years. In addition to initial upgrades, the cost of adequate maintenance and operation of MPC&A systems, which presumably will be the responsibility of Russian facility managers in the future, is significant.1

It is tempting to argue that U.S. financial support for the cooperative program should be terminated, or at least significantly reduced, in the immediate future. The Russian economy is slowly recovering, thereby putting the Russian government in a better position to assume more of the burden for financing MPC&A systems. Unfortunately, financial realities within Russia will undoubtedly inhibit such financial allocations in the near term even if prices for Russian oil continue their upward climb.

There are many competing priorities for new resources available to the Russian government. While the World Bank reports a stabilizing economy and optimistic economic growth prospects, nineteen percent of the Russian population is classified as living below the poverty line.2 Thus, significant increases in budget allocations for modernizing MPC&A systems on a broad scale seem unlikely for the next few years. The competing demands of pensions, better health care, and adequate housing, for example, are simply too strong. Even if new resources are earmarked for nuclear security in general, facility managers will have difficulty effectively acquiring more resources for MPC&A upgrades to protect Russian materials given the widespread perception in Russia that facility vulnerability is not a serious problem. In time, however, a coalition of MPC&A champions should be able to argue for a larger percentage of government resources for MPC&A. But at present, instead of spending more on MPC&A, the Russian government’s emphasis is on increasing salaries at nuclear facilities, where average paychecks are still small.

As a result, the United States needs to both continue investing in MPC&A and insist on greater Russian investment. A sharp U.S. reduction in funding would surely slow the pace of enhancing security for weapon-usable material. At

1  

DOE informed the committee that it had projections of costs through 2013, when current U.S. law requires termination of all U.S. funding (see Appendix D.2), but DOE considers cost estimates beyond 2009 as privileged. Official DOE estimates provided to the committee by DOE of anticipated expenditures through 2009 are included in Appendix H. After considering DOE estimates and taking into account the amount of work that remains, the committee believes that DOE will need at least $500 million through 2009 and $300 million more for upgrades thereafter if it continues operating in its current manner. Further, in May 2005, a senior Rosatom official informed the committee that Rosatom will need nearly $500 million of external funding from 2006 through 2012 to finish upgrades at Rosatom facilities and to fully develop the infrastructure (training, maintenance, and accountancy facilities, etc.) for a sustainable program. This estimate does not include the costs of upgrading naval and other non-Rosatom facilities.

2  

The World Bank’s Russia Economic Report of March 2005 indicates that the GDP growth rate for 2004 was 7.1 percent. The percentage of Russian citizens living below the poverty line in 2004 was 19 percent, however. See http://194.84.38.65/mdb/upload/RER10_eng.pdf.



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