5/16/12 Home / Issues / Russian International Nuclear Cooperation www PGS Printer Friendly Page   Summary of the International Security, Proliferation, and Federal Services Subcommittee of the Governmental Affairs Committee Hearing on Russia and China: Nonproliferation Concerns and Export Controls Thursday, June 6, 2002 Michael Roston Analyst The following summary is drawn from RANSAC's observation of the June 6, 2002 Senate Governmental Affairs subcommittee hearing on export controls and nonproliferation. The summary represents RANSAC's impression of the testimony and discussion, and these notes should not be attributed as an official transcript of events. The written statements of the witnesses are available online at: http://www.senate.gov/~gov_affairs/060602witness.htm Senators Attending: Senator Daniel Akaka (D - Hawaii), Subcommittee Chair; Senator Fred Thompson (R - Tennessee), Ranking Member; Senator Tom Carper (D - Delaware). Witnesses: Panel One: The Honorable John S. Wolf Assistant Secretary, Bureau of Nonproliferation Department of State Mr. Matthew Borman Deputy Administrator, Bureau of Industry and Security Department of Commerce Panel Two: Leonard Spector Deputy Director, Center for Nonproliferation Monterrey Institute for International Studies David Albright President Institute for Science and International Security Gary Milhollin Executive Officer Wisconsin Project for Nuclear Arms Control Opening Statements: Senator Akaka called the hearing to order by noting that while states that buy materials to construct weapons of mass destruction are the primary concern, states that enable these purchases must receive scrutiny. Any discussion of the latter problem must start with Russia and China, which are at the center of many proliferation controversies. While export controls are an imperfect tool for preventing proliferation, he noted that there are many views on improving the system, and hoped that the hearing would highly attractive new approaches. Senator Thompson observed that Congressional attention to Osama bin Laden a few years back was virtually ignored by the media, and he hoped that the war on terrorism would renew interest in proliferation of weapons of mass destruction. It is evident in his estimation that both Russia and China are contributing to proliferation, with China responsible for Pakistan's arsenal, and Russia encouraging Iran to develop nuclear weapons. While Russia and China are certainly at fault for their actions, the Senator concluded by noting that American policies, which are doing too little to prevent these activities, are also to blame. Panel One: Assistant Secretary Wolf began by observing that the European Union and other countries have embraced effective nonproliferation export control norms and frameworks. More and more states are realizing they have a responsibility to control dangerous exports. But while Russia and China have both made enormous contributions to the war against terrorism, he believed their nonproliferation commitments are minimal. Despite strategic dialog with Russia, many proliferation-sensitive technologies are still exported by Russia. In China, the problem is much worse - nothing has been offered except for unenforceable announcements and declarations that belie the need for firmly promulgated export control laws. Despite agreements between the US and China in 1997, Chinese contributions to Iranian weapons programs continue. For both states, dual use technologies were still being exported to multiple countries of concern. Wolf added that failing to fulfill nonproliferation commitments would undermine Russia and China's relations with the United States. Bilateral ties can only move fully forward in new areas once these states have demonstrated their commitment to preventing proliferation. Russia and China, he concluded, are not being consistent enough in their efforts constrain trade that contributes directly to proliferation threats they claim to oppose. Mr. Borman began his statement by pointing out that the Russian system of export controls is evolving. He observed that Russia is steadily increasing its commitments to a number of the international export control bodies, including the Wassenaar Arrangement, the Nuclear Suppliers Group, the Missile Technology Control Regime, and the Zangger Committee. He added that Russia was not a party to the Australia Group. On a domestic level, Russia has established an export control law for dual-use items, implemented regulations including control lists and catch-all controls, produced an interagency review process for export licenses, initiated outreach for exporters, and developed a limited enforcement capability. He was optimistic that Russia generally no longer perceives US export control assistance as a way of limiting Russian access to foreign markets. Russia has taken firm steps to educate its defense enterprises on the need for improved export controls, although much more training is still needed. He said that the Commerce Department's attaché in Moscow was playing an important role in contributing to export control development in Russia. Borman had very little to say on China, noting that there has been no ongoing cooperative engagement for export control purposes, and that China cooperated to a minimal degree with international export control regimes. Senator Akaka started the questioning by asking to what extent cooperation between China and Pakistan has been officially sanctioned by China. Wolf said he would stand by the remarks in a recent CIA report that both countries maintain high-level, official dialog. He felt this problem was proof that China needed to live up better to nonproliferation commitments. Akaka next spoke of his concern that Putin had changed the export laws within Russia to permit trade to countries without full IAEA safeguards, and was worried that Russia was contributing to India's nuclear weapons program. Wolf's opinion was that most cooperation between the two states was on the civilian nuclear energy side, although he was concerned about the lack of safeguards in place for Indian nuclear faclities. The Senator next asked Borman