Strengthening U.S.-Russian Cooperation on Nuclear Nonproliferation: Recommendations for Action (2005)

U.S.-Russian cooperation on nuclear nonproliferation is built on a framework of government-to-government agreements and national laws. Although much of this framework serves the joint efforts well, disagreements over legal issues have in some cases significantly impeded cooperation on nonproliferation. The United States and Russia must together overcome these legal impediments. Doing so not only would facilitate the more rapid implementation of current cooperative nonproliferation programs but would also establish an improved framework for future U.S.-Russian work in this arena.

The legal structure under which the U.S.-Russian cooperation on nonproliferation takes place has been developed over the past decade and a half, and it continues to evolve today. The foremost government-to-government agreement is the Agreement between the Russian Federation and the United States of America concerning the Safe and Secure Transportation, Storage, and Destruction of Weapons and the Prevention of Weapons Proliferation, commonly known as the Cooperative Threat Reduction (CTR) Umbrella Agreement. It entered into force in 1992 and was extended in June 1999 with provisional application for an additional seven years. The CTR agreement expires in 2006.

A number of specific implementing agreements have been put into place under the umbrella of the CTR Agreement. Each implementing agreement is specific to the particular program that it governs. However, not all U.S.-Russian cooperation on nuclear nonproliferation takes place under bilateral agreements such as the CTR Agreement. Some important programs are governed by multilateral agreements. For example, the International Science and Technology Center (ISTC) in Moscow, an intergovernmental organization that helps scientists make the transition to non-nuclear-weapons-related work, was established in 1992 by agreement between the European Union, Japan, the Russian Federation, and the United States. Armenia, Belarus, Canada, Georgia, Kazakhstan, the Kyrgyz Republic, Norway, South Korea, and Tajikistan have subsequently joined the ISTC.

Another example of such an arrangement is the HEU Purchase Agreement mentioned in the previous section. The United States and Russia negotiated a government-to-government agreement for the United States to purchase 500 metric tons of HEU from Russia. Pursuant to that agreement a contract was negotiated between the U.S. Enrichment Corporation (USEC) and Technabsexport (TENEX) to establish the commercial terms for the transaction. Although the implementation has at times been fraught with uncertainty, the agreement and contract continue to operate to this day.

The U.S. Civilian Research and Development Foundation (CRDF) provides another example of possible legal arrangements. CRDF is a not-for-profit organization that also concentrates on helping scientists make the transition away from nuclear weapons-related work. It receives funding for its projects from various U.S. and Russian governmental agencies, as well as from some nongovernmental sources, such as the MacArthur Foundation. CRDF is registered as a not-for-profit foundation in the Russian Federation and operates subject to Russian laws on technical and humanitarian assistance. CRDF maintains an enabling agreement with the Russian Ministry of Science and Education and certifies its projects and programs through the Technical Assistance Commission. CRDF is also included on the Russian government’s official list of foreign organizations whose grant payments are exempt from taxation.

The legal framework for U.S.-Russian cooperation on nonproliferation includes not only the agreements mentioned above but also key national laws and regulations. For example, Russian laws and regulations that govern access to sensitive facilities may affect some cooperative programs. U.S. contracting regulations may also affect some programs.

Successful reconciliation of the two countries’ national legal and regulatory requirements is sometimes necessary before work can proceed on particular projects or types of

projects. U.S. law, for example, can require U.S. government access to Russian facilities to confirm that equipment and materials paid for by the United States are being used for the purposes intended. Russian laws and regulations may restrict such access. Therefore, to move forward in the cooperation, a detailed understanding and some adaptation of laws and regulations on each side may be necessary. In some cases, it may be necessary to add or amend laws or regulations to enable the cooperation to go forward in ways that are consistent with the laws of both countries.

Law, including legally binding agreements and domestic legal reforms, has proven to be a powerful tool for the overall advancement of U.S.-Russian cooperation on nuclear nonproliferation. Examples include the Cooperative Threat Reduction Agreement and the HEU Purchase Agreement. At the same time, disputes over certain legal issues have been major stumbling blocks to cooperation in particular areas. This section suggests ways of making progress on several legal issues of particular importance to cooperation between the United States and Russia in the nuclear nonproliferation arena. During the course of consultations with Russian and American government and nongovernment experts, the joint committee was able to identify mutually beneficial paths forward on several key issues. Interested readers may find useful background information in Appendix G, which contains a particularly extensive set of Russian recommendations on legal issues.

