1

Introduction and Background

Under the Soviet regime, funding for science and engineering came essentially from the central government. The Soviet Academy of Sciences played a significant role in developing basic research in its institutes, while industrial and applied science and engineering were directed principally toward the military sector and were carried out in the defense and industrial ministries. The ministries in charge of nuclear weapons and atomic energy (MINATOM) and the missile and space industry (now the Russian Space Agency) exerted significant influence on research budgets as well as on the direction and implementation of science policy, and many of the country's best engineers were assigned to the institutes involved in this work. Programs and budgets at the Soviet Academy of Sciences institutes were stable and secure, attracting young scholars to graduate and postgraduate work. Soviet strength in space and military fields, foreshadowed by Sputnik, was clearly demonstrated by such accomplishments as the supersonic TU-144 aircraft, the MiG-29, space launch vehicles, and numerous communication and military satellites.

Since the disintegration of the former Soviet Union (FSU), in fact beginning as early as 1985, research funding from the central government(s) for most institutes and in most scientific sectors has declined sharply. Depending on the relative priority the Russian Academy of Sciences and/or relevant ministries place on an institute's work, many institutes and ministry R&D facilities now receive only 25 to 50 percent of their 1980 budgets. As a result, salaries often go unpaid for months.

Severe inflation in the FSU makes it difficult to calculate current budgets or to provide an accurate comparison of the current economic viability of science and technology with that of the 1980s. Moreover, housing, health benefits, and other social services are treated differently among institutes and are no longer automatically included in their budgets, as they were under the communist system. Nevertheless, the committee's many official and private conversations with researchers confirm the reports of a sharp decline in government funding. At the Kurchatov Institute, for example, individuals noted that 70 to 80 percent of the budget now comes from nongovernment sources. Similarly, the Institute of Chemical Physics (ICP) in Chernogolovka receives approximately 70 percent of its budget from nongovernment sources1 These two institutes appear to be in relatively good position to attract other sources of support—the Kurchatov Institute because of its ties to the gas and oil giant Gazprom and the Institute of Chemical Physics because of its many ties and contacts with the West as well as the entrepreneurial spirit of its leadership—but their gross income still falls far short of what is needed to sustain high-level personnel, facilities, and research.

Other institutes have not been as successful in replacing government funding. The All-Russian Research Institute of Experimental Physics at Arzamas-16 (hereafter referred to as Arzamas-16), for example, claims that its state budget has been reduced to approximately 25 percent of what it was prior to 1991, and nongovernment sources barely provide half the estimated requirements. At the Ioffe Institute in St. Petersburg, the director noted that prior to 1991 the institute 's income came almost equally from government grants, Soviet industry, and the Soviet Academy of Sciences. Today, support from government programs and the academy is a fraction of what it was but nevertheless comprises 70 percent of the institute's income. Very limited industry support and international cooperative programs make up the rest of the budget but do not cover minimal operating expenses.

As a result of the funding shortages, the institutes can pay only very low salaries based on broad government guidance. One hundred dollars per month is the oft-repeated salary estimate for a mid-level researcher. A new source of funding for an institute—an industrial contract or scientific grant, for

1  

Kurchatov Director Yevgeni Velikhov and ICP Deputy General Director George Manelis reported to committee members that these outside sources include the International Science and Technology Center (ISTC), the European Union's International Association for the Promotion of Cooperation with Scientists from the New Independent States of the Former Soviet Union program, and the International Science Foundation as well as domestic industry.



