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AMZN 233.22+1.8%Nov 28 9:30 AM EST

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To: Glenn D. Rudolph who wrote (29900)12/15/1998 8:11:00 AM
From: Glenn D. Rudolph  Read Replies (1) of 164684
 


By CARLA ANNE ROBBINS and ANDREW HIGGINS
Staff Reporters of THE WALL STREET JOURNAL

MOSCOW -- There was nothing secret about Yevgeny Adamov's visit last
month to Iran: The Russian nuclear chief took a 20-member delegation of
scientists and politicians for a triumphant inspection of Bushehr, the $800
million nuclear-power plant Russia is building on the Persian Gulf coast.

Back in Moscow, Mr. Adamov announced the work is going so well that
Tehran may soon order another three civilian power reactors. "This is a good
prospect, and there was every sense in going to Iran," he said.

But it is what's going on in the shadows of
Bushehr that has American proliferation experts
truly worried.

According to U.S. intelligence reports, officials
from at least two key Russian nuclear-research
institutes are quietly negotiating to sell Iran a
40-megawatt heavy-water research reactor and a
uranium-conversion facility. While the talks are
in an early stage, the reports suggest Russian nuclear scientists are already
secretly advising Iran on how to produce heavy water and nuclear-grade
graphite. American officials believe the technology and information are
building blocks for a long-range Iranian effort to manufacture plutonium or
highly enriched uranium for a nuclear bomb.

Perhaps even more extraordinary, the Russian researchers are selling their
knowledge for incredibly little: a few hundred thousand dollars so far,
according to U.S. officials. That the Russians would take such chances, and
especially for such small amounts of cash, is a measure of both the desperation
and the arrogance of Russia's once all-powerful Ministry of Atomic Energy,
better known as Minatom.

Since the breakup of the Soviet Union the world has held its breath, waiting
for Russia's nuclear arsenal to leak. So far there have been remarkably few
confirmed incidents of fissionable material smuggled out of Russia or top
scientists wooed away by rogue states. But the dangers of proliferation are
growing as Russia's economic crisis shows no sign of abating. Moscow is
months behind in salary payments to weapons designers and even the guards
patrolling nuclear-weapons sites.

At least as worrisome these days is what appears
to be Russia's deliberate proliferation.
Minatom's Mr. Adamov believes that
nuclear-reactor sales may be his cash-starved
ministry's only hope for survival. A
four-reactor deal with Iran could bring as much
as $4 billion -- assuming Tehran pays its bills.
The covert assistance may be an additional
service intended to keep Iranian customers
happy and in a buying mood. In marketing, the
technique is known as a loss leader.

Viktor Mikhailov, Mr. Adamov's predecessor
and now his first deputy, offered a similar sweetener during the 1995 Bushehr
negotiations: a gas centrifuge that could manufacture nuclear fuel -- or enrich
natural uranium to weapons-grade. "I needed to promise them a carrot and
that's what I did," he explains. Moscow dropped the deal after the paperwork
leaked and the White House protested.

"Minatom is like an empire. It needs money to survive," says Alexei
Yablokov, a former top science adviser to President Boris Yeltsin and a
longtime foe of the nuclear establishment. "It does not want proliferation. It
just doesn't think about it. It cares only about its own survival."

Mr. Adamov flatly denies that his country is helping to create a nuclear-armed
Iran and says the White House has been misled by its intelligence agencies.
The Russians also are interested in cultivating closer ties with Tehran and
appear skeptical that Iranian scientists can mount a successful nuclear-weapons
program, even with Russian advice.

The situation presents the U.S. with some tough policy decisions. So far, the
Clinton administration has been hesitant to press the Russians too publicly or
too hard, fearing a backlash in Moscow and on Capitol Hill. To secure
Russia's unraveling nuclear arsenal, officials argue, they need both Moscow's
cooperation and millions in U.S. aid. This year alone, the U.S. has supplied
more than $400 million in cash and services for nuclear security programs in
Russia.

Choking off U.S. aid or interfering with Minatom's export trade could feed
the ministry's economic decay, creating even greater proliferation problems.
In recent months, the Clinton administration has quietly cut aid to one of the
research institutes believed to be involved in supplying covert aid to Iran.

Yet so far, Washington's private protests and pleas have had little impact.
After a U.S. special envoy recently presented him with what one official calls
hard evidence of "people and blueprints being exchanged," Mr. Adamov
wrote to Energy Secretary Bill Richardson to protest "the unproven and
less-than-attractive discussions of the violations supposedly taking place." U.S.
officials say the discussions have been especially rancorous because the
institute believed to be taking the lead in the deal is Nikiet, the reactor-design
institute headed up by Mr. Adamov until this spring.

The U.S. is also keeping a wary eye on recent Minatom negotiations with
Syria to build a small light-water research reactor, and similar talks with
Libya. This spring, Russia defied world opinion -- and its own
nonproliferation pledges -- when it decided to go ahead with a $2.6 billion
nuclear-power plant sale to India. The announcement came just weeks after
New Delhi set off nuclear tests. Mr. Adamov said he really had no choice:
"The main thing is that there should be work and jobs."

Throughout the Cold War, Minatom's power and privilege was unrivaled. Its
domain includes 10 secret cities where Russia's nuclear weapons were
designed and built; scores of research facilities and institutes; 29
nuclear-power reactors; uranium, diamond and gold mines, and even farms to
feed its estimated one million employees and family members. When Russian
newspapers last year reported that the Soviet Politburo had once ordered
Minatom to produce suitcase-size atomic bombs, ministry officials dismissed
the notion as preposterous, not because such bombs don't exist, but because the
Politburo would never have dared to order around Russia's nuclear barons.

Memory Lane

Ivan Gradobitov, a technician who spent 30 years working at Arzamas-16,
Russia's main secret warhead facility, has more personal memories of that
golden age: a pride in defending the motherland, as well as special shops for
Minatom workers filled with "red caviar, black caviar, everything ... I used to
say: 'If only everyone in Russia could live like we did in Arzamas-16.' " Mr.
Gradobitov now works for a nuclear workers' trade union organizing strikes
and protests.

On a recent evening, hundreds of Minatom stalwarts gathered to celebrate that
past in Moscow's Hall of Columns, a majestic 18th century ballroom under
whose chandeliers Lenin, Stalin and Brezhnev lay in state. They were there to
honor Efim Slavsky, the late head of the Ministry of Medium Machine
Building -- the nuclear ministry's Cold War cover name intended to deceive
outsiders about its real purposes.

Cries of "comrade" boomed from the podium. A goose-stepping honor guard
paraded a red velvet flag bearing Lenin's image. Bald pates and bemedalled
breasts gleamed. Eyes moistened as two presidential hopefuls, Moscow Mayor
Yuri Luzhkov and General Alexander Lebed, pledged that Minatom's star
would rise again. At the end, the audience rose as a military band played the
national anthem -- not Russia's but that of the Soviet Union. The evening's
master of ceremonies was Mr. Adamov.

Long List of Woes

Daily reality for Mr. Adamov is much harsher. Two days before he set off
for Tehran, workers at Chelyabinsk-70, Russia's other premier bomb-making
facility, went on strike to demand five months in back wages. (Two years ago,
Chelyabinsk's despairing director shot himself in the head.) On the eve of his
departure, