Overview
	Technical Background
	The Threat
	Securing Nuclear Warheads and Materials
	Interdicting Nuclear Smuggling
	Stabilizing Employment for Nuclear Personnel
	Monitoring Stockpiles
	Ending Further Production
Reducing Stockpiles   HEU Purchase Agreement   U.S. Highly Enriched Uranium Disposition   Russian Plutonium Disposition   U.S. Plutonium Disposition

 

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Previous Publications
	Funding for U.S. Efforts to Improve Controls Over Nuclear Weapons, Materials, and Expertise Overseas: Recent Developments and Trends February2007 Readthe Full Report (1.5M PDF)
	Securing the Bomb 2006 The latest report in our series, from May 2006, finds that even though the gap between the threat of nuclear terrorism and the response has narrowed in recent years, there remains an unacceptable danger that terrorists might succeed in their quest to get and use a nuclear bomb, turning a modern city into a smoking ruin. Offering concrete steps to confront that danger, the report calls for world leaders to launch a fast-paced global coalition against nuclear terrorism focused on locking down all stockpiles of nuclear weapons and weapons-usable nuclear materials worldwide as rapidly as possible. Read the Executive Summary (379K PDF) or the Full Report (1.7M PDF)
	Securing the Bomb 2005: The New Global Imperatives Our May 2005 report finds that while the United States and other countries laid important foundations for an accelerated effort to prevent nuclear terrorism in the last year, sustained presidential leadership will be needed to win the race to lock down the world’s nuclear stockpiles before terrorists and thieves can get to them. Read the Executive Summary (281 K) or the Full Report (1.9M PDF)
	Securing the Bomb: An Agenda for Action Building on the previous years' reports, this 2004 NTI-commissioned report grades current efforts and recommends new actions to more effectively prevent nuclear terrorism. It finds that programs to reduce this danger are making progress, but there remains a potentially deadly gap between the urgency of the threat and the scope and pace of efforts to address it. Download the Full Report (1.2 M PDF) Выписки из доклада по-русски (423K PDF)
	Controlling Nuclear Warheads and Materials: A Report Card and Action Plan 2003 report published by Harvard and NTI measures the progress made in keeping nuclear weapons and materials out of terrorist hands, and outlines a comprehensive plan to reduce the danger. Download the Full Report (2.7M PDF)
	Securing Nuclear Weapons and Materials: Seven Steps for Immediate Action 2002 report co-published by Harvard and NTI outlines seven urgent steps to reduce the threat of stolen nuclear weapons or materials falling into the hands of terrorists or hostile states. Read the Full Report (516K PDF)

Reducing Excess Stockpiles

U.S.-Russian HEU Purchase Agreement

Status

Despite many disputes and delays over the life of the program, this arrangement is the largest (in dollar terms, or in terms of the number of people employed in implementing it), most important, and most successful U.S.-Russian joint effort focused on controlling nuclear warheads and materials. At one stroke, the HEU purchase provides financial incentives to dismantle thousands of warheads, destroys hundreds of tons weapons-usable material that could otherwise pose risks of proliferation or arms-reduction reversal, provides employment to thousands of Russian nuclear workers, and provides hundreds of millions of dollars a year to the hard-pressed Russian nuclear complex all at very modest costs to the U.S. taxpayer.

Warheads to fuel how it works. HEU that is referred to as "weapon-grade" contains 90% or more of the isotope used in nuclear bombs, Uranium-235 (U-235)[3] a far cry from natural uranium as it is dug up out of the ground, which contains only 0.7% U-235, with nearly all of the rest being U-238, which cannot support an explosive nuclear chain reaction. HEU can be transformed into LEU that cannot be used in a nuclear bomb by simply mixing it with other uranium containing mostly U-238. In principle, that process is straightforward and can be accomplished by a variety of means but in both the United States and Russia, the presence of impurities in the HEU, and the desire to produce a form of LEU that can safely be made into fuel and used in commercial reactors, have introduced some technical complications.

