Weapons of Mass Destruction: Reducing the Threat from the Former Soviet Union (Letter Report, 10/06/94, GAO/NSIAD-95-7). In 1991, Congress authorized the Defense Department (DOD) to establish a Cooperative Threat Reduction program to help the former Soviet Union destroy nuclear, chemical, and other weapons; transport and store these weapons in connection with their destruction; and prevent their proliferation. So far, DOD has more than $1 billion in spending authority for the program. This report examines the program's (1) progress in implementing projects and obligating funds, (2) overall planning, (3) potential impact, and (4) use of funds for nonpriority objectives. --------------------------- Indexing Terms ----------------------------- REPORTNUM: NSIAD-95-7 TITLE: Weapons of Mass Destruction: Reducing the Threat from the Former Soviet Union DATE: 10/06/94 SUBJECT: Arms control agreements Chemical warfare Nuclear weapons Nuclear proliferation Future budget projections Property disposal International cooperation International relations Strategic forces Ballistic missiles IDENTIFIER: DOD Cooperative Threat Reduction Program Ukraine Kazakhstan Russia Belarus Soviet Union Strategic Arms Reduction Treaty START ************************************************************************** * This file contains an ASCII representation of the text of a GAO * * report. Delineations within the text indicating chapter titles, * * headings, and bullets are preserved. 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We are unable to accept electronic orders * * for printed documents at this time. * ************************************************************************** Cover ================================================================ COVER Report to Congressional Requesters October 1994 WEAPONS OF MASS DESTRUCTION - REDUCING THE THREAT FROM THE FORMER SOVIET UNION GAO/NSIAD-95-7 Weapons of Mass Destruction Abbreviations =============================================================== ABBREV ACDA - Arms Control and Disarmament Agency CTR - Coopertive Threat Reduction DOD - Department of Defense FSU - former Soviet Union MC&A - material control and accounting MINATOM - Russian Ministry of Atomic Energy MOD - Ministry of Defense START - Strategic Arms Reduction Treaty Letter =============================================================== LETTER B-257251 October 6, 1994 The Honorable Earl Hutto Chairman The Honorable John Kasich Ranking Minority Member Subcommittee on Readiness Committee on Armed Services House of Representatives In response to your request, we have reviewed several aspects of the Cooperative Threat Reduction (CTR) program. This is the unclassified version of our previously issued classified report to you. The CTR program was established to reduce the threats posed by weapons of mass destruction in the former Soviet Union (FSU). Specifically, we examined the program's (1) progress in implementing projects and obligating funds, (2) overall planning, (3) potential impact, and (4) use of funds for nonpriority objectives. BACKGROUND ------------------------------------------------------------ Letter :1 In 1991, Congress authorized the Department of Defense (DOD) to establish a CTR program to help the FSU (1) destroy nuclear, chemical, and other weapons (including strategic nuclear delivery vehicles); (2) transport and store these weapons in connection with their destruction; and (3) prevent their proliferation. Congress subsequently directed DOD to address these objectives on a priority basis and to address several additional objectives, including the conversion of FSU defense industries to civilian uses. Congress has authorized\1 funding for CTR projects in three annual increments. To date, DOD has over $1 billion in spending authority for the CTR program. About $800 million of this total was to be reallocated from other DOD activities. -------------------- \1 Congress authorized funding for the CTR program objectives in title II of Public Law 102-228, title XIV of Public Law 102-484, and title XII of Public Law 103-160. Congress provided for CTR funding in the amount of $400 million annually in section 108 of Public Law 102-229, section 9110(a) of Public Law 102-396, and title II Public Law 103-139. Other related legislation includes title V of the Freedom of Support Act (P.L. 102-511). RESULTS IN BRIEF ------------------------------------------------------------ Letter :2 The CTR program stands at an important crossroad in its evolution. Over the past 3 years it has evolved from a hastily established 1-year effort into a wide-ranging, multiyear program. However, program officials have not established a process to ensure that annual budget requests are driven by a long-range assessment of tasks that need to be accomplished and have not estimated total requirements for achieving CTR priority objectives. Executive branch officials told us that program officials will continue to ask for $400 million annually because of a belief that this level has been deemed acceptable by Congress. CTR officials intend to obligate the bulk of CTR funds--about $969 million--in support of 36 projects.\2 These projects focus primarily on the program's three priority objectives. As of June 1994, CTR officials had obligated nearly $223 million--about 23 percent of the funding. The program's spending pace was initially slowed by the time needed to complete agreements between the United States and the former Soviet republics, fully develop projects, and comply with legislated requirements for reallocating funds originally appropriated for non-CTR purposes. Program officials expect obligations to accelerate to almost $600 million by the end of fiscal year 1995 as more projects enter implementation. DOD plans to allocate $400 million for CTR projects in fiscal year 1995 and to program $400 million annually for CTR projects. If approved by Congress, these plans would result in a total CTR budget of over $3 billion\3 during fiscal years 1996 through 2000. Although DOD intends to expend a considerable amount of funds for the CTR program, program officials have not yet (1) established a long-term planning process, (2) prepared a multiyear plan and requirements-based funding profile, or (3) implemented an audit and examination process. The need for long-term planning to help prioritize CTR projects is underscored by the disparate prognoses for achieving priority CTR objectives. The program's direct impact over the long term is still unclear and appears to vary widely from one objective to the next. Information obtained during the course of our review indicates that: Currently planned CTR aid appears to be crucial to Ukrainian and Kazakhstani efforts to dismantle delivery systems. CTR officials appear to have overstated the probable impact of similar CTR projects in Russia. Russia can meet--without CTR aid--its Strategic Arms