Nuclear Safety: International Assistance Efforts to Make Soviet-Designed
Reactors Safer (Letter Report, 09/29/94, GAO/RCED-94-234).

The United States and other nations have serious concerns about the
safety of 58 Soviet-designed nuclear power reactors in Russia and
eastern Europe. These reactors do not meet international nuclear safety
standards. Twenty-five of these reactors, because they are of the oldest
design, pose the greatest safety risk; fifteen of these reactors are the
type that exploded at Chernobyl in 1986. In July 1992, the Group of
7--the major industrialized nations--announced a multi-million-dollar
plan to improve the safety of these nuclear power reactors. This report
describes the (1) goals and scope of the international assistance, (2)
United States' planned and ongoing assistance efforts, (3) impact of the
assistance provided, and (4) potential for closing the highest-risk
reactors.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-94-234
     TITLE:  Nuclear Safety: International Assistance Efforts to Make 
             Soviet-Designed Reactors Safer
      DATE:  09/29/94
   SUBJECT:  Alternative energy sources
             Nuclear reactors
             Industrial safety
             International relations
             International agreements
             International cooperation
             Radiation safety
             Nuclear powerplant safety
             Safety standards
IDENTIFIER:  Soviet Union
             Chernobyl Nuclear Powerplant (USSR)
             Lithuania
             Russia
             Slovak Federal Republic
             Canada
             France
             Germany
             Italy
             Japan
             United Kingdom
             Nuclear Safety Account
             Czech Federal Republic
             Hungary
             Ukraine
             
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Cover
================================================================ COVER


Report to Congressional Requesters

September 1994

NUCLEAR SAFETY - INTERNATIONAL
ASSISTANCE EFFORTS TO MAKE
SOVIET-DESIGNED REACTORS SAFER

GAO/RCED-94-234

Safety of Soviet-Designed Nuclear Reactors


Abbreviations
=============================================================== ABBREV

  AID - Agency for International Development
  DOE - Department of Energy
  EBRD - European Bank for Reconstruction and Development
  ECU - European currency unit
  EU - European Union
  GAN - Gosatomnadzor
  GAO - General Accounting Office
  IAEA - International Atomic Energy Agency
  NRC - Nuclear Regulatory Commission
  OECD - Organization for Economic Cooperation and Development
  VNIIAES - All-Russion Research Institute for Nuclear Power Plant
     Operators
  RBMK
  VVER

Letter
=============================================================== LETTER


B-257420

September 29, 1994

The Honorable Joseph I.  Lieberman
Chairman
The Honorable Alan K.  Simpson
Ranking Minority Member
Subcommittee on Clean Air and
 Nuclear Regulation
Committee on Environment and Public Works
United States Senate

The United States and other countries have serious concerns about the
safety of 58 Soviet-designed civil nuclear power reactors located in
the former Soviet Union and in countries in central and eastern
Europe.  These reactors do not meet international nuclear safety
standards.  Twenty-five of these reactors, because they are of the
oldest design, pose the highest safety risk.  Yet they continue to
operate.  Fifteen of these reactors are the type that exploded at
Chernobyl, Ukraine, in 1986. 

In July 1992, the Group of 7 (G-7)\1 --the major industrialized
nations--announced a multi-million-dollar plan to improve the safety
of these nuclear power reactors.  To determine what progress has been
made in implementing this plan, you asked that we provide you with
information on U.S.  and international assistance efforts aimed at
improving the safety of these reactors.  Specifically, this report
describes (1) the goals and scope of the international assistance,
(2) the United States' planned and ongoing assistance efforts, (3)
the impact of the assistance provided, and (4) the potential for
closing the highest-risk reactors. 


--------------------
\1 The seven countries are Canada, France, Germany, Italy, Japan, the
United Kingdom, and the United States. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

As of May 1994, about $785 million had been pledged to implement the
G-7 assistance plan, primarily for improving the safety of the
Soviet-designed civil nuclear power reactors located in the former
Soviet Union and in central and eastern Europe.  A longer-term goal
of the assistance program is to shut down the most dangerous nuclear
power reactors and replace them with alternative energy sources.  The
plan also calls for improving nuclear regulatory agencies in those
countries operating Soviet-designed reactors.  As of May 1994, only
about 7 percent of the projects, worth about $57 million, had been
completed. 

Under the international assistance umbrella, the United States has
proposed safety projects valued at about $150 million, targeting
approximately $85 million to Russia, $50 million to Ukraine, and $16
million to countries in central and eastern Europe.  As of March
1994, the United States had spent about $18 million on safety
projects such as providing training for reactor operators and nuclear
regulators, fire safety equipment, and computer equipment. 

It is difficult to determine whether the international assistance
provided to date has made the reactors safer.  The projects--mainly
safety assessments and training--do not lend themselves to clear,
measurable results.  In addition, an absence of reliable data on the
Soviet equipment makes quantifiable before-and-after comparisons
difficult.  Furthermore, some nuclear safety projects have been
delayed because U.S.  and European contractors are unwilling to
undertake work without protection from liability in the event of a
nuclear accident. 

There are no guarantees that the international assistance effort will
result in safer reactors or expedite the closure of the riskiest
reactors.  In fact, in the absence of a commitment to close down the
reactors, the assistance may encourage their continued operation. 
Donor countries face formidable challenges in promoting the closure
of the Soviet-designed reactors because the countries operating them
depend on nuclear power to meet their needs for domestic energy and
export income.  However, the United States has agreed with Russia and
Ukraine to study alternative energy options that include phasing out
the riskiest reactors. 


   BACKGROUND
------------------------------------------------------------ Letter :2

The 58 Soviet-designed reactors pose significant safety risks because
of deficiencies in their design and in their operation by plant
managers and personnel who lack adequate training in many of the
safety procedures practiced by operators in western Europe, Japan,
and the United States.  In addition, most of these reactors are
located in countries that do not have national nuclear regulatory
laws and independent and effective regulatory enforcement
organizations. 

Western safety experts generally agree that 25 of the 58 oldest
Soviet-designed reactors fall well below accepted international
safety standards and cannot be economically upgraded.  These reactors
include 15 of the type known as RBMKs and 10 VVER 440 Model 230s. 
The RBMKs--considered the least safe by western safety experts--and
VVER 440 Model 230 reactors are believed to present the highest
safety risk because of inherent design deficiencies, including the
lack of a containment structure,\2 inadequate fire protection
systems, unreliable instrumentation and control systems, and
deficient systems for cooling the reactor core in an emergency. 
Fifteen RBMKs are in operation:  2 at Chernobyl, Ukraine; 2 in
Lithuania; and 11 in Russia.  The 10 VVER 440 Model 230s are
operating in Bulgaria (4), Russia (4), and Slovakia (2).  The newer
Soviet-designed reactors--VVER 440 Model 213s and VVER 1000s--have
more safety features than the earlier models.  For example, the VVER
1000s have containment structures similar to those in western nuclear
plants.  However, these reactors are operating under the same
conditions--with operational deficiencies in plant management and
training-- as the reactors of the earliest design. 

Several federal agencies share responsibility for U.S.  participation
in the G-7 safety assistance plan under the overall policy
coordination of the Department of State's Senior Coordinator for
Reactor Safety and International Science and Technology Centers.  The
Department of Energy (DOE) is responsible for projects involving
training, operational safety, and risk reduction.  These projects
include short-term and longer-term improvements in fire protection,
emergency core-cooling systems, backup diesel generators, and
instrumentation and control systems for the RBMK and VVER 440 Model
230 and Model 213 reactors so that they can be operated more safely. 

The Nuclear Regulatory Commission (NRC) is responsible for assistance
to the recipient countries' regulatory organizations.  The Agency for
International Development transfers funds for DOE and NRC projects
under interagency agreements.  The Department of State leads the U.S. 
nuclear safety efforts in international negotiations. 

Figure 1 shows the type and location of the 58 Soviet-designed
reactors operating in the former Soviet Union and in central and
eastern Europe. 

   Figure 1:  Soviet-Designed
   Nuclear Power Plants Operating
   as of May 1, 1994

   (See figure in printed
   edition.)

Note 1:  Numerals within the symbols show the number of reactors, and
numerals in parentheses show the total number of reactors in each
country. 

Note 2:  *In addition, the Bilibino plant, which produces both steam
and electricity, has four small-scale RBMKs producing a total of 44
megawatts, and the Beloyarsk plant has a 560-megawatt fast breeder
reactor. 

\a Graphite-moderated, light-water-cooled reactor. 

\b Pressurized light-water-moderated and -cooled reactor. 


--------------------
\2 The containment structure, generally a steel-lined concrete
domelike structure, serves as the ultimate barrier to the release of
radioactive material in an accident. 


   INTERNATIONAL ASSISTANCE
   EFFORTS
------------------------------------------------------------ Letter :3

The G-7, at its summit meeting in Munich in July 1992, addressed the
complex and urgent safety problems of the Soviet-designed reactors
with an emergency action plan.  The plan falls into two broad
categories--operational safety improvements such as training of plant
personnel and near-term technical measures whereby additional
equipment or enhancements of existing equipment will produce early
safety benefits.  The plan also called for enhancing independent
regulatory authorities in the countries operating these reactors. 
Under this plan, over 20 countries and international organizations
have pledged hundreds of millions of dollars in financial assistance
to improve safety. 

In general, operational safety improvements can be implemented at all
plants regardless of the reactor type.  The extent to which these
improvements are implemented varies from plant to plant and country
to country.  However, the near-term technical measures are being
implemented at specific reactors such as the oldest RBMKs and VVER
440 Model 230s in the hope that they will be shut down as soon as
practicable.  Near-term technical improvements are also planned for
the newer VVER 440 Model 213 and VVER 1000 reactors, but these
changes will be made to provide for longer periods of operation. 

The donors are assessing (1) the feasibility of replacing the oldest
and least-safe plants through the development of alternative energy
sources and more efficient use of energy and (2) the potential for
upgrading the safety of the reactors of more recent design.  The
Chairman of the NRC stated that it could take 8 to 10 years--at a
cost of about $20 billion--to replace the least-safe plants with
alternative sources of electricity. 

The countries participating in the assistance effort are providing
the bulk of the assistance through bilateral agreements with
individual countries.  The G-7 countries, which are the core of the
Group of 24 industrialized nations (the G-24), established a Nuclear
Safety Working Group within the G-24 to coordinate and avoid
duplication of individual countries' assistance efforts.  The G-24
established a coordination center at the European Union (EU) in
Brussels, Belgium.\3 One of its initial tasks was to develop a data
base of the international safety assistance projects.  Several U.S.,
European, and international officials told us that the data base is
of limited use because it does not contain enough detail and is
incomplete.  Many officials noted, however, that despite its
limitations, the data base represents the most comprehensive
available source of information on international assistance.  (App. 
I summarizes the international nuclear safety assistance projects.)

The G-7 plan also called for the World Bank, the European Bank for
Reconstruction and Development (EBRD), and the International Energy
Agency to study possible means of using alternative energy sources to
replace the least-safe nuclear power reactors.  As of May 1994, 22
nations and international organizations had reported to the data base
actual or planned safety assistance projects valued at approximately
$785 million.  Of this amount, only about 7 percent, or $57 million,
represents completed projects. 

The G-7 also created a multilateral fund, the Nuclear Safety Account
(the Fund), directed by its donors and administered by the EBRD, to
address immediate needs for safety improvement not covered in the
bilateral agreements.  According to the EBRD, the Fund had pledged
contributions from 13 countries and the EU totaling about $157
million as of June 30, 1994.  The United States has pledged $15
million to the Fund.  (App.  II shows the pledged contributions to
the Fund.)

Figure 2 summarizes the sources and destinations of international
assistance under the Fund, bilateral agreements, and commitments by
international organizations as of May 1994.  The major donors are the
EU, Germany, Japan, the United States, France, Italy and Canada.  The
major recipients are the Russian Federation, Ukraine, Bulgaria,
Lithuania, Slovakia, the Czech Republic, and Hungary. 

   Figure 2:  Worldwide Sources
   and Recipients of International
   Nuclear Safety Assistance, as
   of May 1994

   (See figure in printed
   edition.)

\a Contributions to the Nuclear Safety Account are included in the
pledge amounts shown for each donor country. 

\b The amount reported by the United States to the G-24 represents
projects to which the United States has made commitments; it is
significantly lower than the expenditures proposed by the United
States, which total about $150 million. 

\c Austria has one project under way, valued at less than $50,000,
that is not included because of rounding. 

\d These amounts are estimates, as the G-24 calculated the amounts
assuming equal sharing of assistance in projects with multiple
recipients. 

\e This amount differs from the total amount listed for the donors
because it includes projects identified only as expressions of
interest by the recipient countries. 

\f Other recipient countries include Armenia, Belarus, Estonia,
Georgia, Kazakhstan, Kirghizia, Poland, Romania, Slovakia, Slovenia,
and Uzbekistan. 

Source:  GAO's analysis of information in the G-24's data base. 


--------------------
\3 The European Union, formerly the European Community, consists of
twelve countries:  Belgium, Denmark, France, Germany, Greece,
Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, and the
United Kingdom.  It is considered a separate entity for the funding
of assistance projects. 


   PLANNED AND ONGOING U.S. 
   ASSISTANCE
------------------------------------------------------------ Letter :4

The United States plans to spend over $150 million in nuclear safety
assistance in the Russian Federation, Ukraine, Bulgaria, Hungary,
Lithuania, the Czech Republic, and Slovakia.  (See fig.  3.) As of
March 1994, about $56 million had been made available to DOE and NRC
for nuclear safety assistance.  Of that amount, about $18 million had
been spent by the United States, including $3.3 million for delivered
nuclear safety equipment and products.  (App.  III lists the
equipment and products.) Other expenditures were for DOE
headquarters' activities; DOE's and NRC's contractor personnel and
travel; and support from DOE's national laboratories, which includes
training and safety upgrades.  The approximately $18 million also
included $4 million for DOE's 2-year membership as a participant in
the Institute of Nuclear Power Operations.  The membership gives DOE
access to the Institute's nuclear safety documents and procedures for
upgrading the operational safety of Soviet-designed reactors.  (App. 
IV lists DOE's and NRC's expenditures.)

As figure 3 shows, the bulk of the funding is targeted to Russia and
Ukraine, and the remainder goes to five other countries in the
region. 

   Figure 3:  Planned Distribution
   of U.S.  Financial Assistance
   of $151.3 Million by Country,
   as of June 30, 1994

   (See figure in printed
   edition.)

Note:  Amounts listed for individual countries do not add to $151.3
million because of rounding. 

Source:  GAO's illustration based on information from Brookhaven
National Laboratory, DOE, and NRC. 


      ASSISTANCE TO RUSSIA AND
      UKRAINE
---------------------------------------------------------- Letter :4.1

Most of the U.S.  assistance program is directed to Russia and
Ukraine, with the near- and mid-term objective of significantly
reducing the risk of operating the older, least-safe reactors until
economic conditions allow them to be shut down or until alternate
sources of power can be provided.  In the longer term, the program
provides assistance in creating a safety culture through improvements
in training and operational practices and procedures and through
support in the development of independent regulatory authorities. 

Specifically, the assistance focuses on

  establishing a regional training center in each country to
     introduce U.S.  nuclear safety concepts and practices;

  implementing and extending the operational safety benefits for the
     VVER 440 Model 230 reactor to reactors of all other designs;

  implementing risk-reduction measures such as reliable power supply
     systems, fast-acting valves, and emergency water supply systems
     at selected RBMK and VVER 440 Model 230 reactors;

  developing nuclear infrastructure, such as a centralized emergency
     response capability;

  upgrading fire safety equipment and procedures at plants;\4 and

  training regulators and assisting them in developing independent
     regulatory agencies with the legal basis to enforce safety
     standards and procedures. 

DOE is responsible for implementing the first five elements, and NRC
is responsible for the last element. 

The United States' objective in providing assistance is to channel
funds toward the issues of greatest concern, such as operational
safety (the development of emergency operating instructions and
training materials) and fire protection.  This assistance is targeted
to five plants in Russia and three in Ukraine.  Appendix V presents
the category and funding of the United States' planned projects in
Russia and Ukraine as of June 30, 1994. 


--------------------
\4 According to DOE, from 1980 to 1988 over 100 fires occurred in
nuclear power plants in the former Soviet Union.  In 1991, a fire in
unit two at the Chernobyl plant destroyed a turbine hall and disabled
the plant's safety systems. 


      ASSISTANCE TO OTHER
      COUNTRIES
---------------------------------------------------------- Letter :4.2

In Bulgaria, Hungary, the Czech Republic, Slovakia, and Lithuania,
U.S.  projects are focused on fire protection, plant analysis,
operational safety improvements such as the development of
symptom-based emergency operating instructions, and training for
regulatory authorities.  Appendix V also shows the category and
funding of projects planned for these countries as of June 30, 1994. 


      STATUS OF DOE'S INITIATIVES
---------------------------------------------------------- Letter :4.3

DOE is responsible for implementing most of the U.S.  safety
assistance program, which is focused on providing training and
equipment to improve operational safety.  Some Russian plant
operators have been trained in maintenance and other support
activities.  Firefighting and fire protection equipment, such as
smoke alarms, fire extinguishers, and fire hoses, have been purchased
in the United States, but at the time of our review, this equipment
had not been delivered.  Additional fire protection equipment, such
as fire doors, will be built in the recipient countries. 

DOE plans to provide more equipment over the next several years.  For
example, in mid-1996 the agency plans to deliver a state-of-the-art
full-scope simulator for Ukraine's first nuclear regional training
center; this simulator will increase the operators' technical
capability to handle reactor emergencies.  DOE is also planning to
help the Russians establish a prototype centralized emergency
response center, using a satellite communications system to link the
center to two nuclear power plants.  In the event of a nuclear
accident, the system can provide reliable, high-speed
telecommunications of voice, fax, telex, and digital information. 

In 1992, DOE established a project office at the Brookhaven National
Laboratory for managing the day-to-day operations of its safety
assistance program.  Brookhaven provides management support for
subcontractors performing specific safety assistance tasks, including
procuring hardware and services in the United States and the
recipient countries, monitoring contracts and work, performing
quality assurance and quality control, and providing technical
coordination for work projects.  (App.  VI presents more information
on Brookhaven's role in providing U.S.  assistance.)


      STATUS OF NRC'S INITIATIVES
---------------------------------------------------------- Letter :4.4

NRC is helping develop national nuclear regulatory bodies by
providing personnel with on-the-job training alongside NRC staff. 
NRC is conducting technical training programs at its headquarters and
field offices; at the NRC Technical Training Center; and at plants in
Russia, Ukraine, and to a lesser extent in countries in central and
eastern Europe.  NRC is also collaborating with Russian and Ukrainian
regulators in assessing their inspection practices and identifying
effective inspection techniques and procedures.  NRC believes that
such technical exchanges and training are helping to encourage an
enhanced safety culture in these countries and making them better
able to improve nuclear safety themselves. 

According to NRC's Chairman, one of NRC's goals is to help improve
the enforcement authority and political stature of Russian and
Ukrainian regulators so that they command the respect of both the
nuclear ministries and the utilities that operate the nuclear power
plants.  He believes that strong and independent regulatory bodies
may eventually be capable of exercising the kind of authority over
nuclear power operations in these countries that NRC does in the
United States.  He said that "the shutdown of unsafe plants in these
countries will ultimately depend upon the strength and independence
of such regulators." He also believes that the early shutdown of the
least-safe reactors is a very important measure of the United States'
success in enhancing Russia's regulatory body. 


   IMPACT OF INTERNATIONAL
   ASSISTANCE UNCLEAR AND HAMPERED
   BY PHILOSOPHICAL AND LEGAL
   DIFFERENCES
------------------------------------------------------------ Letter :5

While some improvements have been noted in nuclear safety in the
recipient countries, the overall impact of the international
assistance effort is not easily measured.  The benefits of the
assistance are being debated, and some nuclear experts and recipients
have expressed reservations about the level, type, and suitability of
the aid being provided.  Liability issues are also causing delays in
the delivery of assistance. 


      ASSISTANCE HAS PROVIDED SOME
      BENEFITS, BUT ACHIEVEMENTS
      ARE DIFFICULT TO ASSESS
---------------------------------------------------------- Letter :5.1

The international assistance has resulted in safety improvements at a
few reactor sites, and NRC believes that the Russian regulatory body
is becoming more effective as a nuclear safety regulator.  In 1991,
the EU allocated nearly $14 million to improve the safety of four
VVER 440 Model 230 reactors in Bulgaria.  The assistance included
training Bulgarian personnel, cleaning and maintaining the
facilities, repairing electrical wiring, establishing testing and
inspection programs, and providing spare parts.  Several nuclear
experts who have visited the plant since these improvements were made
believe that the plant is safer. 

A 1992 assessment by the International Atomic Energy Agency (IAEA)
noted that the international assistance had improved the safety of
the Bulgarian reactors.  However, an IAEA official expressed concern
to us about maintaining the safety improvements in Bulgaria.  He said
that as the western on-site presence at the Bulgarian reactors has
decreased, the Bulgarians' commitment to safety has declined.  He was
uncertain how to sustain the safety improvements. 

NRC officials told us that the training the United States has
provided to develop nuclear regulatory capability should improve
safety but that it is difficult to keep a nuclear safety "report
card" on these countries.  While NRC can expose officials operating
Soviet-designed reactors to the best regulatory practices, it is up
to each country to decide whether and how to implement them. 
According to these officials, there is also no guarantee that the
people being trained will remain active in the countries' regulatory
organizations. 

NRC's Chairman has also cautioned that economic conditions in Russia
and Ukraine are so severe that the long-term prospects for continued
safety in the industry will be negatively affected.  Plant operators
are often more concerned with continuing to operate the plant to meet
the demands for electricity and workers' salaries than they are with
ensuring nuclear safety. 

Furthermore, the impact of the safety improvements has been difficult
to measure.  U.S.  and European nuclear safety officials believe that
much of the assistance provided so far--such as assessments and
training--does not lend itself to clear, measurable safety
improvements.  In October 1993, the U.S.  Secretary of Energy noted
in testimony before the Subcommittee on Energy and Power, House
Committee on Energy and Commerce, that performance measurements are
needed to determine the extent to which the U.S.  and European
assistance programs are reducing the risk of accidents. 

According to a DOE official, the United States does not yet know how
to measure the safety improvements made with U.S.  assistance.  He
said that a quantitative measure comparing before-and-after results
is not possible because not enough reliable data on the Soviet
equipment are available to support such a comparison.  This official
believes that the level of safety at the reactors has increased, but
he said this increase could not be quantified.  He does not believe
that enough improvement has been achieved in the physical plants to
reduce the risk of an accident. 

EU officials told us that they have not systematically evaluated the
impact of their assistance because not many projects have been
completed.  In their view, implementing projects is more important
than evaluating the program at this stage of their assistance
efforts. 

The Director of the IAEA's Division of Nuclear Safety believes that
the assistance provided to date has improved the safety of some
reactors but estimated that the donor countries would have to spend
$50 million to $100 million per plant to make significant
improvements in the RBMK reactors. 


      DISAGREEMENT EXISTS ON THE
      VALUE OF THE AID BEING
      PROVIDED
---------------------------------------------------------- Letter :5.2

In the view of some nuclear safety experts and representatives of the
countries operating Soviet-designed reactors, the international
assistance being provided (1) does not always match the needs of the
plant operators and regulatory organizations, (2) is being
implemented too slowly, and (3) should provide more equipment and
fewer studies. 

Representatives from Russia, Ukraine, and the central and eastern
European countries were critical of the EU's programs, which provide
the largest segment of the assistance.  In their view, the EU's
process for delivering assistance is too cumbersome.  Some also
believe that the programs are commercially motivated, providing
benefit to western contractors rather than improving nuclear safety
in the recipient countries. 

EU officials told us that most of the western European assistance has
been spent on studies or preliminary evaluations.  In their view,
these studies were necessary to (1) assess the condition of the
reactors, (2) set priorities for assistance, and (3) identify needed
improvements in the techniques used for managing the plants.  EU
officials noted that while their programs were initially intended
primarily to provide technical assistance, the programs are
increasingly shifting towards implementing concrete projects to
improve safety, such as the delivery of equipment.  One EU official
also said that the countries receiving assistance had unrealistic
expectations and that some countries, particularly Russia, prefer
financial assistance with "no strings attached."

Other officials, including the Director and Deputy Director of the
IAEA's Division of Nuclear Safety, said that the recipient countries
do not need additional studies of safety problems--because the
deficiencies have already been well documented--but are in urgent
need of equipment and other hardware to help reduce the risk of an
accident.  Representatives of some recipient countries confirmed that
although some of the studies are useful, they need more practical
assistance. 

Representatives from Russia, Hungary, Ukraine, the Czech Republic,
and Slovakia told us that some bilateral programs administered by
France, Germany, Sweden, the United States, and the IAEA were useful. 
They identified the U.S.  NRC's programs as beneficial because they
provided timely training to personnel performing regulatory
inspections.  In September 1993, the Chairman of Russia's regulatory
organization told G-24 representatives that the bilateral assistance
programs being implemented with these countries were timely and
effective compared with other western assistance. 

According to NRC's Chairman, until the infrastructure is in place to
bring the safety of Soviet-designed reactors up to acceptable levels
or to identify alternative energy sources so that the least-safe
reactors can be shut down, no significant amounts of commercial
investment in electricity will flow into the countries of the former
Soviet Union.  Furthermore, unlike NRC, the Russian nuclear safety
and regulatory agency, Gosatomnadzor (GAN), is not supported by
national nuclear legislation in carrying out its regulatory
responsibilities.  GAN can order facilities closed only when it is
able to demonstrate that an accident is pending or very likely to
occur. 

An NRC official said that enactment of a proposed international
nuclear safety convention could help sustain the recipient countries'
commitment to safety.\5 This convention--the idea of which was
launched at an IAEA safety conference in 1991 to codify certain basic
safety principles to which all countries could be held
accountable--was expected to be ready for signature at the IAEA's
September 1994 General Conference.  It provides for periodic peer
review of countries' compliance with generally accepted international
nuclear safety principles.  In October 1993, NRC's Chairman noted in
congressional testimony that the convention is one way to bring
international pressure on countries that do not pay adequate
attention to safety issues.\6


--------------------
\5 See Nuclear Safety:  Progress Toward International Agreement to
Improve Reactor Safety (GAO/RCED-93-153, May 14, 1993). 

\6 U.S.  Efforts to Improve the Safety of Soviet-Designed Nuclear
Reactors, statement before the Subcommittee on Energy and Power,
House Committee on Energy and Commerce (Oct.  28, 1993). 


      ABSENCE OF LIABILITY
      PROTECTION IS A MAJOR
      OBSTACLE TO FURNISHING
      ASSISTANCE
---------------------------------------------------------- Letter :5.3

Efforts by the United States and other donors to provide more
equipment and technical services have also been delayed because the
major countries operating Soviet-designed reactors--Russia and
Ukraine--have been unable to satisfy western contractors' concerns
about protection from liability.  According to a State Department
attorney, contractors worry that they could be found liable for
damages, especially in U.S.  courts, if an accident occurred at a
Soviet-designed nuclear power plant where they have furnished
equipment or performed work.  According to the attorney, a nuclear
accident that caused substantial property damage and personal injury
could result in financial liability for any company that provided
equipment or services to the plant.  In the event of an accident, the
company could face enormous expenses to litigate or settle liability
claims. 

In the United States, the Price-Anderson Act, as it amends the Atomic
Energy Act of 1954, (1) ensures that victims of nuclear damage will
be compensated if an accident occurs at a nuclear power plant and (2)
sets a limit on private industry's liability.  In addition, owners of
nuclear power plants carry property damage insurance and provide
suppliers with a waiver of liability for both direct and
consequential damages in the event of an accident.  U.S.  contractors
are seeking similar protection for the work they perform on
Soviet-designed reactors. 

Many other western countries operating nuclear power plants are party
to international agreements that also assign liability to the owner
of the nuclear power plant, typically a utility company.  These
agreements allow governments to limit the amounts for which the power
plant owner can be held liable.  Several countries operating
Soviet-designed reactors are not parties to the international
liability agreements, nor do they have separate domestic liability
laws (except Lithuania).  (App.  VII describes the applicable
conventions and shows the status of nuclear liability agreements in
the recipient countries.)

The major donor countries are attempting to resolve the liability
issue.  In late 1993, the United States signed bilateral safety
assistance agreements with Russia and Ukraine containing provisions
on liability.  The agreements state that in the event of an accident,
the Russian and/or Ukrainian governments will indemnify the U.S. 
government and its contractors for third-party claims for damages
resulting from a nuclear accident at nuclear power plants where the
U.S.  government or its contractors provided equipment or performed
work. 

According to DOE and State Department officials, most U.S. 
contractors are not satisfied that the government-to- government
agreements provide adequate liability protection because these
agreements are not considered directly enforceable in court by the
contractors.  The contractors believe they would have to rely on the
U.S.  government to secure their rights.  In April 1994, the
Associate Director of Brookhaven National Laboratory told us that the
Board of Directors of Associated Universities, Inc., the organization
that operates Brookhaven for DOE, had decided not to undertake
risk-reduction work in the former Soviet Union because Brookhaven did
not have adequate liability protection.  Many of the architectural
and engineering firms that Brookhaven selected to perform the design
and inspection work on Soviet-designed reactors are also refusing
further work until liability protection is provided. 

In June 1994, one U.S.  contractor announced that it was willing to
proceed with nuclear safety projects if the U.S.  government would
provide assurances that the United States would seek to enforce the
liability agreements and, if necessary, consider helping the
contractor deal with nuclear damage claims that might be filed in
U.S.  courts.  As of July 1994, the U.S.  government had not
furnished a letter of assurance to the contractor. 

In the view of an official from the Organization for Economic
Cooperation and Development's (OECD) Nuclear Energy Agency, the most
satisfactory long-term solution is for recipient countries to enact
nuclear liability laws and become parties to the international
agreements.  The official noted that doing so may be a difficult and
time-consuming process because many of the countries (1) are
unfamiliar with the legal concepts involved, (2) need to develop
liability laws and governmental structures to implement them, and (3)
may have other national priorities. 


   SHUTDOWN OF HIGHEST-RISK
   REACTORS REMAINS AN ELUSIVE
   GOAL
------------------------------------------------------------ Letter :6

Although the United States and other donors agree that the
highest-risk nuclear power reactors should be shut down as soon as
practicable, there are no guarantees that any will be closed in the
near future.  Furthermore, recipient countries that depend on the
reactors for domestic energy and export income are unlikely to shut
down the reactors without viable alternative options for energy
supplies. 


      AGREEMENTS ON CLOSURE MAY
      NOT BE HONORED
---------------------------------------------------------- Letter :6.1

The donor countries, including the United States, believe that the
EBRD-administered multilateral nuclear safety fund is the appropriate
instrument for linking assistance to plant closure.  Although the
EBRD has negotiated such agreements with Bulgaria and Lithuania, the
conditions for closure are tenuous. 

For example, while Bulgaria agreed to a phased shutdown of its
highest-risk reactors by 1998 in exchange for a $28 million grant for
equipment, Bulgaria's commitment hinges on the availability of
adequate replacement energy, which is still being developed. 
Similarly, in return for a $38 million grant, Lithuania agreed to
stop producing electricity at one of its two RBMK units by mid-1998
unless a new operating license is granted by the Lithuanian safety
authority.  Continued operation of the reactor will depend upon the
cost of further safety improvements and the country's energy
situation.  A European official told us that these agreements satisfy
political concerns but may prove difficult, if not impossible, to
fulfill. 

Not only are the highest-risk reactors not being shut down, but some
U.S.  and European officials are concerned that the assistance may be
used by the recipients to justify the continued operation of these
reactors.  According to the Director of the IAEA's Division of
Nuclear Safety, unless the recipient countries have viable sources of
alternative energy, there is little else they can do.  In his October
1993 congressional testimony, NRC's Chairman said that it is
difficult to draw a fine line between short-term safety improvements
and upgrades that could encourage a plant operator to think in terms
of long-term life extension.\7


--------------------
\7 Russia has recently signed an agreement with the United States
that could lead to the closure of the three plutonium production
reactors in Russia.  However, these three reactors are not among the
25 highest-risk nuclear power reactors discussed in this report. 


      OBTAINING COMMITMENT TO
      CLOSE DOWN HIGHEST-RISK
      REACTORS IS DIFFICULT
---------------------------------------------------------- Letter :6.2

Closing the Soviet-designed reactors is a complex and formidable
challenge.  Countries operating these reactors depend, to varying
degrees, on nuclear power to meet their domestic energy requirements. 
In 1993, the nuclear share of electricity production averaged 10
percent in Russia, 30 percent in Ukraine, and 60 percent in
Lithuania.  Some of the countries also rely on nuclear power as a
source of revenue.  In 1992, 15 percent of Lithuania's exports were
in the form of nuclear-generated electricity. 

These countries' reliance on nuclear power is illustrated by
Ukraine's decision to continue to operate two RBMK units at Chernobyl
and possibly restart a third unit that was damaged in a 1991 fire,
even though the Ukrainian Parliament had previously agreed to close
down the entire installation by December 31, 1993.  The IAEA has
recommended to the President of Ukraine that the Chernobyl nuclear
power reactor not be operated because of, among other things, the
loss of skilled personnel and the fact that there is no place to
store additional spent (used) nuclear fuel.  Ukrainian
representatives told western nuclear safety officials that Ukraine's
decision was unavoidable because of domestic energy requirements.  In
addition, Armenia, because of its energy needs, plans to restart two
VVER 440 Model 230 reactors that were shut down following an
earthquake in 1988.  Russia has agreed to help with this effort. 

Donor countries and some of the recipient countries also
fundamentally disagree about plant safety.  For example, while there
is broad agreement in the West about what needs to be done to address
Russian nuclear safety problems, there is no such consensus among
Russian nuclear officials.  Russia, which operates 15 of the 25
highest-risk reactors, has periodically challenged western
assumptions about the safety of its reactors.  Russian authorities do
not accept western judgments that the RBMKs and VVER 440 Model 230s
pose significant inherent risks that require prompt shutdown. 
Russian officials have described the possibility of closing the
country's RBMK reactors as "pure fantasy." In February 1993, a
high-level Russian official told a State Department delegation that
Russia was unable to close plants that were regarded as unsafe by the
West.  He reaffirmed his government's position that nuclear power is
an essential element of Russia's energy program and noted that
expanding nuclear power is essential if Russia is to meet its future
energy needs. 


      RECENT STUDY INDICATES
      FEASIBILITY OF CLOSING
      HIGHEST-RISK REACTORS
---------------------------------------------------------- Letter :6.3

A 1993 study of six countries\8 conducted by the World Bank, the
EBRD, and the OECD's International Energy Agency concluded that,
under one possible scenario, it would be technically feasible to shut
down the highest-risk reactors in these countries and replace them
with alternate energy sources by the mid- to late-1990s.  The study
estimated that, under this approach, it would cost approximately $21
billion to replace these reactors.  However, for various
reasons--including economic, social, and environmental
considerations--the study noted that the affected countries would not
favor shutting down the highest- risk reactors quickly.  The study
also noted that many officials in these countries do not share the
same concerns about the safety of the highest-risk plants as their
western counterparts. 

Many international nuclear safety officials recognize that closing
the highest-risk reactors will require an integrated, long-term
energy strategy.  Several of these officials noted that nuclear
safety assistance is one component of a larger effort that must
include market reforms, adjustments in energy pricing, and the
identification of suitable replacement forms of energy--both nuclear
and nonnuclear--in the recipient countries.  The G-7 has asked the
international financial institutions, under the leadership of the
World Bank, to undertake further independent efforts to help each
country develop its own energy strategy, taking nuclear safety into
account. 