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AN ASSESSMENT OF THE INTERNATIONAL SCIENCE AND TECHNOLOGY CENTER: Redirecting Expertise in Weapons of Mass Destruction in the Former Soviet Union 1 Introduction and Background Under the Soviet regime, funding for science and engineering came essentially from the central government. The Soviet Academy of Sciences played a significant role in developing basic research in its institutes, while industrial and applied science and engineering were directed principally toward the military sector and were carried out in the defense and industrial ministries. The ministries in charge of nuclear weapons and atomic energy (MINATOM) and the missile and space industry (now the Russian Space Agency) exerted significant influence on research budgets as well as on the direction and implementation of science policy, and many of the country's best engineers were assigned to the institutes involved in this work. Programs and budgets at the Soviet Academy of Sciences institutes were stable and secure, attracting young scholars to graduate and postgraduate work. Soviet strength in space and military fields, foreshadowed by Sputnik, was clearly demonstrated by such accomplishments as the supersonic TU-144 aircraft, the MiG-29, space launch vehicles, and numerous communication and military satellites. Since the disintegration of the former Soviet Union (FSU), in fact beginning as early as 1985, research funding from the central government(s) for most institutes and in most scientific sectors has declined sharply. Depending on the relative priority the Russian Academy of Sciences and/or relevant ministries place on an institute's work, many institutes and ministry R&D facilities now receive only 25 to 50 percent of their 1980 budgets. As a result, salaries often go unpaid for months. Severe inflation in the FSU makes it difficult to calculate current budgets or to provide an accurate comparison of the current economic viability of science and technology with that of the 1980s. Moreover, housing, health benefits, and other social services are treated differently among institutes and are no longer automatically included in their budgets, as they were under the communist system. Nevertheless, the committee's many official and private conversations with researchers confirm the reports of a sharp decline in government funding. At the Kurchatov Institute, for example, individuals noted that 70 to 80 percent of the budget now comes from nongovernment sources. Similarly, the Institute of Chemical Physics (ICP) in Chernogolovka receives approximately 70 percent of its budget from nongovernment sources1 These two institutes appear to be in relatively good position to attract other sources of support—the Kurchatov Institute because of its ties to the gas and oil giant Gazprom and the Institute of Chemical Physics because of its many ties and contacts with the West as well as the entrepreneurial spirit of its leadership—but their gross income still falls far short of what is needed to sustain high-level personnel, facilities, and research. Other institutes have not been as successful in replacing government funding. The All-Russian Research Institute of Experimental Physics at Arzamas-16 (hereafter referred to as Arzamas-16), for example, claims that its state budget has been reduced to approximately 25 percent of what it was prior to 1991, and nongovernment sources barely provide half the estimated requirements. At the Ioffe Institute in St. Petersburg, the director noted that prior to 1991 the institute 's income came almost equally from government grants, Soviet industry, and the Soviet Academy of Sciences. Today, support from government programs and the academy is a fraction of what it was but nevertheless comprises 70 percent of the institute's income. Very limited industry support and international cooperative programs make up the rest of the budget but do not cover minimal operating expenses. As a result of the funding shortages, the institutes can pay only very low salaries based on broad government guidance. One hundred dollars per month is the oft-repeated salary estimate for a mid-level researcher. A new source of funding for an institute—an industrial contract or scientific grant, for 1   Kurchatov Director Yevgeni Velikhov and ICP Deputy General Director George Manelis reported to committee members that these outside sources include the International Science and Technology Center (ISTC), the European Union's International Association for the Promotion of Cooperation with Scientists from the New Independent States of the Former Soviet Union program, and the International Science Foundation as well as domestic industry.

