APPENDIX 3
Memorandum from the Foreign and Commonwealth
Office
CO -OPERATIVE
THREAT REDUCTION
AND NON-PROLIFERATION
ASSISTANCE PROGRAMMES
Introduction
1. The Foreign Affairs Committee has requested
a memorandum giving full information on all current and planned
UK and EU threat reduction and non-proliferation assistance programmes,
together with further information on the US programmes, in each
case setting out available details of the disbursement of funds
under the various programmes. The memorandum details the assistance
being provided on chemical demilitarisation, biological non-proliferation
projects and the disposition of nuclear materials in Russia and
the States of the Former Soviet Union.
CHEMICAL AND
BIOLOGICAL PROGRAMMES
UK Assistance
2. One of the key features of the Chemical
Weapons Convention is that member states must destroy any chemical
weapon stocks according to a set timetable—1 per cent by
2000, 100 per cent by 2007. Russia has declared the world's largest
CW stocks—some 40,000 tonnes, largely comprising modern
nerve agent, contained in over 4 million artillery and aircraft
munitions. Russia—unlike the other states which have declared
stocks of CW—has not yet started full scale destruction,
and has now sought an extension of the final destruction deadline
to 2012. The delays in Russian destruction of its CW are a serious
problem for the Convention.
3. Following a Russian request for assistance
and the completion of Spending Review 2000, the Government announced
in July 2000 that it would contribute up to £12 million over
three years (2001-04) towards high priority chemical demilitarisation
and non-proliferation projects in Russia. This funding is included
in the Defence Assistance Fund, and the project is managed by
the Proliferation and Arms Control Secretariat of the Ministry
of Defence, with oversight from a committee which is chaired by
MOD and includes representatives of FCO and DTI. A full time project
manager was appointed in August 2000.
4. In considering options for UK assistance,
we have decided to focus our efforts on industrial infrastructure
projects that will contribute to bringing the planned chemical
weapons destruction facility at Shchuch'ye into operation at an
early date. We decided to provide assistance at Shchuch'ye because
of the non-proliferation benefits from the destruction of the
nerve agent munitions stored there, and because we hoped to encourage
the US Congress to approve further US funding for the facility.
Shchuch'ye in Western Siberia, will be the main facility for the
destruction of Russian nerve agent munitions, where the Russian
Munitions Agency plans to destroy over 4 million artillery munitions
from the Shchuch'ye and Kizner storage depots, and possibly also
munitions from other sites. The US, Canada, Italy. Germany, the
EU and Norway are also providing assistance at Shchuch'ye.
5. On 20 December 2001 in London, on behalf
of the British Government, the Defence Secretary signed a bilateral
agreement with Russia, which provides the essential legal basis
for UK assistance. Dr Zinoviy Park, Director General of the Russian
Munitions Agency, signed the agreement on behalf of the Russian
Federation. On 25 March, and Implementation Arrangement was signed
by the Ministry of Defence and the Russian Agency, which provides
for implementation of the UK's first project at Shchuch'ye.
6. The UK has decided, as an initial project,
to fund construction of the water supply for the destruction facility,
subject to the agreement of a reasonable price for the work and
appropriate technical and financial oversight measures. This project
is a Russian priority, and is essential for the operation of the
destruction facility. Elements of the project will also assist
in providing water for the local community. Through an arrangement
with the US Department of Defence the UK intends, subject to the
satisfactory completion of contractual negotiations, to use Parsons,
the US prime contractor, to carry out this initial project, in
order to allow an early start to work on site. We hope to place
a contract with Parsons shortly. Subsequent UK projects have not
yet been selected and will be subject to separate tender action.
7. Two donors have so far chosen to provide
funding to support Shchuch'ye through the UK programme:
— On 25 June 2001, the EU decided to
provide
2 million to support building infrastructure for
Shchuch'ye. Subject to confirmation, this project will be implemented
under a Financial Agreement between the European Commission and
the UK, through the UK assistance programme. Negotiations on
the Agreement are at an advanced stage. In addition, the UK is
discussing with the European Commission the possibility of carrying
out the EU-funded project to provide consultancy support to the
Russian Munitions Agency in order to improve presentation of the
Russian CW destruction programme and co-ordination of international
assistance.