Reduction Treaty I (START) obligations and eliminate thousands of strategic nuclear delivery vehicles and launchers over the next decade. Russia also does not want U.S. involvement in actually destroying its nuclear warheads. In some cases, currently planned CTR aid may not be enough to overcome existing challenges. Ongoing CTR projects will not enable Russia to meet Western safety standards in transporting warheads to dismantlement facilities, nor will they provide Russia the means to safely destroy its vast chemical weapons arsenal. Currently planned CTR projects could help reduce but not eliminate certain proliferation risks. DOD plans to spend nearly $153 million on nonpriority objectives. DOD officials plan to make defense conversion a higher priority than nonproliferation--a congressionally designated priority--in deciding future CTR funding of projects, despite its uncertain prospects for success. -------------------- \2 DOD does not give funds directly to FSU states but instead provides goods and services needed to address CTR goals. \3 A separate GAO review of all U.S. FSU aid programs indicates that about $1.3 billion in non-CTR DOD aid was also appropriated. Of this amount, $979 million was transferred from DOD to the Agency for International Development. PROGRAM IMPLEMENTATION AND SPENDING PACE ------------------------------------------------------------ Letter :3 CTR officials have obligated or intend to obligate $969 million for 36 projects (see app. 1) in support of 37 agreements negotiated with Russia, Ukraine, Kazakhstan, and Belarus.\4 As shown in figure 1, about 81 percent of these funds will be directed toward projects that support priority objectives. Figure 1: Distribution of $969 Million Obligated or to Be Obligated By DOD (See figure in printed edition.) By June 1994, CTR officials had obligated $223 million of the total $969 million and had disbursed about $50 million. As shown in figure 2, about 87 percent of the $223 million obligated has been directed toward priority objectives. Appendix II provides information on the status of some projects for which funds have been obligated and disbursed. Figure 2: Distribution of $223 Million Already Obligated By DOD (See figure in printed edition.) CTR officials cite several factors in explaining why they have not obligated and expended more funds. These include delays in completing agreements with FSU states and complications due to political sensitivities and disarray on the part of the recipient republics. For example, Ukrainian delays of nearly a year in signing a strategic nuclear delivery vehicle dismantlement agreement with the United States held up the initial $135 million in aid. The Russian Parliament delayed completion of an agreement to establish a science center for almost 2 years. U.S. efforts to help Russia design a nuclear material storage facility have been slowed by local environmental concerns, changes in Russian plans, and Russian government delays in identifying specific types of equipment for the facility. Difficulties in adapting surplus U.S. railcars for carrying nuclear warheads on Russian railways led to a 2-year effort to develop hardware for enhancing Russian railcars. DOD officials told us that the nature of the program's initial funding authority has also complicated their efforts. For both fiscal years 1992 and 1993, Congress authorized DOD to transfer up to $400 million from other DOD funds to CTR projects. Program officials, however, lost access to $212 million of 1992 transfer authority at the end of fiscal year 1993 by failing to transfer it\5 within the allotted 2-year period--due, they informed us, to delays in reaching agreements and changing project requirements. CTR officials told us that they also had difficulties in finding funding sources within DOD to transfer to fiscal year 1993 CTR projects valued at $310 million.\6 As of March 1994, program officials had only $278 million available to spend. The program has since received authority to spend $400 million of appropriated CTR money for fiscal year 1994. It now projects a steep increase in obligations--to almost $600 million--by the end of fiscal year 1995. -------------------- \4 U.S. allies plan to provide similar aid valued at about $194 million. The United States and its allies periodically discuss such aid. \5 Program officials are seeking restoration of the expired transfer authority. \6 According to the DOD Comptroller's Office, DOD had previously funded CTR projects from its Defense Business Operations Fund. However, by 1993 such monies were no longer available. LACK OF CTR PLANNING ------------------------------------------------------------ Letter :4 Congress initially set the CTR program's funding level and provided the program with several broad objectives. A National Security Council-chaired steering group\7 subsequently set priorities to spend appropriated CTR funding based on project proposals developed by several U.S. agencies and FSU experts and officials. DOD officials began requesting CTR funding in their fiscal year 1994 budget submission, but did not identify to Congress what priorities or projects would be funded. CTR program officials have testified before Congress that the program will run through the year 2000 to achieve its weapons dismantlement and storage objectives. DOD plans to program $400 million annually for the next 5 years to implement CTR projects. Although the program has thus evolved into a multiyear effort, program officials have yet to adopt the planning tools needed to guide such a program. These officials have not established a process to ensure that annual budget requests are driven by a long-range assessment of tasks that need to be accomplished and have not estimated total requirements for achieving CTR priority objectives. Moreover, DOD officials have not yet begun auditing FSU use of CTR aid. Results of audits and examinations can provide important input to planning efforts. DOD is required to ensure that such aid is being used for intended purposes and has negotiated CTR agreements that give the United States the right to examine how the aid is being used. DOD recently approved an audit and examination plan and CTR officials hope to initiate audit procedures within the next several months. -------------------- \7 The group includes representatives from the Joint Chiefs of Staff; the Arms Control and Disarmament Agency; the Central Intelligence Agency; and the Departments of Defense, State, and Energy. IMPACT ON PRIORITY OBJECTIVES ------------------------------------------------------------ Letter :5 The long-term impact of CTR projects is unclear, but current information suggests it is likely to vary widely by objective and, within priority areas, from project to project. For example, the Russians have specifically stated that they do not want U.S. assistance in dismantling nuclear warheads. However, CTR aid appears likely to facilitate Ukrainian delivery vehicle dismantlement efforts. Currently planned CTR projects should provide needed requirements data and technical support to Russian efforts to destroy chemical weapons but will not actually destroy the chemical weapons. U.S. officials note that CTR projects will only lay the foundation for addressing the FSU proliferation threat. NUCLEAR WARHEAD DISMANTLEMENT ---------------------------------------------------------- Letter :5.1 Russia appears able to dismantle tens of thousands of retired nuclear warheads by the end of the century without U.S. help. The total Russian nuclear stockpile is estimated to be 30,000 warheads. According to Russian officials, they are dismantling the FSU nuclear stockpile at a rate of 2,000 to 3,000 weapons per year. If Russia can continue dismantling warheads at the highest rate, then as many as 24,000 warheads could be eliminated by the year 2001. Furthermore, Russia does not want any help from the United States in actually dismantling these weapons. Some Russian Ministry of Atomic Energy (MINATOM) officials have asserted that a shortage of storage for nuclear materials from dismantled weapons will eventually impede their dismantlement efforts and are seeking assistance in constructing a new storage facility.\8 Although U.S. agencies have been unable to confirm that a shortage exists, some agencies believe that Russia has adequate storage space. These agencies believe that sufficient space could be available at Russian Ministry of Defense (MOD) nuclear storage facilities. In the past, however, MINATOM has argued against the use of MOD facilities. Recent Russian statements suggest that warhead dismantlement could proceed without the new facility. On the other hand, U.S. proponents of the facility argue that (1) Russia could blame dismantlement delays on the U.S. government if it fails to support the facility and (2) existing storage space, designed for other purposes, may not be well suited to store weapons components. -------------------- \8 U.S. officials estimate that the facility could cost $315 million. CTR officials have obligated $15 million to help design it and plan to obligate $75 million for operating equipment. Russia has asked for another $75 million in construction aid. Japan has indicated that it might be willing to assist Russian fissile material storage efforts. NUCLEAR WARHEAD SAFETY AND SECURITY ---------------------------------------------------------- Letter :5.2 U.S. officials are concerned about the safety and security of FSU nuclear weapons. Although there have been no known incidents, concerns exist that a Russian nuclear warhead could be lost, stolen, or involved in an accident. The United States has begun providing Russia with railcar safety and security enhancement kits, emergency response equipment, and nuclear material storage containers. Deliveries of armored blankets\9 have been completed. While such aid may lessen transportation risks somewhat, U.S. analysts informed us that it will not make the Russian weapons transportation system safe by Western standards. To meet their dismantlement requirements, the Russians have requested that 115 railcars be modified. According to a study conducted by U.S. analysts, the number of railcars being modified is sufficient to meet Russian dismantlement needs. However, the railcar modification kits will not remedy all shortcomings. The Russians had asked for no more than 115 kits and deleted fire suppression equipment because such equipment increased the weight of their railcars. Russia recently indicated concerns over safety issues by asking the United States for (1) railcars to carry guards, emergency response equipment, and hardware for detecting obstructed and defective tracks; (2) 600 "supercontainers" to transport weapons; and (3) 15 containers to transport damaged weapons.\10 The United States has not yet determined whether to fund this request. -------------------- \9 Blanket deliveries began not long after Russia had completed removing tactical warheads from other FSU states. \10 The French and British plan to provide another 350 weapon supercontainers--valued at about $35 million. The British also plan to provide Russia with special trucks to carry weapons. STRATEGIC DELIVERY VEHICLES ---------------------------------------------------------- Letter :5.3 The FSU states must still eliminate about 530 START-accountable nuclear delivery systems and destroy their launchers (e.g., silos, submarine tubes, and heavy bombers) to comply with START I limits.\11 Assuming that Kazakhstan and Ukraine eliminate the systems deployed on their territories, and Belarus returns its systems to Russia for redeployment as agreed in the Lisbon Protocol, Russia will be required to eliminate only about 200 delivery vehicles and their launchers. CTR program officials intend to provide Russia with cranes, welding implements, hydraulic tools, bulldozers, liquid fuel containers, incinerators, plasma cutters, and other items. CTR officials acknowledge that Russia already possesses similar items. CTR officials informed Congress, in early 1994, that they may provide more dismantlement aid from fiscal year 1995 funds to insure that Russia can meet its START I obligations. However CTR officials' past assertions that Russia cannot meet its START I obligations without CTR aid appear to have been overstated and inaccurately justified the dismantlement assistance. Russia has been dismantling nuclear delivery systems in compliance with arms control treaties for decades without U.S. assistance. According to Russian officials, Russia has already achieved 100 percent of START's 3-year limits and nearly 50 percent of its 7- year limits for delivery vehicles. At this rate, Russia could meet START delivery vehicle limits in 5 years--well within the allowed 7-year period that will begin when START enters into force. In the past 4 years, Russian officials have claimed to have eliminated over 400 launchers. CTR officials have since conceded that CTR aid is not necessary to ensure Russian START I compliance and instead indicated that Russia will need additional assistance for START II dismantlement efforts. Officials have also asserted that CTR aid will increase the Russian dismantlement rate. The Russians have made general statements indicating that the aid could accelerate their progress by increasing the flexibility and efficiency of their efforts but have not indicated the rate of acceleration. Ukraine has fewer delivery systems than Russia to dismantle but lacks Russia's capabilities and infrastructure. U.S. aid, thus, appears likely to facilitate Ukrainian dismantlement efforts. U.S. officials plan to obligate over 70 percent of the estimated cost of dismantling Ukrainian systems. The United States will help provide equipment (including fuel, cranes, cutters, computers, and incinerators) and a SS-19 liquid propellant neutralization facility,\12 as well as assist in deactivating SS-24 missiles.