MINATOMs Plan For Downsizing MCC

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Nuclear Cities Initiative Expanding Within To
Respond To Expanding Threat (An
Overview) November, 2004
Margot Mininni
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An Enduring Threat

• States and terrorist groups have attempted to
  acquire weapons-critical knowledge, equipment,
  and materials from the FSU (RAND)
• 21 of Russian scientists surveyed say they would
  work for rogue states (LLNL)

• Russia/FSU is the prime concern
• Wealth of materials expertise at all levels
• Several Institutes sanctioned for transfer of WMD
  technology
• Refocus on Russian expertise since collapse of
  AQ Khan network

• Terrorists/Rogue States
• Iran, Libya North Korea received enrichment
  know-how from A.Q. Kahn and associates
• Islamic Jihad attempted to buy HEU and weapons
  grade plutonium from Russia
• Chelyabinsk regional facility employees attempted
  to divert 18.5kg of HEU (74 of amount needed for
  one bomb)

Supply
Demand
"There is evidence terrorists have a lot of
desire to connect themselves with either or both
the intellectual capital of the previous regime
with respect to weapons of mass destruction and
quite conceivably materials."
Charles Duelfer Head of the Iraq Survey Group
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Russian Transition Initiatives Scientist
Redirection Arm of NA-20
RTI established by Congress in 2002 to provide
common management and policy guidance to two
complementary programs
Russian Transition Initiatives (RTI) Mission
Draw on DOEs unique expertise and resources to
reduce the potential for diversion of WMD
expertise, materials and technologies to
terrorists and proliferant states
Common senior management
Initiatives for Proliferation Prevention
(IPP) Mission Scientist Redirection
Nuclear Cities Initiative (NCI) Mission
Workforce Transition
Shared Resources

• Knowledge about cities
• USIC
• Budget Analysis
• Administrative Support
• Outreach Activities
• Travel Support

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WHY RTI WORKS

• National Laboratory expertise
• Technical competencies
• Comprehensive relevant experience downsizing the
  U.S. weapons complex
• Unique relationship with Russian Institutes
• USG has first hand knowledge of institute
  activities and personnel
• Maintains U.S. Lab-Russian institute connections
• Well positioned to complement advance other
  NNSA nonproliferation programs
• EWGPP MPCA NA-22/DHS NA-241 (Iraq/Libya)

Russia wants to draw on DOE HQ and complex
downsizing and transitioning expertise
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NCI in Russias Closed Cities

• NCI created in 1998
• Projects managed through U.S. National
  Laboratories

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Current Cities

• Population 83,000
• Main Facilities All-Russian Scientific Research
  Institute of Experimental Physics (VNIIEF) with a
  workforce of 18,000 and the former Avangard
  Electromechanical Plant with a workforce of
  approximately 3,500
• Functions weapons design and weapons
  assembly/disassembly

Sarov

• Population 48,000
• Main Facility All-Russian Scientific Research
  Institute of Technical Physics (VNIITF) with a
  current workforce of 9,500
• Functions nuclear weapons design, HEU and Pu
  storage

Snezhinsk

• Population 100,000
• Main Facility Mining and Chemical Combine (MCC)
  with a workforce of 9,000
• Functions Pu production reactor, Pu
  reprocessing, and waste management

Zheleznogorsk
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NCI Activities

• Research and Plan Development
• Infrastructure Development
• Diversification Projects
• Manufacturing and Commercialization
• Sustainability Training
• Audit, Exit City

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NCI Impact

• 26 businesses started or expanded
• Over 1,600 jobs created
• International Development Centers established in
  two cities
• Avangard 550,000 sq. feet converted to
  commercial space now being filled by civilian
  businesses
• 2 business centers established, 3 ISPs, 3
  software centers, 1 revolving fund launched
• 63 million leveraged
• Training, Economic Diversification Workshops
  delivered

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Titan A Success Story in Sarov

• ISO 9000 certification and manufacturing
  capability upgrades
• Total Cost 346,000 (including facility
  improvements)
• Certification completed in October 2003
• First of its kind certification in Sarov
• Immediate and long-term effects on sales of
  titanium prosthetics and bolts

Increased sales from 200,000 in 2002 to a
projected 1,530,000 in 2004. New customers in
Europe and U.S.
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ITEC A Success Story in Snezhinsk

• Supplies broad range of security services
• MPCA equipment
• Identification devices
• Headed by former VNIITF leadership
• Employs more than 65 people
• Profits increased more than 4 times over 2002
  earnings to 2M in 2003
• Reinvests those profits into its own development
• Developing non-nuclear market
• Promising contacts throughout Russia
• Completed first export

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SITI A Success Story in Zheleznogorsk

• Created new business pre-insulated pipe,
  insulation shells, slab insulation, and
  polyethylene pipes
• Products support energy efficiency program in
  Zheleznogorsk
• 420K NCI investment over 1M in leveraged funds
  from business partner
• Entrepreneur business partner drawn from local
  region, Krasnoyarsk
• Created 60 jobs at start, with a full production
  level of 114 new jobs.