— Following an approach by Norway,
in December 2001 the MOD signed a Memorandum of Understanding
under which Norway agreed to provide assistance to Russia at Shchuch'ye
worth some £700,000 to be implemented through the UK assistance
programme. This funding will be used to procure a transformer
for an electricity substation to support the Shchuch'ye facility.
In March, a further Memorandum of Understanding was signed under
which Norway agreed to provide a further some of £700,000
for provision of an second electricity transformer at Shchuch'ye,
again to be implemented through the UK programme.
The EU and Norway have followed this approach
because they wanted to provide assistance with CW destruction,
but—because of the time and resources needed—did not
want to set up their own bilateral arrangements with Russia. We
are willing to consider such arrangements with other donors too,
provided it is cost-effective.
8. The MOD proposes to invite tenders for
the further UK assistance projects at Shchuch'ye as part of a
common tender process which will also cover projects funded by
Norway and the EU. We started the tendering process in May by
placing a contract forecast in the European Journal. It is anticipated
that this process will take approximately 6-9 months.
9. Although managed by the MOD, the UK's
assistance programme relies heavily on specialist support from
a variety of sources, in both MOD and FCO. It has also benefited
from regular consultation with the DTI on lessons learned from
their nuclear programmes.
10. As a result of the need first to complete
negotiations on our agreements with Russia and our first contract,
it has not yet been possible to start implementation of assistance
projects. Expenditure of some £250,000 has been incurred
to date on setting up the assistance programme.
11. As a result of the priority given to
CW destruction projects, no decisions have yet been undertaken
to implement any biological non-proliferation projects. The possibility
of doing so will be considered in the light of priorities and
available resources.
Existing EU Assistance Programmes
12. Under a Council decision of December
1999 the EU committed 5.8 million Euro, through the Joint Action
on Non Proliferation Programme, for support to the construction
of the chemical weapon destruction facility at Gorny in the Saratov
region of Russia. The project is being implemented through an
established German assistance programme at Gorny. The EU funds
are being used to pay for the management effort of a German firm
assisting the Russians to assemble equipment supplied under the
German programme, and to supply filter boxes and equipment to
drain chemical agent from transport containers into tanks at the
destruction facility. All three elements of the project are underway
and will be completed in 2002.
13. The EU is also providing assistance
with Russian chemical demilitarisation through two projects under
the TACIS ( Technical Assistance to the Commonwealth of Independent
States) programme. The first project involves the development
of an environmental monitoring system for the area around the
planned chemical weapon destruction facility at Gorny. This included
the establishment of an analytical laboratory and monitoring facilities.
The value of this project is
3 million and, following an extension, is due to
be completed in August 2002. The objective of the second project
is to address the safety and environment issues in preparation
for the decontamination and destruction of a former chemical weapon
production facility at Dzerzhinsk, in the Nizhny Novgorod region
of Russia. This has included establishing a health monitoring
strategy for workers involved in the destruction process, and
the establishment of a CW analytical lab and a pilot decontamination
facility to test environmentally friendly detoxification technologies.
The budget for the project is
4 million and the project is due to run until August
2002. Both projects are managed by a consortium of EU companies
that includes the UK's Defence Science and Technology Laboratory
(Dstl).
Planned EU Assistance Programmes
14. Following a Council decision in July
2001 the EU Joint Action Programme is currently setting up two
further chemical weapons related projects in Russia. Under the
first project the EU will provide
2 million for infrastructure projects to support
construction of the planned chemical weapons destruction facility
at Shchuch'ye in Western Siberia. The EU is seeking to implement
this project through the UK programme (see above).
In addition the EU has allocated
700,000 to provide consultancy support and training
to the Russian Munitions Agency in project management and in presenting
the Russian chemical weapons destruction programme both to existing
and potential international donors, and to the local public. The
EU is in discussion with the MOD concerning the possible implementation
of the project though the UK.
Nuclear
15. Enclosed with this Memorandum is a copy
of the latest "FSU Programme Quarterly Progress Report"[1]
published by the Nuclear Industries Directorate (NID) at the Department
of Trade and Industry (DTI). This report summarises progress in
the Programme directed by NID to help tackle nuclear safety, security
and non-proliferation issues in the states of the Former Soviet
Union (FSU).
