Matthew Bunn:  Science, Technology, and Public Policy Program,Harvard University

Ken Luongo:  Russian American Nuclear Security AdvisoryCouncil

Jon Wolfsthal:  Moderator, Carnegie Endowment for InternationalPeace
 

Jon Wolfsthal:  [beginning cut off]. . .dedication and foresightmany of the issues we'll be discussing here today are really a lot betteroff than they might have been.
Despite the flurry of attention given to the unfortunate Russian submarineincident yesterday, the issue of Russia's nuclear arsenal and securityis by no means new.  The collapse of the Soviet Union brought withit the frightening realization that the Russian nuclear arsenal and theirstockpile were oversized and underprotected.  Russian scientists havegone months and even years without being paid, Russian guards are not issuedwinter clothes, and security systems have been shut down for somethingas simple as non-payment of electricity bills.

By U.S. government estimates, Russia has produced some 1,350 metrictons of nuclear materials.  I'll repeat that: 1,350 metric tons ofnuclear materials, enough for tens upon tens of thousands of nuclear weapons. While the majority of this material, about 700 metric tons, is within weaponsand has a relatively high level of security, the remaining 650 metric tonsrange from being fairly well secured to being an acute threat for theftand diversion.  These materials are spread throughout the Russianlandmass and states of the former Soviet Union and are in constant dangerof theft from both outside and from insiders.  What makes matterseven worse is that due to outdated accounting and security systems, wemay not even know if these materials would be stolen or have already beenstolen.  This risk, unbelievably, has been with us for almost a decade.

A number of U.S. government programs, launched as early as 1991, havebeen designed and implemented to address many of these issues.  Somehave made tremendous and surprising progress, and others have been completelyunproductive.  Unfortunately, as will be discussed today, even thoseprograms that have achieved some measure of success have fallen on hardtimes due to problems with oversight, insufficient resources and a changeof approach from one of cooperation to one of almost confrontation.

Among the most unsung and important of these programs is the one we'llbe discussing in large part today, that's administered by the Departmentof Energy through its experts and the national laboratories.  Theauthors of the report being released today have been instrumental in thedevelopment of this Materials Protection, Control, and Accounting program,referred to as MPC&A, and have been with the program really from itsvery inception.  Whatever progress has been made has been due to themas much as anyone, and is the result of their knowledge, dedication andcreativity.

Each of the speakers will talk for about ten minutes, and will run inthe following order.  To my immediate left is Ken Luongo, who is thedirector of the Russian American Nuclear Security Advisory Council. He is a former nonproliferation advisor and official at the Departmentof Energy and, although he may object to the term, is in my book the fatherof the MPC&A program.  To the far left of the table, Matthew Bunnwill speak next.  He is the assistant director of the Science, Technologyand Public Policy Program at Harvard University.  He is a former WhiteHouse Office of Science and Technology policy advisor from 1994 to 1996,when really the bulk of progress was made on these programs.

In many ways, what's being done now is implementing ideas that weredeveloped or amassed then.  And then playing anchorman today willbe Oleg Bukharin in the center, who is a researcher at Princeton Universityand one of the foremost researchers on the Russian nuclear complex. Among his other publications, of which there are many, he is the key authorof a seminal work on the Russian nuclear program, "Stalin and the Bomb." So with that, Ken Luongo.
 
Ken Luongo:  Thank you Jon, and thank you all for comingtoday.  I know that everybody's interested in the Russian submarineaccident, but this briefing is more like homework for the next potentialcatastrophe.  Because if the program that we're talking about todaydoesn’t work and this nuclear material falls into the hands of potentialproliferators or terrorists, the next disaster featuring Russian nuclearmaterial will be much, much worse than what's going on in the Barents Searight now.
This program was specifically created in the aftermath of the collapseof the Soviet Union to protect the essential ingredients for nuclear bomb-making:plutonium and highly-enriched uranium.  If it fails to meet its objectives,or if some failure along the way occurs, it will create a body blow tointernational security and create an international security crisis thatwill be potentially unprecedented but at the very least will be quite serious. This is a program that needs to be implemented quickly and effectively.

As Jon said, the three of us have actually spent a substantial amountof our professional lives focusing on this subject.  We believe inthis program.  We want this program to be successful, and we believethat there are a number of successes which have occurred in this program.

Our analysis and recommendations touch on the successes that have occurred,but there are also, I think by any objective analysis, a number of problemsthat have developed in the program.  In my particular view, thereare problems that have developed over the past two or three years thatneed to be reversed.  In particular, when you're talking about workinginside the closed nuclear complex of Russia or even in the civilian partof the nuclear complex of Russia, which is more open, you're talking aboutworking in the crown jewels of the old Soviet Empire.  And to tryand do that without having a sound basis of cooperation and partnershipis going to make your job extremely difficult, and one of the problemsthat we see is this partnership issue.

Another is whether or not the novelty, as it were, politically has wornoff of this subject, because high-level political attention seems to bedecreasing.  Though I must say, there has been a substantial interestin the program in the Vice President's Office, and when problems have developedand they have been brought to the attention of that office, they have beenaddressed and they've been solved.

But I think that the essential question for me is whether or not thisprogram is succeeding and whether or not just counting beans is sufficientto determine whether or not the program is succeeding.  I think wehave to ask ourselves whether or not counting how many monitors, fencesand sensors that have been installed is leading us down the path of whatcould be called a nuclear Vietnam, where we counted bodies and told ourselvesthat we were winning, but didn't really know that we were not winning;whether some other measures for accounting for how the program is developingare more appropriate in this case.  Because in fact, this is a casewhere a lot of softer measurements may be more accurate than hard measurementsof how many pieces of hardware have been installed.

Our analysis is really the culmination, as I said, of about three yearsof work.  Matt and I both worked together in the Administration andOleg was an essential collaborator outside the government.  We'vehad not just discussions with critics of the program, we've had a numberof briefings from people who run the program and manage it, we've had anumber of briefings from Russian specialists and people outside the government. I think that the culmination of all of that research is a balanced reportthat tries to assess the success that occurred and tries to point in theright direction of where things need to head.

So with that, let me briefly go through our major findings and a verybrief skirt over some key recommendations and then turn it over to my colleagues.

To reiterate, we think this program has been successful, we think thisprogram is essential, we think this program needs more people and moremoney.  However, we think that the program has, to a certain degree,lost its focus, lost its intensity, and lost the drive, which made it successfulin the early days.  There needs to be a substantial acceleration ofthe effort. It's urgent, in our view.  The scope of the work thatneeds to be done is now substantially larger than it was when the programwas initiated.  There was an analysis of what needed to be done, whichbuildings needed to be covered. That scope has now expanded.  Butit doesn't necessarily mean that the program needs to be stretched outas much as it currently is.

The planned upgrades are, as I said, too stretched out.  We thinkthat given the international security crisis, given both the decisionsof last week, as we read in the press, for the Russian government to reduceits nuclear arsenal, which is going to put more warheads and more nuclearmaterial into the process than ordinarily would be if they were still onmissiles and standing, that this is an essential effort that needs to beaccelerated.  We think that one of the ways to deal with the expandingscope of the program is to consolidate this bomb-grade material as quicklyas possible in the smallest number of locations.  While there is somework in that regard, there has not been sufficient urgency in the process. I think that this is an area where high-level political attention couldactually help accelerate this subject.
Performance testing is an essential area.  This is what Oleg willtalk about, it's really a matter of making sure that what you're installingis actually working and is tested under realistic threat scenarios. There are a variety of different programs that develop regulation and otherthings that may seem mundane, but don't exist in Russia and are in theirinfancy and need to be better shepherded along.  There are activitieswhere some work was done and has started or changed, and the regulatoryimplementation is absolutely essential.

Another area is sustainability.  Not just you have to test thesesystems once you install them, you have to ensure that they're going toremain robust and workable over the long term.  That means not justthe hardware, but that the people have adapted in the system to this newsafeguards culture, and that money, training and continued interactionwith the United States over the long haul is established.

And then there are a number of significant management problems, I think,that we've identified.  One of the biggest is, besides the loss ofpartnership with the Russian side, and I think it's realistic to say thatthere is a disappointment among the Russian specialists in this regard,another major problem that we've seen is the downgrading of the positionof the national laboratories in this process.  There have been manyfathers of this program, I somehow was there when the baby was born, butI'm not sure I was the father of the baby.  But there was a systemof working with the Russians, there was a way of interacting that for lackof a better term maybe was called laboratory-to-laboratory approach. What that emphasized was grassroots interaction between scientists on theRussian and American sides, and then it focused on using high-level politicalattention to try and drive some of the issues that were agreed to at thelower levels.  The laboratories have now been exiled in essence tocontractor status, they're no longer really a part of the management orpolicy making process in the program and I think that that's been a significantblow to the program.

I don't want to talk too much about access because I think Matt's goingto talk about that in some detail.  But the question of access tothese facilities has been blown into a showstopping issue, and I'm notsure that it needs to be a showstopping issue.  There was a lot ofwork that was done to try to pave the way.  Some of it has been abandoned.

So if I were to outline for you, I won't go through all of our recommendationsbecause they're voluminous, I would say that there are five major issuesthat need to be focused on and that Matt and Oleg will address most ofthem.  The first is this question of consolidation and conversionof material to downgrade the scope of the problem.  In other words,instead of looking at every building and providing technical fixes everyplace nuclear material exists, consolidating it into fewer places and convertingit to non-weapons use as quickly as possible is a major consideration forthe program in the future.

The second issue is sustainability of the security upgrades.  Withoutthis – we have invested roughly $700 million in this effort, we're likelyto invest at least $1 billion more. That's a substantial national securityinvestment that needs to be protected over the long term.  That meansyou can't let it just go after all of the sensors and fences are installed.

The third major issue is management and partnership.  This is thewhole collection of activities focused on partnership with the Russians,getting laboratories more involved in the process, having an acceleratedplan for action, getting this job done as quickly as possible.  Frankly,any suggestion that this program can stretch out another ten or twentyyears is not something people should take seriously.  This is toourgent an effort to allow it to sit.

Fourth, the question of access and whether or not we're allowing accessto sensitive facilities inside the crown jewels of the Russian nuclearcomplex should be the essential issue that defines whether or not we canwork at those locations.

And then finally, performance testing and whether or not these systemsare being tested under realistic conditions.  Let me stop there.

Matthew Bunn:  Thanks very much.  It's a pleasure tobe here today to talk about something that I think is really one of themost vital national security challenges facing the United States. If we ask the question, is preventing hostile states and terrorist groupsfrom getting nuclear weapons vital to U.S. and international security,the answer is clearly yes.  If we ask the question, is theft of nuclearmaterial in the former Soviet Union one of the most likely ways such astate or terrorist group could get a nuclear weapons capability, the answeragain is yes.  If we ask the question, therefore, is securing nuclearmaterial in the former Soviet Union among the top ten most vital nationalsecurity interests of the United States, I would say the answer is clearlyyes.

But has it been treated with that level of attention and priority bythe U.S. government?  The answer is clearly no.  Unfortunately,the U.S. government has only sporadically paid attention at the very highestlevel of government to moving this issue forward, although I agree withmy colleague Ken that on those occasions when the Vice President's Officehas intervened, it has done so effectively.  When it was no longerin the headlines, it was no longer on the top of the national securityagenda, and that reflects an inability to set clear strategic prioritiesin this government, in my view.

It's a myth that this problem has been resolved.  Attempts to stealpotential bomb materials were in the headlines in 1994 and 1995, but theyhaven't stopped.  As recently as 1998 there was a major conspiracyat a Russian nuclear weapons facility to steal 18.5 kilograms of highly-enricheduranium, material that would be directly usable in nuclear weapons. Given the hundreds of millions and billions of dollars that a person likeSaddam Hussein would be willing to pay for enough material for a bomb,this material has to be protected at least the level that a vault of diamondswould be protected.  And yet anybody -- any of you who have been toa Russian bank and been to a Russian nuclear facility know that that issimply not the situation that exists today.  The bank security isvery impressive.  The nuclear facility security is not.

Let me talk for a couple moments about some specifics in our reporton some areas where we really think substantial changes need to be made. The first is partnership and the important subcategory of that: access. Partnership with the Russians, for better or worse, is the only way thegoal of ensuring Russian nuclear material security can be accomplished. This material is Russia's to protect.  All we can do is help and urgethem on.  By the way, in this press conference we're going to be talkingabout Russia.

There is also material in a number of the other states of the formerSoviet Union that is equally critical to protect.  About 99 percentor more of the material is within Russia, but some of the material in theother states also poses serious issues and we recommend in the report thata serious increase in the level of attention to securing that materialbe undertaken.

The fact that you can only succeed in partnership is why policies thatundermine partnership so urgently need to be corrected.  In the lastfew years, for example, the program has very sensibly developed guidelinesfor what objectives should be achieved – how secure are we shooting for? They've done that entirely within the American program, without consultingwith the Russians, and refuse to show those guidelines to the Russians. They've then gone to the Russians and said, well, things that we had agreedto do are now cancelled because they don't meet the guidelines; well, wecan't show you the guidelines, but all of these contracts we've writtenwith you we're going to have to rewrite.  That's often been presentedas  a demand rather than as an item for discussion and amicable negotiation.
A particularly classic example of this emphasis on essentially saying"our way or the highway" is the issue of access.  In September of1999, the U.S. Department of Energy cut off all further work at some ofthe most important facilities in Russia, the two nuclear weapons designlaboratories and all four of the assembly and disassembly facilities, becausethe Russians would not grant access to sensitive areas of those facilities. That action effectively ripped up agreements that the United States hadalready signed.

Let me give you a little background on that.  Access is extremelyimportant for successfully implementing this program.  It helps toconfirm what kind of high priority weapons-usable material is in the facility,to understand the best approaches to upgrade security for that material,and to confirm that the U.S. money is being spent appropriately. There's a wide range of reasonable debate as to exactly how hard to pushon the issue of access when it comes to the tactics.  But these aresome of the most sensitive facilities in all of Russia, they are the crownjewels, as Ken said.  It was clear from the outset that there weresome facilities that under Russian law they simply would not be able toallow Americans into.

As a result, the U.S. teams, under instruction from the Department andwith the full knowledge of the Department, negotiated flexible approachesto providing assurances, as it's called in the program, that U.S. moneywas indeed being spent appropriately.  These involve photographs ofequipment installed, videotapes, operational reports on exactly how theequipment was working over time that would be relatively difficult to fakeup, certifications by responsible officials, and so on.

Some of the agreements specifying these arrangements were signed, officialagreements between the governments of the United States and Russia. Russian experts who wanted to move this cooperation forward made enormous,time-consuming efforts to work their own bureaucracy in ways that we wouldnever be able to understand how to do, to move that cooperation forward. And they took enormous personal risks with their security agencies. There are independent nuclear analysts in Russia who are in jail todayfor working on these kinds of sensitive issues.  These people knewthat that was the environment that they were working in and yet they werewilling to take the risk, arguing that the United States was going to bea reliable partner.

Well, that isn't what happened.  The Department of Energy teamthat came in to run the program in early 1997 was unsatisfied with theseflexible arrangements.  And then the August 1998 financial crisisforced a number of Russian nuclear sites to engage in some very creativeaccounting, setting up dummy companies and the like to make sure that theirmoney that they needed to implement their programs wouldn't be seized bythe banks and so on.  And at some sites, as a result of that financialcrisis and the ensuing chaos, there were difficulties actually fulfillingthe contracts that had been signed with the United States.

In the midst of all this, on the front pages of newspapers every daythere were accusations of corruption and theft of U.S. aid or IMF moneyor what have you.  At the same time, the Russians cracked down harderin early 1999 on access than they had before, partly because of sour U.S.-Russianpolitical relations over Yugoslavia and the ABM treaty, partly becauseof the rise of an FSB official to power, and partly because of the crackdownin the United States on Russian access to American facilities resultingfrom the Wen Ho Lee case.  And finally there was an Inspector Generalreport at the Department of Energy in the summer of 1999 that warned thatwork was going on at sites with no access.

So in September 1999, the Department of Energy announced that therewould be no new contracts for these very important facilities unless accesswas provided – precisely what we had agreed in writing we could do without. DoE then went and testified to Congress, further limiting their flexibilityto deal with this, that there would be no contracts for facilities if firstthere was no access.  This had a number of annoying effects. Number one, there's been no further contracts to upgrade security for thesevery crucial nuclear facilities for a year.  Number two, it hardenedthe FSB's position rather than softening their position, confirming intheir minds the suspicion that what we were really after was collectingintelligence on their sensitive facilities.  Third, it undercut andbetrayed the Russian experts who had gone so far to move this cooperationforward and who will not likely be willing to take those kinds of risksagain.  Even if new access arrangements are someday agreed to thatare stronger than what we had in the past, the damage to the spirit ofpartnership so crucial to this program's success is going to be grievousand long lasting.  We believe that this approach was a blunder ofcolossal proportions.

