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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Suggested Citation:"5 Systems for Controlling Exports of Militarily Sensitive Items." National Research Council. 1997. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union. Washington, DC: The National Academies Press. doi: 10.17226/5590.
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Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 85 5 Systems for Controlling Exports of Militarily Sensitive Items SCOPE OF EXPORT CONTROL REQUIREMENTS Large Repositories of Weapons-Related Items The Soviet military-industrial complex produced an enormous variety and quantity of weapons and weapons-related items. Thus, the export potential of the successor states of the former Soviet Union (FSU)—particularly Russia, Ukraine, Belarus, and Kazakstan—is of great significance from the viewpoint of U.S. national security interests.1 For several decades the Soviet military-industrial complex was the major supplier of weapons and supporting systems for use in the Soviet Union, the other countries of the Warsaw Pact, and many countries in other regions. The enter- prises provided a wide range of technologies incorporated into rocket systems, jet aircraft, tanks, automatic rifles, electronic systems, lightweight alloys, and hun- dreds of other types of armaments and related commodities. With the demise of the USSR, however, many manufacturing enterprises have greatly reduced their weapons-related production activities because of the absence of significant or- ders by the successor governments. Of course, some manufacturing lines have 1 According to Jacques Sapir, 73 percent of the Soviet Union’s defense industry was in Russia, 15 percent in Ukraine, 5 percent in Belarus, and 3 percent in Kazakstan (Jacques Sapir, “Defense Conver- sion and Restructuring in the Russian High-Technology Sector: Is There an Alternative to Uncontrolled Exports?” in Judith Sedaitis, ed., Commercializing High Technology: East and West, Center for Inter- national Security and Arms Control, Stanford University, Calif., January 1996, p. 111). 85 Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union 86 PROLIFERATION CONCERNS continued to produce weapons and dual-use items for the defense ministries, primarily in Russia; and many enterprises have greatly increased their efforts to sell such commodities abroad, with mixed success.2 At the same time, large stocks of weapons and other military equipment left over from Soviet times, as well as recently produced items, are now located in marshalling yards, warehouses, and other storage areas. The future disposition of many of these goods is uncertain. Dual-use items such as electronic control devices, specialty materials, advanced manufacturing equipment, and other com- modities for supporting military activities are being stored in anticipation of possible future sales to recover some of their value.3 Eventual disposition of “surplus” items by governments or by enterprises through transfers to local organizations with uncertain security systems or to other countries that could use them in a provocative manner raises apprehensions in the West. At the same time, many of the goods have considerable value, both for military end users and for commercial organizations with capabilities to adapt dual-use equipment to civilian needs. The implementation of arms control agreements and related activities are adding to stockpiles large quantities of particularly sensitive material and equip- ment, as well as large inventories of conventional weapons. The sensitive items include direct-use nuclear material, chemical agents, and components for mis- siles and nuclear weapons. However, these items are usually located in separate areas that are distant from stockpiles of less sensitive items. Of special concern is the limited attention of the governments of the successor states to controlling technical data.4 Such data might describe in detail, for example, the technologies embodied in weapons of mass destruction and sophisticated con- ventional weapons systems. Such data are contained both in archives and in the expertise of the scientists and engineers who have been involved in developing, manufacturing, and maintaining the weapons and supporting systems. 2 See “Rosvooruzheniye Expects 1996 Arms Sales to Top $7 Billion” and “Russia Competes Again for Arms Trade,” both in Moscow Times, March 28-April 3, 1996, for information on trends in Russian arms sales. 3 Discussions during the committee’s visit to Russia in May 1996. In fall 1993, Gennadi Petrovich Voronin, deputy to the chairman of the Russian Federation Committee on Defense Industry, stated that Russia had a weapons stockpile ready for export worth $20 billion (G. Voronin, “How Russia’s Defense Industry Responds to Military-Technical Policy,” Comparative Strategy, vol. 13, no. 2, April 1994, p. 84). For additional information on this topic, see the interview with Nikolai Shumkov, head of the Main Department to Guarantee Supervision and Utilization of Armaments and Military Hardware of the State Committee for the Defense Industry, in Military Parade, Jan./Feb. 1995, pp. 94-96. 4 Discussions during the May 1996 committee visit indicated that, while materials and commodi- ties were high export promotion and control concerns, technical data were treated as a much lower priority. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 87 In some cases, controlling the international flow of sensitive technical infor- mation is more important, even though it is far more difficult, than controlling the commodities themselves. Some countries of proliferation concern may be ca- pable of building their own weapons systems if they have access to the technolo- gies set forth in technical documentation or to guidance provided by experienced specialists. Also, they may be interested in adapting existing designs of weapons systems and supporting equipment to their special needs, drawing on foreign experiences embodied in technical data. Growing Interests in Producing Dual-Use Items As military orders declined, almost all defense enterprises in the four succes- sor countries began searching for new products they could manufacture for civil- ian markets.5 Much of the civilian production of the former Soviet military plants has long been directed to simple consumer goods that do not require a high level of technology (e.g., food products, trucks, refrigerators, television sets).6 How- ever, many enterprises and research and development institutes, with their sights on both international and domestic civilian markets, are now seeking to use more advanced capabilities to produce high-technology items. As they attempt to con- vert sophisticated military technologies to civilian applications, they inevitably become involved with many items that are included on international dual-use export control lists.7 Materials and equipment associated with the production of biological and chemical warfare agents present particularly difficult control prob- lems because some of the same technologies have applications in pharmaceutical, agricultural, and other civilian areas.8 As in the case of commodities produced solely for weapons purposes, much of the technology underlying dual-use goods is reflected in design documents and operating manuals. Since access to such documentation could, in many cases, save considerable time and resources of commercial competitors attempting to 5 See Kevin O’Prey, A Farewell to Arms? Russia’s Struggle with Defense Conversion (New York: Twentieth Century Fund Press, 1995), pp. 44-47, and Tarja Cronberg, “Civil Reconstruction of Military Technology: The U.S. and Russia,” Journal of Peace Research, vol. 31, no. 2, May 1994, pp. 213-217. 6 Before the process of large-scale conversion was begun in the late 1980s, 40 percent of produc- tion by volume in military plants was for civilian goods. By 1993 it was up to 75 percent (Albert Trifonov, “Russian Defense Industry Policy,” Comparative Strategy, vol. 13, no. 1, January 1994, p. 87). 7 For further discussion of these problems, see Glenn E. Schweitzer, Moscow DMZ: The Story of the International Effort to Convert Russian Weapons Science to Peaceful Purposes (Armonk, N.Y.: M. E. Sharpe, 1996) pp. 121-138. 8 U.S. Congress, Office of Technology Assessment, Proliferation of Weapons of Mass Destruc- tion: Assessing the Risks (Washington, D.C.: U.S. Government Printing Office, 1993), p. 6. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union 88 PROLIFERATION CONCERNS produce and market comparable items, the technical specifications and related data frequently are considered valuable intellectual property and are protected accordingly. However, only in Russia are the ground rules for such protection reasonably well developed, but even there effective implementation and enforce- ment seem to be problematic. In any event, a party seeking technical data for use in designing new types of weapons systems probably would not be deterred by violations of patent and copyright laws. Challenge for Export Control Authorities Export control authorities are thus faced with the reality that many technolo- gies in the aerospace, nuclear, chemical, and biological fields are inherently dual- use, requiring only modest adaptations for different end uses. Hundreds of facili- ties in the four countries—particularly Russian enterprises and institutes from the former Soviet military-industrial complex—are attempting to market items em- bodying sensitive technologies.9 Most of the manufacturing enterprises and research institutes involved in de- sign and production of weapons and dual-use items are owned or controlled directly by governments, with only a limited number of smaller private firms and individual entrepreneurs gradually obtaining the capability to manufacture some dual-use items.10 Despite controls that the governments can exert over state enterprises, few firms appear to give sufficient attention to export control. The principal concern of almost all firms is increasing their sources of income—a completely understand- able response at a time when they are having difficulties meeting payrolls and paying utility bills. Although export control procedures exist, some exporters may know little about regulatory policies and practices. Others may assume that, if they are to receive substantial cash payments for their goods, they will be able to work out any problems with the government ministries.11 The ministries themselves are under considerable pressure to assist the enter- prises and institutes in obtaining foreign contracts and thereby maintain their industrial and scientific capabilities. Such an orientation may mean open advo- 9 Discussions during the committee’s visit to Russia in May 1996. For a listing of many of these enterprises, see Bureau of Export Administration, Russian Defense Business Directory (Washington, D.C.: U.S. Department of Commerce, 1995), and Investment Opportunities in Ukrainian Defense, (Washington, D.C.: U.S. Department of Commerce, 1996). 