United States
16. The United States is committed to co-operation
with the Russian Federation through programmes such as the Co-operative
Threat Reduction Programme (CTR) and those authorised by the Title
V of the Freedom Support Act (which includes the International
Science and Technology Center, Civilian Research and Development
Foundation, Export Control and Related Border Security). Such
programmes add to the security of both countries by securing weapons
of mass destruction (WMD) and associated technologies, equipment,
and expertise, and by eliminating excess WMD, fissile materials,
and delivery systems. President Bush has made clear the administration's
commitment to those efforts, including in his FY2003 budget a
request for non-proliferation and threat reduction assistance
to the amount ever requested for such programmes.
17. However, under the legislation authorising
CTR assistance, the Administration must certify each year the
commitment of each recipient country to six courses of action,
including complying with all modernisation programmes that exceeds
legitimate defence requirements. In considering whether to certify
Russia to receive CTR assistance this year, the US identified
concerns about Russia's commitment to comply with the Biological
and Chemical Weapons Conventions. The enclosed chart gives a breakdown
of current US programmes.
18. The following is a brief description
of some of the US programmes currently underway in Russia and
countries of the former Soviet Union:
Nuclear Weapons Storage Security
A total of 123 security fencing and sensor systems
have been provided for installation at warhead storage locations
sites in Russia. In addition, equipment and training has been
provided to Russian guards at these sites, and an integrated computer
network is under development to improve Russian warhead control
and accounting.
Nuclear Weapons Transportation Security
This effort supports secure transport of Russian
warheads from deployment to storage, and from storage to dismantlement
locations. The US has also provided funding for 79 specialised
railway wagons used for warhead transport.
International Nuclear Materials Protection and
Cooperation—Navy Complex
This programme is helping to improve the security
of weapons usable material by installing improved nuclear material
protection, control, and accounting systems at Russian naval nuclear
warhead sites, naval HEU (High Enriched Uranium) fuel storage
facilities, and shipyards where nuclear materials are present.
Nuclear Cities Initiative (NCI)
This programme facilitates reduction of the
Russian nuclear weapons complexes by removing functions and equipment
from weapons facilities within the closed nuclear cities and helping
to create alternative non-weapons work for scientists who will
be displaced by the reduction in scientific personnel.
Biological Weapons (BW) Proliferation Prevention
Destruction of the former Soviet biological
weapons production facility at Stepnogorsk in Kazakhstan has begun;
equipment has already been removed and demilitarised. Efforts
have started with Uzbekistan to eliminate the testing complex
on Vozrozhdeniye Island and destroy anthrax stocks located there.
Bio Redirection Programme
This programme, involving 30 institutes in former
Soviet states, provides incentives to ensure that biological weapons
scientists do not market their skills to countries of concern
or terrorists, while also promoting access and transparency at
former Soviet biological weapons research and production sites.
Export Control and Related Border Security Assistance
(EXBS)
The EXBS programme broadly seeks to stem the
proliferation of weapons of mass destruction by ensuring that
potential suppliers have proper controls over the exports of arms,
dual-use goods, and related technologies. It also helps states
that may serve as transit and trans-shipment points to develop
the tools to interdict illicit shipments. Within Russia and the
former Soviet states, the programme has worked to improve national
legal and regulatory infrastructures related to export controls;
provided equipment and training in WMD identification and interdiction
techniques for customs officers, border guards, and other personnel;
and encouraged regional cooperation in the interdiction of smuggled
materials among former Soviet states.
