Business Week International International Business
THE FALLOUT FROM A RUSSIAN NUKE DEAL (int'l edition)
For years, the dull yellow building housing the Russian Ministry of Atomic Energy near downtown Moscow has been a center of power and intrigue. Throughout the cold war, the Ministry's secret army of more than 2.5 million workers kept pace with U.S. counterparts producing materials for atomic bombs. In 1986, they fought to contain Chernobyl, the worst nuclear accident ever. Following the collapse of the Soviet Union, they have been mostly coping with measly salaries and greatly diminished prestige.
But now, the Ministry is on the offensive again--this time pushing commercial exports rather than making weapons. Top Ministry officials want to boost foreign sales of their uranium, radioactive isotopes with medical or industrial uses, and nuclear reactors for commercial power stations. To help the effort, the officials have beefed up marketing departments at the Ministry itself and at their four export arms.
SHOPPING LIST? The new push is causing a big stir in the West. The Russians have shocked U.S. officials by announcing a $1 billion contract with Iran to help build four nuclear power reactors. Washington says the reactors enhance the ability of Iran to produce nuclear weapons, which Islamic radicals could use for terrorism or to spark a conflagration in the tense Persian Gulf. "The Iranians have a shopping list of materials they need to build a bomb and have been scrounging the world for them," says a Western diplomat stationed in Moscow.
Nonsense, insists Vitaly F. Konovalov, who is Deputy Atomic Energy Minister: "All the specialists know that these reactors cannot be used for military purposes." What's more, the reactors will be routinely inspected by the Vienna-based nuclear watchdog, the International Atomic Energy Agency, Konovalov says.
Even though Western experts acknowledge that the new reactors won't be able to produce weapons-grade uranium or plutonium, they argue that the reactors will raise the overall level of Iran's nuclear-related skills and that is dangerous in its own right. The experts also discount inspections by the IAEA as being largely ineffective.
Despite those concerns, the Ministry's plan calls for installing two Soviet-designed, pressurized-water, VVER 400-Mw reactors, similar to models exported to Finland and under construction in Cuba. Russia also will finish building two 1,000-Mw reactors begun by Germany's Siemens during the Shah's regime.
UNFINISHED BUSINESS. Work was stopped on the pair of reactors when the radical Ayatollah Khomeini and his supporters took power in 1979. The Russians wanted the German company to resume work on the project with them. Under pressure from Washington, however, the German government made it clear the deal was verboten for Siemens.
Officials in Moscow argue that their aggressively pushing exports of nuclear products is the best way to prevent a nuclear brain drain to rogue states such as North Korea. An official with the Federal Counter-Intelligence Service, one of the successor agencies to the KGB, notes that in 1992, the agency caught several Russian nuclear scientists at an airport about to take off for Pyongyang. While the authorities claim that there have been no attempts yet to steal weapons, they report they have caught smugglers with expensive and rare radioactive isotopes, such as osmium, that have industrial uses.
AND KOREA? America's own plan to build light-water reactors in North Korea is giving the Russians extra ammunition. Although the Americans are trying to get the South Koreans and Japanese to fund and build the reactors, the fact remains that Washington is sanctioning such a deal with a reclusive authoritarian regime. The Russians argue with conviction that the U.S. is being hypocritical by encouraging a deal with North Korean while at the same time seeking to block a similar one with Iran.
Another reason for pushing the sensitive exports to Iran in particular, Russian officials say, is that it will help keep Islamic fundamentalists from stirring up trouble among Muslims on Russia's southern flank. Their worries have only grown stronger after Moscow's bloody suppression of Muslim fighters in the breakaway republic of Chechnya. Whatever the geopolitical rationale, U.S. efforts to isolate the bad boys of the Mideast are certain to be dealt a crippling blow.By Peter Galuszka in Moscow