Now, I have some good news to report.  First of all, let me gothrough what we recommend.  We recommend that the DoE essentiallyreverse course and tell the Russians that we are going back to our previouslysigned agreements with them on this point, while continuing to push hard,within the spirit of partnership, to work out assurances that will effectivelyensure that U.S. funds are used appropriately.  One thing that oughtto be considered is an approach that the Department of Defense has alreadytaken, which is the use of Russian trusted agents, people who are Russianswith Russian security clearances but work for major U.S. contractors whocan offer certifications that work is being done appropriately.

Now the good news is, there have been intensive negotiations, particularlyin the last six or seven months.  The United States and Russia haveidentified two pilot areas at the two nuclear weapons design laboratories,Arzamas-16 and Chelyabinsk-70, to test out new approaches to providingassurance.  The Department is waiting now for a Russian proposal onthat, and is hoping that those proposals will include access.  Buteven if they don't, if there is a credible proposal that does not includeaccess, while the final decision rests with the Department they are nolonger ruling out issuing new contracts.  But as of so far, zero newcontracts to report.
Let me just mention the issue of sustainability, which Ken mentionedand we think is absolutely essential.  Material is not going to besecured if the equipment provided has broken down, if procedures are widelyignored, if the new approaches to security and accounting are regardedas annoying impositions of the Americans rather than as something crucialto Russia's own future security.  What's needed goes far beyond makingsure that equipment has appropriate warranties and you can get spare partsfor it.  It requires a series of steps to ensure that a system isestablished in Russia that puts in place the needed incentives, resources,and organizations to secure this material over the long haul.

We have a wide range of recommendations in the report; it's probablythe most detailed set of recommendations on sustainability that existsanywhere.  Let me just mention a couple of items related to incentives,which are very key.  As the saying goes in the nuclear world, "safeguardsdon't make kilowatts."  If a manager of a Russian nuclear facilityis investing his money in security, that means he's not investing his moneyin things that bring in revenue.  And so they have every incentive,facing desperate budget cutbacks, to cut back on spending on security andaccounting.

There are four things in particular – we list a number of things, butthere are four things in particular that the United States needs to doto change this incentive picture.  Number one, we need to use ourown leverage.  We should make it clear to Russian nuclear facilitiesthat effective security and accounting for their nuclear material is theprice of admission for getting lucrative contracts from the United States,and we should convince other major nuclear states to do the same. We should use the leverage provided by the fact that some major Russiannuclear facilities get most of their income from the U.S. highly-enricheduranium purchase to lean on them to improve security and accounting. We haven't done that.

Secondly, regulation.  Only when there's a realistic prospect thathe's going to get fined or shut down if he doesn't have good enough securityand accounting for his nuclear materials, is the manager of a Russian nuclearfacility going to bother to invest in security and accounting for nuclearmaterials.  So we have to reverse the slide that's occurred in recentyears in U.S. support for putting in place effective regulation on securityand accounting in Russia.  Regulation always sounds boring, but thereis nothing more central to long-term security for this material in Russiathan ensuring that those managers who are making those budget decisionsknow that if they don't have stringent security and accounting it's goingto hit them where it hurts, in the pocketbook of their facility or in itsability to operate.

Third, we have to do more on nonproliferation training.  We havean immense number of people in the system working on security and accountingin Russia today who see it as sort of a technical job and in a certainsense are unaware of its importance.  The guard outside a Russianbuilding with enough material for a bomb in it often doesn't even knowthat that's what's in that building, and he doesn't know just how crucialthe guarding of that building is for Russia's own national security. We have to make it clear to everyone in that system that they are on thefront lines of the global effort to stem the spread of nuclear weapons,and that is absolutely essential for Russia's own security.

Finally, we need to put at the very top of the nonproliferation agendawith Russia this issue of security and accounting for nuclear material. This is a fundamental requirement of responsible nuclear statesmanship. We need to make that clear.  It's as important as ratifying arms treaties,as enforcing export controls.  We need to bring it up at every level,in every meeting, until the job gets done.  We need to make it clearthat this is one of our top priorities.  That was happening to somedegree in the early 1990s, but it has not been happening in recent years. I believe that if you looked carefully at the amount of time spent on variousissues you would find that there's probably been more time spent at thehighest levels on chicken parts in recent years than there has been onsecurity for nuclear materials.  So with that, I will turn to my colleagueOleg Bukharin.

Oleg Bukharin:  Thank you Matt.  Well as the programmakes progress in safeguards and security upgrades of nuclear facilitiesin Russia and the former Soviet republics, two questions are asked. Are these safeguard upgrades effective, and are they going to be sustainableover time?  The optimistic answer is that we don't know.  A somewhatmore realistic answer is probably not -- at least without an effectiveprogram of performance testing.  So let me focus on this issue.

There are two approaches to evaluating nuclear security.  The moretraditional one, called the compliance or prescriptive approach, is thatyou have nuclear review agencies, there is a list of safeguards elementssuch as fences, sensors, etc., which a system ought to have in place. And nuclear inspectors go out to a particular facility with a checklistand basically check against this list that the facility has all the elementsinstalled and operable.  For example, they could ask the question,does this perimeter system have sensors, and are they turned on or not? While this approach is certainly useful, it does not provide for a trueevaluation of a system's effectiveness.  In fact, it's quite oftenthat a system might satisfy all regulatory requirements and still not beable to fulfill its principal mission, which is to prevent theft of nuclearmaterials or sabotage of a nuclear facility.

In contrast, a performance-based approach specifies a level of threatcalled the “design-basis threat,” -- typically it's one insider or oneinsider in a combination with a small group of outsiders which are well-armedand motivated.  Then the performance-based approach requires the facilityto demonstrate that it's capable of defeating this specified security threat,in this case nuclear inspectors go out to nuclear facilities and ask thequestion, how will they go about stealing nuclear materials?  Whenthey put on their black hats and in fact try to realistically test thesystem, try to beat the system.  This test could include, for example,a mock terrorist attack, or an attempt to bypass a perimeter intrusiondetection system in a stealthy manner, or it could include an attempt tosmuggle out a certain quantity of nuclear materials, camouflaged some wayin a container of industrial waste.

Putting this black hat on is not a straightforward task. It requiresvarious specialized skills and experience, including terrorist tactics,tactical applications, nuclear facility operations, variations in regulations,and the list goes on and on.  In the United States the performancetesting programs were started in the early 1980s, and in our opinion theyturned out to be absolutely critical in improving safeguards effectivenessin this country.  Now security of nuclear materials and facilitiesin the U.S. is probably much better than anywhere else in the world. And also safeguards performance testing programs turned around the waythe safeguards community is going about the business of securing nuclearmaterials.  People are much more proactive, they are asking the rightquestions, they are seeking to identify vulnerabilities and correct them.

In Russia, to the best of our knowledge, there are no such institutionalizedperformance testing programs.  A cooperative effort to establish suchprograms is an urgent task for the DoE MPC&A program.  There aretwo interlinked objectives for such a cooperative effort.  The firstis to demonstrate that U.S.-sponsored upgrades are in fact effective indefeating security risks. And second is to make safeguard upgrades sustainable,at least to be able to detect where effectiveness is deteriorating sometimein the future.  So this could be done by establishing institutionalizedprograms.  In fact, these two objectives are synergistic.  Bothof these objectives are very sensitive: (a) they demonstrate vulnerabilities,and (b) they show what tactics could be applied to exploit these vulnerabilities. Because of this sensitivity, in most cases testing would have to be doneby Russian specialists with appropriate security clearances.

So our report discusses in great detail the difficulty of establishingsuch a cooperative effort, and also makes a number of suggestions on howthe DoE MPC&A program could go about starting a performance testingprogram in Russia.  For example, we are proposing to set up a jointinspection team which will consist of U.S. and Russian experts.  Theywould train together, thereby building up trust and partnership; they woulddo testing jointly at less sensitive facilities in the United States andin Russia.  And the Russian element of the team would go out to themost sensitive facilities in Russia and test them under contracts fromthe DoE MPC&A program.

Another issue which Ken mentioned is consolidation.  Clearly, thisis a high priority issue.  It makes plain sense.  You take outmaterial from a building or facility; as a result you don't have a riskthat this material will get stolen, you don't have to pay for securityupgrades, you don't have to pay operations and maintenance costs over timewhich could be quite substantial.  There are obviously difficulties. There are substantial costs and risks in moving this material and downblendingit to less proliferation sensitive material.  At some facilities theprogram has already made improvements and now going back and removing nuclearmaterials is psychologically difficult. Perhaps the most significant issueof all is that many Russian facilities believe that without nuclear materialstheir mission would essentially disappear.  They won't have status,they won't have access to resources, they won't be able to do interestingand challenging research which requires nuclear weapons-usable materials.

The Department of Energy has been aware of the need to consolidate materialsfor a long time, and in fact some progress has been made and some promisingplans have been drawn.  However, our analysis indicates that thereare still a number of issues in this area.  The effort is underfundedand does not have access to sufficient resources.  There is no focusedwork to create a package of incentives for nuclear facilities to part withtheir nuclear materials.  And finally, there is not enough coordinationbetween the DoE MPC&A program and other programs within the Departmentand other parts of the U.S. government.  For example, there is animportant nonproliferation effort called Reduced Enrichment for Researchand Test Reactors, the RERTR program.  Its objective is to convertresearch reactors which operate on highly-enriched uranium to low-enricheduranium fuel which is not usable in nuclear weapons.  There is anRERTR agreement with Russia, and the program is making some modest progressin Russia and the former Soviet republics.  But there is very littlecoordination between the DoE MPC&A program and the RERTR program. I think I will stop here and we'll be happy to answer your questions.

Jon Wolfsthal:  That's great.  I propose that sincewe do have some media coverage, please identify yourself and your organizationand direct your question to either individuals or the entire panel.


[Question and Answer]

[inaudible] from Inside Energy:  This is either for Kenor Matt.  The last time I heard somebody talk about MPC&A, orat least I remember Secretary Richardson saying that approximately 70 percentof the sites within Russia have had their most important materials secured,and that gave the impression that this program is on the right track andthat it's doing very well.  And then there was the GAO report whichsaid I think it was more like 4 percent, which obviously dictates an entirelydifferent picture.  With this report that you're releasing now, areyou saying it's somewhere in the middle there, is it closer to the 4 percent,is it closer to the 70 percent?  Is there a proper figure?

Matt:  We have a section in the report that's called "MeasuringMPC&A Progress" that takes that issue head on.  We argue, as mycolleague Ken pointed out, that we have to get beyond the bean counts,beyond this is how many facilities have had a monitor installed or whathave you.  The GAO figure is a little bit more than the 4 percentyou said, is about 6 or 7 percent, and actually came from the DoE. It's not a GAO figure, it's a DoE figure. It is the figure for the amountof material in facilities whose entire MPC&A programs have been completed,as far as the U.S. government is concerned.  That's obviously a smallfigure.  There is a larger amount of material that is in buildingsthat have been partially upgraded or facilities that have been partiallyupgraded. However, the number of 70 percent that's been offered by Richardsonand company is at least as wrong in the impression that it gives as theGAO figure, in the sense that 70 percent counts essentially all of thematerial for which anything has been done.  In many of those cases,it is only the smallest first steps that have been made.

What really needs to happen is to sit down on a building by buildingbasis, look at what we know about the Russian nuclear complex and its materials,what we know about what's been accomplished so far, what we know abouthow much money is going to have to be spent, figure out how much more workthere is to do in total, and then do an assessment of how much of thatwork have we done so far.  That way you can measure as a percentagehow much of the work you've done.  That doesn't necessarily mean thatyou've reduced that percentage of the threat.  Unfortunately you'redealing with an intelligent adversary who's going to go for the materialthat isn't protected yet.  So if you have a building where 90 percentof the material has been protected and 10 percent hasn't, and the samepeople have access to the 90 percent as to the 10 percent, you may nothave reduced the security threat at all at that building.  So it'sa complex issue.  But both of those assessments of how far we've comeare wrong.  We've come a long way, but we have a much longer way yetto go.

Ken:  I think part of the problem with this particular issueis it illustrates that this program has gone from something which is seriousto part of a public relations battle.  The GAO number which they gotfrom DoE may or may not be right, but 70 percent is certainly not right,and the fact that DoE feels that they have to refute everything with someinflated, "everything's perfect" response is an indication, at least inmy opinion, that the balance has somehow been lost.  This is an enormouschallenge, no one is questioning that it's an enormous challenge, bothfor the U.S. and Russia.  To give glib answers doesn't help get thejob done.

Jon: One of the problems that the MPC&A program faces isthat it has adapted a sort of bunker mentality.  And that's been drivenby the fact that they have not been given adequate resources.  Inthe simplest terms, the number of people.  The amount of travel thatthe average MPC&A staffer or task force member has been going throughis inconceivable to average working people in America, in terms of timespent away from home, the amount of time they spend on airplanes goingto remote locations, and then the amount of time that they have to spendtrying to get their lives back in order when they do get back to eitherthe laboratory or the States.  And then, for people like Ken or myself,when they're working for us or our bosses, coming down and asking questions,"OK, now what's the exact percentage of material that you've protectedin the past four weeks."  So it's not surprising that they've falleninto this mentality.  The solutions, however, are fairly simple tothink of and hard to implement.  Hire additional people, work withCongress to get additional resources that are necessary, and sort of breakout of this bunker mentality.

Paul Mann from Aviation Week: A question for Jon, Ken and Mattand Oleg too for that matter.  Is the lack of strategy and the lackof political will at the top rooted in this bean-counter mentality, ordoes the lack of strategy and political will have different roots? I'm curious about whether you trace in your analysis what the roots ofthis lack of will and lack of strategy are.

Ken:  My answer is probably prejudiced, but it is my answerand I really believe it and I think the facts will bear it out.  Therewas during the infancy of this program in the 1994-early 1997 period, particularlythrough 1996, an intense and acute interest at the top of the Departmentof Energy by senior officials in this subject which drove, as any analysisof bureaucracy will tell you, drove those below to produce for those whowant production at the top.  That was coupled with, as Matt mentioned,some very scary front-page headlines in a variety of different newspapers,that got the attention of people not just in the Department of Energy butin other parts of the government and in particular in the White House. There was a third element, and that was an activist core of people thatreally believed in the subject that somehow got responsibility for actuallymanaging it.

What happened was, a structure was built up that worked but was imperfect,and almost all at once all three of these things were eliminated. The people at the top of the DoE left, the people in the middle of theDoE left, the news reports were no longer on the front page and no longeras scary, and then there were a variety of different bureaucratic responsesto what had occurred in the prior three years.  That's my back ofthe envelope analysis.

Matt:  I agree with what Ken said.  I think that alsojust because the program has been continuing for a while it's inevitablethat it becomes more bureaucratized and more sort of run-of-the-mill ina certain sense.  So it's almost inevitable that it would lose someof its original revolutionary élan, as you might say.  Butat the same time, to me it is deeply disturbing that until very recentlyno one in the Department of Energy had sat down with the people who runthis program and said – or anywhere else in the government for that matter– and said, "What's the fastest we can get this job done? What would ittake, what are the obstacles, how can we overcome some of those obstacles,how much money would you need, how many people would you need, and howmuch could you accelerate the program?"  That question was not beingasked.  And that question needs to be asked. One of the key recommendationswe make in this report is that you need to sit down, working with the Russians,and work out an accelerated program that says, what is the fastest we canget this threat to international security reduced.  And then you needto go to the Congress, both the President and the Department of Energyworking together, and say, we need this money because it's going to rapidlyreduce a dramatic threat to U.S. national security.  And that justhasn't been happening, the program has been sort of idling along at moreor less previously planned budget levels.  In fact, on several occasionsin recent years the Congress has given more money than was requested andthe Department of Energy has then reprogrammed some of that money awayto other less urgent priorities.