NON-PROLIFERATION AND THREAT REDUCTION—ASSISTANCE
TO FORMER SOVIET STATES
| ($US million) Programme Title
| Recipient | FY92-02
US Funding
| FY03
US Request | Unfunded
Costs[2]
|
| Strategic Arms Elimination | Russia current (other former
Soviet states in past)
| 1,688 | 77 | 0
|
General Purpose Nuclear Submarine
Dismantlement
| Russia | 0 | 0
| 1,000 |
Nuclear Warhead Transport and
Storage Security
| Russia current (other former
Soviet states in past)
| 484 | 60 | 0
|
Nuclear Warhead Dismantlement
Infrastructure Downsizing
| Russia | 68 | 16
| 2,900 |
Weapons of Mass Destruction Infrastructure
Elimination
| Ukraine,
Kazakhstan | 52
| 13 | 0 |
| Elimination of Weapons-Grade Plutonium Production
| Russia | 104 | 49
| 0 |
Fissile Material Storage Security and
Consolidation
| Former
Soviet States | 1,603
| 195 | 1,300 |
Plutonium Disposition | Russia
| 138 | 34 | 1,200
|
Plutonium Production Reactor
Decommissioning, Spent Fuel Storage
| Russia,
Kazakhstan | 6
| 34 | 3,000-4,000 |
| HEU Research Reactor Fuel Return | Former Soviet States
| 12 | 9.5 | 20
|
| Civil Nuclear Reactor Safety, Shutdown |
Russia,
Ukraine | 611 |
35 | 9,000 |
| Secure Radiological Sources | Former Soviet States
| 0 | 0 | 100
|
| Chemical Weapons Destruction | Russia
| 295 | 127 | 4,000
|
Elimination or Conversion of CW
Production Capability
| Russia,
Kazakhstan | 39.5
| 10 | 430 |
| CW Storage Security | Russia
| 20 | 0 | 0
|
| Biological Site Security and Consolidation |
Former Soviet States | 21 | 35
| 200 |
Elimination or Conversion of BW
Production/Testing Capability
| Former Soviet States | 41 |
11.5 | 320 |
Export Control and Border Security
Upgrades
| Former Soviet States | 258
| 104 | 100 |
Non-proliferation of WMD Expertise
(including Science and Technology Centers)
| Former Soviet States | 414
| 61 | 1,000 |
| | |
| |
Non-Proliferation Department
Foreign and Commonwealth Office
28 June 2002
FSU Programme
QUARTERLY PROGRESS REPORT
Fourth quarter January-March 2002
(a) This report summarises progress in the Programme
directed by Nuclear Industries Directorate to help tackle nuclear
safety, security and non-proliferation issues in the states of
the Former Soviet Union (FSU).
(b) The programme was established by the Government in
July 2000 at the conclusion of the last three year spending review,
when it announced a new £84 million programme of UK assistance
to contribute to international efforts to tackle the nuclear safety,
security and non proliferation problems of states in the FSU.
The programme, which covers the financial years 2001-04, is managed
by the DTI, with advice given by an inter-departmental committee.
It covers a wide range of multilateral and bilateral initiatives.
(c) One page summaries of progress in each sub programme
area are contained in Annex A of the report.
(d) A further progress report will be presented at the
July meeting of the Advisory Committee. This will cover:
— a further assessment on the forecasts presented
in this quarterly report and those for 2002-03; and
— details of progress in appointing new project
managers for the programme under Call Off Contract Arrangements;
Note:
(1) The "allocations" for each programme area
in Annex A are those set out in the Cross Cutting Review paper
unless otherwise indicated. These were reviewed and agreed at
the March 2002 Committee meeting.
(2) Risk—in Annex A, a brief statement of the key
risks associated with each sub programme area is highlighted.
However, it should be borne in mind that some elements of the
programme carry very low risk in terms of achieving poor value
for money and exposure to financial mismanagement etc (eg the
comparatively small-scale technology transfer and training activities
under the Nuclear Safety Programme). This is in contrast to the
planned NW Russia projects that are likely to commit multi-million
pounds of the FSU Programme budget in future years. The risk here
will be reduced by rigorous project management and tight monitoring
of projects together with utilising technical experts who fully
understand the complexity of the nuclear engineering involved.
The appointment of the project managers via Call Off Contracts
Arrangements in the early part of 2002-03 should make a material
difference in handling future risk issues.
FSU PROGRAMME—FOURTH
QUARTER REPORT
First quarter—summary of achievements
1. Financial and risk management arrangements for the
programme were put in place during the first quarter. These cover
every stage of running the programme from project selection and
expenditure commitment. The financial and risk management structures
were developed in consultation with DTI Internal Audit and the
National Audit Office.