\13 CTR program officials plan to provide Kazakhstan with needed technical assistance in destroying SS-18 missile silos once Russia has removed the warheads and missiles. The United States and Kazakhstan have yet to define program requirements or obligate significant funds for dismantling delivery vehicles. CTR officials also plan to provide assistance to the government of Belarus to clean-up former strategic rocket forces bases and use them for civilian purposes. Under CTR, the United States will provide training, but the Belarusians will complete the work themselves. -------------------- \11 START I limits the FSU to 1,600 delivery vehicles and 6,000 warheads no later than 7 years after entry into force of START I. START II further lowers these limits and bans multiple re-entry vehicle intercontinental ballistic missiles. \12 Other allied nations have held discussions with Ukraine on the disposal of liquid fuel from strategic weapons. \13 "Deactivation" is a non-START I/II term used to describe the status of Ukrainian SS-24 missiles that have had their warheads removed. Ukrainian officials have stated that SS-24 warheads are being returned to Russia as part of the agreement with Russia and the United States. The United States is uncertain what Ukraine plans to do with its SS-24 missiles once the launchers are eliminated as Ukraine is not legally bound to destroy the missiles under START. CHEMICAL WEAPONS ---------------------------------------------------------- Letter :5.4 Russia lacks needed technical capabilities for safely destroying its chemical weapons. As such, it may not be able to comply with the time frames of the international Chemical Weapons Convention for safely destroying its declared 40,000-metric ton chemical weapons stockpile.\14 U.S. officials have concluded that Russia is likely to place a low priority on paying the high cost of doing so. To date, CTR officials plan to obligate $55 million to assist Russia with its chemical weapons destruction. Officials are now providing Russia with a technical support office and technical services. Officials are in the process of providing a chemical weapons analytical laboratory and have awarded a contract for a detailed operations plan for destroying the Russian chemical weapons stockpile. These projects should provide needed requirements data and technical support but will not destroy Russian chemical weapons.\15 CTR program officials have indicated that the program may help fund construction of a chemical weapons destruction facility from its fiscal year 1995 budget. One DOD official has stated that the United States may spend $300 million to help build a pilot destruction facility. -------------------- \14 Arms Control: Status of U.S.-Russian Agreements and the Chemical Weapons Convention (GAO/NSIAD-94-136, Mar. 15, 1994). \15 Germany has committed funding to explore destroying Russian chemical weapons. NONPROLIFERATION ---------------------------------------------------------- Letter :5.5 U.S. officials are concerned that FSU weapons of mass destruction and related technologies may spread to other countries and that continued FSU economic deterioration could exacerbate this threat. CTR officials plan to help employ FSU weapons experts, improve controls and accountability over nonmilitary and military nuclear material, and strengthen national export control systems.\16 The CTR program has not assessed the total requirements for addressing the FSU proliferation threat, and U.S. officials note that these CTR projects will only lay the foundation for future efforts by the FSU states themselves. According to Russian estimates, there are several hundred FSU experts capable of designing a nuclear weapon and 10,000 individuals with related weapons skills. To help them find peaceful work in the FSU, U.S. and allied officials have established a multilaterally funded science and technology center in Moscow and plan to establish a similar center in Kiev. The Moscow science center's currently approved projects will sponsor more than 3,000 scientists for about 3 years. CTR officials plan to help develop or improve national controls and accountability over nonmilitary and military nuclear materials in Russia, as well as nonmilitary nuclear materials in Ukraine and Kazakhstan.\17 Such systems are prerequisites for international safeguards. U.S. officials informed us that the FSU system lags 20 years behind that of the United States. While the Russians have had a facility-based material control and accounting (MC&A) system for all facilities on their territory, they never instituted a consolidated nationwide nuclear MC&A system for reconciling facility level records and transported shipments. The Department of Energy has prepared a program plan for strengthening Russia's nuclear MC&A system by creating a national level information system and improving MC&A and physical protection at the facility level by installing systems for two or three facilities. The Energy Department is developing similar plans for Ukraine and Kazakhstan. The United States has not determined the total requirements or costs for establishing complete systems. CTR officials have provided training and equipment for developing a Western-style national export control system in Belarus. Officials are assessing what would be needed to develop such systems in Ukraine and Kazakhstan and have conducted export control seminars in the two countries. The United States and Russia are negotiating export control assistance to include training and seminars but not equipment. U.S. officials have cited nonproliferation objectives in justifying U.S. support for the proposed Russian nuclear material storage facility. The facility should help Russia prevent unauthorized access to its weapons material, although the Russians are not obligated to store all the materials from disassembled nuclear weapons in the storage facility. However, until additional agreements are signed, the extent to which the facility will do so is unclear. The facility could also help support the U.S. long-range efforts to encourage nations to place such materials under international safeguards.\18 To help ensure that the facility accomplishes desired nonproliferation objectives, the United States has attempted to negotiate specific transparency measures that would help ensure that stored materials are derived from dismantled weapons, safe from unauthorized use, and not used in new weapons.\19 However, Russian officials insist the U.S.-proposed transparency measures be part of a reciprocal and comprehensive arrangement with the United States. To date, the two nations have not reached such an agreement. According to DOD, Russia needs to agree to various transparency measures for the storage facility and adhere to agreed upon audit and examination procedures before the project can move forward. -------------------- \16 Canada, the European Union, France, Germany, Italy, Japan, Norway, and the United Kingdom intend to provide assistance for various nonproliferation projects, including export controls, and science centers in Russia and Ukraine. \17 Belarus has recently requested similar aid. \18 The United States plans to place surplus weapons materials under international inspections to encourage other countries to do the same. U.S. officials consider the Russian facility to be a model in response to the global dilemma of safely disposing of nuclear weapon materials. Russian officials have stated that the facility could be placed under international safeguards as part of the global disposition effort. \19 Russia has agreed to allow the United States limited inspections of the facility to ensure proper use of CTR aid. FUNDING NONPRIORITY OBJECTIVES ------------------------------------------------------------ Letter :6 The CTR program has developed several projects aimed at addressing nonpriority objectives. Of these, defense conversion is to receive the highest share of CTR funding--nearly $123 million. CTR officials currently plan to help the FSU spin-off privatized civilian firms\20 from enterprises that were producing weapons of mass destruction. The new firms would then serve as role models for others. Program officials plan to award contracts to U.S. firms to help create civilian companies from four Russian defense enterprises.\21 DOD has also established a nonprofit corporation to administer a demilitarization enterprise fund to invest CTR assistance. Prospects for success in defense conversion are unclear at best. For example, many Russian officials remain interested in preserving a sizable defense industry--in part to earn hard currency by exporting arms--and three of the four Russian enterprises designated for CTR conversion are not slated to be privatized but will remain state owned. These parent companies would still produce some defense equipment, and the extent to which the new business ventures will be clearly separated from their parent companies remains to be resolved, raising the possibility that U.S. aid could benefit the parent defense companies if safeguards are not put in place. DOD officials acknowledge that the untested CTR approach may not succeed in producing profitable projects or lead to fully privatized firms. If so, they said, the United States can terminate remaining projects. Although the CTR program has yet to assess the total requirements of converting Russian industries or the total cost for FSU defense industry conversion,\22 CTR officials have stated that defense conversion projects could receive another $60 million in fiscal year 1995 funds and could eventually cost as much as $250 million. -------------------- \20 CTR officials also plan to set up enterprises to provide housing and training for demobilized Strategic Rocket Forces officers in the FSU states. U.S. analysts estimate that between 20,000 and 25,000 such officers may be demobilized. \21 Program officials awarded contracts to U.S. firms to help develop civilian firms from three Belarusian defense firms. \22 According to one Russian estimate, defense industry conversion in Russia could cost $150 billion. RECOMMENDATION ------------------------------------------------------------ Letter :7 We recommend that the Secretary of Defense institute a proactive, long-term CTR planning process to help DOD properly allocate the billions of dollars it hopes to spend over the next several years among many competing--and shifting--demands. Such a planning process should incorporate estimates of total requirements for achieving CTR objectives, prioritization of competing objectives, evaluations of projects, and assessments of what U.S. aid could reasonably achieve in overcoming obstacles confronting CTR objectives. Under this planning process, DOD officials should periodically revise and update the plan and use it in producing annual budget submissions that are keyed to achieving priority CTR goals. MATTERS FOR CONGRESSIONAL CONSIDERATION ------------------------------------------------------------ Letter :8 Given the uncertainties concerning defense conversion in Russia, Congress may wish to consider withholding large-scale funding for future Russian defense conversion projects until the initial results of currently funded projects have been assessed. Because the executive branch has not clearly articulated U.S. objectives with regard to the storage facility, Congress may also wish to consider requiring the executive branch to provide a detailed explanation of how the nuclear material storage facility will (1) serve U.S. nonproliferation interests and (2) directly affect Russian warhead dismantlement. AGENCY COMMENTS AND OUR EVALUATION ------------------------------------------------------------ Letter :9 We asked DOD, the State Department, the Department of Energy, and the Arms Control and Disarmament Agency (ACDA) to comment on a draft of this report. Energy declined to comment, but DOD, State, and ACDA generally agreed with the factual elements of the report. DOD also said that it intended to implement our recommendation that the Secretary of Defense establish a proactive, long-term planning process for the CTR program. DOD will establish two new offices to address CTR planning--a policy planning office in the Office of the Assistant Secretary of Defense for International Security Policy and a program office in the Office of the Under Secretary of Defense for Acquisition and Technology. However, DOD did not indicate when such offices would be established, how they would prepare a long-range strategic plan for the CTR program, or how these separate offices would coordinate their planning efforts. DOD and the State Department did not concur with our suggested matters for congressional consideration. DOD and the State Department commented that providing additional information on the nuclear material storage facility is unwarranted. However, this report demonstrates that, to date, the rational for supporting this expensive facility is still not clear. DOD further stated that it is premature to make judgments about the effectiveness of defense conversion and reduce its funding. Given the uncertainties associated with defense conversion in the FSU, we believe that the outcome of initial projects should be evaluated before the program commits additional funding. DOD's and the State Department's comments are presented in their entirety in appendixes III and IV, respectively, along with our evaluation. ACDA agreed with our report message but suggested that we address our recommendation to the National Security Council not the Secretary of Defense because an interagency steering group chaired by the National Security Council should plan the priorities