The process now being used in Russia includes several steps:[4]

• First, nuclear warheads are dismantled. Russia does this with its own resources, without U.S. assistance or verification. In this process, the metal HEU weapons components are separated from the rest of the weapon.

• Second, the canisters containing these HEU metal components are shipped to processing facilities, where the components are cut into metal shavings.

• Third, the shavings are roasted in an oven to convert them to uranium oxide.

• Fourth, the uranium oxide is dissolved in hot nitric acid and chemically processed to remove impurities, such as traces of plutonium.

• Fifth, the purified material is converted to uranium hexafluoride (the only chemical compound of uranium that is a gas at suitable working temperatures, and thus the compound typically used for uranium enrichment), and shipped to an enrichment plant.

• Sixth, at the enrichment plant, the 90% enriched uranium hexafluoride is blended with 1.5% enriched uranium hexafluoride, to make roughly 4-4.5% enriched LEU (essentially by having two pipes come together in a "Y" joint). Blendstock enriched to 1.5% Uranium-235 is used rather than natural uranium (0.7%) or depleted uranium "tails" left over from uranium enrichment (typically 0.2-0.3%), in order to dilute some of the undesirable isotopes in the Russian HEU (including U-234 and U-236), to meet Western commercial specifications. Russia produces this blendstock by re-enriching tails at its large enrichment plants.

• Seventh, the LEU hexafluoride canisters are shipped to the United States for conversion into oxide and fabrication into reactor fuel. The United States gets 20% of its electricity from nuclear energy, and roughly half the fuel for U.S. nuclear power plants is now coming from this purchase so dismantled Russian nuclear weapons are providing 10% of all the electricity Americans use every day.

Under the agreed transparency arrangements for the HEU deal, U.S. monitors are allowed to observe many of the steps that take place in Russia, and Russian monitors are allowed to check on the steps that take place in the United States.

Background and history. The HEU Purchase Agreement often referred to in Russian nuclear publications as "the contract of the century" was first publicly suggested by Thomas L. Neff of the Massachusetts Institute of Technology, in an op-ed in the New York Times in October 1991, just as the Soviet Union was nearing collapse.[5] The basic idea was to turn the immense danger posed by the uranium in the huge Russian nuclear weapon stockpile into an opportunity by dismantling the nuclear weapons, blending the uranium in them to forms that could no longer be used in weapons, and selling the blended material to generate billions of dollars to stabilize Russia's nuclear complex and prevent the proliferation dangers that might be posed by its collapse.

Serious U.S.-Russian negotiations over the HEU purchase began in January 1992, just after the Soviet Union fell apart, and a government-to-government agreement outlining a U.S. purchase of 500 tons of HEU from dismantled Russian nuclear weapons was signed in February 1993.[6] It took almost a year to translate that government-to-government agreement into a commercial contract, and then most of another year (during which considerable difficulties over purifying the material to meet commercial specifications were worked through) before the U.S. firm implementing the deal made the first orders for nuclear fuel, in late 1994. Deliveries began in early 1995.[7] The table shows the number of tons of HEU blended and delivered to the United States as LEU each year.

HEU Blended by Year[8]

Similarly, the U.S. government has imposed trade restraints on Russian uranium exports to protect domestic industries from low-cost Russian supplies, and has included the uranium from the purchase agreement in these restraints a factor which has substantially complicated the arrangement. Russia, for its part, has had on occasion a somewhat unrealistic approach to the commercial nuclear market (for example, setting a "floor" price below which it would not sell the uranium from the deal that was well above world market prices), and has frequently called for U.S. government intervention to rescue the deal.[9]

USEC, with its aging and inefficient gaseous diffusion enrichment plants, is the highest-cost supplier in an oversupplied world enrichment market. To survive until plants using more efficient technology can be built, USEC has needed either a U.S. government subsidy or a source of supply that it can purchase for well below market prices, using the resulting profit to subsidize its uncompetitive operations. Hence, after failing in 1999 to convince the U.S. government to provide hundreds of millions of dollars in subsidies to cover what it asserted were reduced profits resulting from carrying out this national security initiative, USEC sought to convince Russia to provide the LEU from the HEU purchase agreement at prices well below market rates. After several years of controversy and dispute (during which both the Clinton and Bush administrations undertook prolonged reviews of USEC's proposed approach), in June 2002, the U.S. and Russian governments finally approved a modified contract covering the whole period until 2013, when the current purchase agreement expires.

