 
has to be some way to deal with the challenge that we face now.
    If you know smuggling is going on, you can go on site, the 
IAEA can go on site and do inspections to see if safeguards are 
being adhered to and the like. But isn't there something 
missing here?
    What are the other options available to us? Should we try 
to force some change in the enforcement regime under the U.N. 
Security Council's authority?
    Mr. Speier. Mr. Chairman, first of all, with respect to the 
question of whether there is more smuggling going on than this 
one incident in November of 1995, I think we should remember 
that the absence of evidence does not mean evidence of absence.
    We may not know about everything that is going on. But more 
than that, there have been reports of Russian experts going 
where they should not be going, and helping countries develop 
missiles.
    Part of the MTCR controls are to stop this. But I have been 
told by a Russian official recently that perhaps these are 
retired Russian missile experts who are making their own 
decisions to do this.
    So the transfer of technology can go on apace without one 
finding guidance equipment at the bottom of the Tigris River. 
But more than that, you've twice raised the very important 
question of investigations, and how should we pursue them.
    I think first of all, the Subcommittee should see what the 
intelligence community already knows, and make its judgment 
about their ability to conduct investigations. The problem may 
be either the lack of investigations or the lack of action to 
follow up those investigations.
    I think certainly the actions in the form of sanctions have 
trailed off in recent years.
    Senator Cochran. That seems to be an option that you are 
suggesting, or intimating, that we ought to press the 
administration to consider. Is that an accurate impression that 
I have gotten from what you are saying?
    Mr. Speier. Investigations? Or----
    Senator Cochran. Sanctions.
    Mr. Speier. Sanctions?
    Senator Cochran. Yes.
    Mr. Speier. To the extent that there is authority under 
existing law, absolutely. We have got to make it clear there--
in Senator Glenn's words, we must take the profit out of 
proliferation. Right now, it is a big money maker to do this.
    If you impose the right kinds of sanctions, it's a big 
money loser.
    Senator Cochran. I would like to hear your reaction to a 
recent article in Foreign Affairs written by Michael Mandelbaum 
on the subject of U.S. relations with Russia and China.
    He says this: ``While difficult, the Russian-Chinese 
policies to which the United States objects, are not impossible 
to change. If an issue is important enough, the governments in 
Moscow and Beijing can impose their will.
    ``Irritants in American relations with Russia and China 
persist not only because the administrative capacity of each 
government is limited, but also because the issues at stake are 
not important enough for either government to muster the 
political capital and incur the costs necessary to remove 
them.''
    Now, he is, I think, telling us that we have got to make it 
more politically attractive and economically attractive for 
Beijing and Moscow to take action. And that is my impression.
    Dr. Potter, what do you get from that? Do you agree with 
Michael Mandelbaum?
    Mr. Potter. I do agree, although I guess I would add 
another dimension to the problem here and this is where I 
probably disagree with my good friend, Dick Speier, about the 
wisdom of trying to induce Russia to leave the MTCR.
    I am very much concerned about the need to provide 
incentives to develop larger nonproliferation constituencies in 
problem countries, whether those countries be Russia, China, 
India, Pakistan--you pick your favorite country of concern.
    And I think that one probably does not assist the process 
of developing these constituencies by removing countries from 
international nonproliferation regimes. On the contrary, by 
engaging them in international regimes, you create offices, you 
provide budgets, you attract individuals who develop a vested 
interest in various nonproliferation activities.
    I think there is not an adequate constituency in Russia or 
the post-Soviet States. There is an even smaller constituency 
in China.
    Unfortunately, these constituencies are not likely to 
develop very quickly. I am not suggesting that this is the only 
approach that one has to take, but I think that one needs to be 
cognizant of this fact, and wherever possible when we can 
engage a country, it is useful to do so.
    I would argue, for example, that even though there are a 
number of the post-Soviet States that are not directly involved 
in the export of nuclear material, a number of them are 
transshippers. We should try to bring those countries into the 
Nuclear Suppliers Group, because it would focus more government 
attention on important nonproliferation issues.
    While we both need to think about better ways to increase 
incentives and to provide disincentives, one also needs to 
think about the long term issue. And related to that is the key 
question of trying to deal with defense conversion in the 
former Soviet Union.
    Unfortunately, as long as there is a strong economic 
incentive to sell basically anything to anyone for the right 
price, regardless of the development of export controls, we are 
not really going to be able to get a handle on the problem. 
This is why we need to focus first and foremost on shoring up 
the nuclear material and the missile technology at the source.
    I think export controls is important, but it's going to be 
much more difficult to try to capture that material once it 
leaves the source. So this is where I would invest my greatest 
effort.
    Senator Cochran. Dr. Speier.
    Mr. Speier. I partially agree with Dr. Potter. First of 
all, with respect to the Mandelbaum statement, the statement as 
I heard you read it, Mr. Chairman, argues that we can influence 
the Russian and Chinese governments if we put enough priority 
on it.
    But it's not clear that the problem in missile 
proliferation is just with the Russian government. The problem 
may be that it is so profitable for these Russian aerospace 
entities and military entities to make these exports that they 
either attempt to influence the government to approve the 
exports, or they make them outside of the government's control.
    What appropriate sanctions can do, such as putting the 
space station cooperation and the launch cooperation into 
jeopardy, what they can do is threaten to pull all the profit 
out of these deals, and, indeed, to make them very costly.
    And the same for other sanctions that we might impose. So 
it's not a question of acting on--the people have very good 
will in what is certainly a minimal central government in 
Moscow.
    There are other elements of the system that need to see the 
right combination of costs and benefits, and I think this is 
perhaps where Dr. Potter's comments and mine overlap.
    As far as regime membership, the Missile Control Technology 
Regime, and, indeed a nonproliferation regime in general should 
not be viewed as a birthday party where everybody gets to come.
    There should be some serious requirements for ability and 
willingness to contribute to the cause of nonproliferation if 
one is going to be in that regime.
    And it's very questionable whether Russia right now 
qualifies.
    Senator Cochran. This has been an excellent discussion of 
some of the issues and the problems that we face in trying to 
do a better job of influencing the conduct of nation-states to 
try to hold down the spread of weapons of mass destruction.
    That's the goal that we have in holding these hearings, to 
better understand the challenges and what some of the options 
are for government policies that will be more successful in 
dealing with the challenge.
    We also want to announce that our next hearing will be on 
the subject of proliferation and U.S. export controls, and we 
will hold that hearing next Wednesday, June 11, at 9:30 a.m.
    Until then, this Subcommittee will stand in recess.
    [Whereupon, 4:10 p.m. the Subcommittee stood in recess, to 
reconvene, Wednesday, June 11 at 9:30 a.m.]

                                (all)