10 Even for weapons-related firms that are partly or entirely in private hands, the government has a number of ways to influence the enterprise management. See Clifford Gaddy, “Market Reform and Defense Industry in Russia: Who’s Adjusting to Whom?” The Brookings Review, vol. 14. no. 3, Summer 1996, p. 32. 11 These attitudes were reflected in discussions by the committee in Russia with both government officials and enterprise managers, although specific examples were not cited and there was no indica- tion of how widespread these views are. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 89 cacy for expanded sales or simply staying out of the way of the enterprise direc- tors. For example, in Russia the Ministry for the Defense Industries and the Ministry for Atomic Energy (MINATOM) are vocal advocates for exports of high-technology products. While these ministries are active participants in the evolving export control systems, at the same time they push hard to enable the enterprises for which they have responsibility to follow up every lead for possible sales that technically comply with international requirements.12 Important overseas targets for sales of both military and dual-use items are the long-standing consumers of Soviet products, particularly governments and organizations in Asia and the Middle East. In 1995, 80 percent of Russia’s mili- tary sales were to China and India.13 For dual-use technologies, additional coun- tries in Asia, such as South Korea, and nations throughout Europe also are con- sidered as high-priority marketing arenas by enterprise directors. Both Russia and Ukraine are having some success in reaching western markets with aerospace technologies,14 and a number of Russian enterprises are developing western mar- kets for dual-use items that are on control lists. Meanwhile, research institutes are seeking links with many foreign institutions that can lead to new commercial products in high-technology areas. Industrial organizations in the United States, Europe, Asia, and the Middle East, in turn, are not hesitant to search out advanced technologies throughout the FSU; and firms from dozens of countries outside the region are now engaged in joint ventures and other arrangements with advanced-technology enterprises and institutes. Countries of proliferation concern, including Libya, Iran, North Korea, and Iraq, are among the many nations that actively explore trade opportunities in 12 U.S. Department of State response, reflecting government-wide views, to committee questions, February 1996. See also Andrei Shoumikhen, “The Weapons Stockpiles,” Comparative Strategy, vol. 14, no. 2, April 1995, p. 214. 13 Richard Grimmett, Conventional Arms Transfers to Developing Nations, 1988-1995 (Washing- ton, D.C.: Congressional Research Service, August 1996). U.S. Arms Control and Disarmament Agency, World Military Expenditures and Arms Transfers, 1995 (Washington, D.C.: U.S. Govern- ment Printing Office, April 1996) also cites Russian arm sales in the period 1992-1994 to such countries of western concern as Iran, North Korea, and Syria. Overall Russian arms sales, which have been increasing recently, are approximately one-third of total U.S. arms sales in 1995. How- ever, U.S. sales are more widely distributed among many countries. 14 Voronin, op. cit., p. 84. See also the cases of the Saratov Aviation Plant and the Central Aerohydrodynamic Research Institute in David Bernstein, ed., Defense Industry Restructuring in Russia: Case Studies and Analysis, (Stanford, Calif.: Center for International Security and Arms Control, Stanford University, December 1994); Victor Zaborski, “Ukraine’s Niche in the U.S. Launch Market: Will Kiev’s Hopes Come True?,” World Affairs, vol. 159, no. 2, Fall 1996, pp. 55-63; Victor Zaborski, “Ukraine’s Missile Industry and National Space Program: MTCR Compliance or Prolifera- tion Threat,” The Monitor: Nonproliferation, Demilitarization, and Arms Control, vol. 1, no. 3, Summer 1995, pp. 5-8. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union 90 PROLIFERATION CONCERNS Russia and other successor states.15 That said, however, detailed information about the quantities and types of sensitive commodities leaving Russia and the other successor states—as legal trade or as contraband—is not readily available. Even the publicly available Russian custom reports are presented at a level of generality that provides few insights beyond those gleaned from anecdotal re- ports. Nevertheless, it must be assumed that transfers of sensitive items will be a very real possibility on a sizeable scale in the years ahead. The international export control regimes provide important guidance as to the design and operation of national mechanisms for regulating exports of many items. However, the international agreements reached in the frameworks of these regimes call for prohibitions or restrictions on transfers of only the most critical items. These agreements generally emphasize transparency of international trans- fers rather than proscribed limitations on exports of most weapons-related items, particularly dual-use commodities, and allow each country to decide for itself whether to authorize an export. Thus, if diffusion of sensitive items to countries of proliferation concern and to terrorist groups is to be contained on a broad basis, the international community must agree increasingly not only on the critical elements of national export control systems but also on responsible export control decision making. In summary, U.S. policies and programs must address the dual challenges of • supporting the establishment in the successor states of legal, regulatory, and enforcement systems that help ensure that international transfers of items on the control lists of the international regimes are subjected to governmental re- views and licensing procedures and that approvals of exports are consistent with the requirements of the regimes, and • encouraging the successor states to ensure that the decision-making pro- cess on whether to approve exports of controlled items gives adequate weight to the international security implications of such exports. The foregoing challenges must be met at a time when all the governments and enterprises of the region are desperate for international markets and thus frequently seek such markets in countries that may not be considered fully re- sponsible by western governments. In such economic circumstances none of the successor states want to have regulatory systems that delay foreign sales because of excessive bureaucratic requirements. Also, Russia and, to a lesser extent, the 15 Gary Bertsch and Igor Khripunov, “Restraining the Spread of the Soviet Arsenal: Export Con- trols as a Long-Term Nonproliferation Tool,” in U.S. Congress, Global Proliferation of Weapons of Mass Destruction, Hearings before the Permanent Subcommittee on Investigations of the Senate Governmental Affairs Committee, Part II, (Washington, D.C.: U.S. Government Printing Office, 1996), pp. 665-701. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 91 other countries will have political difficulties curtailing some trade opportunities that fully conform with the requirements of the regimes but nevertheless could, in the view of the United States, contribute to the proliferation of weapons of mass destruction or otherwise threaten international security. EFFORTS OF RUSSIA, UKRAINE, BELARUS, AND KAZAKSTAN TO ESTABLISH AND UPGRADE EXPORT CONTROL SYSTEMS Inheritance from the USSR Russia inherited many of the components of the export control system of the FSU. Also, the Soviet system was the only approach that was familiar in 1992 to officials of the other newly independent countries of the region. The Soviet system was quite effective in containing sensitive commodities and information, motivated by the challenge of staying ahead of the West and the attendant need for protection of state secrets. Indeed, many items were classified as secret and simply not considered for export. Other sensitive items were firmly under the control of well-disciplined state organizations, with little possibility of leakage from the system. All decisions on exports of militarily sensitive items were made centrally. Thus, all exports, including exports viewed with alarm by other governments, could be attributed, with a high degree of confidence, to well-considered actions by the government. Changing Times As Russia and the other successor states increasingly embrace industrial partnerships with many countries, even in sensitive technological areas, the former security barriers for containing items of military significance are now giving way to western-style export control systems. Such systems are intended to prevent uncontrolled diffusion of military technologies while still permitting responsible trade involving sensitive items, often at the initiative of individual enterprises, with approval by the government.16 The possibility of leakage of sensitive goods into international markets out- side normal trade channels has become a great concern in the West. Irrespective of export controls, enterprise managers in the four successor countries are aware of the increased temptations in the region for theft; but managers who are deter- mined to protect sensitive items have difficulty finding financial support from the government or elsewhere for industrial security upgrades. Also, there are many 16 For some examples of sensitive exports, see Sergei Kortunov, “National Export Control System in Russia,” Comparative Strategy, vol. 13, no. 2, April 1994, pp. 231-238. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union 92 PROLIFERATION CONCERNS reports of illegal practices by enterprise managers in the region who arrange for sales abroad of natural resources and other valuable exports,17 and the involve- ment of management personnel of defense-oriented firms in diversions of sensi- tive items cannot be ruled out. While data are not available on the extent of such activities, anecdotal evidence suggests that the likelihood of illicit diversions needs to be continuously addressed. At the same time, the governments of the four countries have become in- creasingly sensitive to heightened western concerns over the possibilities of smug- gling and diversions that could contribute to the proliferation of weapons of mass destruction. Government leaders have publicly espoused nonproliferation goals, and the key ministries repeatedly claim that their commitments to controlling exports are consistent with international nonproliferation norms. However, another consideration is probably the most important factor stimu- lating the interest of government officials in upgrading export control systems unilaterally and through bilateral cooperative efforts. They consistently link trade and export control issues, reflecting their desires to gain recognition as respon- sible trading partners—an important step toward greater access to western mar- kets and technologies.18 Of special significance, Russia wants to be perceived as a world leader in the development and deployment of nuclear and aerospace technologies for peaceful purposes; and Ukraine seeks wide recognition for its achievements in developing technologies for applications in space programs.19 Also, cooperative ventures offer opportunities for additional financial re- sources for staff salaries and international travel and for equipment purchases. Adopting Internationally Acceptable Export Control Systems Many of the countries of the FSU, particularly the four countries of principal interest for this study, have started down the path of adopting export control systems that conform to the approaches developed in the West. Table 1.5 in the Executive Summary sets forth the key elements of such systems that had been identified by the members of the former Consultative Group and Coordinating Committee for Multilateral Export Controls (COCOM). These were incorporated into a “Common Standard” that was intended to be applicable to all types of sensitive exports. The Common Standard still commands broad international acceptance. Russia has the most highly developed export control system in the region.20 A 17 Discussions during the committee’s visit to Russia in May 1996. 