Publication: Monitor Volume: 3 Issue: 142

On July 21 First Deputy Prime Minister Boris Nemtsov and Atomic Energy Minister Viktor Mikhailov met with US energy secretary Federico Pena and signed an agreement on handling nuclear materials. (RTR, July 22) Details of the talks were not available, but must have involved the troubles which have arisen around implementation of a 1993 uranium deal.

In February 1993 President Clinton committed the U.S. to buy 500 tons of highly enriched uranium, extracted from dismantled Russian nuclear warheads, over the next ten years at an estimated total cost of $12 billion. Washington’s goal was to encourage Russia to dismantle half its nuclear warheads, about 20,000 in all, and by providing funds to Russia’s nuclear industry discourage them from trying to sell advanced technology to countries like China and Iran. While the deal made sense from the standpoint of security, the economics were less clear. The U.S. already had 50 percent of the world market in uranium, and the influx of Russian stocks would drive down prices and harm American producers. The U.S. side agreed to pay in advance for uranium deliveries: the weapons grade material would then be mixed with natural uranium (in a ratio of two to one) for sale to power plants. In 1995 and 1996 Russia received $431 million from the U.S. for uranium deliveries. (Izvestia, July 17)

But the deal started to unravel in 1996. In April of that year Congress adopted a bill privatizing the USEC corporation which was buying the Russian uranium. USEC argued that it was losing money on the deliveries, and that it faced challenges from two new U.S. companies — Pleides and NUKEM — which wanted to get in on the deal. (Novaya gazeta, April 28) USEC is also arguing with Tekhsnabeksport, the sales arm of the Russian Atomic Energy Ministry, over who should supply the uranium used to dilute the weapon material, and over how to share the proceeds. Tekhsnabeksport, meanwhile, is aggressively selling its own uranium in the U.S. and in third countries like South Korea.

No Solution to Ingush-Ossetian Crisis.