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AN ASSESSMENT OF THE INTERNATIONAL SCIENCE AND TECHNOLOGY CENTER: Redirecting Expertise in Weapons of Mass Destruction in the Former Soviet Union TABLE 1 Ioffe Institute's Income and Expenses, 1991 and 1995 Income (%) Expenses (%)   1991 1995   1991 1995 Soviet Academy of Sciences 33 1/3 60 Salaries 25 65 Industrial contracts 33 1/3 — Research/equipment 40–50 5–7 Government grants and programs 33 1/3 10 Infrastructure (utilities, etc.) 2–3 25 International programs (e.g., International Science Foundation, ISTC)   30 Scientific materials 22–33 3–5 example—rarely raises salaries; rather, the additional money covers salaries that have not been paid for several months. On the other hand, even though institute directors may reallocate a researcher's other salary and research funds to maintain some overall equity in pay among employees, ISTC grants are given directly to the researchers and allow only 10 percent for overhead. Table 1 compares the Ioffe Institute's income and expenses for 1991 and 1995; it provides a stark, and typical, example of the impact of the economic decline in the FSU. In 1991 the institute required only 25 percent of its budget for salaries and was able to devote almost 50 percent of its budget to research. Today, most of the institute's funds go toward salaries and infrastructure, with almost nothing left for equipment costs. The director also noted that, overall, the budget is about 5 percent, in real terms, of what it was in 1991. It is not clear what factors are included in his comparison, but the bottom line is one of severe deterioration. The Kurchatov Institute's director told a similar story: whereas previously 10 to 12 percent of his institute's budget was for salaries and up to 70 percent was for equipment, today 60 percent is for salaries, 30 percent for infrastructure, and almost nothing is available for equipment. The effect of such a drop in funding for the science and engineering infrastructure is severe: institutes have had to redirect their budgets away from operations, equipment, and facilities to pay what amount to barely poverty-level salaries. There is abundant evidence that the science community, particularly the experimentalists, is becoming technically obsolete. The impact on science and engineering personnel is equally severe: under such deteriorating economic and social conditions, those who remain in science in the FSU do so with little hope of regaining their former prominence or quality of life. Others have left their fields altogether to work abroad or to develop businesses in banking and other commercial sectors in the FSU. In this environment the threat exists that weapons scientists and engineers will be tempted to emigrate to countries of proliferation concern. The difficulties faced by the science and engineering communities in the FSU clearly are part of the larger economic situation there, and a recovery of the former is dependent on a strong economic recovery overall. In addition, private industry will have to learn that R &D investment is important for long-term survival and profitability. The FSU's financial problems are compounded by the need for structural change. Some research institutes must shift their emphasis to civilian R&D, while others will have to find resources from nongovernment sources. Some institutes (the Kurchatov Institute and the Ioffe Physical-Technical Institute, for example) have already had some success in doing both, while other institutes will probably have to close. The great challenge for Russia is to handle the transition to a market-driven economy in such a way that the intellectual and physical resources in its science community are not completely and irrevocably lost. Some of the difficulties confronting the science and engineering communities are a legacy of the years of communist control. As noted in a 1994 report by the Organisation for Economic Cooperation and Development: “in the transition towards a new system, the principal sources of resistance may be the corporatist traditions and the patterns of allegiance which have long structured economic and social life and which are now directed towards maintaining acquired advantages or appropriating new sources of wealth in a context of crisis and penury.”2 Although science and technology were given a special prestigious place in Soviet society, the system also led to a number of significant drawbacks, including: ideological interference with academic freedom; a large and highly distorted research base; isolation from the international science community; separation of research, design activities, experimental development, and industrial production, even among the republics; and an underdeveloped civilian infrastructure (e.g., communications, information, consumables, support services). 2   Organisation for Economic Cooperation and Development (OECD), Science, Technology and Innovation Policies, Federation of Russia, vol. I, OECD, Paris, 1994, p. 13.