2. ROAME Statements were drafted for both the overarching
programme, and most of the main sub-programmes and circulated
to members of the Interdepartmental Advisory Committee (the two
remaining mini ROAMEs covering Kazakhstan and the KEDO project
will be circulated for comment in February). Formal approval of
these was given at the fourth meeting of the Committee on 12 November.
The ROAME Statements are intended to be the main vehicle to demonstrate
that adequate monitoring and evaluation procedures are in place,
and to ensure that individual projects fulfil the overall objectives
of the programme.
3. The first quarter also saw the development of a number
of new project proposal notably focused on NW Russia. These are
expected to start in the first quarter of 2002-03 once the Supplementary
Agreement is signed with Russia covering liabilities, tax and
access arrangements etc (the signing of this agreement is now
expected around late Spring if the remaining legal issues on third
party liability can be resolved—see below).
Second quarter achievements
4. As in the first quarter, the main factors holding
up project initiation ranged from a mixture of Russian bureaucratic
delay (eg concluding our bilateral Supplementary Agreement with
Russia), to in some cases policy disagreements (eg German objections
to MOX fuel, and the reluctance of some G7 countries to commit
funding prevents agreement on plutonium disposition). In addition,
as with all new programmes, they take time to get set up and established.
This is especially the case where there is a need to ensure there
are robust financial and project management frameworks in place.
A vital element, initiated in the second quarter was to develop
an effective contract strategy for the programme to:
— Ensure we recruit experienced project managers
for portfolio of projects we expect to initiate over the next
few years;
— Ensure projects that have been through a lengthy
negotiation period with FSU countries can be started with the
minimum of delay.
5. The contract strategy was completed in October, and
the competitive tender process to recruit project managers also
started in October (see below).
6. However despite these delays, a number of projects
proposals were taken forward particularly focused on NW Russia.
One of the physical protection of proliferation sensitive materials
projects was able to be successfully completed in Russia without
the Supplementary Agreement (the nuclear propelled cargo ship
in NW Russia).
Third quarter achievements
7. As indicated above, a substantial level of effort
was undertaken in the third quarter to develop the contract strategy
for the programme and start the recruitment process for external
project management contractors. A contract notice was placed in
the EC Official Journal in late October and 15 Expressions of
Interest were received. All the tender documents were drafted
for this major procurement exercise and a short list of companies
were invited to submit bids. The tender documents were sent out
in the fourth quarter (See below). In completing the tender documents,
NID3 consulted DTI's Procurement Adviser, Internal Audit, Legal
and the Independent Panel Member (Mark Armitage, a contract expert
from the Coal Authority) plus Ken Penman (MoD) and Phillippe Borys
(consultant but formerly EBRD). Messrs Armitage, Penman and Borys
plus Alan Heyes would form the evaluation panel with Ian Downing
chairing.
8. As reported in early quarterly reports, as part of
the programme of expenditure on nuclear problems in the FSU, the
UK is focusing on projects to help tackle the issue of the 100
plus decommissioned nuclear submarines in NW Russia. Before project
work in this area and on other nuclear safety related programmes
in Russia can be undertaken, there needs to be a legal framework
in place to cover issues such as nuclear liability, access to
sites, tax and confidential information. The third quarter saw
considerable effort to try and reach a consensus on the text of
this bilateral framework agreement, the so-called Supplementary
Agreement, with Russia. No project work can commence until the
agreement is signed. In addition, negotiations on a multilateral
agreement, the Multilateral Nuclear Environment Programme in the
Russian Federation (MNEPR) are continuing.
9. The third quarter also saw the completion of a major
review of the Nuclear Safety programme that was discussed at the
12 November meeting of the Committee.
Fourth quarter achievements
10. Previous quarterly reports have emphasised the absolute
need to conclude a legal framework with Russia, the so-called
Supplementary Agreement, before substantive project work in NW
Russia and on other nuclear related programmes in Russia can commence.
Good progress was made in negotiations in Moscow on 12-13 February
but one outstanding but crucial issue remains to be resolved (on
which the Russian Ministry of Foreign Affairs is isolated). The
Foreign Secretary has written to the Russian Foreign Minister
in an attempt to resolve this issue and a reply is expected shortly.
It is not clear how helpful this reply will be but it is expected
that the Agreement will be concluded in the period up to June
2002.