18 U.S. Department of State response to committee questions, February 1996. 19 Discussions with Ukrainian officials during the committee’s visit in April 1996. Also, Zaborski, op. cit. 20 See Suzette Grillot and Cassady Craft, “How and Why We Evaluate Systems of Export Con- trol,” The Monitor, vol. 2, no. 4, Fall 1996, pp. 11-15, for a quantitative approach showing this. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 93 small number of officials who formerly worked in the Soviet export control system have led the Russian effort. They have recast the old regulations to better fit western patterns and are reorienting the cadres of specialists involved in the effort. The other countries began their programs nearly from scratch, relying prima- rily on new personnel with very little experience in the field. On occasion, their efforts have been plagued by turf disputes, inadequate budgets, inertia, and tech- nical problems—the impediments to change that exist in many bureaucracies. In all countries, limitations also can be traced to a lack of experience and equipment. Studies by U.S. government agencies and nongovernmental groups confirm the committee’s overall impression that the four countries have made significant progress since the beginning of 1995 in upgrading their export control systems to meet the requirements of the Common Standard.21 However, even after rapid progress in 1995 and 1996, in almost every aspect of the Common Standard, the four countries have a long road ahead until adequate export control machinery is in place and is operating effectively and efficiently. While Russia has the most developed system, it also faces the largest challenge.22 An essential element of an effective national export control system is a sound legal framework. All countries of the region are in the process of upgrading the legal bases for their activities. Russia has not yet enacted comprehensive export control legislation, although many decrees and regulations have been promul- gated that provide a basis for an active program.23 As of June 1996, Kazakstan was the only country of the four with a free-standing export control law. Belarus and Ukraine were still preparing draft legislation. Implementing regulations in these three countries were in various stages of development. At the same time, all four countries are attempting to promulgate lists of controlled items consistent with the lists of the international regimes. In summary, each of the four countries has established or is establishing an interagency regulatory mechanism for reviewing and approving export licenses, and they are installing computerized systems for tracking applications for and action on licenses. Enforcement: The Weak Link The four countries have many difficulties in the enforcement area. While 21 At the outset the committee decided not to construct a detailed baseline for each country against which to measure their progress. This assessment of progress being made in the region is based primarily on the committee’s discussions of activities under the bilateral programs. 22 U.S. Department of State’s response to committee questions, February 1996. Discussions dur- ing committee’s visit to Russia in May 1996 and to Kazakstan, Ukraine, and Belarus in April 1996. Information provided to the committee by U.S. Department of Commerce specialists concerning their rating system. 23 Gary Bertsch and Igor Khripunov, eds., Russia’s Nonproliferation and Conventional Weapons Export Controls: 1995 Annual Report (Athens: University of Georgia, 1996). Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union 94 PROLIFERATION CONCERNS enforcement of export control laws can never be the only line of defense against nonproliferation, the probability of detection and the consequences of detection must be sufficiently high so as to be a credible deterrent. Much of the attention in the successor states is directed to strengthening the customs services, initially through an explosive growth of personnel and ex- panded training programs. In Russia, for example, customs personnel have in- creased from 7,000 to 54,000 in 4 years; in Ukraine from 2,000 to 17,000; in Belarus from 400 to 6,000; and in Kazakstan from 1,000 to 7,000.24 This growth reflects the fact that the customs services are being called on to play a more extensive role in the new approaches to security as well as in collection of export and import fees. Also, the countries are faced with many international borders that previously did not exist. On the other hand, customs personnel have much less enforcement authority than counterparts in the United States. The problem of controlling the outflow of commodities is immense. Cus- toms facilities simply do not exist along many stretches of the tens of thousands of kilometers of frontiers, and inspection equipment, laboratory support, and automation equipment are in short supply. The training requirements are enor- mous. (Even in the United States, with its well-developed customs training capa- bilities, training opportunities are limited to 1,500 persons per year.) Customs officials are confronted with many export and import issues. In Russia, export and import customs fees—which include taxes on exports of natu- ral resources and imports of industrial goods—represent 20 to 25 percent of the national budget, and customs officials understandably give priority to the collec- tion of sorely needed revenues.25 In Kazakstan, all exports are subject to taxes, with sensitive exports being a very small part of the broader export control agenda.26 Exports of militarily sensitive items may at times appear so complex that such matters are pushed aside in favor of more familiar activities. Another difficulty that will not be easily overcome is susceptibility of en- forcement personnel to corruption throughout the region. Salaries are very low and often delayed for several months. Thus, employees of the customs services and border guards are attractive targets for bribes by smugglers. Recent actions of interest by the four countries include the following: • In Russia several new decrees were issued in the spring of 1996 that clarified the procedures for addressing dual-use items and the control lists for such items. The customs service promptly strengthened its organizational struc- ture to address different categories of controlled dual-use items, including nuclear- related, missile-related, and other items.27 24 U.S. Department of State response to committee questions, February 1996. 25 Discussions during the committee’s visit to Russia in May 1996. 26 Discussions during the committee’s visit to Kazakstan in April 1996. 27 Discussions during the committee’s visit to Russia in May 1996. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 95 • Kazakstani officials are particularly concerned about smuggling in the Caspian Sea area and are gradually increasing their capabilities to monitor activi- ties along the coast of the country.28 • Belarusan and Ukrainian officials believe they have identified the principal smuggling routes in their countries and are focusing their efforts accordingly.29 Of course, intelligence agencies play an important role in the enforcement area. Officials in Kazakstan and Russia underscored the importance of intelligence information in anticipating and uncovering illegal operations. However, an assess- ment of the role of intelligence services was beyond the scope of this report.30 End-Use Verification Another problem area is the limited capability of all four countries to screen the proposed end users who are identified in applications for licenses for exports of controlled items. Western governments rely heavily on data banks concerning appropriate end users and call on their embassies to assist in clarifying question- able destinations for controlled goods. They maintain a variety of black lists, gray lists, and terrorist lists. Developing accurate and up-to-date records is an expen- sive undertaking, and devoting resources to such activities is not of priority concern in the four countries. Russia has the strongest capability to check on the appropriateness of proposed end users, but officials acknowledged limitations in confirming end users. They added that improving the databases for end-user verification is an important need.31 Measuring Progress in Containing Sensitive Items An important step in the development of an export control system is adherence to the requirements of one or more of the international control regimes. For ex- ample, Russia has agreed to internationally adopted limitations and reporting re- quirements on transfers of nuclear materials, nuclear dual-use items, and missile technology-related commodities. Russia has declared that its export control proce- dures are consistent with the policies of the Australia Group.32 While such arrange- ments are certainly not a direct measure of the degree to which transfers of items of 28 U.S. Department of State’s response to committee questions, February 1996. 29 Discussions during the committee’s visits to Ukraine and Belarus in April and May 1996. 30 A discussion of the importance of the intelligence services is included in The Nuclear Black Market, Center for Strategic and International Studies, Washington, D.C., 1996. 31 Discussions during the committee’s visit to Russia in May 1996. 32 Discussions during the committee’s visit to Russia in May 1996. 33 For a Russian perspective on this issue, specifically as it relates to the Missile Technology Control Regime, see A. V. Ustinov, “Export of Missile Technologies: Will Russia Enter the World Market?,” Comparative Strategy, vol. 13, no. 3, July 1994, pp. 283-286. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union 96 PROLIFERATION CONCERNS proliferation concern have been or will be thwarted, they are important steps in a national commitment to prevent uncontrolled exports of sensitive items.33 Also of considerable significance is the membership of Russia and Ukraine in the recently established Wassenaar Arrangement. They have agreed to prevent the acquisition of arms and sensitive dual-use technologies by military end users in countries whose behavior is a cause for concern. In addition, they have agreed to share information about exports covered by the regime in an effort to help ensure that such exports do not contribute to destabilizing buildups of arms.34 Ukraine recently joined the Nuclear Suppliers Group and declared that it is acting in accordance with the Missile Technology Control Regime’s requirements.35 Against this evolving situation, what can be said about leakage of controlled items from the region? While there are occasional reports of successful thefts and diversions—for example, interception of missile guidance components from a storage site in Russia en route to Iraq—other contraband items may have avoided detection. Smuggling of guns and drugs is believed to be widespread, suggesting that if criminal elements should become interested in items relevant to weapons of mass destruction they might be able to use their experience with guns and drugs as a point of departure in making smuggling plans with even more ominous consequences. Surrogate indicators of progress in controlling sensitive items are function- ing regulatory systems, well-developed licensing procedures, and effective use of enforcement and interdiction capabilities. They are probably the best measures that can be developed, and conformance with the more detailed versions of these three general indicators is the essence of the Common Standard discussed above.36 A Regional Approach Finally, the countries of the region began several years ago to reduce the barriers to trade in some of the successor states. Of particular significance, a 34 Under Secretary of State for Arms Control and International Security Affairs Lynn Davis noted this aspect in her speech at the Carnegie Endowment for International Peace in Washington, D.C., on January 23, 1996. 35 During the committee’s visit to Kiev in April 1996, Ukrainian officials complained that the U.S. Government was blocking Ukraine’s membership in the Missile Technology Control Regime. U.S. officials subsequently advised the committee that, while Ukraine had become an “adherent” to the regime in May 1994, the United States continued its opposition to membership in view of Ukraine’s retention of military missiles. At the same time, U.S. support for Ukraine’s membership in the Wassenaar Arrangement was an indication of the willingness of the United States to recognize progress in controlling many types of sensitive technologies. 36 Useful efforts are under way to assess the implementation of export controls in the new states of the FSU. See Tools and Methods for Measuring and Comparing Nonproliferation Export Controls, Occasional Paper of the Center for International Trade and Security (Athens: University of Georgia, 1996) and Grillot and Craft, op. cit., pp. 11-15. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 97 Customs Union is being established as a step toward facilitating trade among some of the countries of the region. Border control posts have been removed on the Russian-Belarus border, and eventually trade is also to flow unimpeded be- tween Russia and Kazakstan and perhaps across other borders.37 Arrangements have been made to deploy a limited number of Russian cus- toms agents on the northern, western, and southern borders of Belarus to help control items originating from or destined for Russia, and Russian customs offi- cials are resident in Minsk and Almaty for coordination purposes, largely with regard to tax issues. Also, there are reports that Russian border guards will be deployed on the northern, southern, and western boundaries of Belarus.38 Of course, the trend toward the free flow of goods raises into sharp focus issues of transshipment of controlled items throughout the FSU. The international regimes prohibit reshipment of controlled items without approval of the country of origin, and this requirement is one reason that Russia has taken the lead in seeking cooperation with counterparts in almost all of the other states in the region. Such cooperation is in its early stages; Russia is initially providing Rus- sian-language versions of the international control lists, which are not otherwise readily available, and its own regulations. Expanded cooperation directed toward exports of sensitive items seems clearly in the interest of all of the governments. INITIATION OF U.S. PROGRAMS OF COOPERATION Approach of the U.S. Government In early 1992, the U.S. Government established programs of bilateral coop- eration in control of exports of proliferation concern with Russia, Ukraine, Belarus, and Kazakstan. The U.S. Government has stated its overall objective of this “nonproliferation program of cooperation” as follows: . . . to identify a cadre of like-minded individuals in the target countries and to work with them in order to transform the general political will for nonprolifera- tion efforts into new laws, regulations, organizations, and procedures and the competent administrative officers required to build an infrastructure . . . in all functional areas of export control systems development.39 The U.S. Government is looking forward to the following development as an important indicator of the success of its programs: 37 Derek Nowek, “CIS Customs Union Develops,” BISNIS Bulletin, International Trade Adminis- tration, U.S. Department of Commerce, October 1996, p. 1. 38 Discussions during the committee’s visit to Russia in May 1996. 39 Provided by U.S. Department of State, September 1996. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union 98 PROLIFERATION CONCERNS To have confidence that the country of concern has the capability and willing- ness to cooperate, on a multilateral and bilateral basis, in the coordination of export control policy, the investigation of suspect transactions, and the prosecu- tion of violations of export control laws. This would allow us to classify the country as a close trading partner and to liberalize the flow of trade between our two countries.40 Thus, the bilateral programs were designed to encourage and support rapid development of comprehensive export control systems—to upgrade the export control “machinery” in the countries. However, a related, though less explicit, U.S. objective was to encourage responsible decision making on proposed ex- ports of sensitive items, whether or not such exports are permissible under the international control regimes. Implementation of the bilateral programs languished for several years be- cause of a variety of political and administrative problems. In Washington, there were delays concerning transfers of funds to support the program among agencies and restrictions and delays on purchasing equipment for the program. In each of the four capitals, questions arose regarding the appropriateness of involvement of the United States in sensitive areas; and in Russia, problems over U.S. auditing requirements for equipment prevented the use of U.S. funds to purchase comput- ers for the program. Finally, by late 1994, most of the problems had been over- come, and implementation rapidly accelerated. The U.S. program’s approach has been carried out by specialists from the Departments of State, Commerce, Energy (DOE), and Defense (DOD) and the Customs Service and has included the following elements: • policy-level exchanges to emphasize the importance of enactment and enforcement of export control legislation for reasons related to nonproliferation; • training on the essential elements of comprehensive export control laws and enforcement regulations (except Russia); • computer automation of export control licensing procedures and provi- sion of enforcement equipment; • workshops on international nonproliferation export control regimes and associated control lists; • seminars on government outreach to nongovernmental entities, and par- ticularly manufacturing organizations, on export control and nonproliferation; • training and equipment for supporting enforcement activities; and 40 Ibid. 41 Information provided by the Departments of Commerce and Energy. For specific information on the activities of the Bureau of Export Administration, see Export Administration Annual Report 1995 and 1996 Report on Foreign Policy Export Controls, U.S. Department of Commerce, Washing- ton, D.C., March 1996. U.S.-sponsored training for Russian specialists was considered inappropriate given their relatively Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 99 • lab-to-lab programs, including technical exchanges, directed to nuclear- related exports.41 Limited efforts have also been undertaken to introduce specialists from most of the other successor countries to U.S. experience. For example, officials from the Central Asian and Caucasus states have participated in regionally-oriented overview seminars in Istanbul and Washington. During the first four years of the program, U.S. expenditures for bilateral programs with the four countries were about $39 million from the Cooperative Threat Reduction program budget of DOD and much smaller contributions from the regular budgets of several agencies. At the request of the executive branch, Congress shifted responsibility for funding the programs to the Department of State, beginning in fiscal year (FY) 1996. During that year, Congress appropri- ated $10 million to the State Department’s Nonproliferation and Disarmament Fund, which was earmarked for export control programs worldwide. Figure 5.1 portrays the funding situation through FY 1996; Table 5.1 outlines the general topics of U.S. government cooperative programs; and Table 5.2 identifies many of the specific activities undertaken using funds from these two sources as well as the limited funds that the concerned agencies were able to obtain through other channels.42 Meanwhile, the activities of other western countries in the development of export control systems in the successor states have been limited. While other governments have, of course, a major stake in success of the international re- gimes, including the involvement of Russia and other states in the region, they have not undertaken programs comparable to those of the United States aimed at enhancing local capabilities. GENERAL FINDINGS CONCERNING COOPERATION IN EXPORT CONTROL The committee considered but did not use a highly structured approach to assessing the effectiveness of U.S. efforts to support export control activities in the four countries. It was simply not possible to separate the impact of American involvement from the progress that would have been made in its absence. The well-developed capabilities in basic areas of export control. However, Russian specialists have ac- tively participated in many dialogues concerning various aspects of export control and have arranged very useful visits in Russia for American specialists. As to automation, Russian sensitivities over auditing requirements for U.S-provided computers have been an impediment toward collaboration in this field. At the same time, MINATOM has decided to use a DOE-sponsored automated system to assist in processing nuclear-related export applications. 42 Information provided by the U.S. Departments of State, Commerce, Defense, and Energy and the U.S. Customs Service. Copyright National Academy of Sciences. All rights reserved.

100 CTR Russia CTR STATE CTR Ukraine CTR STATE CTR STATE CTR Belarus CTR CTR CTR STATE Kazakstan CTR Unobligated COM Equipment STATE Exchanges Regional STATE STATE ENERGY 0 1 2 3 4 5 6 7 8 9 Mlillions of dollars Copyright National Academy of Sciences. All rights reserved. FIGURE 5.1 Funding for Export Control Cooperation (FY 1991-1996). Source: U.S. Department of State/U.S. Department of Defense. CTR, funded through the CTR program; STATE, funded through the Department of State; COM, funded through the Department of Com- PROLIFERATION CONCERNS merce; ENERGY, funded through the Department of Energy. Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 101 TABLE 5.1 Goals of U.S. Cooperative Export Control Programs I. National Commitment to Export Control • Political/policy decision to adhere to international nonproliferation norms, including treaties, regimes, and embargoes. • Responsible arms transfers (Organization for Security and Cooperation in Europe guidelines). II. Legal Authority for Control of Exports of Munitions and Dual-Use Goods, Technologies, and Activities • Six essential legal principles: (1) comprehensive controls, (2) implementing directives, (3) enforcement power and penalties, (4) interagency coordination, (5) international cooperation, and (6) protection of sensitive business information. III. Licensing • Control lists need to (1) cover international lists and national needs and (2) be clear to exporters. • License review needs (1) complete information and (2) thorough review of all parties to transaction. IV. Enforcement • Preventive enforcement to reduce violations (license screening of end use/user). • Interdiction and enforcement. • International cooperation. Source: U.S. Department of Commerce. committee relied on the Common Standard to provide a qualitative baseline of activities that should be adopted in some fashion by all countries and examined how each country was measuring up in a general sense with regard to each element of the standard. At the same time, the committee took note of efforts by both the U.S. Gov- ernment and academic specialists to develop approaches for numerically rating the state of development of components of the Common Standard in the four countries as of early 1995 and late 1996. While the committee did not make its own quantitative judgments concerning the evolution of the export control sys- tems, the observations set forth below are consistent with the preliminary quanti- tative efforts of others. Strong Support in the Region for U.S. Cooperative Efforts U.S. programs have stimulated considerable interest and action at the policy and technical levels in Russia, Ukraine, Kazakstan, and Belarus in developing effective export control systems consistent with the requirements of the interna- tional control regimes. American specialists and their counterparts have devel- oped a high degree of mutual confidence that their joint efforts are producing Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union 102 PROLIFERATION CONCERNS TABLE 5.2 Export Control Cooperation Activities (Led as noted by the Department of State (S), Defense (D), Commerce (C), and Energy (E) as of December 1996) Participants from Several Countries Export control technical forum and UPDATE conference. Washington, March 1994 (Belarus, Kazakstan, Russia, and Ukraine as well as 10 Baltic and Central European states) (C). Export control technical forum and UPDATE conference. Washington, April 1995 (Belarus, Kazakstan, Russia, and Ukraine as well as 11 Baltic and Central European states) (C). Export control nonproliferation forum. Istanbul, November 1995 (Kazakstan as well as 6 Central Asian and Caucasus states) (C). Export control technical forum and UPDATE conference. Washington, July 1996 (Belarus, Kazakstan, Russia, and Ukraine as well as 12 Baltic and Central European states) (C). Export control nonproliferation forum. Washington, September 1996 (Kazakstan as well as 7 Central Asian and Caucasus states) (C). Russia Laboratory-to-laboratory program between Kurchatov Institute and Los Alamos National Laboratory, December 1994 (E). Policy consultations. Moscow, March 1995 (S). Overview of U.S. export control system. Washington, July 1995 (C). Industrial-government relations forum. Boston and Washington, October 1995 (C). Orientation on Russian export control and enforcement activities. Moscow, December 1995 (S&C). Preventive enforcement forum. Washington and Miami, March 1996 (C). Overview of U.S. export control system follow-up forum. Washington, April 1996 (C). Russian system orientation follow-up forum. Moscow, June 1996 (S&C). Preventive enforcement follow-up forum. Moscow and St. Petersburg, September 1996 (C). Nuclear nonproliferation workshop. Washington, November 1996 (E). Industrial-government relations follow-up forum. Moscow, December 1996 (C). Ukraine Project development and initial technical discussions. Washington, April 1994 (S). Continued general technical discussions. Kiev, May 1994 (S). Orientation on automated licensing. Washington, July 1994 (C). Assessment of Ukraine’s export control system. Kiev, August 1994 (C). Executive exchange. Washington, October 1994 (C). Project development. Washington, December 1994 (S). Automatic licensing system assessment, design, and verification. Kiev, February 1995 (D&C). Automation design follow-up. Washington, March 1995 (C). Harmonization of national and regime control lists for munitions and dual-use technologies. Washington, May 1995 (C). Legal forum on essential elements of an export control law. Washington, May 1995 (C). Preventive enforcement forum (enforcement techniques, prelicense and postshipment verifications, license screening, illegal acquisition indicators, and enforcement information sharing). Kiev, July 1995 (C). Nuclear nonproliferation and industry outreach seminar. Kiev, September 1995 (E). Policy and related consultations. Kiev, October 1995 (S). Review of Ukrainian nuclear control list. Kiev, October 1995 (E). Project fund allocations. Washington, February 1996. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 103 Follow-up assessment of progress to date. Kiev, May 1996. Technical exchange. Chicago and Los Alamos, July 1996 (E). Laboratory-to-laboratory program in place between Argonne National Laboratory and the Ukrainian Institute for Nuclear Research. July 1996 (E). Export control administration. Kiev, September 1996 (C). Executive exchange. Washington, October 1996 (C). Preventive enforcement follow-up forum. Kiev, October 1996 (C). Belarus Program development. Minsk, April 1993. Assessment of export control requirements. Minsk, June 1993 (C). Preventive enforcement forum and automation requirements assessment. Minsk, August 1993 (C). Legal forum on essential elements of an export control law. Washington, September 1993 (C). Orientation on licensing, enforcement, and automation. Washington, September 1993 (C). Automation specification and project plan development. Minsk, December 1993 (C). License processing. Washington, February 1994 (C). Automation design. Washington, March 1994 (C). Assessment and project development. Minsk, May 1994 (D). Finalize automation procurement. Minsk, August 1994 (D&C). Technical workshop. Minsk, September 1994 (E). Automated system installation planning. Minsk, October 1994 (C). Program development. Minsk, June 1995 (S). Installation and certification of automated system. Minsk, August 1995 (D). Legal and regulatory forum to review draft export control law and decrees. Washington, September 1995 (C). Preventive enforcement and industry outreach forum. Minsk, October 1995 (C). Automation system requirements follow-up. Washington, February 1996 (C). Preventive enforcement and industry outreach follow-up forum. Washington and Dallas, Texas, March 1996 (C). Kazakstan Policy consultations. Almaty, December 1993 (S). Program development. Washington, July 1994 (C). Policy consultations, assessment, and program development. Almaty, November 1994 (S). Legal forum on essential elements of an export control law. Washington, March 1995 (C). Nuclear nonproliferation and industry outreach seminar. Almaty, June 1995 (E). Policy consultations and program development. Almaty, June 1995 (S). Assessment of licensing automation requirements. Almaty, July 1995 (C). Incorporating international control lists into Kazak export control list. Washington, September 1995 (C). Automated system design. Washington, September 1995 (C). Preventive enforcement and industry outreach. Almaty, October 1995 (C). Developing implementing regulations and automated system design. Washington, April 1996 (C). Laboratory-to-laboratory program in place between Los Alamos and Argonne national laboratories and the Kazakstani National Nuclear Center. April 1996 (E). Nuclear technical exchange. May 1996. Automation assessment and program planning. Washington, July 1996 (C). Drafting implementing regulations and orders (follow-up to April 1996 forum). Washington, September 1996 (C). Source: U.S. Departments of Commerce and Energy. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union 104 PROLIFERATION CONCERNS important results in critical areas. The joint efforts, undertaken at a relatively low cost, have been particularly significant in developing the legal bases for export control, training cadres of specialists in a variety of relevant fields, and installing systems for more efficient processing and validation of license requests. The committee found that the reactions of foreign participants in joint activi- ties were very positive, indeed almost always enthusiastic, about the programs. American specialists are repeatedly given partial credit by their foreign counter- parts for many important achievements in export control throughout the region. Almost all key local officials have actively participated in the programs of coop- eration, and many are in regular contact with American colleagues through a variety of channels. However, reducing to an acceptable level the possibility of unsanctioned transfers of weapons and weapons-related items from the FSU to other states will require many years of effort at the international, national, and facility levels by governments and specialists of the four countries. The countries must be prepared to devote substantial resources of their own if they are to achieve and maintain internationally acceptable systems for export control. Building on early achieve- ments, American specialists can continue to play an important role, and in many cases a pivotal role, in the establishment of systems that conform to the require- ments of the international legal regimes. At the same time, they can provide the United States with valuable linkages to important agencies and specialists through- out the FSU. Clearly, the U.S. effort has been effective in capturing the attention of the leaders of the four countries and in focusing cooperative activities on compliance with the international regimes. Some of the governments of the region have been accepted as members of one or more of the international regimes, as indicated in Table 1.1 of the Executive Summary. Now these governments must remain com- mitted to the difficult task of implementing their political commitments. Examples of Results of Cooperative Programs The following examples of the payoffs of cooperation underscore the impor- tance of U.S. contributions in the FSU: • American specialists introduced Russian colleagues to the concept of internal company compliance programs, which is gradually becoming an impor- tant topic in the export control community of Russia. Table 5.3 sets forth the key elements of such compliance programs, which are being carefully reviewed by a number of key Russian enterprise managers. • Russian customs officials are beginning to draw on the extensive experi- ence of several U.S. agencies in developing the documentation needed to pros- ecute alleged violators of export control regulations. • Kazakstan would not now have an export control law had American spe- Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 105 TABLE 5.3 Government-Industry Relations—Elements of an Enterprise Export Control Compliance Program 1. Management Policy • Formulate a clear and concise export control policy statement that outlines senior management’s commitment to export compliance. 2. Responsible Officials • Identify positions in the firm that include responsibility for export control compliance. 3. Recordkeeping • Records kept of all export transactions. 4. Training 5. Internal Audits • A qualified person or team should conduct regular internal reviews to ensure that the firm’s program is operating effectively and that it is in compliance with applicable export regulations. 6. Notification • A system should be established for consulting with the export control authority when questions arise regarding the propriety of specific export transactions. 7. Product Classification/Licensing Determination Screen • A system to determine whether a validated license is required for exports. 8. Diversion Risk Screen • Export transactions, including all the parties involved, should be reviewed for indicators of risk of diversion to an unauthorized end user, end use, or destination. 9. Sensitive Nuclear End-Uses/End-Users Screen • Exporters establish a system to ensure that transactions do not involve prohibited nuclear end uses or end users. 10. Missile End-Uses/End-Users Screen • Exporters establish a system to ensure that transactions do not involve missile end uses or end users. 11. Chemical/Biological Weapons End-Uses/End-Users Screen • Exporters establish a system to ensure that transactions do not involve chemical or biological weapons end uses or end users. Source: Export Management System provided by U.S. Department of Commerce. cialists not persuasively argued that in the long run legislation that codifies export control commitments is preferable to a series of presidential decrees that lack the same degree of permanency and may not be taken as seriously by legal institu- tions when resolving enforcement cases. • In Belarus, U.S. assistance in computer hardware and software has be- come the basis for an automated license review system on-line, and U.S. equip- ment also plays an important role in interdiction and enforcement activities. • In Ukraine, key officials are regularly drawing on their advanced training concerning U.S. licensing procedures, and effective assistance has been provided in control list development and enforcement procedures. • In all of the countries the U.S. programs have played a pivotal role in acquainting local officials with the requirements of the international control re- Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union 106 PROLIFERATION CONCERNS gimes and in encouraging them to develop national systems that fully reflect those requirements. • All of the countries are developing systems that are far more open to public scrutiny than the Soviet system was, and this openness is attributable in part to American involvement in the evolutionary processes. In short, had it not been for the active involvement of U.S. specialists in the four successor countries, it is unlikely that any of the countries would have given export control its current level of priority. Of course, they would have continued to develop less ambitious approaches to export control at a slower pace, but it is unlikely that many of the new laws and regulations, organizational structures, and review mechanisms would be in place without U.S. involvement. Also, the cadres of well-trained specialists in key positions would be significantly smaller, par- ticularly in Ukraine, Belarus, and Kazakstan.43 Achieving U.S. Export Control Objectives The United States has on occasion urged restraint by the Russian Govern- ment with regard to proposed sales of sensitive nuclear and missile-related items and advanced fighter aircraft to countries of concern, even though the sales were to be carried out in a manner consistent with the requirements of the international control regimes. It is unrealistic to expect that all export decisions will reflect U.S. perceptions of proliferation risks; however, the mechanisms established for reaching export decisions should involve those organizations in the countries that are concerned with nonproliferation. The U.S. Government considers as perhaps the weakest link in its programs of cooperation the perception by some foreign legislators, officials, and industry representatives that export control cooperation with the West is counterproduc- tive. Such skeptics question whether badly needed export revenue should be sacrificed to satisfy the nonproliferation concerns of the West.44 Export control experts from both the United States and the cooperating gov- ernments are in a position to explain to such critics and others the difference between the development of export control machinery (which all parties favor) and specific export control decisions (which sometimes are controversial). While the distinction may not satisfy foreign critics of “unwise” denials or American critics of “unwise” sales, it may help in protecting cooperation that is designed to establish needed regulatory machinery. 43 Discussions during the committee’s visits to Ukraine, Belarus, and Kazakstan in April 1996. 44 U.S. Department of State’s response to committee questions, February 1996. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 107 Adapting Approaches to the Local Environment The four governments are attempting to put in place all elements of export control systems. The details of such systems need not be identical to the Ameri- can approach; they should take into account the capabilities and needs of each country. For example, a very simple licensing system may be appropriate in a country where all manufacturing facilities of concern are government owned and the number of organizations authorized to export controlled items may be as small as three or four, as in the case of Kazakstan. On the other hand, special measures may be needed in some of the countries to compensate for corruption among enforcement personnel, such as multiple paths for checking on compli- ance. The ultimate test of an export control system is its effectiveness in carrying out the requirements of the international control regimes and not necessarily its consistency with the American approach. An important aspect of the cooperation strategy should be the continuing empha- sis on rapid “indigenization” of the programs, particularly in Ukraine, Belarus, and Kazakstan: the emphasis on programs that “train the trainers” and increasing reliance on vehicles, computers, boats, and other equipment produced locally or that at least can be serviced and maintained locally. Rapid indigenization is essential to ensure that the countries are ready in the near future to assume full responsibility for upgrad- ing and maintaining systems that are internationally acceptable. While the political outlook, economic conditions, industrial assets, and civil service personnel capabilities vary considerably among the four countries, the positive attitude toward working with American specialists to improve export control systems was consistent in many agencies in each country. Thus, U.S. specialists have an unusual opportunity to adapt familiar organizational and tech- nical approaches to realities in the region and to set priorities for establishing those aspects of export control systems that are most likely to have near-term impact in containing sensitive items. Layers of Control Layers of control are helpful in deterring and detecting illegal exports— controls at the enterprise or institute level, checks at the customs certification and border stations, surveillance along the borders, and programs for interdiction of contraband between the foregoing control layers. At present, the primary reliance on the customs services in the enforcement area is a necessary point of departure for this approach since customs officials are involved in most of the layers. However, many other agencies also have a role to play and should be involved in cooperative efforts, including the intelligence agencies and the military and para- military agencies responsible for border surveillance in the four countries. Also, innovative approaches are needed for control at the source. Once an item leaves an enterprise through unauthorized channels, the difficulties of detecting it en route to a foreign destination are very severe. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union 108 PROLIFERATION CONCERNS Financial Viability of Key Enterprises and Institutes A serious threat to the efforts of the United States to strengthen the capabili- ties of institutions in the FSU in order to curb proliferation is the continuing decline in the financial viability of the concerned enterprises and institutes. It is not reasonable to rely on unpaid or underemployed work forces to implement important aspects of export control systems, such as internal compliance pro- grams. The need for high levels of integrity in resisting economic pressures for personal financial gain should not be placed in competition with personal sur- vival. There is no easy solution to the massive economic shortfalls throughout the former Soviet military-industrial complex, and programs to protect sensitive items should take into account the unstable situation in these institutions. U.S. Legislative and Organizational Framework for Cooperative Programs Finally, the legislative and organizational approaches in Washington to de- veloping, supporting, and implementing cooperative programs deserve greater attention. Specifically, the Defense Against Weapons of Mass Destruction Act of 1996 did not address several important aspects of export control, particularly the responsibilities of the Commerce Department, while concentrating on the role of the U.S. Customs Service. Moreover, budgetary support for export control coop- eration is in constant jeopardy in the unpredictable and small budget of the State Department. Areas for Future Emphasis Against the foregoing background of developments in the four countries and the experience of cooperative programs to date, several areas deserve special emphasis during the next several years: • Joint efforts should reflect the need for the four countries to complete the infrastructure that provides an adequate legal, organizational, and manpower base to support export control. • The importance of the governments continuing to strengthen implementa- tion and enforcement is very clear. • Since not all aspects of export control can receive immediate attention, priorities should focus on urgent problems, including (a) the need to control the most sensitive items, (b) the opportunities for controlling items at the enterprise level, and (c) the importance of participation by adjacent states of the FSU in regional approaches to combat the smuggling of sensitive items. • The protection of sensitive technical data that are subject to export control has not received sufficient attention. Preventing the diffusion of such information in some instances can be more important than containing commodities, and higher priority should be given to efforts to control sensitive technical information. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 109 • An important related area is the evolution of a cadre of export control officials who give adequate weight to proliferation concerns in decision making. Indeed, a regulatory system that operates in conformity with the procedural re- quirements of the international regimes but that fails to achieve outcomes that reflect a commitment to nonproliferation goals cannot be considered acceptable. RECOMMENDATIONS TO THE U.S. GOVERNMENT CONCERNING FUTURE COOPERATION IN EXPORT CONTROL I. Support Completion of the Legal, Organizational, and Manpower Infrastructure Specific Finding: A starting point for controlling exports of sensitive items is a legal and organizational framework that provides the capability for policy and regulatory development, licensing activities, and enforcement. Each of the four countries is in the process of broadening and codifying the legal basis for its programs and of providing an operational system staffed with well-trained spe- cialists. This long-term effort requires continued attention over a number of years. The United States has the most fully developed export control infrastruc- ture of any country and is in a strong position to contribute in many ways. Over the long term, however, the four countries must assume responsibility for ensur- ing that improvements are sustained. Budgetary support in the United States for bilateral export control programs needs more stability. The budget level of $10 million for FY 1996, supplemented with funds from earlier years already in the pipeline, has sustained an appropriate level of activity. Funding for FY 1997 has become quite fragmented. The Nonpro- liferation and Disarmament Fund of the Department of State, which was to be the central funding source for several agencies, has only $5 million for export control programs on a worldwide basis. Meanwhile, Congress has earmarked $15 million of its FY 1997 appropriation to DOD for the Cooperative Threat Reduction pro- gram for the activities of the U.S. Customs Services in the FSU. DOE has set aside funds to continue its activities. On the other hand, the Department of Commerce, which should play a critical role, has no budget line for its participation. Recommendation: Continue to fund export control efforts in the FSU at least at the level of FY 1996 for several more years and be prepared to increase funding should particularly important high-impact opportunities arise. U.S. agencies finally have in place the international arrangements, the receptivity of key foreign counterparts, and a base of initial experience to facili- tate program efforts in a number of important areas. Against this background, program activities can be broadened at little additional cost in ways that will enable American specialists to continue past activities while introducing new concepts and approaches. If Russia, in particular, unexpectedly seeks a much Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union 110 PROLIFERATION CONCERNS higher level of cooperation, increased funding would be a very good investment, especially with regard to enforcement activities.45 Recommendation: Ensure that adequate resources are available to the Department of Commerce, as well as to the Departments of State, Defense, and Energy and the U.S. Customs Service, so that specialists with unique expertise can continue to participate in the programs. The future funding available to the agencies is very uncertain and should be put on a firmer basis. Several approaches should be considered: (a) each of the concerned agencies could seek its own appropriation for participation in the program; (b) funds could be made available to the agencies through the Freedom Support Act; and (c) if the budget of the State Department continues to be a vehicle for financing activities of other agencies, Congress should protect—through earmarking—the amount to be directed to export control activities in the FSU, and the State Department should strengthen its staff so that more serious planning and evaluation efforts associated with the funds can be carried out. Recommendation: Emphasize in bilateral discussions at all levels the im- portance of developing capabilities to meet international requirements for export control and to ensure adherence to all relevant aspects of the interna- tional control regimes. Unfortunately, the topic of export control is too often considered complicated and remote from immediate problems and therefore is left off the agendas of important policy discussions. At the same time, advocates for export control in the FSU are still few in number, and they need all the political support they can obtain, particularly from their own governments. To help buffer the technical cooperation efforts from political problems, the United States should not hesitate to initiate confidential discussions through diplomatic channels to re- solve misunderstandings concerning international export control issues. Recommendation: Negotiate an intergovernmental agreement with Rus- sia to help ensure the long-term stability of bilateral cooperation in the field of export control. Given the large stores of sensitive commodities and technical data in Russia, sustained cooperation that addresses a broad range of issues is clearly warranted. An important step in this regard is the completion of a bilateral agreement. Recommendation: Support the strengthening of institutions in the FSU that provide training and advisory services for government agencies and enterprises involved in export control. The number of new specialists who 45 The committee notes that multiyear funding for the bilateral programs would increase the stability and continuity of the cooperative efforts but acknowledges that U.S. congressional proce- dures make multiyear funding unlikely. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 111 could benefit from training in both the general area of export control and in special- ized fields is very large. Also, the technical issues involved in determining whether certain items are subject to licensing, in going through the licensing process, and then in actually shipping items abroad can be complicated for even experienced manufacturers and shippers. Of particular interest is support for the enterprises in their determinations of commodity classifications. In Russia, where many enter- prises and shippers are involved, an independent Center for Export Control has been established and deserves support from both internal and external sources. Also deserving support are the specialized training and advisory units in ministries and enterprises that are expanding their export control activities. Recommendation: Involve interested American universities and non- governmental organizations, when appropriate, in promoting training and research related to export control that involves specialists from the FSU. Several American universities and nongovernmental organizations have been effective in promoting greater awareness of the importance and details of export control activities throughout the FSU. Funded primarily by private foundations, these organizations have provided training opportunities in the United States for individuals from each of the four countries who subsequently assumed leadership roles in their governments. The U.S. Government should draw on the resources of these organizations to help strengthen local capabilities in the successor states. They can be particularly helpful in tracking progress in implementing and enforc- ing laws and regulations. II. Strengthen Implementation and Enforcement Capabilities Specific Finding: In each of the four countries there is a considerable gap between the requirements and plans for export control activities and the imple- mentation of effective programs for fulfilling those requirements, particularly in the area of enforcement. The role of the United States in this area has been very limited relative to the size of the problem, and activities should be significantly increased. While U.S. efforts have been quite successful in assisting with the prepara- tion of laws and regulatory documents, only recently have the documentation requirements for prosecution of violations become a topic for cooperation. One of the most effective deterrents to violations of export controls, at least in the United States, has been the successful prosecution of violators; and it seems likely that penalties would have an impact in the FSU. However, there are few reports of successful prosecutions in this region. Recommendation: Continue to cooperate with counterpart agencies that have received computers and related equipment to ensure that automated Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union 112 PROLIFERATION CONCERNS licensing and customs tracking systems are installed and used as planned. There is a clear need for American specialists to provide hands-on guidance in Ukraine, Belarus, and Kazakstan concerning systems and programs that have proved to be effective in the United States. Adaptations may be necessary in the countries, and the rapid transfer of American experience both in using and in adapting the equipment and software that have been provided can be very helpful in the immediate future. Recommendation: Expand bilateral cooperation among customs offi- cials, emphasizing training and demonstration programs that can have mul- tiplier effects in view of the vast responsibilities of the customs services. Despite the enormity of the task facing customs officers in the FSU, cooperation in training, advice, and demonstration equipment can help impart momentum into the much larger efforts that are needed but that are far beyond the capabilities of the United States to support directly. Recommendation: Share with enforcement counterparts information on procedures used in the United States to collect evidence and prosecute par- ties found to be violating export control laws. As the criminal justice systems in the four countries continue to evolve, American specialists can be very helpful in relating their experiences concerning the detailed aspects of preparation for and carrying out of prosecutions of violators of export controls. While the legal systems in the countries of interest vary significantly from the American legal system, many techniques that have been successful in the United States should be of relevance to other countries as well. Recommendation: Encourage high-visibility prosecutions of export con- trol violators in the four countries so that local exporters become aware of the consequences of violations of export control laws and regulations. At- tracting the attention of exporters of sensitive items through high-visibility pros- ecutions of violations should be particularly important in countries where in the past crimes were often overlooked if the perpetrators had strong political connec- tions. III. Focus on Critical Commodities, Stewardship at the Enterprise Level, and Regional Approaches Specific Finding: In addition to supporting the development of comprehen- sive approaches to export control, U.S. specialists should advocate short-term strategies that focus on immediate solutions to reducing the likelihood of uncon- trolled diffusion of sensitive items. In a territory as vast as the FSU, once a diverted item of concern leaves a production or storage facility undetected, its discovery becomes very difficult. Therefore, of particular importance is greater Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 113 attention to controlling the most sensitive items at the enterprises and institutes while continuing efforts to intercept controlled items en route to their final desti- nations, including transit through neighboring countries. American business is often far more effective than U.S. government officials in obtaining the attention of Russian enterprise officials, and the involvement of such business people in discussions of enterprise activities can be very produc- tive. Also, regional approaches are critical if smuggling and inappropriate trans- shipments of controlled items are to be checked. Recommendation: Emphasize control of the most sensitive items by tar- geting educational and enforcement efforts on the organizations most likely to handle such items. Concentrating on the most sensitive items as defined in the international control lists could be an important interim step before comprehen- sive control systems are operating effectively. This approach would counter smug- gling and diversions inspired by parties intent on obtaining weapons technolo- gies, which presumably would include some of the most critical items. Recommendation: Encourage the strengthening of surveillance at the enterprise level through enhanced capabilities of on-site customs officials. Customs officials are resident at many of the most important manufacturing facilities in the FSU, and officials from regional offices visit other facilities regularly. In addition to their responsibility for providing necessary documenta- tion for shipments of authorized goods, they should play a very active role in helping to prevent unauthorized shipments from the facilities. Recommendation: Expand interactions between officials of American companies and foreign enterprises responsible for internal export compli- ance programs and for industrial security and demonstrate to foreign coun- terparts how the U.S. private sector participates in the development of new export control regulations. The internal compliance programs of U.S. firms have already triggered considerable interest among enterprise managers in Rus- sia. More industrial leaders from the countries should have the opportunity to appreciate the value that U.S. businessmen attach to such programs. U.S. experi- ences in industrial security should also be helpful to counterparts. Finally, the U.S. experience in bringing companies into export control activities from the very beginning indicates that, when business concerns are considered from the outset, misunderstandings can be avoided as to export requirements during imple- mentation activities. Recommendation: Encourage local officials involved in the Customs Union in the FSU to strengthen approaches for monitoring transshipments of controlled items. The impact of the Customs Union, if any, on transshipments Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union 114 PROLIFERATION CONCERNS of controlled items is still evolving. With or without the union, the countries of the region should be alert to the reliability of end users throughout the region, particularly as transshipment agents. Recommendation: Participate in cooperative programs with countries of Central Asia that emphasize the importance of countering smuggling and inappropriate transshipments of sensitive items. Controlling the flow of goods across the lengthy borders of the successor states is very difficult. An important step in limiting contraband, which could include sensitive items, is a commitment by all successor states to establish programs to intercept smuggled goods as quickly as is feasible. The regional training programs supported by the United States should emphasize the threats from smuggling while giving less attention to the development of elaborate export control systems in countries that produce few controlled items. IV. Increase Attention to Control of Technical Data Specific Finding: Some nations and subnational groups of proliferation con- cern could benefit significantly from access to technical data about the design, manufacture, or integration of weapons system components. Yet this topic is receiving relatively little attention in the FSU. Russia, in particular, still protects military-classified documents. Also, the country is concerned about intellectual property. But controls over intellectual property are uncertain and are not de- signed to keep documents out of the hands of irresponsible parties. Recommendation: Encourage counterparts in the four countries to strengthen national regulatory and organizational frameworks for regulat- ing flows of technical data subject to export controls. None of the countries has established an adequate framework for addressing technical data. This com- plicated topic, involving many ministries and institutions from both the military and the civilian sectors, will require many adjustments of current approaches that concentrate on commodities, for both specialists from the region and American collaborators. Recommendation: Develop and disseminate “model” technical data pro- visions that could be used by institutions in the FSU in contracts with domes- tic or foreign organizations involving controlled items. As a first step, such model provisions could be developed for and included in those contracts between American institutions supported with U.S. Government funds and Russian facili- ties that involve the transfer of data that are subject to export controls. While technical data concerns will vary depending on the transaction, contracts should have provisions to ensure that the requirements of the international regimes will be respected. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 115 V. Encourage Full Consideration of Proliferation Issues in Export Control Decisions Specific Finding: While the bilateral programs have concentrated on estab- lishing the machinery for reaching and enforcing export control decisions, they have given less attention to the policy considerations that should underpin deci- sions, other than consistency with the limited requirements of the international regimes. Given economic realities, the governments of the successor states will inevitably give greater weight than would the United States to promoting trade with nations that pose proliferation risks. Until there are strong nonproliferation advocates involved directly or indirectly in the interagency deliberations, the principal inhibition on controversial exports of sensitive materials will often be external pressure from the United States or other interested countries. Recommendation: Ensure that continuing consultations on the impor- tance of export control activities in meeting nonproliferation objectives be- come an integral component of U.S. bilateral relations with the successor states in both the short and the long terms, as has been the case with rela- tions between the United States and its traditional allies. When special pro- gram funding for cooperative activities comes to an end, the leverage of the U.S. Government on the export control activities in the successor states will diminish greatly, even though such activities will continue to have very significant na- tional security implications. To help prevent the loss of interest in the U.S. Gov- ernment in these programs, the State Department should ensure that the signifi- cance of export control is fully recognized in its future policies with regard to the successor states. Recommendation: Promote bilateral discussions of the relationships be- tween exports of sensitive items and proliferation concerns in many forums, at the governmental and nongovernmental levels. American specialists should repeatedly point out that, while the establishment of governmental machinery for export control is very important, the goal is prevention of diffusion of sensitive items that could cause international security problems. Therefore, each sensitive export must be considered not only from the point of view of the international “legality” of the transaction but also from the viewpoint of the national security “desirability” of the transaction. Recommendation: Support the development of cadres of nonprolifera- tion specialists in the FSU who have strong linkages with both policy officials in their countries and colleagues abroad. The professional capabilities and commitments of cadres of specialists are at the heart of the effectiveness of export control systems. The professional culture of such specialists should reflect a high degree of sensitivity and commitment to nonproliferation objectives. Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union 116 PROLIFERATION CONCERNS AREAS FOR ADDITIONAL STUDY Export control activities touch on many related areas of international secu- rity importance. Areas that deserve more detailed analysis include the following: • Smuggling of controlled items. As previously suggested, greater attention needs to be devoted to interdiction of contraband material and equipment after it leaves the source undetected by responsible parties. The known histories of smug- gling of controlled items and of other items such as drugs and small arms may give some insights into the problems. The interests and capabilities of organized crime to penetrate the nuclear establishments of the countries of the region needs special attention, even though the bilateral materials protection, control, and accountability programs discussed in the previous chapter should address some aspects of this issue. Also, the intelligence services and law enforcement agencies have not participated fully in the discussions of export control either in the United States or the FSU; they undoubtedly could provide important additional perspec- tives on the problem. • Controlling the borders. Better understanding of the responsibilities, ca- pabilities, and activities of the various units responsible for border security in the FSU should provide insight into how U.S. cooperative efforts could be most supportive in this area. • Controlling the export of conventional weapons. Russia continues to sell significant quantities of fighter aircraft and other conventional weapons abroad, and several other countries of the FSU also sell limited quantities of conventional weapons abroad. A review of the inventories of armaments in the FSU available for transfers abroad and the export control aspects of sales and other transfers should help clarify the magnitude of this issue during the next several years. • Controlling items related to biological warfare. While the international regime for biological agents and related equipment identifies critical items to be controlled (Australia Group control lists), development and enforcement of effec- tive export control systems is very difficult, given the relative simplicity of the technologies involved. In this area control of technical data incorporated into documents or retained by former defense scientists is an important objective, and effective approaches to this end are needed. • U.S. support at key facilities. Many enterprises and institutes that have control over sensitive items in the four countries of concern have been in very difficult financial situations for several years. At the same time, a number of American programs are supporting projects at a large number of those institu- tions. Greater attention should be given to how U.S. programs targeted to these institutions through many channels can be used to assist in upgrading commit- ments to export control, thereby counteracting to some extent the pressures to sell equipment and information that would enable the institutions to meet their pay- rolls. Perhaps U.S. programs that provide some financial relief to the institutions Copyright National Academy of Sciences. All rights reserved.

Proliferation Concerns: Assessing U.S. Efforts to Help Contain Nuclear and Other Dangerous Materials and Technologies in the Former Soviet Union SYSTEMS FOR CONTROLLING EXPORTS OF MILITARILY SENSITIVE ITEMS 117 should require certain steps at the institutions to upgrade export control compli- ance as a condition of receiving U.S. funds. • Tracking the evolution and effectiveness of export control systems. Docu- mentation of the evolution of the export control systems in the region and, to the extent possible, correlating development of the systems with assessment of leak- ages of sensitive items from the region would be helpful in both assessing the impact of export control and providing guidance for future U.S. programs in this field. • Anticipating the activities of organized crime. While there currently are no known links between the activities of organized crime syndicates and the smuggling of militarily sensitive commodities or information, the possibility of such links should be of considerable concern. Studies of organized crime activi- ties in regions of the FSU where sensitive items are concentrated (e.g., Moscow region, St. Petersburg region, Urals) could be helpful in identifying emerging pathways for circumventing export control requirements. • Reducing the vulnerability of surplus sensitive items. Given the vast quan- tities of surplus weapons-related items being stored in Russia (in addition to direct-use nuclear material), attention should be given to steps for reducing the number of storage sites, the security arrangements at these sites, the procedures being used for disposing of surplus items, and the ultimate disposition of selected items that have no possibility for conversion to civilian uses. • Clarifying the regulatory basis for controlling technical data. For many years, balancing the need for national security restrictions on technical data ex- changes with the scientific benefits from international technical cooperation has been a difficult issue. Now the situation is even more complex as electronic communications can result in rapid distribution of all types of data throughout the world. At the same time, the export control restrictions remain. A special effort to clarify the types of data that are and should remain controlled in the framework of the international regimes would be very helpful. Copyright National Academy of Sciences. All rights reserved.

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The successor states of the former Soviet Union have enormous stocks of weapons-usable nuclear material and other militarily significant commodities and technologies. Preventing the flow of such items to countries of proliferation concern and to terrorist groups is a major objective of U.S. national security policy. This book reviews the effectiveness of two U.S. programs directed to this objective. These programs have supported the efforts of Russia, Ukraine, Belarus, and Kazakstan in upgrading the physical protection, control, and accountability of highly enriched uranium and plutonium and strengthening systems to control the export of many types of militarily sensitive items.

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