Jon:  When the program started, it was largely administeredby the laboratory-to-laboratory mindset and process that Ken outlined. And there was a real aggressiveness to that program.  As a result,there were some problems, not necessarily with corruption or percentageof the monies, but there wasn't a sort of A-line oversight in terms ofexactly which dollar was where at which point in the pipeline.  Therewere adequate safeguards to make sure the money was spent on what it wasintended for, but you couldn't check dollar for dollar at every minuteof every day.  This is about the same time that there was a largebacklash in Congress against what was seen as foreign aid, why are we sendingall this money to the Russians.  In order to preemptively protectthe programs, there was a shift away from laboratory control.  AsKen has described, that shift has simply swung all the way to the otherside of the pendulum and so in order to protect themselves they're countingevery possible bean.  How many portal protectors, how many doors havebeen bolted, how many windows have been bricked up, how many guard uniformshave been purchased.  And that's in part gotten them away from thecooperative laboratory-to-laboratory mindset that was so useful in thebeginning.

Aloysius Hogan with Congressman Knollenberg:  There's considerableinterest in Congress in the domestic or U.S. domestic nuclear fuel cycle,and there's concern that the HEU agreement, amongst the kilowatt communityshall I say, is bringing down the mining, conversion and enrichment capabilitiesin the United States, that they're going to go bankrupt and indeed havelost millions of dollars recently.  The United States has a responsibilityin the enrichment oversight community and the USEC Privatization Act reportsrequire DoE and the President to make certain that this HEU agreement doesn'tlead to the downfall of the domestic nuclear fuel cycle.  I heardKen, if I’m not mistaken, saying that downblending, using this materialelsewhere is a priority, and I think there's agreement on that, but doyou have any suggestions or recommendations in your report for how to dothat without damaging the U.S. nuclear fuel cycle?

Matt: First of all, I don't think that it's the HEU agreementper se that is hurting the U.S. domestic nuclear fuel cycle industry sobadly.  I think it is the unbelievable blunder that the Administrationcommitted in privatizing USEC at a moment when the market circumstanceshad changed to such a degree that it was clear that it would not effectivelyimplement the HEU deal, and in doing ineffective implementation of theHEU deal would also undermine the U.S. domestic industry.  I've writtenabout that at some length in a report "The Next Wave," which covers allthe various programs in these areas related to plutonium and HEU, not inas much detail as this one does on MPC&A.  I described it as amongthe most egregious national security blunders of the Clinton team, whichadmittedly is a role for which there's some competition.

I believe there are still options today, not only to move forward withthe HEU deal and even accelerate it, but also to maintain a viable U.S.industry.  But as long as USEC remains as the sole executive agentwith absolutely no competition, and even more if it succeeds in gettingthis new deal where it will not only have sole control of the enrichmentservices from the HEU purchase but also sole control of the new, even lower-costsupply of Russian commercial enrichment services, the U.S. industry isgoing to be in trouble and the HEU deal is going to be in trouble. In my own view, the national security of the United States and the possibilitythat nuclear material would fall into the hands of rogue states is a moreimportant priority than how much of the uranium going into U.S. nuclearreactors was mined or converted or enriched in the United States. But nonetheless, both of those are reasonable priorities for the government.

Dan Horner from Nuclear Weapons Materials Monitor:  I wonderif you could give us an estimate of what it would cost to implement thesuggestions in your report, over what time frame, and perhaps some detailabout what the different increments cost or some breakdown of the overallexpenditures.
Oleg:  Well it's a very difficult issue. I think that our viewis that very considerable progress could be made within the next 7 or 8years, and that includes both consolidation of nuclear materials and acceleratedinstallation of security upgrades at individual facilities. We don't reallyhave any information which would make it possible to do a budget estimate,but presumably would be in the range of several billion dollars.

Matt:  Let me be at least a little bit more specific, althoughI don't think that's in our report, I think my colleagues maybe took itout, if I remember correctly.  But it's in "The Next Wave." An admittedly back of the envelope and very rough estimate is that an acceleratedprogram that includes what needs to be done, not only on upgrades but onconsolidation and sustainability, would cost at least another $100 milliona year beyond what's currently being spent for a period of 7-8 years. As I mentioned, the accelerated strategic plan to carry out -- the outlinesof what would be in such an effort does not yet exist, and needs to beprepared.  So you can't really make a serious budget estimate fora plan that doesn't exist.  But nonetheless it's probably in thatballpark.  It's certainly not going to be less, and probably won'tbe greatly more.

Ken:  I just want to add one thing to that.  The budgetand the recommendations and the timing issues that we're talking aboutare not separate circles.  They are all interrelated, because thingsthat you want to accomplish are going to require political drive to getthem done, which in turn will require additional funding.  The issuehere is whether all of the stars can get back into alignment so that theactivities that need to get done can get done.  To do $250 milliona year would be fine, but if you're stymied on access and you can't getany new contracts and you can't do any new work, it's a major problem.

Mary Alice Hayward from the Senate Armed Services Committee: First of all I'd like to thank these gentlemen upfront for holding whatI consider a very important presentation on a subject that I believe hasbeen ignored by both the Administration, the Department of Energy and theU.S. government during the past year.  I think a lot of emphasis hasbeen placed on the Nuclear Cities Initiative at the expense of the MPC&Aprogram.  I’m glad that you started ramping up the public interestin this program.  As you know, this program's been involved now foralmost a decade, and of $500 million that we have spent to date, we arenot really sure what we've accomplished.

A couple comments on your comments as it relates to the infamous numbersthat have been floating around in the MPC&A report.  I think thebottom line there, what that shows, is that we really don't know how tomeasure whether or not we’ve achieved the program's goals.  Part ofthe attempt in coming up with figures, bean-counting to use your term,to try to get a sense or handle on how much material is actually secured,and the subsequent controversy that ensues as a result of that report,simply demonstrates that this is still an incredibly hard challenge forboth the NGO community to get their arms around, as well as the U.S. governmentand especially the U.S. Congress.  What I'd like to ask you guys is,how do you in fact measure success?  This is something I personallyhave to grapple with in order to make some sort of sense of how to measurewhere the $500 million has gone and whether or not we decide to authorizean additional $100 million every year on top of what the Department requests.I appreciate Kenny's question to this regard because I think essentiallyuntil we figure out how to measure success, we can throw billions of dollarsand we'll never really know whether or not U.S. national security is beingprotected.

Secondly, I like very much Matt's comment on the need for establishingsecurity AND accounting.  We all know that the challenge in that iscoming up with some sort of measurable guidelines that we can employ thatwill satisfy all parties concerned, that means the Russians as well asthe United States.  So I throw the challenge back at you, as to howand what we should do to find those security and accounting measures thatwill satisfy all interested parties.

I also applaud your support for the consolidation effort.  I believethat this is something that I personally will direct my committee to focuson in the upcoming years.  I think that consolidation activity iscritical.  However, I want to note, and this goes back to your pointKen, that this would in fact be an expansion of scope that we have criticizedthe program for engaging in.  Nevertheless, I believe the consolidationeffort might be the best way to effectively expend U.S. resources and alsobuild back the partnership between the United States and our Russian partners,that you have pointed out has degraded over time.  It also has muchclearer measurable ways of measuring success, and I would look forwardto any kinds of recommendations that the four of you have regarding howwe can effectively implement this consolidation effort and direct the Departmentin the next Administration to making that one of its primary focuses, aswell as not undermining, as the gentleman here on my left said, the issueof the U.S. enrichment nuclear material business.  And finally, thejoint inspection team, Oleg?  Excellent suggestion.  I wouldlike to find out more on your mind how this can work and I would welcomesome kind of comment from all of you on everything I've just said.

Ken: I think that everybody at this table supports both the NuclearCities Initiative and the MPC&A initiative.  I don't think thatwe view them as separable, because this is all a question of how to rationalizewhat goes on inside the Russian nuclear weapons complex.  I thinkboth of them are important, and I think neither of them frankly have gottenthe kind of attention inside the U.S. government which is really required,which I think indicates a much bigger issue that we're not talking abouttoday, but that we probably should grapple with as we look at what's goingto happen in November and the transition between the administrations, beit Gore or be it Bush.

The other thing, if I could just address Aloysius' point for a moment? I think Matt's exactly right about domestic production.  But I haveto say that we, as we try to claw away at what exactly is under the surfacein Russia on a number of these programs, have found out that the HEU purchaseagreement and the sale of this uranium is more important for a varietyof different reasons than just the fact that bomb-grade materials are beingdownblended in Russia.  The revenue stream is substantial, much moresubstantial than any other program that the U.S. and Russia are involvedin, besides loans.  And that money is going to support a number ofgood activities.  I don't want to address, I mean Matt wrote the sectionon how to measure success in consolidation, so I'll turn it over to him. But I would just say that I think it's unfair to pit program against programwhen both require substantial support. Just because the Department can'tget their act together to deal with this in a round way as opposed to asegmented way, I don't think we should just call out NCI as a particularproblem.

Matt:  Let me try to deal with a number of the specificquestions.  On measuring progress, it's a very difficult problem,as you mentioned.  Contrary perhaps to some of those who have beenreinventing government lately, nowhere is it written that those thingsthat are important are those things that are measurable.  It's oftenvery difficult not to fool yourself with bad numerical measures when youstart coming up with numerical measures.  We do have a box in thereport on how to measure progress, but I think when you get to the endof it you won't be fully satisfied that we've solved the problem. Olegmay have a bit more to say.  But what you really have to look at isnot how many buildings have portal monitors installed, but how much hasthe threat been reduced, and that's a much more complicated question.
On the guidelines for accounting, I think the key issue to understandis what's important is not so much that the United States knows where everykilogram of Russian weapons-usable material is, but that RUSSIA knows whereevery kilogram of Russian weapons-usable nuclear material is.  Unfortunately,that's not the case today, and there are a wide range of disincentivesfrom the point of view of Russian managers to carrying out accurate accounting. For example, there's a system of personal responsibility.  For theguy running a particular area of a nuclear facility, if there's an inventorytaken and there's less material there than is on the old paper recordsthat they have that date back to thirty years ago, it's his fault. That makes a pretty serious disincentive to actually getting around totaking that accounting in any accurate way.  We propose in the reportthat there ought to be some kind of sort of amnesty period, like the weekwhen you can return your overdue library books.  Similarly in theSoviet system, there were huge incentives for building up unaccounted forstocks, what were called honeypots.  You had a quota to produce acertain amount of material in a year, if you produced more than that, insteadof sending it in you'd keep it aside in case next year you couldn't meetyour quota, you could send it back out.  And often the manager anda couple of his cronies were the only guys who knew about that stuff, soit's not on the official books.  There's a lot of problems of thatkind.

But I think accounting is really very crucial, because it's one of thekey factors in dealing with the insider threat, which is the big threat. And it also tells you whether or not all the other measures have been effective.If you've got good accounting you can say nothing's missing, and they justcan't say that at the moment.  President Putin has been talking alot about taking an “inventory of Russia.”  How much money is therein the central reserve bank, how much timber do we have, how much nickeldo we have?  I think a critical part of that inventory of Russia hasgot to be how much plutonium and highly-enriched uranium do we have.

On consolidation, Oleg mentioned the obstacles, but we do think thereare enormous opportunities for putting together targeted packages of incentivesfor individual facilities.  This effort would have to reach out ofthe MPC&A program and coordinate a number of programs, so that you'dsay to a facility, if you give up this HEU, we will give you cash for thevalue of the HEU, we'll give you assistance in doing research that doesn'trequire it, if it's appropriate for that facility we'll give you assistancein converting to low-enriched uranium which can't be used in bombs. These kind of targeted packages are what's needed to overcome the obstacles,and it's what hasn't been put together so far.  I'll stop there andlet Oleg talk about the joint inspection teams.

Oleg:  I think that I will add another dimension to theissue of measuring progress.  Obviously the security of nuclear materialdepends on the level of threat.  I'll say there are three basic classesof threat.  One that is probably most common is that you have a desperateworker, he does not have any evil intention in mind but if he sees an opportunitythat he can put some HEU in his pocket and walk out of the facility, hedoes it.  An example is the theft of HEU from the Luch facility nearMoscow in the early years.  Now you put portal monitors at the facilityexits, it's more than likely to deter this individual from stealing thematerial.  So you eliminate a very broad threat, if you think of itas a pyramid then you take probably 60 or 70 percent of it.

The next one is that you have a dedicated effort, sponsored maybe bya foreign government, by a terrorist group, to break in the facility orto bribe individuals to manufacture the substitute material so that theywill place this material instead of real HEU and try to get away with it. Obviously, defending against such a threat is much more difficult and suchdefense requires a much more elaborate system of hardware and also securityprocedures.  It probably should be the goal of the MPC&A programto arrive at this level to be able to defend nuclear materials againsta fairly sophisticated and dedicated attack.

Finally, the highest level of threat is when you have high-level facilitymanagers or maybe a security director cooperating to steal material. You can't do a security mechanism against such a threat unless you bringin resources by the state, by counterintelligence agencies, by securityagencies, plant informers inside the facility, and things like that.

So I think in discussing this measure of success, it's necessary totake into account the level of threat we are dealing with at this moment. And I think we have a fairly detailed discussion of the joint inspectionteam approach in the report, so just to save time maybe I'll just referyou to the report.

Matt: Let me just jump in on the point that Oleg made about thehigh-level facility managers being a serious threat.  This is oneof the reasons why not only the MPC&A program but the Nuclear CitiesInitiative and the HEU deal are so important.  If the people runningthe security equipment that we help install are desperate, unable to feedtheir children reliably, unable to pay for their children's education,embedded in a collapsing economy that's rampant with crime and corruption,you're not going to have good security no matter how much security equipmentyou put in.  And so dealing with the fundamental root causes of insecurityin the Russian nuclear complex is also a critical part of the picture.

Milton Hoenig, Consultant: My question is for Ken.  Howessential is improving the involvement of the national laboratories inmanagement to achieving your overall goals, such as the performance-basedtesting?

Ken:  For performance-based testing the laboratories areinvolved to some degree.  My general point about the laboratoriesis as follows.  The laboratories have much more expertise at a technicallevel than most of the people inside the Department of Energy that areworking on this program.  It's true when I was there and it's truetoday as well.  They are able to – there is this phenomenon, I thinkit's true for the Department of Defense in CTR and I think it's true forthe Department of Energy in nuclear activities.  There is a relationshipthat exists between scientists that doesn't exist between officials anddoesn't exist between bureaucratic actors.  Those people are ableto get much more accomplished. If you don't give them license and you don'tgive them rope to go and accomplish what the boundaries are that the peoplewho are willing to take the risk -- as Matt said, who are no longer willingto take the risk but who may again be willing to take the risk –- you tryto get what they are willing to suggest.  Then that bubbles back upthrough the system and needs to be worked at a political level. But ifyou don't give license to these people in the channel that's working togo out and explore what more can be done, how things can be improved, howthings can be accelerated, then I think you're cutting off an enormouspart of the flexibility and potential success of the program.  Oneof the reasons why everyone's so burdened with travel in this program isbecause they kicked the laboratories out of the management part of theprogram.  That may be an overstatement, but it's not terribly untrue.

Mike Pevzner from the Fletcher School of Law and Diplomacy: As you noted, I think it's quite clear that sustainability and accountabilityfor this program is very closely intertwined with the level of partnershipbetween the U.S. and Russia, and at the lab-to-lab level it seems thatwe do have the kind of influence in terms of providing contracts to theselabs to have a level of influence.  Although, as you note, when thelevel of cooperation is not sufficient and the U.S. does cut off thesecooperative programs, that kind of shoots us in the foot as well, so perhapsit's not as high a level of influence as we would like.  However,as you noted, at the higher level, the ministerial level, the level ofpartnership has been declining in the last several years.  How seriousa threat do you think this is to the overall sustainability of the program,how can the U.S. turn this trend around, and can it be done by the U.S.alone?

Ken:  There is something to be said for personalities thatmesh in making this process work.  Just as you can't divorce the technicalaspects of this program from the political aspects, or divorce them fromthe historical aspects of how people squirreled away honeypots of materialso they didn't get shot by Beria, all of these things are intertwined. I think part of it is the relationship that exists on a personal levelbetween the Cabinet official who's responsible for this and his counterpartin Russia.  To be completely honest, this is a major undertaking,this is basically a foreign policy activity, but it falls to the Secretaryof Energy for a variety of different reasons and it's his responsibility.

One of the things that I really believe in that Matt said is that you'vegot to bring the subject up.  You can't encase it like a wound, becauseit just festers.  You've got to be able to take advantage of everyopportunity to talk about what's going wrong and talk about what more youwant to have happen at that high-end level.  If you try to gloss overit or you're talking about other things and not about this, then I thinkthat the problems just begin to mount.  So I think that channel atthe Cabinet level is essential.  I think the people who tend to havethose jobs in Russia have very prickly personalities and don't particularlyingratiate themselves with U.S. officials.  But nonetheless, theyare very capable people, and in many cases they have made a number of veryimportant things happen.  So I think it's important to maintain thatdespite the pain.

Matt:  I support everything Ken said on how difficult itis.  I wanted to say there may be an overall tone in some of whatwe've said in this press conference of blaming the United States for theproblems.  There are a lot of problems that are generated on the Russianside as well.  But the U.S. side is what we hope we can affect themost with our report, and therefore we've concentrated on those thingswhere U.S. decisions have been creating difficulties.  But there'sno doubt that dealing with the Russians on these and other nuclear subjectsis a long and difficult and annoying and painful road.  But there'sno alternative to taking that road. They're the people who have the materialthat threatens our security, and in our security interests we have to takethat road.

The other thing I would say is that I'm not convinced that what youdescribe as a trend is in fact a trend.  I think of it more as a verybumpy line that has its ups and downs.  In particular, usually whenyou have a new minister of atomic energy come in it turns out that he'sfull of bluster and says, I'm not going to be so soft on those Americansas my predecessor was, but then over a period of time is socialized intothe benefits of cooperating with the United States.  I think we definitelysaw that happen with Adamov when he came in.  Ken can recount foryou the joyous first meeting he had with Minister Adamov after the pressconference if you're interested.  But it did not go spectacularlywell.  Nonetheless, there's been a lot of important and useful U.S.-Russiancooperation with Adamov since then.

Jon:  Let me just throw in a useful anecdote.  Duringthe bombing in Kosovo, the Russians at a very high level made a lot ofprotest and put off a lot of high-profile activities. Military-to-militarycontacts were cut off.  MPC&A contacts were not affected. Lab teams went over, DoE headquarters teams went over, and we were reallyconcerned about this at the time and we took very specific pains to findexactly how far down into the system this problem was going to sink. And it didn't sink to the MPC&A program, which is a sign that thereis something in it for the Russians, they appreciate that.  No onewho works on nuclear materials and understands the properties can go awaywithout having some nugget of responsibility.  The question is, isthat nugget of responsibility overwhelmed by hunger or some other problems.

Gail Kaufman from Inside the Pentagon:  I was curious, youhave this lovely report, and where is it going from here, what's your nextstep?

Ken:  Well, it has been inserted into the Department ofEnergy.  I don't know if it will be surrounded by immune cells orwhether it will be accepted somehow by the host body, I don't know exactlywhat's going to happen.  I think this was a really hard report todo, and I neglected to say in the beginning that really Matt and Oleg deservethe lion's share of the credit for this report, because they are trulythe experts in this area.  But I think we have sufficient enough beliefin the recommendations that we're going to try to work to get those recommendationsimplemented, however we have to do it.

Matt:  Let me also just say that a lot of this report wasput together over the course of a couple of years really, and a few monthsago the Department of Energy put a new manager in charge at the top ofthe MPC&A program, Jack Caravelli.  We have some significant hopethat things are going to change for the better in many of the areas thatwe describe, and in fact he is already taking actions pointed in at leastsome of the general directions that we're recommending.  Those actionsaren't detailed in the report in very much detail because most of themhaven't yet come to fruition.  But we are hopeful that this reportwill be useful to him in shaping a successful and effective and acceleratedMPC&A program in the future.  He's already read this report, I'vehad probably an hour and a half conversation with him about its recommendations. We will be continuing to brief and make the case for these recommendationsover time.  But we have reason to be at least modestly hopeful thatsome of these approaches will be influential among those who are workingon this program.

Ken:  By the way, we also gave advance copies to key Russiansas well.

Mike Knapik from McGraw Hill:  A centerpiece of the Clinton-Putinsummit this past June was the agreement on a U.S.-Russian plutonium – disposalof excess weapons plutonium.  That to some extent became I think inthe public's mind a key program that the U.S. and Russia have to disposeof excess weapons material that poses a threat.  The cost of thatparticular program in Russia are estimated at least $2 billion over 20years, probably more; in the United States, which has a parallel program,at least $4 billion.  Given the urgency of the problems that you'veposed in this particular report, is that the proper emphasis of spending? Should some of that money be redirected into MPC&A work?  Andin fact, shouldn't that program become the primary focus of this effortto control excess and loose fissile material in Russia?

Matt:  For those of you who don't know, I was the staffdirector for the National Academy of Sciences study on plutonium dispositionand have been working on plutonium disposition for many years.  Myown view is that there's a lot of synergy among different programs andit would be a mistake to move ahead by eating your siblings.  It isvery dangerous when advocates of these various programs begin criticizingthe other ones as "not as important as my program," etc.  I believethat if you had an Administration that really put together a strategicplan that was prioritized for dealing with all of the key issues raisedby weapons-usable nuclear material in the former Soviet Union, even ifit cost several billion dollars over a period of years, that Congress wouldbe prepared to write those checks.  The reason that many of theseprograms have had difficulty getting congressional support is the perception,at least sometimes justified, on Capitol Hill that there's no sense ofstrategic priorities among these different programs.  Everyone comesup and says my program's the most important one.  That there's nostrategic plan overall, that there's not as much coordination and synergyamong these programs as there should be.  I believe if those perceptionsand those realities were addressed, then Congress would be willing to provide. If you go up to Congress and say here's a plan and we're going to nearlyeliminate the risks posed by weapons-usable nuclear material in the nexteight years, but it's going to cost us $8 billion, I think Congress wouldbe prepared to write those checks.  And that's the argument I makein "The Next Wave" report, where I outline such a plan, which would cost$5-8 billion to implement over a period of about 5-7 years – that's additionaldollars, not total dollars, over that time frame.

But within the issue of nuclear materials in Russia, we have focusedon security and accounting, which is the most immediate, the most urgent;you are absolutely right in that respect.  If you're not doing enoughwith MPC&A, it just doesn't even make sense to talk about plutoniumdisposition, because the material isn't going to stay tied down long enoughfor you to get around to dispositioning it.  But you really have tohave an interacting, synergistic set of programs that deal with five basicproblems.  The material isn't secure; the people in the system don'thave the funding and support that would eliminate the incentives to possiblysteal the nuclear material; there's no international or bilateral transparencyand monitoring of this material; there's more of it still being produced;and there isn't yet a plausible, financible plan to get rid of it. And all of those aspects need to be addressed in synergy to really havea strategic program that's going to be effective in addressing these threats.

Steve Dolley from Nuclear Control Institute: Following up onMike's question, Matt made the point actually that I was going to make,there's a very close synergy between the MPC&A questions and the plutoniumdisposition questions.  And yet the plutonium disposition programin the U.S. and Russia seems to be moving forward very rapidly.  Thereare plans at this point to put fuel in reactors in the U.S. and Russiabeyond test assembly starting in 2007.  So I guess my question wouldbe, first off, is that perhaps moving too rapidly if the vulnerabilitiesthat you isolate in this report are not sufficiently addressed by thatpoint, and secondly, which of the vulnerabilities that you isolate in thisreport are of most particular importance in the context of a program todispose of surplus plutonium by means of MOX fuel in commercial reactorsin Russia?

Matt:  One of the things that we do say, and this is I thinkin the category of incentives for sustainability, is that the United Statesshould take the position that it's not going to support any new effortsthat involve both processing and transport of weapons-usable nuclear materialin Russia, which are activities that can increase the risk of theft ifyou aren't careful about securing them, until there's stringent and effectivesecurity and accounting measures for those new activities in place. If something got stolen, if nuclear material got stolen, from a programthat was only underway because the United States was paying for it, andended up in the hands of a hostile state or terrorist group, it would notonly be a gigantic security disaster, but it would be a gigantic politicaldisaster.  After all, the whole point of these programs is to reducethe risk of proliferation, not to increase it.  So I believe thatthere has been insufficient emphasis in the plutonium disposition programto date on making – while there is lip service given to the notion thatwe're not going to do anything that isn't secured and accounted for alongthe way, I think there's been insufficient emphasis to date on figuringout how exactly are we going to make that happen as we move forward, who'sgoing to pay for it, how's it going to be secured, and so on.  Therewill have to be, just as one example, much more stringent security establishedat commercial reactors in Russia if those reactors are storing fresh fuelthat contains separated plutonium in it, which they don't do today. I think there's a lot of thinking that still has to go into that.

On the other hand, 2007 is still seven years away. We are hopeful thatalmost the entire MPC&A job can be accomplished in those remainingseven years.  And so I would not want to say today that we ought toslow down on our plutonium disposition efforts, but we ought to greatlyincrease our focus on making sure they're carried out securely.  Thatalso applies, to some degree, to programs that are already underway, likethe HEU deal, which involves a large amount of blending and transport overthousands of kilometers of highly-enriched uranium that would be attractivefor theft.  We don't say you ought to stop that until there's goodMPC&A, but there ought to be priority on getting good MPC&A inplace for that effort.

Ken: At the risk of repetition, I just want to reiterate my viewof Matt's previous answer.  It really is both hard to believe andis a travesty that this integrated strategy for how all of these piecesfit together, as far as I can tell, has not been an activity that has beenundertaken by this Administration.  That's what leads to this Balkanizationof the Russia and FSU programs.  There was a time when Balkanizationmade sense because individual programs, this one in particular, were beingbombarded by hostile bureaucracies.  So in order to isolate it fromthat and allow it to grow, it was somewhat Balkanized.   It doesn'tmake sense to keep it in a separated category any more.

[Tape 1 ends]

[Tape 2 begins]

. . . is to determine whether or not they can put together a plan, nowwe're into this eight years already, a plan sometime in the next year ortwo that can integrate all of these different activities.

On your question of what should be done – Matt and I have had this conversationbefore.  Plutonium disposition in a sense was the first out of thebox because nothing was being done about security.  I think it's kindof gone off on a trajectory that was loosed by the National Academy's excellentreport.  I'm not sure it needs to be slowed down, but I think MPC&Aneeds to be pushed up to run parallel to it.

Matt: In my view, and I know Ken is nervous about this view,if you really want to pull together an integrated program and make it work,there needs to be somebody in charge.  Whoever gets elected in Novemberneeds to appoint somebody at a high level with direct access to the presidentwho wakes up every morning saying, what can I do about the threat of nuclearmaterial in the former Soviet Union today?  Such a person does notexist in the U.S. government.  There is no one in the U.S. governmentwho has responsibility for overseeing this entire set of programs, makingsure they're all working together, finding the strategic synergies. That person needs to be brought into being.

Jon:  The second part of the question was which of theseparticular vulnerabilities really need to be addressed in the context ofplutonium disposition.

Ken:  I think Matt mentioned both processing and movementbetween facilities.

Matt:  And the new storage sites that will now have weapons-usablematerial that didn't before at the commercial reactors.

Glenn Curtis from the Federal Research Division at the Library ofCongress:  There is a substantial cadre of nuclear experts whoalready are famously underpaid and also who are now threatened with downsizingand conversion in the nuclear cities.  I was wondering whether thebrain drain that is conceivable from this phenomenon is considered to bea serious security problem, and number two, whether anything is being doneto constructively move that cadre of people into another form of rewardingactivity if and when the anticipated downsizing and conversion programsgo into full effect.

Ken:  This is a very serious problem.  There are avariety of different programs, like the International Science and TechnologyCenter in the State Department, the Initiatives for Proliferation Prevention, and the Nuclear Cities Initiative in the Department of Energy, for attackingparts of the problem.  Your question of whether or not the problemis being approached in a strategic way is really the key question. Once again, there doesn't seem be – it's growing, the integration betweenthese different efforts to some degree, but it's not quite gelled yet. Then we also have two additional activities.

One is what is called the European Nuclear Cities Initiative, whichis an initiative of the Italian Foreign Ministry. Maurizio Martellini fromthe Landau Network has been pushing the European Union to address thisquestion and so far with some success.  And then, because we feelthe nongovernmental world should play a more important role in trying toengineer some of these activities, not just pushing the government to dothings, we've formed a consortium of individuals, organizations and businessesthat are interested in this subject and it's just getting underway now. Raphael Della Ratta there in the first row is our coordinator for this.
 
Jon:  To reiterate on the first part of this question onthe threat, it is severe and acute, and there's an impression that thesituation is improving, but in fact we're working on a report that we hopeto release by the end of the year that's done demographic surveys in threenuclear and three missile enterprise cities in Russia. They show the problemis continuing to be bad and in many cases is getting worse.  It'sevidenced that the average salary in some cities is $56 a month for somehighly trained technicians and scientists.  When you ask them, youwouldn't go work for this country, would you, they say, well sure, whywouldn't I go work for a Syria or a China or an Iran.  They're membersof the NPT, so why not.  So it is a big problem and it's not necessarilygetting better.

Question:  This is a follow up for Matt and Oleg. You mentioned that you think for plutonium there should be an emphasison reactors to get rid of those, is there a recommendation in here aboutgas reactors in partnership with Russia and the European Union and Japanfunding this?

Matt:  Let me make clear, this report is not about plutoniumdisposition.  We were answering questions about plutonium dispositionbecause they were asked.  There's absolutely no recommendations aboutany aspect of plutonium disposition in this report.  I do cover plutoniumdisposition at some length in "The Next Wave."  In my own view, andthis was also the view expressed by the National Academy of Sciences in1994-95, while the high-temperature gas reactor may well have considerablemerits, we should not wait until new-development reactors become availablebefore starting plutonium disposition.  Using reactors that are yetto be developed and yet to be built involves additional costs and additionaldelays that we should not support.  Now, that does not mean that ifan HTGR does become available in the time frame when plutonium dispositionis still going forward that we shouldn't absolutely eagerly include itin the disposition of excess plutonium.
Let me also correct another possible misimpression.  I am nota person who believes that plutonium disposition should only be carriedout in reactors.  It is a Russian position that it should only becarried out in reactors, but I am a strong supporter of continuing to workwith the Russians on the immobilization technology that we will also beusing in our program in the United States.  I believe there's a verylow chance that we will be able to get up to the disposition rates we needin Russia at any reasonable time frame without incorporating at least someimmobilization into the program, unless there is some way to convince othercountries to burn some of the plutonium in their reactors, which is beingdiscussed, but there's no real progress on that yet.

Question:  You mentioned the change in the Department ofEnergy regarding the access issues.  What was the motive for thatchange, was it a reassessment, was it in the Department that they thoughtthey were not getting the information they needed, or was there a concernalong the lines of what John mentioned that with pressure on foreign aidthat they needed to be able to justify the program in some way to Congress? What was the motivation for that change?

Matt: If I could read the minds of the relevant officials I'dbe able to give you a better answer to that question.  I've rackedmy brains trying to think, how could they possibly have made such a blunder? But I think there are a number of things.  Number one, they were veryaware of all of the charges of corruption, of IMF money going to Swissbank accounts rather than being used to prop up the ruble and so on, andthey knew perfectly well that if somehow it could be demonstrated thatsome MPC&A money had gone to build somebody's dacha or what have you,that that would be potentially the end of the MPC&A program, or atleast a very serious political problem for it.  That I think is thenumber one factor.

The number two factor is I think that they really didn't realize justhow deep and intractable the access problem was.  I think that theythought, we'll take this tough position and there'll be Sturm und Drangfor a month, and then the Russians will roll over and they'll give us accesseverywhere we want.  And to anyone who knew the Russian security system,that was a wrong judgment, and it was clear that it was going to be a wrongjudgment.  Nonetheless, I've spoken to some of the very senior officialsin the Department who approved this decision who said that that was theirexpectation.

Number three, I do think that there was, if not congressional pressure,at least a perception of congressional pressure to go this direction andsay, why are we doing this work in places where our people can't even go.

But I think ultimately the most important thing that the Departmentcan do on the access front, which was done in the early years and hasn'tbeen done recently, is to send the most senior officials of the Departmentup to the Congress, stare the members straight in the eye, and say Mr.Senator, this is why this is important to the United States, this is whyit has to be done this way, these are the assurances we're going to beable to have even without access, and I personally am willing to assureyou that the U.S. money is going to be used appropriately.  That'swhat needs to be done and that's what hasn't been getting done recently.

Ken: I have one historical anecdote.  There was such a conversation,as I have explained to Matt in the past, where a very senior official fromthe Department of Energy when this program first got underway went to keymembers of Congress and said, here's the problem, here's the danger, here'sthe solution we think will work, here's the risks, including we may notknow where every single penny is going to go and we may not be able toget access to every single place.  On balance, we think this is dangerousenough that we should at the margins be willing to understand that noteverything may be perfect.  That concept has been completely lostin the transition between the Administrations, and I agree with Matt it'sgoing to take that kind of political courage to make it work again.

Jon:  I just want to thank you for coming and we look forwardto seeing you at our next event.