The United States and Russia are conducting a joint study to examine
options for Russia's future electric power using both nuclear and
nonnuclear options.  The study will look at possible sources of
power; transmission improvements; energy efficiency; and the
environmental, safety, and financing aspects.  The study's interim
report was completed in time for the July 1994 G-7 summit meeting in
Italy; the final report is scheduled to be completed by the end of
1994. 


--------------------
\8 Nuclear Safety and Electric Power in Armenia, Bulgaria, Lithuania,
Russia, Slovakia, and Ukraine (June 1993). 


   OBSERVATIONS
------------------------------------------------------------ Letter :7

To reduce the risk of another major nuclear power plant accident, the
United States and other nations have pledged hundreds of millions of
dollars to the difficult and costly task of upgrading the safety of
Soviet-designed reactors and improving the safety culture in the host
countries.  However, these countries are providing assistance without
a commitment from all the recipient countries to close down the
highest-risk reactors on a mutually agreed timetable.  In fact, in
the absence of a commitment to close down the reactors, the
assistance may encourage their continued operation.  Donor countries
face formidable challenges in promoting the closure of the
Soviet-designed reactors because the countries operating them depend
on nuclear power to meet their domestic energy and export needs. 
Furthermore, in many instances the donor and recipient countries
fundamentally disagree about the safety of these reactors. 

Because economic conditions are poor in these countries and
alternative energy options are not yet available, it appears unlikely
that any reactors will be shut down in the short term.  Therefore,
trying to help them operate more safely until they can be closed
appears to be a reasonable international course of action. 

Most of the bilateral assistance promised has yet to be delivered. 
The question of liability is a major impediment to providing some
assistance.  As of July 1994, the United States and other western
countries had not been able to resolve this matter satisfactorily
with contractors:  It appears that Brookhaven, the contractor
managing the U.S.  assistance for DOE, and the firms selected to
perform design and inspection work may either withdraw from the
program or limit the scope of their work unless additional liability
protection is provided. 

If the liability issue is resolved, and as the United States
increases its nuclear safety assistance, it will be important to
demonstrate that the assistance is improving the safety of the
Soviet-designed reactors.  In the absence of performance-based
criteria to measure and evaluate the effect of the assistance, the
proposed international nuclear safety convention may provide a useful
forum for experts from various countries to review progress in
achieving and sustaining increased levels of safety at these nuclear
plants. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :8

We discussed the facts presented in this report with the State
Department's Deputy Senior Coordinator for Nuclear Safety Assistance,
the Director of DOE's International Programs Division, the Director
of NRC's Office of International Programs, and the project manager at
the Brookhaven National Laboratory.  We also discussed these facts
with officials from the EU, EBRD, and IAEA.  In general, these
officials agreed with the facts presented.  They gave us additional
clarifying information, and we revised the text where appropriate. 
However, as requested we did not obtain written agency comments on a
draft of this report. 


---------------------------------------------------------- Letter :8.1

To address our objectives, we interviewed officials and reviewed
documentation from the Department of State, DOE, NRC, and Brookhaven
National Laboratory.  We met with officials from some of the
countries operating Soviet- designed reactors, such as Russia and
Ukraine.  We also met with officials from international organizations
actively working to improve nuclear reactor safety, including the
IAEA and the EBRD.  Our scope and methodology are discussed in detail
in appendix VIII. 

We performed our review between June 1993 and July 1994 in accordance
with generally accepted government auditing standards. 

We plan no further distribution of this report until 30 days from the
date of this letter unless you publicly announce its contents
earlier.  At that time, we will send copies to the Secretaries of
State and Energy, the Chairman of NRC, the Administrator of the
Agency for International Development, the Director of the Office of
Management and Budget, and other interested congressional committees. 
We will also make copies available to others on request. 

Please call me at (202) 512-3841 if you or your staff have any
questions.  Major contributors to this report are listed in appendix
IX. 

Victor S.  Rezendes
Director, Energy and
 Science Issues


INTERNATIONAL NUCLEAR SAFETY
ASSISTANCE PROJECTS, AS OF MARCH
1994
=========================================================== Appendix I

                                                      Number
                                                          of
Project type                                        projects
--------------------------------------------------  --------
Training of personnel                                    124
Safety assessments/safety evaluation reports             117
Proposals for safety upgrades of equipment or            102
 structures
Production or supply of equipment                        101
Improving methodologies related to training,              91
 operations, and maintenance
Information exchanges, including written                  65
 materials, visits, and conferences
Theoretical or experimental safety research               57
 reports
Improving procedures related to maintenance,              48
 operations, and testing
Projects related to periodic testing of nuclear           29
 facilities
Arrangements to provide maintenance at nuclear             6
 facilities
Other\a                                                   89
Unknown/unspecified                                       65
============================================================
Total\b                                                  894
------------------------------------------------------------
\a Other projects include International Atomic Energy Agency safety
review missions, radioactivity studies, and assessments of
radioactive waste treatment. 

\b Projects may include multiple activities.  As a result, the total
number of projects listed (894) exceeds the number of projects listed
in the data base (568). 

Source:  G-24's data base. 


PLEDGED CONTRIBUTIONS TO THE
MULTILATERAL NUCLEAR SAFETY FUND,
AS OF JUNE 30, 1994
========================================================== Appendix II



   (See figure in printed
   edition.)

Source:  European Bank for Reconstruction and Development. 


U.S.  NUCLEAR SAFETY EQUIPMENT AND
PRODUCTS DELIVERED TO COUNTRIES
OPERATING SOVIET-DESIGNED
REACTORS, AS OF MARCH 1994
========================================================= Appendix III

Country          Location       Project                Value
---------------  -------------  -------------  -------------
Bulgaria         Kozloduy       Plant               $150,000
                                analyzer

Bulgaria         Kozloduy       Computer              23,000
                                software

Bulgaria         Kozloduy       Fire trucks          500,000
                                and equipment

============================================================
Subtotal                                            $673,000

Russia           Kola           Leak sealant         200,000
                                and equipment

Russia           Smolensk       Sample fire           20,000
                                doors and
                                sealant
                                equipment

Russia           Balakovo       Office               160,000
                                equipment

Russia           Balakovo       Training              25,000
                                tools

Russia           Balakovo       Soldering             40,000
                                equipment
                                (training)

Russia           Balakovo       Instrumentati        400,000
                                on training

Russia           Balakovo       Training             400,000
                                course

Russia           Balakovo       Safety               100,000
                                training

Russia           Balakovo       Simulator             25,000
                                maintenance
                                training

Russia           Balakovo       Simulator             50,000
                                software
                                training

Russia           Balakovo       Office                42,000
                                equipment

Russia           Balakovo       Needs                100,000
                                analysis

============================================================
Subtotal                                          $1,562,000

Ukraine          Zaporozhye     Simulator             25,000
                                maintenance
                                training

Ukraine          Zaporozhye     Training              25,000
                                tools

Ukraine          Zaporozhye     Sample fire            5,000
                                doors and
                                detectors

Ukraine          Zaporozhye     Fire                  45,000
                                protection
                                equipment

Ukraine          Unspecified    Training              50,000
                                course

Ukraine          Khmelnitsky    Maintenance          400,000
                                course

Ukraine          Khmelnitsky    Control room         450,000
                                reactor
                                training

Ukraine          Khmelnitsky    Needs                100,000
                                analysis

============================================================
Subtotal                                          $1,100,000

============================================================
Total                                             $3,335,000
------------------------------------------------------------
Source:  Based on data from the Brookhaven National Laboratory and
DOE. 