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AN ASSESSMENT OF THE INTERNATIONAL SCIENCE AND TECHNOLOGY CENTER: Redirecting Expertise in Weapons of Mass Destruction in the Former Soviet Union During the committee members' visits to Russia, they found that researchers and leaders are aware of these problems and are attempting to change their research structure and attitudes in order to cope with the problems. There are some hopeful signs, particularly in the space and aeronautics fields, for which some outside funds are available. But in general the severe lack of funding makes change difficult. Although it is impossible to predict what will emerge from the changes now under way, it seems very likely that civilian R&D will be relatively more important and that R&D will be funded from a variety of sources, including, eventually, the private sector. At the present time, the R&D system is caught between two poles, with government funding greatly reduced because of reductions in the defense budget and the general economic collapse and the private sector unable, or perhaps unwilling, to provide larger amounts of financial support. While the survival of science and technology in the FSU ultimately depends on the interactions of the FSU governments and the science and engineering communities, Western countries, by the early 1990s, recognized the implications of, and their own national interests in, helping the FSU sustain the best of its science and engineering base during its economic transition. A 1992 National Research Council (NRC) report to the assistant to the president for science and technology stressed the broader implications of the FSU's economic decline: “The FSU is in crisis. . . . If FSU science and technology wither and flounder, it is difficult to see how the FSU nations can prosper. Science and technology, together with capital and free social institutions, propel a modern economy.” 3 The 1992 report and others stressed the key role that scientists and engineers must play in the economic revitalization necessary for a successful transition by the FSU to an open and stable market-driven democratic society. Western countries, recognizing the importance of international cooperation and assistance to such a transition in the FSU, have responded with various programs. The International Science Foundation (ISF) provided timely and significant help to basic research scientists in Russia and the other republics. Shortly after being established in 1992, the ISF made over 25,000 emergency grants of $500 to FSU scientists. The emergency grants program was followed by ISF's major funding activity, the Long-Term Research Grants Program, under which the foundation distributed grants to some 3,500 FSU research teams from 1993 to 19954 In 1992 the NRC's Office for Central Europe and Eurasia, which had long supported U.S.-Soviet exchanges in basic research, implemented the Cooperation in Applied Science and Technology program to allow U.S. scientists to host colleagues from the FSU for joint research in applied science and technology. NATO also provides grants to facilitate collaboration and long-term scientific linkages, and several scientific societies began new programs with the FSU: in 1992, the American Physical Society began providing a limited number of emergency grants, free membership to the society, publications, and training courses, and the American Mathematical Society and American Astronomical Society made similar attempts to alleviate the dire economic conditions and isolation of science and engineering personnel in the FSU5 Of course, these programs have not reached all FSU scientists and engineers, and some organizations have already ended their activities, leaving many top scientists and engineers with little or no access to foreign support6 These and other programs have the broader goal of helping to preserve science and technology in the FSU. Western countries also have directed specific efforts at the many scientists and engineers who conducted weapons-related research and designed and manufactured weapons of mass destruction and their delivery systems. As noted in the 1992 NRC report to the president, “Of special concern, temptations are increasing for FSU military scientists to look abroad for opportunities to use their capabilities.” 7 Weapons scientists from Los Alamos National Laboratory and Arzamas-16 began working together on basic science projects almost immediately after the collapse of the Soviet Union. This collaboration developed into the so-called Lab-to-Lab Program that today is addressing nuclear materials control throughout the Russian nuclear complex. In 1994 the U.S. Department of Energy initiated its Industrial Partnering Program (IPP), now called the Initiatives for Proliferation Prevention, which is designed to engage former Soviet weapons scientists and engineers in projects with commercial potential. It was in this context of proliferation concern that another unique international effort, the ISTC, took form. THE ISTC'S ORIGINS Germany was the first Western country to propose, in 1991, an international program to provide financial support to weapons scientists in the FSU. By early 1992 the United States, Germany, and Russia were discussing the possibility of such an international program, and in February 1992 the 3   Reorientation of the Research Capability of the Former Soviet Union: Results of a Workshop on March 3, 1992, National Academy Press, Washington, D.C., 1992, p. 7. 4   International Science Foundation, 1994 Annual Report, ISF, Washington, D.C., 1995, p. 1. 5   The many joint ventures and other activities involving the U.S. private sector are generally beyond the scope of this report, although some mention of the role of the private sector is made in the context of the discussion on commercialization. 6   The ISF ceased grant-making activities in 1996. The American Physical Society has discontinued its emergency grants program and no longer provides free membership for FSU physicists, although its training programs increased in 1996. 7   NRC, op cit., p. 2.

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AN ASSESSMENT OF THE INTERNATIONAL SCIENCE AND TECHNOLOGY CENTER: Redirecting Expertise in Weapons of Mass Destruction in the Former Soviet Union three countries proposed the ISTC. Shortly thereafter, the European Community joined (replacing the individual participation of Germany), and Japan also agreed to participate in the program. In the United States, legislative authority was provided by the fiscal year 1992 Department of Defense Authorization Act (P.L. 102-484). From early on the participating countries agreed that the ISTC would be an intergovernmental body, and in 1992 they formalized the center's organization, structure, and procedures in the form of two documents: an agreement and a statute8 The agreement delineates the purposes of the ISTC and its legal status and governance structure, and the statute contains additional details on its structure and organization. The participating parties reached agreement on the following very significant issues: secretariat's staff and high-level participants in the center's activities would have diplomatic privileges and immunities. The ISTC would have wide-ranging tax and customs exemptions. Each party providing funds for projects through the ISTC would have the right to determine which projects it would support, rather than having their financial contributions put into a general pool. On November 27, 1992, representatives from the United States, Russia, the European Community, and Japan met in Moscow to sign the agreement, which was then submitted to the European Parliament for an opinion and to the Russian Supreme Soviet for ratification.9 The debate in the Supreme Soviet was lengthy and involved as many as five committees. It elucidated two broad concerns of members of the Supreme Soviet regarding the proposed center and other Western efforts in science and security: (1) the involvement of foreign governments in the security affairs of Russia and (2) the influence of foreign governments on Russia's scientific priorities. Members of the Supreme Soviet also had a number of specific allegations concerning the agreement: First, opponents argued that diplomatic status for secretariat staff members would give them a license to spy without the fear of punishment. Second, opponents asserted that the provision in the agreement allowing the ISTC to earn a “profit,” for which there would be special currency exchange privileges, would open the door to illegal currency operations. Third, opponents criticized the agreement for not having adequate provisions regarding intellectual property rights. Finally, opponents claimed that the agreement's provisions on monitoring and auditing granted too many rights to foreign participants, giving them access to highly sensitive Russian facilities. Although many of the criticisms were addressed in the ISTC statute, which all parties had approved in draft form in February 1993, opponents were concerned that the statute could be changed without the approval of the Supreme Soviet. Finally, an internal agreement was reached under which the Russian Government promised not to change the statute without consulting the Supreme Soviet. But ratification of the agreement was interrupted by a larger crisis in the Russian Government, when President Yeltsin dissolved the Supreme Soviet in October 1993. Finally, on December 27, 1993, the four parties signed an intergovernmental protocol giving the ISTC temporary stats but nonetheless making it fully operational. The ISTC was officially established on March 2, 1994. Since then, other countries, including Sweden and Finland,10 have joined the ISTC. Representation by the FSU has expanded to include Georgia, Belarus, Armenia, Kazakstan, and Kyrgyzstan. Kazakstan has a branch office as well as a program on decommissioning nuclear reactors, and Belarus has a small branch office.11 THE ISTC'S OBJECTIVES The agreement codified the ISTC's objectives. The primary one is to provide opportunities for FSU scientists and engineers who work on weapons of mass destruction to redirect their talents to other activities and to find employment in the civilian sector in fields of interest. The ISTC is also intended to contribute thereby to: “the solution of national or international technical problems; and to the wider goals of reinforcing the transition to market-based economies responsive to civil needs, of supporting basic and applied research and technology development, inter alia, in the fields of environmental protection, energy production, and nuclear safety, and of promoting the further integration of scientists of the states of the CIS [Commonwealth of Independent States] and Georgia in the international scientific community.”12 U.S. MANAGEMENT OF THE ISTC The U.S. Department of State led the negotiations that culminated in the establishment of the ISTC and maintains 8   See Appendix A and Appendix D. 9   Internal approval procedures in the United States and Japan were completed beforehand. 10   Finland joined the ISTC in 1994; as of October 1995, Finland's participation is as a member of the European Union (EU). 11   The branch offices support development and submission of project proposals to the ISTC in Moscow, which continues to serve as the central coordinating point for all projects. Staff for the branch offices are provided by the countries in which they are located. The committee did not visit either branch office and so does not comment here on their operation. 12   Agreement Establishing an International Science and Technology Center; see Appendix A.