The new contract arrangement is complex, setting the price USEC pays Russia at roughly a 10-15% discount from a three-year-lagged average of various market prices for enrichment work (measured in "separative work units," or SWUs). The discount itself is modest, intended to reflect USEC's marketing and handling costs, but the effect of the choice of indexes to average, and the three-year lag, is that for years to come, USEC will be paying Russia prices well below the market prices at which USEC will sell the material. This will give USEC a strong profit incentive to carry out the deal, something that has sometimes been lacking in the past.[10] But at the same time, the new arrangement reduces the payments to Russia that have been the main source of revenue for cleaning up and converting Russia's massive nuclear weapons complex, and the U.S. government's willingness to help USEC force Russia to accept this below-market rate has provoked considerable bitterness among some Russian nuclear officials.[11]

Paying separately for the uranium and enrichment work. The material from the HEU Purchase Agreement arrives in the United States as LEU, ready to be converted and fabricated into reactor fuel. Originally, the United States and Russia agreed that the United States would simply pay Russia for the whole value of each kilogram of LEU. But the way the nuclear fuel market has traditionally worked, utilities have generally bought their uranium and enrichment work separately purchasing natural uranium and then sending it to an enricher who the utility would pay to enrich it. Thus, when USEC receives LEU from Russia and sends it to a utility to fulfill an enrichment contract, uranium that it got from that utility to be enriched is displaced, and builds up in a stockpile at USEC. This is, in effect, the natural uranium that USEC would have used to produce the LEU it sent to the utility, had it not gotten that LEU from Russia. Hence, the LEU can be thought of as having a "uranium component" (sometimes referred to as the "feed component," referring to the uranium "feed" to an enrichment plant) and an "enrichment component" the amounts of uranium and enrichment work the United States would have used to produce that same amount of LEU domestically. In 1996, after a series of difficulties with the original arrangements for payment for these two components, the USEC Privatization Act mandated a new approach, now the one being used, under which USEC pays Russia in cash for the enrichment component, and gives Russia title to the natural uranium displaced by the incoming LEU (in effect, paying in kind for the uranium component). Russia is then responsible for marketing (or using itself) this natural uranium, subject to the various trade restraints that the United States and other nuclear markets have imposed on Russian uranium exports.

Over the years, the disputes and delays in implementing the deal have sometimes focused on the SWU component, and sometimes on the uranium component: both parts of the deal have to work well for the overall HEU Purchase Agreement to move forward. In particular, in 1998-1999, the uranium component was not getting sold, and Russia, arguing that it was not getting paid adequately, threatened to pull out of the agreement unless this issue was resolved. The problem arose because the world uranium price was depressed to a level below what the Russian government would accept for its uranium a situation that was caused by a variety of factors, including the U.S. government's action in providing USEC with large uranium stockpiles and then privatizing USEC, which created an oversupplied market. Ultimately Senator Pete Domenici (R-NM) stepped in to save the agreement (as he had done before), in this instance by appropriating $325 million so that the U.S. government could purchase and put in stockpile the uranium from the 1997 and 1998 deliveries under the HEU agreement; that removal of material from the market, combined with a new contract in which three Western uranium firms took an option to purchase the natural uranium from the HEU deal, provided enough of a resolution for the deal to continue.[12]