why contact with China was so limited. Borman responded that work is impossible without both governments being equally interested in moving forward together. Wolf added that he was glad that China had stated its willingness to strengthen chemical and biological technology controls, but that it had to get used to the idea of not making these statements as a favor to the US. Instead, he suggested, it must implement policies that indicate a firm opposition to proliferation, backed up by rigorous enforcement. Wolf added he was interested in cooperation with China at a similar level to cooperation with Russia, but that "it takes two hands to clap." Senator Thompson next made a statement that the US had been taking political statements by Russia and China on their willingness to prevent proliferation at face value for too long, and that the Bush administration was repeating old mistakes. He felt that without real pressure, Russia and China would do whatever they please, and that the problem might even be accelerating at this point. Wolf responded that the Bush administration was being less diplomatic than its predecessor, and that Chinese companies had been sanctioned a month before the summit in Shanghai. He felt the administration had made clear that it believed Russia had the expertise and resources to prevent illicit exports, but lacked the will to do so. Thompson asked if they were turning a blind eye to the problem. Wolf responded that they were not effectively implementing their laws. Senator Akaka next asked how the US should respond to the idea that there is a double-standard: that American and European companies have sent dual-use items to states of concern, and that Russian-Iranian cooperation is no different from the US-North Korea Agreed Framework. Wolf argued that when the US identifies western companies that are violating export controls, they rigorously enforce them, often telling a company it has a choice between developing its market in the US or developing its market in Iran. While the US was helping North Korea, Russia provides fuel-cycle assistance to Iran that is inconsistent with the needs of Bushehr's light-water reactor. Because Iran has the minimal safeguards required by the IAEA, he felt that Russia cannot ensure that expertise and technology it provides is not being diverted to a nuclear weapons program. Akaka next asked if the US was concerned about India since sanctions were lifted. Wolf said that the only existing engagement was on cooperative nuclear safety projects. Borman added that all Indian nuclear entities were on US export control lists. Panel Two: Mr. Spector began by warning that the mistakes of the past with Russia's nuclear exports were being repeated, and that Russia was proving itself willing to open a nuclear pandora's box because it is profit-hungry. Selling nuclear research reactors to Syria, Libya, and Myanmar was creating unnecessary proliferation risks, and he feared Russia's sales to India of missile technology would further destabilize the Indian subcontinent. In his estimation, the political will to enforce nonproliferation norms within Russia was low, and that export laws were being manipulated with Moscow's blessing. Despite sanctions on specific enterprises, and the raising of these concerns by Bush at the May 2002 summit, problems persist. Spector proposed several solutions to this problem. Initially, he felt that the Missile Technology Control Regime needed to express its dissatisfaction with Russia, perhaps by devising an expulsion process, something that is currently lacking within the institution. Another step would be to implement a similar denial of spoils from illicit exports that the US uses on its own enterprises when they violate export control laws. One option he proposed was the reverse of a "debt swap," so that for every dollar that Russia makes from its nuclear sales to Iran, the US could require Russia to re-pay its debt that much more quickly. Finally, Spector called for ongoing training in export controls for Russian government officials, especially at the mid-career level. Dr. Albright spoke next, and differed with Spector, arguing that Russia had made progress in developing export control laws, despite the existence of implementation problems. A gaping problem needing correctiong, in his opinion, was the lack of knowledge and understanding about export controls outside of the Moscow region. He noted as an example that 90% of Russian enterprises lack effective information to verify that they are shipping technology to the appropriate end-user of a dual-use item. He added that the idea of ending support to Russia's export control system was flawed because the greatest risk was in the illicit transfer of goods that happens under the radar screen. He noted that in this regard, American assistance has been crucial because it had directly contributed to blocking Iranian and Iraqi efforts to acquire sensitive technologies. For this reason, the US must commit more resources and expertise to Russia where there really is a lack of capacity to tackle this problem, not merely a lack of will. With more assistance, he felt that Russia's status as the "supermarket of proliferation" could be ended. Mr. Milhollin next observed that the list of proliferation outrages is growing, and that the current situation in India and Pakistan is concrete proof of the dangers involved in unconstrained Russian and Chinese exports. In his opinion, the failure of these states to rein in their exports had put millions at risk of death in a nuclear war. Milhollin proposed four steps to improve export controls. First, he felt that sanctions needed to forbid all trade across-the-board with enterprises in Russia and China that disregard nonproliferation export controls. Too often, sanctioned companies can still purchase technologies that are high-performance but just below the threshold of export controls. He felt that implementing stronger sanctions that cut off all trade between the United States and offending enterprises was necessary. Second, Milhollin noted that frequently, the sanctioning of enterprises that were subsidiaries of larger