The governments of the United States and Russia disagree about the level of liability protection that should be afforded agents and contractors of the U.S. government who are working on projects involving nuclear technology in Russia. The U.S.-Russian impasse over liability protection has had a significant negative effect on cooperation on nonproliferation. Solving this problem should be a very high priority. The joint committee recommends that the governments of the United States and Russia, as a long-term and comprehensive solution to the liability issue, adopt and ratify the Convention on Supplementary Compensation for Nuclear Damage (CSC).¹ The ratification of CSC by the United States and Russia would result in all third-party claims for nuclear damage resulting from a nuclear incident being channeled exclusively to the operator responsible for the nuclear incident and being resolved exclusively through the legal system of the country where the nuclear incident occurred. CSC ratification by Russia and the United States would also have the benefit of prompting ratification by other states, thereby facilitating future joint efforts to solve nonproliferation problems in other countries and regions of the world.

Until this solution is achieved, government-to-government agreements on liability will be necessary to provide a framework within which cooperation on nuclear nonproliferation can proceed. Because of this necessity, the joint committee recommends that the Russian Duma ratify both the CTR umbrella and the ISTC umbrella agreements.² This would be an initial, practical step toward a long-term and comprehensive resolution of the liability issue. The continuing limbo serves neither country’s interest in continuing vital cooperation on nonproliferation.

Russia’s accession, in March 2005, to the 1963 Vienna Convention on Civil Liability for Nuclear Damage³ was just such an important initial step forward. The joint committee recommends that the Russian government, in implementing the 1963 Vienna Convention, adopt a comprehensive domestic nuclear liability law that is consistent with CSC and that covers both civilian and defense nuclear sites (which the Price-Anderson Act in the United States does).

Taxation issues continue to hinder cooperation on nonproliferation. These problems stem from the fact that the U.S. government is unwilling to have its contributions to bilateral nonproliferation efforts taxed by the Russian government. Exemptions must therefore be provided for contractors and grantees who receive U.S. funding for work performed in Russia. However, there are often problems with the provision and implementation of these exemptions. The joint committee recommends that the governments of the United States and Russia conclude negotiation and adoption of the umbrella bilateral agreement entitled the Protocol Between the Government of Russia and the U.S. Government on the Implementation of Taxes, Dues, and Duty Exemptions in Connection with Gratuitous Assistance Rendered to the Russian Federation by the U.S. Government, which the two governments have in recent years negotiated almost to conclusion.

In addition, the joint committee recommends that the Russian government modify its tax system along the following lines to facilitate cooperation on nonproliferation:

1. The amount of time that it takes to complete the bureaucratic procedure of assigning projects and programs the status of gratuitous technical aid should be reduced. Improvements in this area could be made either by changes to the Russian tax code or by government decree. For example,

Russian law should be changed to clarify that any taxes paid while applications are pending will be refunded after the exemption is confirmed.

Confirmation of the tax-exempt status of a project or program is often delayed because of confusion about the documentation that must be submitted to the Commission on International Humanitarian and Technical Assistance (CIHTA). Although a list of forms and documents to be submitted to CIHTA has been published, confusion still exists about various unwritten requirements. A complete list of all the formatting and other requirements regarding documentation should be published.

2. The mechanism for exemption from the value-added tax (VAT) should be improved:

   • The VAT exemption law needs to be amended so that it includes organizations implementing nonproliferation programs as well as donors and beneficiaries. Most of the nonproliferation work in Russia that is funded by the U.S. government is done through implementing organizations, either contractors or grantees; a statutory reference to implementing organizations would help clarify their eligibility for exemption from paying taxes on their U.S. government-funded work.

   • The current insistence by CIHTA that certificates providing an exemption from the payment of VAT be issued on a transaction-by-transaction basis causes great difficulties. The mechanism for VAT exemptions should be changed to facilitate exemptions from the payment of VAT for small transactions and recurrent transactions (such as the monthly phone and electricity bills).

   • Russian vendors currently have insufficient incentive to honor VAT exemption certificates, especially in light of the burdensome nature of the reporting procedure for vendors who accept such certificates. The VAT exemption law should be changed to provide vendors with sufficient incentives to honor VAT exemption certificates, including by simplifying the VAT exemption reporting procedures.

   • The VAT exemption law needs to be changed so that there is an effective system for VAT reimbursement in cases in which transactions that are exempt from the payment of VAT are in fact taxed, including the inclusion of a statutory time frame within which such reimbursements must take place.