Impact. In addition to destroying enough potentially vulnerable HEU for many thousands of nuclear weapons, the HEU Purchase Agreement has had more impact in staving off the proliferation hazards that would be posed by a collapse of the Russian nuclear weapons complex than all of the U.S. programs specifically targeted on that mission combined. By early 2003, Russian sources estimated that the deal had generated $3.5 billion in revenue to Russia and that revenue is now coming in at hundreds of millions of dollars per year. Several thousand Russian nuclear experts and workers are directly employed on the various steps of fulfilling this contract and are therefore not included among those for whom other U.S., Russian, or international programs have to provide other employment. The total number of jobs specifically for nuclear experts and workers created by this means is probably larger than the combined total from all the programs specifically focused on job creation. Moreover, MINATOM officials have indicated that the funding for MINATOM's own roughly $50 million per year conversion program in its nuclear weapons complex comes primarily from the HEU purchase as does funding for dealing with nuclear waste from dismantled submarines, and for cleanup in MINATOM's nuclear complex[13] and they have estimated that from 1998 through 2001, this conversion program had created over 8,000 jobs in Russia's nuclear complex.[14] Had these jobs and this revenue not been available, the proliferation risks from Russia's nuclear complex during the 1990s would have been incomparably greater.

Moreover, the HEU Purchase Agreement played an important role in one of the greatest nonproliferation successes of the 1990s the denuclearization of Ukraine. In the 1994 Trilateral Agreement between Ukraine, Russia, and the United States, Ukraine agreed to send all the nuclear weapons on its soil back to Russia, and Russia agreed to provide nuclear fuel to Ukraine to compensate for the value of the HEU in those warheads an arrangement that was funded with money from the HEU Purchase Agreement. Indeed, in 1995, the U.S. government agreed to have USEC advance Russia $100 million against future deliveries, to provide funds for providing fuel to Ukraine.

Russian HEU stockpiles excess and the rest. The HEU Purchase Agreement focuses on 500 tons of HEU which Russia determined was excess to its military needs. This figure just under half of the roughly 1050 tons of HEU Russia is believed to have had when the deal began[15] was chosen in 1992, long before Russia decided to undertake the deep reductions in its strategic nuclear arsenal it has since planned on. Even if Russia plans to maintain several thousand tactical nuclear weapons in addition to its planned strategic arsenal, and to use tens of tons of HEU as fuel for military and research reactors, hundreds of tons of additional HEU might be declared excess in the future and become available for sale.[16] Thus, a central long-term question for the HEU deal is whether it will end when the original 500 tons is completed, or continue, and address a much larger fraction of Russia's HEU stockpile.

A related question concerns the pace of the agreement. The current blending rate of 30 tons per year was set by what the commercial market would bear, not by what would be desirable for world security. From the point of view of security, it would be desirable to destroy ever kilogram of excess HEU as rapidly as possible. Russian facilities are believed to have the capacity, with the addition of just a few more machines, to blend HEU roughly twice as quickly as they are doing today. There may therefore be opportunities to work out an agreement under which the United States and other concerned nations would pay Russia to accelerate the blend-down of HEU and keep the additional blended material in monitored storage until the commercial market was ready to absorb it (see discussion below).

Complementary reductions in Russia's HEU stockpile. The HEU Purchase Agreement is the largest, but not the only, program that is reducing Russia's HEU stockpile. First, Russia is continuing to use HEU as fuel for naval reactors, civilian nuclear icebreakers, plutonium production reactors, tritium production reactors, and research reactors: combined, these uses consume roughly 2-3 tons of HEU per year.[17] Second, within the Materials Protection, Control, and Accounting (MPC&A) program, there is an effort known as Materials Consolidation and Conversion (MCC), which is intended to remove stockpiles of HEU from small, potentially vulnerable facilities and blend them to 19% enriched LEU.[18] By the end of fiscal year (FY) 2002, this effort had blended over 3 tons HEU, out of 29 tons it eventually hopes to address.[19] Third, the Russian uranium fuel fabrication facility at Elektrostal, under license from Framatome, has been blending HEU with reprocessed uranium from European utilities to produce fuel for European reactors; through the end of FY 2002, approximately 6-8 tons of HEU had been blended by this means, and blending was continuing at a rate of roughly one metric ton of HEU per year.[20]

Accelerated Materials Disposition. At their May 2002 summit, President Bush and President Putin agreed to establish a working group on "expanded disposition" of HEU and plutonium.[21] The working group rapidly completed a first report that outlined a variety of options for modest additions to the current HEU Purchase Agreement.[22] The Bush administration has requested $30 million in its FY2004 budget for an "Accelerated Materials Disposition" initiative that would begin implementation of the concepts outlined in the joint report.