DOE'S AND NRC'S EXPENDITURES, AS
OF MARCH 1994
========================================================== Appendix IV

                    (Dollars in Thousands)

Expenditure                                           Amount
--------------------------------------------------  --------
DOE
------------------------------------------------------------
Headquarters activities                                 $460
Travel                                                   153
Associate membership in the Institute of Nuclear       4,500
 Power Operations to obtain symptom-based
 emergency operating instructions
Brookhaven National Laboratory contracts             9,401\a
Argonne National Laboratory support                    1,823
DOE/Brookhaven Area Office support                        23
Pacific Northwest Laboratory support                      47
============================================================
Subtotal                                             $16,407

NRC
------------------------------------------------------------
Contractor personnel                                    $515
Travel                                                   696
Training                                                 125
Equipment                                                117
Other costs                                                7
============================================================
Subtotal                                              $1,460
============================================================
Total                                                $17,867
------------------------------------------------------------
\a Includes about $3.3 million in nuclear safety equipment and
products delivered to countries operating Soviet-designed reactors. 

Source:  Compiled from DOE and NRC data. 


PLANNED DISTRIBUTION OF U.S. 
FUNDING TO COUNTRIES WITH
SOVIET-DESIGNED REACTORS
=========================================================== Appendix V

Figures V.1, V.2, and V.3 show the planned distribution by activity
of U.S.  funding in the amount of $85.4 million for the Russian
Federation; in the amount of $50.2 million for Ukraine; and in the
amount of $15.8 million for countries in central and eastern Europe. 

   Figure V.1:  Planned
   Distribution of U.S.  Funding
   Totaling $85.4 Million for the
   Russian Federation, as of June
   30, 1994

   (See figure in printed
   edition.)

Source:  Based on data from the Brookhaven National Laboratory, DOE,
and NRC. 

   Figure V.2:  Planned
   Distribution of U.S.  Funding
   Totaling $50.2 Million for
   Ukraine, as of June 30, 1994

   (See figure in printed
   edition.)

Source:  Based on data from the Brookhaven National Laboratory, DOE,
and NRC. 

   Figure V.3:  Planned
   Distribution of U.S.  Funding
   Totaling $15.8 Million for
   Central and Eastern European
   Countries, as of June 30, 1994

   (See figure in printed
   edition.)

Source:  Based on data from the Brookhaven National Laboratory, DOE,
and NRC. 


HOW THE UNITED STATES IS MANAGING
ITS NUCLEAR SAFETY ASSISTANCE
========================================================== Appendix VI

The United States is managing the safety assistance program from
Washington, D.C., under an interagency agreement in which the U.S. 
Agency for International Development (AID) funds the Department of
Energy (DOE) and the Nuclear Regulatory Commission (NRC) for
implementing nuclear safety initiatives in the former Soviet Union
and in central and eastern Europe.  The decision to manage the
program in this manner, rather than from U.S.  missions located in
the recipient countries, is a departure from AID's usual practice for
delivering foreign aid.  U.S.  officials said the rationale for this
decision was based on several factors:  (1) the short-term nature of
the program did not justify establishing AID or other DOE and NRC
technical missions in the recipient countries; (2) the State
Department's Senior Coordinator and DOE's and NRC's technical experts
on nuclear safety are located in Washington; and (3) the U.S.-based
private firms and organizations, national laboratories, and
consultants through which the program is being implemented are
located in the United States and can be more easily managed from
Washington. 

In 1992, DOE established a project office for managing the day-to-day
operations of its safety assistance programs at the Brookhaven
National Laboratory in Upton, New York.  Brookhaven is responsible
for providing management support for the technical contracts under
which subcontractors perform specific safety assistance tasks.  This
support includes procurement of hardware and services from sources in
the United States and the recipient countries, monitoring of
contracts and work, quality assurance and quality control, and
technical coordination of work projects. 


   BROOKHAVEN PLANS TO CONTRACT
   DIRECTLY WITH RUSSIAN NUCLEAR
   POWER PLANTS TO COMPLETE
   PROJECTS
-------------------------------------------------------- Appendix VI:1

In an effort to respond directly to the most urgent safety needs of
Russia and Ukraine, Brookhaven plans to contract directly with these
countries' nuclear power plants.  It also plans to contract with the
All-Russian Research Institute for Nuclear Power Plant Operations
(VNIIAES) to supply engineering support for training centers,
simulators, and operational safety at nuclear power plants where VVER
and RBMK reactors are in place.  Brookhaven's project manager for the
Nuclear Safety Initiative told us that this approach is
cost-effective for the U.S.  program and will allow the recipient
plants, which would be best motivated, to take responsibility and
implement operational safety measures and near-term measures to
reduce risk. 

Brookhaven also plans to establish a project office in Russia. 
According to Brookhaven officials, the office's staff will function
primarily as a coordinating body.  It will be staffed primarily by
Russians; one U.S.  official will be hired by Brookhaven.  According
to DOE, the U.S.  official will serve primarily as a liaison and
coordinator.  Brookhaven plans to contract with Russia's state-owned
utility, Rosenergoatom, which is responsible for operating nuclear
power stations, to provide for support services and coordination
within Russia in this office. 

The scope of the work, price of the contracts, and responsibilities
of the parties for each task will be negotiated between Brookhaven on
the one side and each plant and Russia's VNIIAES on the other.  The
plants and VNIIAES will provide the personnel, equipment, facilities,
materials, and services necessary to perform the work.  Brookhaven
may also provide information and equipment.  The United States,
Russia,and Ukraine have formed a joint management committee to
perform program planning and management as well as to select staff to
carry out the work programs. 


      CONTRACT PAYMENT WILL NOT BE
      BASED ON COST DATA
------------------------------------------------------ Appendix VI:1.1

Brookhaven plans to place task-order contracts with the power plants
and VNIIAES and negotiate a fixed dollar price for a given scope of
work.  It does not intend to use a detailed cost estimate prepared by
these organizations to justify the final price for the work to be
performed.  Rather, it plans to use its experience on similar work in
the United States to set a benchmark for the cost of the work. 

According to Brookhaven's project manager, the prevailing business,
political, and social conditions in Russia and Ukraine render efforts
to have these organizations prepare detailed cost estimates in
support of task-order bid prices of little or no value.  Because of
past business practices under the communist government, there is no
readily accessible or reliable data base on costs that can be used to
judge the acceptability of the cost estimates developed. 

The project manager also believes that it would take considerable
time and effort to get the power plants and VNIIAES to respond in any
meaningful way to requests for such estimates.  Because these
countries do not follow standard accounting practices, he believes
Brookhaven would get a different pricing approach from each
organization.  In the United States, the value of the services
Brookhaven plans to buy is determined by the marketplace, but no such
determinant exists in these countries.  Furthermore, on the basis of
a generally negative experience within the industry, Brookhaven will
not try to pay employees on the basis of a guess as to what they are
currently being paid. 