for the CTR program. We made this recommendation to the Secretary of Defense because DOD has the spending authority to fund the CTR program. ACDA's comments and our evaluation are presented in their entirety in appendix V. SCOPE AND METHODOLOGY ----------------------------------------------------------- Letter :10 We reviewed CTR documents and met with officials from DOD and the Departments of Energy and State in Washington, D.C., as well as with officials from ACDA and the Central Intelligence Agency. The specific data on funding obligations and disbursements represents a compilation of figures provided by various DOD sources, including the Office of the Special Coordinator for Cooperative Threat Reduction, the Defense Nuclear Agency, and the U.S. Army Corps of Engineers. We conducted our review between October 1993 and July 1994 in accordance with generally accepted government auditing standards. --------------------------------------------------------- Letter :10.1 Unless you publicly announce its contents, we plan no further distribution of this report until 30 days after its issue date. At that time, we will send copies to other interested congressional committees; the Secretaries of Defense, Energy, and State; the Director of the Arms Control and Disarmament Agency; and the Director of the Central Intelligence Agency. Copies will also be made available to others upon request. Please contact me on (202) 512-4128 if you or your staff have any questions concerning the report. Major contributors to this report are listed in appendix VI. Joseph E. Kelley Director-in-Charge International Affairs Issues FUNDING FOR COOPERATIVE THREAT REDUCTION PROJECTS =========================================================== Appendix I (Dollars in millions) Obligations Planned as of 6/13/ Disbursements Projects by country obligations 94 as of 6/21/94 ------------------------------------ ------------ ------------ -------------- Belarus -------------------------------------------------------------------------------- Communications link $2.30 $0.30 $0.27 Defense conversion 20.00 7.27 0 Emergency response 5.00 3.98 1.50 Export controls 16.30 0.48 0.17 Site restoration 25.00 2.87 0 Propellant elimination 6.00 0 0 ================================================================================ Subtotal 74.60 14.90 1.94 Kazakhstan -------------------------------------------------------------------------------- Communications link 2.30 0.06 0 Defense conversion 15.00 0 0 Emergency response 5.00 2.00 0 Export controls 2.30 0.04 0 Material control and accountability 5.00 0.02 0 Silo elimination 70.00 0.12 0 ================================================================================ Subtotal 99.60 2.24 0 Russia -------------------------------------------------------------------------------- Arctic nuclear waste assessment 20.00 10.00 2.79 Armored blankets 5.00 3.24 2.91 Chemical weapons destruction 25.00 11.58 1.63 Chemical weapons lab 30.00 0 0 Defense conversion 40.00 0.15 0 Emergency response 15.00 11.77 9.06 Export controls 2.30 0 0 Fissile material containers 50.00 48.18 3.03 International science and technology 25.00 23.02 0.47 center Material control and accountability 30.00 0.25 0.15 Railcar security upgrade 21.50 21.50 13.97 Storage facility design 15.00 15.00 11.42 Storage facility equipment 75.00 15.01 0 Strategic offensive arms elimination 130.00 28.06 0.06 ================================================================================ Subtotal 483.80 187.76 45.49 Ukraine -------------------------------------------------------------------------------- Communications link 2.40 0.04 0 Defense conversion 40.00 5.38 0 Emergency response 5.00 2.00 0 Export controls 7.30 0.09 0 Material control and accountability 12.50 0.03 0 Nuclear reactor safety 11.00 0 0 Science\technology center 10.00 0 0 Strategic nuclear arms elimination 185.00 4.67 0.03 ================================================================================ Subtotal 273.20 12.21 0.03 Other projects -------------------------------------------------------------------------------- Defense/military contacts 15.00 1.01 0.09 Defense Demilitarization Enterprise 7.67 0 0 Fund Other assessment costs 15.00 4.84 1.99 ================================================================================ Subtotal 37.67 5.85 2.08 ================================================================================ Total $968.87 $222.96 $49.54 -------------------------------------------------------------------------------- Note: Numbers may not add due to rounding. COOPERATIVE THREAT REDUCTION PROJECT STATUS ========================================================== Appendix II This appendix provides information on the status of some projects for which funds have been obligated. The Department of Defense (DOD) was unable to provide updated information for all of these projects. BELARUS Communications link: Interim equipment was installed and made operational in August 1993. Permanent equipment is expected to be provided by March 1995. Defense conversion: The program has selected three defense-related enterprises as conversion candidates and issued a draft request for proposals on how these candidates could be converted. The program also issued a request for proposals to U.S. industry regarding housing for demobilized Strategic Rocket Forces officers. Emergency response: DOD delivered 400 protective suits, 147 pairs of protective boots, 4 radiation detectors, 10 air samplers, 100 dosimeters, and 34 computers. The project is planned to be completed in June 1995. Export controls: DOD delivered equipment in late 1993 as part of a Commerce Department administrative automation project activity. The project also supported assessment visits, bilateral meetings, and technical exchanges, including a training session for Belarusian export licensing and enforcement officials. Site restoration (Project Peace): Project requirements are being discussed. Equipment lists and needed training are being finalized for the selected site of Postavy, a former SS-25 missile base. KAZAKHSTAN Silo elimination: Requirements and equipment lists are being determined. RUSSIA Arctic nuclear waste: Several workshops have been held. DOD sponsored several expeditions during the summer of 1993, and some assessments of nuclide levels in the Arctic and North Pacific were conducted. Armored blankets: This project is completed. In July 1992, 250 sets of surplus U.S. Army armored blankets were delivered. By June 15, 1993, 250 sets of Cooperative Threat Reduction (CTR)-contracted armored panels and 24 gallons of seam sealer had been delivered. Chemical weapons destruction: In June 1993, the Army Chemical Material Destruction Agency opened a chemical weapons support office in Moscow. The United States and Russia signed a joint work plan in January 1994. On January 31, 1994, DOD issued a request for proposals to