3. The Russian tax code should be amended to exempt gratuitous assistance from the excise tax.

4. Both sides should work together to address and resolve issues of exemption for regional and local taxes.

The United States seeks access to Russian locations at which U.S.-funded work is taking place to ensure that U.S. assistance is spent on the intended purposes. This includes needs assessment before work begins, assessment after completion of the work, and periodic assessments thereafter to ensure that the U.S.-funded material and equipment continue to be used properly and effectively. For the Russian government, however, access requests can raise national security concerns.

A lack of reciprocal access has been a particular concern for the Russian Federation. The United States has long emphasized that it is seeking access only to ensure that its assistance funds are being used for their intended purposes and that reciprocal visits to U.S. facilities are therefore not relevant. If the United States and Russia are engaged as partners to address proliferation problems around the world, however, then they will need to work closely together to develop improved counterproliferation technologies and procedures and exchange best practices. Visits by Russian experts to U.S. sites would facilitate this collaboration, enabling those experts to see how various techniques have been implemented at individual U.S. facilities and providing opportunities for joint research. In support of such visits, President Bush stated the following in a press conference on December 20, 2004: “I think one of the things we need to do is to give the Russians equal access to our sites, our nuclear storage sites to see what works and what doesn’t work, to build confidence between our two governments.”⁴The joint committee recommends that the governments of the United States and Russia collaborate actively to identify the practical steps that would be required to implement President Bush’s recent call for more reciprocal access.

U.S. requests for access to Russian facilities can be most easily accommodated by Russian nuclear and military agencies if the request is for access that is as nonintrusive as possible; the purpose for the visit is as narrowly tailored as possible, consistent with the goals of the visit; and the visits include only personnel who have been cleared in advance to participate. Preagreed master lists of visitors (such as those used for U.S. and Russian monitors under the Plutonium Production Reactor Agreement and HEU Purchase Agreement) that are updated annually, kept to a reasonable length, and used to supplement, not replace, existing procedures for individuals not on the lists have helped smooth access for certain agreements, especially when there is a degree of reciprocity in such visits. The joint committee recommends that the U.S. government require U.S. agencies and contractors to define their requests for access so that they are as clear as possible and so that the purpose of the visit is defined as narrowly as possible, link their access requests to the achievement of specific goals, and make use of mechanisms such as the use of preagreed master lists of visitors whenever possible. They should also coordinate their visits to the maximum extent possible, to minimize the administrative burden for Russian facili-

ties. Further clarification on the levels or types of access needed (represented in Russian by the distinction between dostup and dopusk)⁵ may mitigate concerns in both countries.

At the same time, the Russian government’s ability to grant necessary access in a timely manner needs to be facilitated by a streamlining of Russian regulations and procedures, which, for example, currently require up to 45 days for the processing of paperwork.

One potentially powerful new tool for mitigating access disputes is the joint development and deployment of remote monitoring and verification technologies and systems that could satisfy both U.S. and Russian needs. The Office of National Infrastructure and Sustainability in the U.S. Department of Energy, for example, works cooperatively with Russian agencies to install MPC&A Operations Monitoring systems in sensitive facilities. This involves the installation of video cameras and other sensors at key points in a nuclear facility so that site managers and government officials can monitor MPC&A activities. This project has installed monitoring systems at five sites in Russia, and three more are being designed and installed. Such technologies may be adaptable to meet some of the U.S. government’s need for data on how U.S. tax dollars are spent in Russia.⁶The joint committee recommends that the governments of the United States and Russia increase their joint work on remote monitoring and verification technologies and systems for this purpose.

Access disputes might also be mitigated by negotiation of a bilateral framework agreement on access issues. The United States and Russia should consider whether negotiation of such an agreement would be productive.

Delays and other difficulties with respect to visa issuance by both the United States and Russia—a problem of long standing—remains a significant hurdle to U.S.-Russian cooperation on nuclear nonproliferation. The joint committee recommends that the governments of the United States and Russia provide multiple-entry visas to program participants who regularly need to visit on program business.

The U.S. government’s ability to provide nonproliferation assistance to Russia has at times been severely complicated by legislative requirements stipulating that the president must certify that Russia has met standards that, in some cases, have little connection to the assistance in question.⁷ If the president is unable to give such certification, funding for vital nonproliferation programs may be threatened or cut off for reasons that are unrelated to the merits of the programs.⁸ Even when such cuts are avoided, the uncertainty caused by this process can be very disruptive to cooperative nonproliferation programs.⁹ Nonproliferation assistance serves the interests of the United States as well as the interests of Russia, and the U.S. president should have maximal flexibility to continue progress in addressing the existential threat of nuclear terrorism. The joint committee recommends that the U.S. Congress either repeal such certification requirements or provide the president with permanent waiver authority.