organizations did not prevent sales from going forth. He felt that parent organizations needed to be made to account for the actions of their subsidiaries, and that accountability must be produced up and down the corporate ladder. Third, the duration of sanctions needed to be extended. Several of the enterprises sanctioned recently in China were recidivists who had been sanctioned in the past. Only 14 Chinese enterprises are presently on the Commerce Department's list of sanctioned businesses, and at least 40 more could easily be added. As a final step, Milhollin hoped that offending enterprises would be prevented from entering the United States. By revoking their right to enter the US, many business transactions could not occur, and illicit exports would be better constrained. Senator Akaka began the questioning by asking if Iran's civilian nuclear program would contribute to its nuclear weapons program. Spector responded that while Iran's IAEA membership guarantees that the Bushehr facility will be well safeguarded, the bigger danger is drawn from Russia's training of Iran in nuclear science, helping it develop the knowledge to build its own facilities. Senator Akaka then and asked if export control technologies used in many western states would be useful to Russia and China for controlling illicit exports. Milhollin said that while computerized tools would improve their systems in technological terms, the lack of will to enforce export controls was the real problem, and that assistance should be conditioned on changes in attitude in each country. The Senator then asked Albright if Minatom was responsible for illicit sales, and if it was cooperating with export control efforts sufficiently. Albright noted that there were major chain of control problems in Russia, and that Minatom has frequently lost track of technology that has then ended up in the wrong hands. He felt it was essential that distinctions be made between deliberate acts and illicit trafficking. He felt that Iraq proved the need to prioritize illicit activities not performed deliberately by a state. Just as Germany's export controls system needed help in the 1980s, he felt Russia's system needs help now. Akaka next asked if the Commerce Department's Moscow attaché would help improve Russia's export control system. Albright said it can, but that Russia needed to develop a better sense of who the end users were for many technologies it was exporting, and that the US could do a great deal to help Russia in this area. Senator Thompson differed with this point, observing that the US cannot keep track of end users in its exports. Milhollin said that the Commerce and State Departments can help American exporters to get a better idea of identifying end users. He was concerned, however, that many companies push their overseas sales to the edge of legality. He hoped that by expanding the list of enterprises that could not be traded with, more illegal exports could be prevented. Thompson felt he still did not understand how we knew who the end users of products were. Milhollin responded that intelligence agency intercepts and penetration of enterprises overseas is the only means we have of determining sales. Milhollin then added that he agreed with the Germany analogy for Russia and China, but felt that shaming them would be a better solution. When the US embarrassed the Kohl government for its sale of sensitive chemical equipment to Libya, it immediately added one hundred new inspectors to its export control bureau. Thompson asked about how Russia's export laws had been manipulated. Spector responded by referring to the Tarapur case, and explained how Russia had declared that India's reactors would be unsafe if they did not have sufficient fuel. He felt that Russia was often skirting the edge of the MTCR by selling cruise missiles to states that could easily be modified and re-classified as ballistic missiles. Senator Thompson then asked Albright about progress in Europe on improving export controls. He said that Germany, Austria, and Switzerland, three problem states of the past, had substantially improved their efforts to stop and discourage illicit exports. Milhollin added that the problem had shifted more to Eastern Europe, as was evidenced by Iraq's violation of its embargo. He was concerned, however, that Germany was still selling items to Iran, and that France was limiting the effectiveness of the Iraqi embargo. Albright concluded this point by adding that the violation of the Iraqi embargo was tied to a European belief that it could never go nuclear again, and he felt that the US must do more to educate its allies of the danger of this possibility. Senator Akaka then asked if it would be a good idea to limit aid to Russia to encourage compliance with nonproliferation goals, or instead use other incentives. Spector responded that in some cases, aid programs were necessary because of American national security goals. He felt that Russia had a lot invested in WTO entry and in debt cancellation, and that these were mechanisms that should be considered. He also felt that permitting Russia to import spent nuclear fuel from overseas might be a positive incentive that could encourage compliance. The Senator then asked Albright if punishment was the best approach for enterprises in other countries that violate export control regimes. Albright responded that it had not always worked, and referred to the Russian lab NIKIET that had been sanctioned for cooperating with Iran's nuclear program. He felt that while NIKIET was angry about being sanctioned, it was surviving under these constraints. Senator Akaka closed the hearing by observing that he was unconvinced that Russia and China were committed to preventing the proliferation of weapons of mass destruction by controlling the export of dangerous technologies. He agreed with Milhollin's proposal to end all trade with enterprises violating export laws. He hoped that Russia and China could be persuaded of the consequences of proliferation, and of the importance of export controls to winning the war on terrorism.

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