U.S. industry for a concept of operations plan for destroying Russian chemical weapons. The contract was awarded to Bechtel National, Inc. Defense conversion: DOD issued draft request for proposals to U.S. industry concerning conversion of four Russian defense enterprises and housing for demobilized Russian Strategic Rocket Forces officers. Emergency response: According to CTR officials, 800 protective suits, 105 radiation detectors, fiberscopes, communications equipment; 3 packaging trucks; a portable integrated video system; 10 "Jaws of Life" sets; 56 computers; 235 radios; and training have been provided. Fissile material containers: Ten prototype containers were delivered to Russia in April 1993. Sixteen containers are to be delivered for testing, followed by 500 production containers. About 10,000 containers should be delivered by December 1995. The remaining 23,000 on contract will be delivered by the end of 1997. International Science and Technology Center: The center began operations on March 3, 1994. The second Governing Board meeting was held in Moscow on June 17 and 18, 1994, at which a broad range of proposals were considered. Thirty-one new project proposals, worth about $18 million, were approved that could help develop technologies related to international efforts in verification of nuclear test ban treaties, destruction of weapons of mass destruction, and environmental monitoring. To date, about $30 million has been committed to a total of 54 projects. These projects will sponsor more than 3,000 scientists for a period of about 3 years. Material control and accountability: The Department of Energy completed a program plan to strengthen the Russian national system of material control and accounting and physical protection. Activities conducted included a U.S.-Russia technical exchange, Russian visits to U.S. facilities, U.S. visits to Russian facilities, a technical working group meeting, and a U.S.-Russia seminar on material control and accounting and physical protection. Railcar security upgrade: The United States developed kits for enhancing the security of railcars used to transport nuclear weapons. As of February 15, 1994, 10 conversion kits had been shipped to Russia. Delivery of another 105 kits is scheduled to be completed by October 1994. Storage facility design: According to the U.S. Army Corp of Engineers, the U.S. component for the facility design was completed in December 1993. The Corp delivered, installed, and provided training for 13 computer work stations in 1993. Additional computer supplies, three lap top computers, software, and a printer were also shipped to Russia. Strategic offensive arms elimination: DOD procured some equipment (such as oxyacetylene torches, welding, and cutting tools) and planned to begin deliveries to Russia by July 1994. UKRAINE Communications link: At the time this report was written, the United States had offered to meet for initial technical exchanges to identify requirements, but Ukraine had not accepted the offer. In the interim, the United States had conducted a cost-benefit analysis of possible equipment to be provided. Defense conversion: In March 1994, the United States and Ukraine signed an agreement for up to $40 million in defense conversion projects. Two contracts worth $15 million have been awarded. One of these contracts will employ about 300 workers this year and will manufacture about 300 homes. Later this year, two other contracts should be awarded, one for converting a defense industry into a housing industry and the other to convert portions of defense industries into commercial ventures. Emergency response: The United States has proposed dates for initial technical exchanges required to identify requirements. Ukraine has not responded to the meeting dates. Until requirements are determined, no procurement actions can occur. Export controls: This project will provide assistance in the building of export control institutions and infrastructure. Basic requirements were received in May 1994 and a Ukraine delegation visited the United States to refine requirements for automation equipment. A technical exchange is being scheduled for this year. Material control and accountability: Technical exchanges took place earlier this year and the first site visit to identify specific hardware requirements was scheduled. Once requirements are defined request for proposals will be issued. Initial deliveries of small equipment are anticipated in January 1995. Strategic nuclear arms elimination: At the emergency request of Ukraine, DOD delivered dismantlement materials, including cranes, all-terrain vehicles, communications equipment, truck batteries, power saws, and other tools. This equipment, in addition to gasoline and diesel fuel provided under the CTR program, were used by Ukraine to help return nuclear warheads to Russia. In addition, contracts have been awarded for additional equipment such as cranes, bulldozers, and graders. The contract for the design of the missile neutralization facility has also been awarded to a Ukrainian company. OTHER PROJECTS Defense and military contacts: For Russia, a bilateral working group met in November 1993 to develop the 1994 program agenda. A memorandum of understanding has been signed with Belarus. U.S. and Ukrainian officials have scheduled 27 events for the rest of this year and into 1995. To date, 10 events, worth about $268,000, have been funded. (See figure in printed edition.)Appendix III COMMENTS FROM THE DEPARTMENT OF DEFENSE ========================================================== Appendix II (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) The following are GAO's comments on DOD's letter dated August 25, 1994. GAO COMMENTS 1. DOD did provide us with documents showing the Russian dismantlement schedule with CTR assistance but could not provide any baseline data. We therefore could not determine to what extent CTR assistance would accelerate Russian dismantlement efforts. We do not disagree that CTR assistance could help the Russians increase the flexibility and efficiency of their dismantlement efforts. 2. While we do not disagree that CTR assistance being provided for nonproliferation efforts could assist the former Soviet republics, according to the information obtained during our review, DOD has not assessed the requirements needed to address the proliferation threats. This lack of requirements based spending underscores our recommendation that the program needs to develop a long-term planning process to ensure that funds are being properly allocated and that obstacles confronting CTR objectives can be effectively overcome. 