Just as some certification requirements can weaken the financial stability of CTR and other nonproliferation pro-

grams, existing legal requirements and limitations restrict the speed and flexibility with which CTR funds can be distributed in response to urgent, unanticipated challenges. “Notwithstanding” language can be helpful in addressing these impediments. Funds appropriated by the U.S. Congress to the Nonproliferation and Disarmament Fund (NDF), for example, can be expended notwithstanding any other provision of law. The flexibility that this language affords has made it possible for funds from NDF to be used quickly and effectively. In light of the unpredictability of developments in the nuclear nonproliferation arena, the joint committee recommends that the U.S. Congress consider the use of such “notwithstanding” language with respect to additional nonproliferation accounts, including Cooperative Threat Reduction programs.

Radiological terrorism—the use of “dirty bombs”—has the potential to cause casualties and effect severe dislocation and massive economic damage through the use of relatively simple devices.¹⁰ One of the most significant recent developments in combating radiological terrorism is the approval by the IAEA Board of Governors in 2003 of an updated Code of Conduct on the Safety and Security of Radioactive Resources (the Code). The Code is not legally binding. However, the IAEA General Conference has urged each state to write to the director general of IAEA that it fully supports and endorses the agency’s efforts to enhance the safety and security of radioactive sources, is working toward following the guidance contained in the Code, and encourages other countries to do the same. Both Russia and the United States have made such written commitments.

The joint committee recommends that the governments of the United States and Russia exchange information, including “best practices,” regarding domestic legal regimes relating to radiological terrorism and implementation of the Code. Improving applicable laws and regulations in the area of inventory control and physical protection of radioactive substances can help reduce the threat of radiological terrorism. Legal reforms should seek to increase the difficulty of illegal acquisition of radioactive substances by elevating the level of physical protection of radiological substances and enhancing the licensing and record-keeping procedures for the dangerous radioactive substances whose use is permitted.

The United States recently became a party to the Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management.¹¹ Russia signed the agreement but has not yet ratified it. The joint committee recommends that the Russian government become a party to this agreement and pass appropriate implementing and other related legislation.

The Russian Federal Atomic Energy Agency (Rosatom) and the U.S. Department of Energy signed an interagency agreement on cooperation against radiological terrorism threats in 2004. Nevertheless, cooperation between the United States and Russia against radiological terrorism threats could potentially also be enhanced by an appropriate government-to-government agreement reflecting new developments in this arena, especially if significant science and technology interactions are to develop, as discussed below in the section on scientific and technical cooperation. The joint committee recommends that the governments of the United States and Russia enter into negotiation of an agreement that will facilitate science and technology cooperation between the two countries against the threats of radiological terrorism.

Cooperation between the United States and Russia on the management of spent nuclear fuel could also make a significant contribution to nonproliferation efforts. Russian authorities are interested in selling spent fuel management services internationally, whereby other countries pay a fee for Russia to store their spent fuel. To support this effort, the Russian Duma passed legislation explicitly authorizing Russia to take back spent fuel containing plutonium from reactors in third countries. This program supports nonproliferation goals by making it impossible for those countries to reprocess their spent fuel to extract plutonium and important uranium isotopes. This is the approach reflected in the agreement, signed in February 2005 by the Russian and Iranian governments, for Russia to provide Iran with fresh fuel and then take back the spent fuel.¹²

The United States is in a strong position to stimulate such agreements, because the United States supplied much of the spent nuclear fuel in the world as fresh fuel. The U.S. Atomic Energy Act of 1954¹³ stipulates, however, that this nuclear

fuel cannot be retransferred unless an agreement for peaceful nuclear cooperation, known as a “123 Agreement” (because it is described in Section 123 of the Atomic Energy Act), is in place. Attempts to establish such an arrangement between the United States and Russia so that Russia could “take back” spent fuel of U.S. origin have been stymied to date because of U.S. concerns about Russian cooperation with Iran. Entering into negotiations for such a scheme, on the basis of the understanding that it could be completed only in the context of a satisfactory solution to the Iranian nuclear proliferation threat, could reinforce diplomatic efforts to confront that threat effectively. The joint committee recommends that the governments of the United States and Russia enter into negotiation of a joint spent fuel repatriation agreement in support of multilateral diplomatic efforts to resolve the Iranian proliferation threat.