Specifically, the initiative includes: [23]

• $25 million for the first year of a U.S. government purchase of LEU blended from up to 1.5 tons of HEU per year, for 10 years, to serve as a strategic reserve of enriched uranium that would only be used if there were major interruptions in supply in the future (such as the past delays in deliveries in the HEU deal);

• $1 million for the first year of a further U.S. government purchase of 150 kilograms of HEU each year, over 10 years, to fuel the remaining U.S.-government-owned HEU-fueled research reactors;

• $1 million (with additional funding from within the MPC&A program) to ramp up blending under the Material Consolidation and Control effort to 5 tons per year, until the 29 tons of HEU to be addressed in that effort has all been blended; and

• $3 million in supplemental funding for efforts to convert research reactors both U.S.-supplied and Russian-supplied to use proliferation-resistant low-enriched uranium fuel.

At the time that the U.S.-Russian working group wrote its first report, the Russian side was not ready to officially explore a larger-scale accelerated blend-down initiative that might involve blending down tens of tons of additional HEU each year. Immediately after the completion of the government-to-government study, however, Russia's Ministry of Atomic Energy (MINATOM) agreed to move forward with a study sponsored by the private Nuclear Threat Initiative looking at options for large-scale accelerated blend-down.[24]

Budget

See budget table

The HEU Purchase Agreement is being implemented as a commercial transaction, with a private firm (USEC) buying the material for resale on the commercial market. Hence there is not an annual appropriation for the HEU purchase itself (though there is a small annual appropriation for HEU transparency). The principal costs to U.S. taxpayers resulting from the HEU purchase have been the following:

• the revenue that USEC returned to the U.S. government while it was still government-owned was probably somewhat less than it would have been had this large Russian source of supply not been displacing some of USEC's production;

• the price that investors were willing to pay the government for USEC when it was privatized was probably somewhat less than would have been the case had this large Russian supply not been displacing USEC production; and

• $325 million appropriated in FY1999 for a U.S. government purchase of two years' worth of the natural uranium component of the HEU material, designed to put the uranium part of the deal back on a stable footing, as discussed above.

Key Issues and Recommendations

Stable implementation of the existing agreement. The HEU Purchase Agreement has suffered repeated delays over various commercial disputes. Ensuring continued stable implementation of this crucial initiative deserves very high priority. The reserve stockpile of LEU blended from HEU that the U.S. government has agreed to purchase over the next decade should provide a useful backup in the event of another substantial interruption of supply. In the longer term, if problems again arise with USEC as the executive agent, the U.S. government should keep the option of other executive agent arrangements open including the possibility of designating multiple executive agents, who could compete with each other to buy the Russian material, guaranteeing Russia a fair market price by the free play of competition.[25] In its 2002 agreement with USEC, DOE effectively agreed to maintain USEC as sole executive agent unless USEC failed to perform successfully in that role but another serious crisis in the agreement in the future could open up the possibility of additional agents again.

• Recommendation:Maintain and stabilize implementation of the U.S.-Russian HEU Purchase Agreement, including purchasing a stockpile of blended material to cover interruptions in deliveries, and leaving open the option to designate additional executive agents if necessary.

Limited quantity and rate of blend-down. As noted earlier, while the 500 tons of HEU covered under the HEU Purchase Agreement is enough for tens of thousands of nuclear weapons, it represents less than half the total estimated stockpile Russia had when the deal began. At the same time, at the current rate of blending it will take another decade even to complete the blending of that that first 500 tons. Blending down more material, faster, would be highly desirable.