3. We note that Congress has never designated defense conversion as a CTR priority. Instead, it has acted at times to limit some funding spent on defense conversion such as spending caps on the Defense Enterprise Fund. Many of the enterprises selected for conversion will continue to produce weapons. Profits and technology from the newly privatized firms could be returned to the parent defense enterprises. Furthermore, many Russian officials remain interested in preserving a sizable defense industry to earn hard currency by exporting arms. Based on these factors, the impact of defense conversion on nonproliferation efforts in the Former Soviet Union (FSU) appears to be remote. DOD's plans to request additional funding for defense conversion efforts in the FSU without first evaluating their outcome also indicates the need for a long-term CTR planning process. 4. Recently, CTR officials in meetings with us, conceded that CTR assistance was not essential for Russia to meet its Strategic Arms Reduction Treaty I (START) obligations. Rather, DOD has stated CTR assistance will help accelerate Russian dismantlement. We do not disagree that CTR assistance could help the Russians improve the efficiency of their dismantlement efforts. As a result, we have deleted this matter for consideration from our report. 5. The uncertainties of the storage facility have not been fully and clearly conveyed to Congress in past executive branch reports and statements of testimony. Given the facility's high potential cost--estimated at about $315 million--we continue to believe that Congress may wish to consider requiring the executive branch to justify the storage facility by discussing all of the factors affecting its potential benefits. (See figure in printed edition.)Appendix IV COMMENTS FROM THE DEPARTMENT OF STATE ========================================================== Appendix II (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) The following are GAO's comments on the Department of State's letter dated June 21, 1994. GAO COMMENTS 1. We do not take issue with the State Department's assertions that one of the CTR program's major direct effects has been to increase the willingness of recipient states to become non-nuclear and that the U.S. provision of assistance allows for U.S. participation in discussions of nuclear issues in the FSU and access to high-level policymakers. However, the verification and validation of such assertions were beyond the scope of our review. 2. The report does not equate program success with the expenditure of funds. Instead, the report cites several reasons why funds could not have been expended sooner. 3. We took issue with DOD assertions that CTR assistance was needed to ensure that Russia can meet its START I obligations. Such assertions were conveyed to Members of Congress as justification for providing dismantlement assistance to Russia. Recently, however, DOD officials have conceded that Russia does not need dismantlement assistance to meet its START I obligations. 4. DOD provided us with documents showing Russia's dismantlement schedule with CTR assistance but could not provide any baseline data. We, therefore, could not determine to what extent CTR assistance would accelerate Russian dismantlement rates. We do not disagree that CTR assistance could help the Russians improve the efficiency of their dismantlement efforts. 5. The State Department is correct in noting the role of other agencies involved in the CTR program; however, DOD plays a key role in the decision-making process for allocating CTR monies. 6. The State Department's definition of an audit and examination process is narrowly focused. An audit and examination process is much more than a financial accountability system. Without knowledge of how well assistance is being used, DOD cannot plan what future requirements should be fulfilled in the FSU. 7. As noted in our report, U.S. officials are concerned that a Russian nuclear warhead could be lost or stolen. 8. We have removed this matter for consideration from our report because DOD officials have recently conceded that Russia can meet its START I obligations without CTR dismantlement assistance. DOD has stated that CTR assistance will help accelerate Russian dismantlement. We do not disagree that CTR assistance could help the Russians improve the efficiency of their dismantlement efforts. 9. We disagree with the Department of State's suggestion that the facility will necessarily contribute directly to the Russian dismantlement effort. The uncertainties of the storage facility have not been fully and clearly conveyed to Congress in past executive branch reports and statements of testimony. Given the facility's high potential cost--estimated at $315 million--we continue to believe that Congress may wish to consider requiring the executive branch to provide it with a detailed justification of the facility project that discusses all of the factors affecting its potential benefits. (See figure in printed edition.)Appendix V COMMENTS FROM THE ARMS CONTROL AND DISARMAMENT AGENCY ========================================================== Appendix II (See figure in printed edition.) See comment 5. (See figure in printed edition.) (See figure in printed edition.) See p. 15. See comment 7. (See figure in printed edition.) The following are GAO's comments on the Arms Control and Disarmament Agency's (ACDA) letter dated June 17, 1994. GAO COMMENTS 1. Although we do not take issue with ACDA's assertion that Ukraine's willingness to deactivate its missiles was a direct result of dismantlement assistance both provided and promised, verification and validation of such an assertion were beyond the scope of our review. 2. We took issue with DOD's assertions that CTR assistance was needed to ensure that Russia can meet its START I obligations. Such assertions were conveyed to Congress as justification for providing CTR dismantlement assistance to Russia. Recently, CTR officials have conceded that Russia does not need dismantlement assistance to meet its START I obligations. 3. Based on the uncertainties associated with defense conversion assistance in the FSU, the impact of defense conversion on nonproliferation efforts appears to be remote. 4. While Congress had authorized over $1 billion for the CTR program, only $278 million was available as of March 1994. We did, however, modify the report to clarify this point. 5. To date, no long-term plan exists for the CTR program. 6. The heading of "Nonpriority Objectives" describes those CTR efforts that were not congressionally designated as priorities. 7. The information discussed does not represent interagency discussions and deliberations. Rather, we generated the recommendation and matters for congressional consideration based on our findings. Based on our sources, the information, as stated, is unclassified. MAJOR CONTRIBUTORS TO THIS REPORT ========================================================== Appendix VI NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIVISION, WASHINGTON, D.C. F. James Shafer Beth A. Hoffman Le�n Pierre R. Toureille David J. Black Jo Ann T. Geoghan Richard B. Kelley