By working together, the United States and Russia, as the world’s preeminent nuclear powers, can make an enormous contribution to strengthening the global legal regime for preventing nuclear proliferation. The NPT, which entered into force in 1970, has made and will continue to make a tremendous contribution to nonproliferation efforts. Recent experience, however, has demonstrated that implementation of the regime suffers from certain weaknesses. The NPT, and the nuclear nonproliferation regime that is founded upon it, is facing new tests and challenges, the most prominent of which are states that proliferate nuclear weapons or the technology to build those weapons and the potential threat of nuclear terrorism. These threats, and the recent revelations regarding the existence of an international network that for several years has been engaged in the illicit trade of nuclear materials and technologies, have revealed the fragility of the nuclear nonproliferation regime and the critical relationship between nuclear weapons proliferation and nuclear terrorism.

Today, the world faces a “crisis of compliance” because of North Korea’s announced withdrawal from the NPT, revelations that Libya was engaged in programs for the development of weapons of mass destruction, the undeclared nuclear experiments in South Korea, and the possibility of a clandestine nuclear weapons program in Iran. These challenges to the NPT regime reflect weaknesses in implementation of the treaty. These weaknesses include the possible mischaracterization of Article IV of the treaty as a justification for the use of nuclear power development to disguise undeclared nuclear weapons development activities and the lack of clarity on the consequences of withdrawal from the NPT.

The joint committee recommends that the governments of the United States and Russia work together to strengthen the nuclear nonproliferation regime and the NPT that is at its foundation, giving joint consideration to how such weaknesses in the implementation of the NPT regime could most effectively be addressed. This could be an issue for discussion by the Joint High-Level Commission. As a first step, it is critical that the meaning of the treaty be clarified to ensure that Article IV cannot be successfully invoked to justify a program aimed at the development of a nuclear weapon capability under the cover of a putative peaceful nuclear energy program.

The NPT legal regime can be supplemented without amendment of the treaty itself. Current and future opportunities for strengthening the NPT regime include continuing support for the G-8 Global Partnership Against the Spread of Weapons and Materials of Mass Destruction; facilitating compliance with the United Nations Security Council’s Resolution 1540; bolstering the Guiding Principles of the Nuclear Suppliers Group so that it is more difficult to transfer sensitive technologies to countries that do not currently possess them; and revising nuclear materials protection, control, and accounting regulations and practices as appropriate.

The United States and Russia should explore how advances in the legal regime may be able to reflect or incorporate recent technological advances and approaches. These include developments in remote monitoring techniques, methods for detecting undeclared nuclear activities, the development of low-enriched uranium fuel for use in reactors that now use highly enriched uranium fuel, and the return of used or spent highly enriched uranium fuel.

Both the United States and Russia are parties to the Convention on the Physical Protection of Nuclear Material (CPPNM), which requires certain physical protection measures during international transport of civilian nuclear material. The joint committee urges the United States and Russia to continue to support amendment of the CPPNM to expand its scope to include the physical protection of nuclear material during domestic use, storage, and transport.¹⁴

The joint committee also applauds the April 2005 passage of the International Convention on the Suppression of Acts of Nuclear Terrorism.¹⁵

The joint committee recommends fuller and more direct dialogue and information sharing between U.S. and Russian legal experts, perhaps under the aegis of the Joint High-Level Commission, including scholars and

other nongovernment experts, as appropriate. Resolution of U.S.-Russian disputes over legal issues such as liability could be greatly facilitated by a fuller and more direct dialogue between U.S. and Russian legal experts. Impasses are prolonged by the current state of affairs, in which lawyers for both sides operate with insufficient understanding of each other’s legal requirements, and complicated legal issues are too often negotiated in the absence of lawyers by policy makers who have only a limited grasp of the legal issues.

Such dialogue would also be useful in the area of security culture. U.S. and Russian lawyers and other experts could share “best practices” on the legal and regulatory frameworks, incentives, disincentives, and enforcement efforts necessary to foster disciplined, well-trained, and responsible custodians and protective forces and fully utilized and well-maintained security systems.

Lawyer-to-lawyer dialogue could facilitate both a more complete, nuanced, and contextual understanding of each side’s legal requirements and the development of creative solutions. Once progress in addressing the existing legal problems has been made, attention could profitably be given to, for example, those legal mechanisms—perhaps borrowed from best practices in other arenas—that could actively improve rather than merely unstop cooperation. Lawyer-to-lawyer dialogue should involve face-to-face meetings, but once the dialogue is established, it can be usefully supplemented with communication through the use of technologies such as videoconferencing and Web links.