Russia's uranium processing facilities are believed to be capable, with the addition of only a few pieces of equipment, of blending 60 tons of HEU each year, rather than 30. This much larger amount of material could not simply be sold on the market without crashing prices and disrupting the existing 30-tons-per-year deal. But as a security investment, the United States and the other participants in the G-8 Global Partnership could pay Russia to blend an additional 30 tons each year and keep it off the market, in monitored storage, until the existing deal is complete.[26] If the blending rate were doubled, more than a thousand bombs worth of additional HEU would be destroyed every year clear, measurable threat reduction for each dollar invested

There are a variety of reasons why Russia's Ministry of Atomic Energy may be less than enthusiastic about pursuing such a large-scale accelerated blend-down initiative. These include concerns over whether it will be possible to sell the extra material when the current deal expires, lack of confidence in future U.S. willingness to abide by commitments to reasonable commercial terms (given past U.S. shifts in its approach to the existing HEU Purchase Agreement), concerns over the political implications of agreeing to sell off another large piece of Russia's nuclear stockpile, lack of interest in an arrangement that provides more jobs and revenue for facilities that already have plenty of jobs and revenue under the existing HEU deal, and the like.[27] At the same time, destroying nuclear material that might otherwise be vulnerable to terrorist theft is as much in Russia's interests as it is in the U.S. interest, and reducing the quantity of HEU that had to be guarded to stringent standards would reduce Russia's security costs. Some senior Russian experts have endorsed such an initiative as an important next step in U.S.-Russian nuclear security cooperation.[28] To be successful, a deal will have to be structured that clearly serves Russia's interests as well as international interests in destroying HEU. Such an arrangement is clearly possible; the key question is what combination of price and other arrangements would ensure that the answer was not nyet but da.

To move this effort forward, the United States should begin a serious exploration with Russia of the circumstances under which it might be willing to agree to a large-scale accelerated blend-down of HEU. In particular, the United States and the other participants in the G-8 Global Partnership should consider approaches that might be able to leverage more than just the destruction of additional HEU: for example, if the payment for accelerated blend-down were in the form of a pre-payment against future deliveries (which would help convince Russia that the United States would have a strong incentive to help get the material onto the market in the future, allowing Russia ultimately to receive its full commercial value), the pre-payment might be designed to be larger than the actual cost of the blending, with an understanding that the additional funds would be spent on securing nuclear materials, shrinking Russia's nuclear complex, and providing jobs for excess nuclear personnel.[29]

As it did in 1998 to facilitate negotiation of a plutonium disposition agreement, Congress should provide an appropriation to pay for the blend-down and incentives that may be negotiated as part of the package (amounting to perhaps $50 million for the first year), conditional on negotiation of an accelerated blend-down agreement. Having such conditionally appropriated funds makes U.S. commitments to pay for such initiatives much more credible, and greatly facilitates negotiation.

• Recommendation:Reach agreement with Russia on an accelerated blend-down initiative, paying Russia a fee to blend additional HEU to non-weapons-usable levels and store it for later sale when the market is ready.

Security for the HEU in processing and transport. Bulk processing and transport of nuclear material can create particularly severe vulnerabilities to theft, if stringent security and accounting measures are not put in place. When tens of tons of material is being processed every year, it is very difficult for accounting systems to ensure that a few kilograms have not gone astray. And trucks and trains transporting material over thousands of kilometers are more difficult to secure than fixed and fenced storage facilities. Yet a theft of HEU from operations that were only taking place because the United States was paying for them would not only be a disaster for world security, but would be a political catastrophe for the entire threat reduction effort suggesting that it was causing, not curing, the proliferation problem. Hence, ensuring high levels of security and accounting throughout the HEU blending process should be a very high priority.

In the early days of the HEU Purchase Agreement, little progress was made in MPC&A cooperation with the facilities where the blending was taking place in part because, with revenue from the HEU purchase, they did not need MPC&A money to keep their personnel gainfully employed. Fortunately, more recently cooperation at these facilities has been moving forward much more rapidly, and significant security and accounting upgrades have been put in place. Moreover, the MPC&A program has provided a substantial number of hardened trucks and railcars for nuclear material transport. Nevertheless, there is more to be done to ensure in cooperation with Russia that every step in this process is secure as it can be.

• Recommendation: Work with Russia to ensure that stringent standards of security and accounting are maintained throughout the entire process of producing LEU from dismantled nuclear weapons.

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