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AN ASSESSMENT OF THE INTERNATIONAL SCIENCE AND TECHNOLOGY CENTER: Redirecting Expertise in Weapons of Mass Destruction in the Former Soviet Union oversight for the U.S. Government of the day-to-day operations of the center. The ISTC's Governing Board, with representation from each of the four original parties, determines the ISTC's policies and procedures, provides general guidance, and approves projects for funding. The board is assisted by a coordination committee, which prepares recommendations for it and reviews policy and program issues on an ongoing basis. The secretariat, which consists of the executive director, three deputy executive directors, each representing one of the four original parties, and other key staff, is responsible for the daily administration of the ISTC. The Scientific Advisory Committee provides assessments of the technical merit of proposals submitted to the ISTC and advises it on scientific issues. The United States exerts influence on ISTC policies and activities through its membership on the Governing Board and the Scientific Advisory Committee and through the secretariat's staff. The United States has held the executive directorship since the center was established, but the position will likely be filled by the European Union beginning in early 1997. FUNDING OF THE ISTC The original contribution by the United States to the ISTC was $25 million. An additional $24 million in fiscal year 1995 and $15 million in fiscal year 1996 brings the U.S. total to $64 million as of 1996. This amount includes $11 million for projects in Kazakstan, $5 million for projects in Belarus, and $1 million for projects in other former Soviet republics that are members of the ISTC (Armenia, Georgia, and Kyrgyzstan). As of mid-1996, the European Union and Japan had contributed $53.5 million and $17 million, respectively. In 1995, Finland contributed $1.3 million and Sweden $4 million. Each of the four founding parties also contributes staff, whose salaries and related expenses are paid for by the contributing country from non-ISTC designated funds. The United States has provided the executive director, the chief financial officer, two project managers, the chief accountant, and an adviser. In the United States, substantial additional in-kind support for ISTC activities is also provided by the national laboratories, which contribute employee time and effort to review proposals. The first $49 million of U.S. funding for the ISTC came out of the Department of Defense's Cooperative Threat Reduction program, which has received a total of $1.5 billion since fiscal year 1991. The ISTC is now funded by the State Department from Freedom Support Act funds, which was funded at $850 million in fiscal year 1995 and $641 million in fiscal year 1996. This transfer of the ISTC from the Defense Department's budget to the State Department's budget did not result in any significant administrative changes since the State Department had administered the ISTC from the start, but it did result in additional congressional committees being involved in the authorization and appropriations process. This may have an effect on the ISTC's future funding, a topic the committee addresses in Chapter 4. ISTC ACTIVITIES TO DATE As of March 1996 the ISTC had funded 236 projects (including feasibility studies and second-stage funding to several projects), involving more than 12,000 FSU scientists in five countries. Approximately two-thirds of the scientific personnel funded by ISTC grants are from the nuclear weapons sector, and the largest number of grants has been awarded to the All-Russian Research Institute of Experimental Physics (Arzamas-16), the All-Russian Scientific Research Institute of Technical Physics (Chelyabinsk-70), the Moscow Engineering Physical Institute, and the Kurchatov Institute. Less than 10 percent of funds support scientists from the biological or chemical weapons sectors. In its 1995 annual report,13 the ISTC noted that, of the science and engineering experts participating in ISTC-funded projects, 63 percent had a background in nuclear weapons, 3 percent in chemical weapons, 4 percent in biological weapons, 16 percent in missile technology, and 14 percent in other areas.14 The appropriateness of this distribution is discussed in Chapter 4. In addition, the ISTC has conducted several workshops and technical seminars that complement grants activities. The seminars are intended to stimulate the development of new proposals and increase collaboration among FSU scientists. All of these activities are directed at the primary goal of diminishing the risk of weapons scientists and engineers emigrating from the FSU to rogue states and terrorist groups eager to acquire their knowledge and experience. Central to understanding and meeting this goal is an understanding of what is actually known about such emigration. The committee addresses this question in the next chapter before proceeding to its assessment of the ISTC's activities. 13   The International Science and Technology Center: Second Annual Report;” January–December 1995, ISTC, Moscow, 1995, p. 6. 14   While the ISTC's intent is to provide grants to weapons scientists and engineers, most projects necessarily include some nonweapons scientists and engineers.