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Kraspan A Success Story in Zheleznogorsk

• Manufactures ventilated building facades in
  Zheleznogorsk
• Entrepreneur business partner, drawn to
  Zheleznogorsk through incentives.
• Incentives NCI 300k, City subsidized buildings,
  City loans 2 M leveraged
• New job creation 251 NCI cost per job less
  than 1,500 per job

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Russia / FSU Country Plans

• Progress
• RTI has engaged over 15,000 scientists across
  the former Soviet WMD complex
• RTI has leveraged over 240 Million in non-USG
  funding
• RTI has helped to establish or expand over 26
  commercial enterprises
• RTI has made significant progress in Sarov and
  Snezhinsk and is ramping down in these cities,
  while ramping up elsewhere

• Path Forward
• Support EWGPP by addressing work force
  transition, allowing the Russians to shut down
  and decommission reactors as scheduled in Seversk
  2008 and Zheleznogorsk 2011
• Address workforce transition in Zarechny as
  RosAtom solidifies plans for that closed city 
• Direct efforts at finishing work and exiting
  from select institutes, and identify other
  institutes that represent an emerging or
  immediate threat

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Seversk EWGPP-RTI Coordination
Fossil Plant 40 complete
Fossil Plant 69 complete
Fossil Plant 91 complete
Fossil Plant 14 complete
Fossil Plant 100 complete Reactor Shutdown
Project Identification Work Plan Development
Engagement Project Implementation
Establish Joint Committee
Implement Workforce Transition Plan

Business Development Infrastructure Transformati
on
Convert SCC Create SCC Open Access Area
Technopark
Complex Transformation, Sustainability Transition,
RTI Draw down
FY04 FY05 FY06 FY07
FY08 FY09-FY11
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Leveraging and Partnership
International Partners
U.S. Government
EWGPP
RTI
Russian Government
Industry
MPCA
GTRI
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Path Forward
Lessons Learned
Path Forward

• Engage city administration in economic
  diversification workshops
• Maintain good relations with administrators

• Project reviews should include business
  specialists as appropriate
• Business consultants should be available for the
  duration of the project

• Plan ahead
• Conduct Project Reviews to add extra vetting
  measures to blue chip projects

The right mix of small and large projects must be
identified
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Path Forward
Lessons Learned
Path Forward

• Keep talking
• Make plans clear from the outset
• Look for innovative solutions to overcome
  obstacles

Expect delays but persevere

• Pursue training program
• Look at the IDC model
• Think through your exit strategy

• Commercial centers should be developed within the
  city for Russian investors
• And, if necessary, outside the ZATO for foreign
  partners

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Path Forward
Lessons Learned
Path Forward

• Must be buy-in to the projects, which must
  account for city needs and strengths
• As partners, cities should be prepared to bear
  some cost of the project
• Ensure that cities and/or institutes seek funds
  besides from NCI

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END OF BRIEFING Backup Slides
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The FSU Threat

• Supply
• Knowledge transfer happens and can be damaging
• AQ Khan Libya, Iran HEU Program
• Gen. Kuntsevich Syria CW Program
• Russia/FSU is the prime concern
• Wealth of materials expertise
• Institutes sanctioned for transfer of WMD
  technology
• States and terrorist groups have attempted to
  acquire weapons-critical knowledge,
  equipment, and materials from the FSU (RAND).
• 21 of Russian scientists say they would work for
  rogue states (LLNL).

• Demand
• Terrorists
• Islamic Jihad attempted to buy HEU
• Chechens built dirty bomb in 1996

• Demand
• Emergent Nuclear States
• North Korea
• Iran

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The Global Threat

• Supply
• A significant numbers of Iraqi scientists are
  unemployed and under a lot of stress
• Flight from country is easy and attractive
• Need for resources could drive them to sell
  expertise
• Terrorists proliferant states could exploit
  religious, linguistic and cultural affinities in
  Iraq and Libya to recruit scientists and other
  skilled workers

• Demand
• Terrorists
• Active in Libya and Iraq
• Al Qaeda seeking WMD
• Emergent Nuclear States
• North Korea
• Iran