Brookhaven cited a recent experience to illustrate the problem.  For
similar work, a Russian design institute, insisted that as the
contractor it be paid $12,000 per man-year, while a Ukrainian
scientific institute would do the work for about $100 per man-month. 
Brookhaven, along with DOE program management, has determined that it
would be unwise to set a precedent by negotiating hourly labor rates
because this is a sensitive social issue.  Brookhaven believes that
by negotiating fixed-price contracts, it can get a better price and
avoid dealing with the social issue of wage rates. 

The DOE program manager told us that DOE has approved the guidelines
he developed for establishing reasonable cost estimates when
contracting with Russian or Ukrainian firms.  The guidelines allow
DOE to approve Russian cost estimates as long as they do not exceed
the cost of performing the contract in the United States. 


INTERNATIONAL NUCLEAR LIABILITY
AGREEMENTS AND STATUS OF LIABILITY
COVERAGE IN COUNTRIES OPERATING
SOVIET-DESIGNED REACTORS
========================================================= Appendix VII

Two international conventions regulate liability for nuclear damage
to persons and property.  The first is the Convention on Third-Party
Liability in the Field of Nuclear Energy (the Paris Convention,
1960), which applies to 14 European countries.  The second is the
similar Convention on Civil Liability for Nuclear Damage (the Vienna
Convention, 1963), which currently applies to 24 parties.  The goal
of these conventions is to ensure rapid, adequate, and equitable
forms of compensation for victims of a nuclear accident.  The
conventions ensure that the responsibility for damages caused by a
nuclear accident is channeled to the plant operator, typically a
public utility. 

According to a September 1993 document from OECD's Nuclear Energy
Agency, although the Paris and Vienna conventions are similar, they
do not provide a single, uniform third-party liability regime for all
the countries that are parties to either convention.  Until 1992, the
two conventions operated in isolation from each other, so that each
convention benefited only victims within the territory of its own
parties.  For example, damage occurring in the territory of a party
to the Paris Convention, caused by an accident in a country that is a
party to the Vienna Convention, would not be covered by either
convention.  No country is a party to both conventions because of the
potential conflicts involved in their simultaneous application.  This
significant gap in the protection of victims was lessened by a joint
protocol that links the two conventions. 

The 1988 Joint Protocol on Civil Law Liability and Compensation for
Cross-Boundary Damage From Nuclear Accident established a link
between the 1960 Paris Convention (which covers most West European
countries) and the Vienna Convention (which has worldwide coverage). 
Since the protocol entered into force in 1992, parties to it are
treated as though they were parties to both conventions.  The
liability of an operator and the amount of that liability are still
determined by the convention that covers the country where the
operator's installation is located.  The protocol resolves potential
conflicts between the two conventions, particularly in the case of
transport, by ensuring that only one convention applies to any
accident.  There are currently 16 parties to the joint protocol. 

The accident at Chernobyl highlighted the need to modernize and
strengthen the Vienna and Paris conventions.  Since 1986, the
International Atomic Energy Agency has served as one forum for many
aspects of international nuclear liability, with a view toward
establishing a comprehensive international regime that would obtain
broad adherence.  A number of proposals to amend the Vienna
Convention are currently being considered. 

With the exception of Lithuania, none of the countries with the
highest risk RBMK and VVER 440 Model 230 nuclear power reactors is
party to the Vienna Convention or the joint protocol.  Table VII.1
shows the status of nuclear liability coverage in the countries
operating Soviet-designed reactors. 



                         Table VII.1
           
            Nuclear Liability Regime In Countries
            Operating Soviet-Designed Reactors, as
                      of March 23, 1994

                                  Party to      Party to
              National            Vienna        Joint
Country       legislation?        Convention?   Protocol?
------------  ------------------  ------------  ------------
Russia\a      Under preparation   No            No

Ukraine\a     Under preparation   No            No

Lithuania     Yes                 Yes           Yes

Bulgaria\b    Under preparation   Under         Under
                                  preparation   preparation

Czech         Under preparation   Yes           Yes
Republic

Slovakia      Expected end of     No            No
              1994

Hungary       Revision of         Yes           Yes
              existing
              legislation under
              preparation
------------------------------------------------------------
\a Signed a bilateral agreement on nuclear liability with the U.S. 
government. 

\b A copy of the Bulgarian regulation guaranteeing liability
protection is annexed to each contract. 

Source:  Based on data from the G-24's Nuclear Safety Coordination
Committee. 


SCOPE AND METHODOLOGY
======================================================== Appendix VIII

To assess U.S.  and international efforts to provide assistance to
improve the safety of nuclear power reactors in the former Soviet
Union and in central and eastern Europe and to evaluate the impact of
and impediments to providing the assistance, we interviewed and
obtained documentary information from officials at the U.S. 
Department of State, Department of Energy (DOE), and Nuclear
Regulatory Commission (NRC).  We also met with officials of the
Brookhaven National Laboratory in Upton, New York, to review how
specific safety projects were being carried out on behalf of DOE. 

As requested, we did not obtain written agency comments on a draft of
this report.  However, DOE, State Department, and NRC officials
generally agreed with the facts in this report.  They offered
technical clarifications, which we incorporated where appropriate. 

To obtain information on what further action is needed to improve
nuclear safety, we met with officials of the Institute of Nuclear
Power Operations and the World Association of Nuclear Operators in
Atlanta, Georgia.  We also met with officials of the Electric Power
Research Institute in Palo Alto, California.  In addition, we
interviewed a number of nuclear safety experts in private industry. 

To determine the amount and type of assistance being planned or
provided to improve the safety of Soviet-designed reactors, we
obtained data from the G-24's Nuclear Safety Assistance Coordinating
Center in Brussels, Belgium.  This organization is responsible for
developing a data base for international nuclear safety assistance. 
We did not independently verify the accuracy and completeness of the
data provided by the G-24.  We converted all of the funding data from
European currency units (ECU) to U.S.  dollars, using an exchange
rate of 1 ECU equals $1.163. 

To identify perceptions about the benefits and limitations of the
assistance and efforts to coordinate international assistance, we
interviewed officials and obtained documentation from several
international organizations.  Specifically, we met with officials
from the International Atomic Energy Agency (IAEA) (Vienna, Austria),
OECD's Nuclear Energy Agency and International Energy Agency (Paris,
France); the World Association of Nuclear Operators (Paris and London
centers); the European Bank for Reconstruction and Development (EBRD)
(London, England); and Euratom (Luxembourg).  We also met with
several representatives of Europe's nuclear industry to obtain their
views on the safety of Soviet-designed reactors and liability issues. 

We also met with or obtained information from donor and recipient
countries and organizations.  Donors' views were obtained from the
European Union and from representatives to IAEA from Japan, Germany,
and Sweden.  We also met with nuclear safety officials from France
and the United Kingdom.  We received information from representatives
of the following countries that are operating Soviet-designed
reactors:  Bulgaria, the Czech Republic, Hungary, the Russian
Federation, Slovakia, and Ukraine. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IX

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION,
WASHINGTON, D.C. 

Jim Wells, Associate Director
Gene Aloise, Assistant Director
Thomas J.  Flaherty, Evaluator-in-Charge
Duane G.  Fitzgerald, Ph.D., Nuclear Engineer

EUROPEAN OFFICE

Glen Levis, Site Senior
Pamela J.  Timmerman, Senior Evaluator
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