11. Notwithstanding the situation with the Supplementary
Agreement, there has been considerable progress in preparing the
planned NW Russia projects to be able to begin as soon as the
Agreement is concluded. The spent nuclear fuel (SNF) interim storage
project at Polyarnyi is still ready to commence almost immediately.
Further specification and contract work has been concluded for
the cooperative project with Norway to fund the building of a
SNF cask transport ship. Ministerial approval has been given for
this project and MoU is now ready for signature with Norway. Methods
of monitoring the use of this ship have also been established.
In addition, UK commitment to assisting vital site characterisation
work at Andreeva Bay has been strongly signalled to and acknowledged
by the Russian authorities and potential donors. This includes
taking forward a project proposal for the Russians to develop
and use remote inspection equipment on the SNF stocks and legacy
at the site. This is a fundamental area of work if a strategy
and international response, both bilateral and multilateral, is
to be determined.
12. NW Russia work and the call-off contract arrangements
have formed the basis for further and deeper cooperation and exchange
of information with colleagues dealing with the Destruction of
Chemical Weapons programme and MoD to MoD initiative (the AMEC
Programme—Arctic Military Environmental Cooperation Programme).
The UK was specially invited to join the AMEC Programme (Russia,
the US and Norway) to broaden the cooperation on the military
side with the Russian Navy. This is being managed by our Naval
Attaché in Moscow and will form an important part of the
UK response to the situation in NW Russia, both in areas where
the Russian Navy of the civilian authorities (MINATOM) has responsibility.
13. Good progress was made with the multilateral legal
framework agreement, the Multilateral Nuclear Environment Programme
(MNEPR) during negotiations in March. The Agreement is subject
to Russian legal and ratification procedures. It may be some 18
months before it can come into force.
14. Following on from previous quarterly reports (See
paragraph 8 above) a contract notice was placed in the EC Official
Journal in late October. 15 Expressions of Interest were received
and a short list of seven organisations were invited to submit
bids (Nukem, PE International, Mott MacDonald, BNFL, Crown Agents,
NNC and Halcrow) by Tuesday 9 April. However, to provide the tenderers
with an opportunity to ask questions, offer comments and feedback
to DTI on the FSU Programme tender documents DTI hosted a Q&A
session on 20 February. This session was attended by representatives
from all of the seven organisations.
15. The mini Roame statements for KEDO and the Kazakhstan
project were presented to, and approved by the Inter Departmental
Committee on 4 March 2002.
16. An updated strategy paper for UK assistance to Russia'
Closed Nuclear Cities was presented to the IDC meeting on 4 March
and has now been approved by its members.
17. The Russian government has approved the text of the
MNEPR and this is expected to come into effect in the medium term.
Summary of key issues to address for the first quarter 2002-03:
— Signing of the Supplementary Agreement with Russia.
Without this it will be very difficult to undertake the planned
projects in NW Russia.
— Complete the competitive tender process for recruiting
up to four call-off contractors to provide external project managers
for the programme. Deadline for bids was 9 April and evaluation
of tenders took place on 11-12 and 24 April.
— Initiation of the revised strategy for "Closed
Cities" and recruitment of first project(s)—the revised
was approved by the Advisory Committee by correspondence and a
submission to Ministers will be prepared by the end of April (FCO
and DTI Ministers).
— Complete the evaluation and contract around 27
projects worth £2.5 million.
— Developing and agreeing proposals for specific
assistance in the programme areas of Closed Cities, Kazakhstan
and Plutonium Disposition.
— Signing of the MNEPR Agreement and the tracking
of its progress through the Russia Duma. Only when this process
is complete can the MNEPR become an effective legal vehicle for
the spending of UK funds in the Russian Federation.
— Progression of the project for Plutonium Disposition.
The PU Experts Group recommenced its meetings on 16 April following
the completion of the US non-proliferation policy review in December
2001.
— Consider the options should the Supplementary
Agreement not be concluded. These include scaling back of some
of the projects (to reduce potential liability), termination of
other projects, possible piggy-backing on the Norway/Russia legal
framework agreement and reliance (in the longer term) on the MNEPR
if concluded.
1
Ev 54-65. Back
2
Beyond US plans for future funding. Back
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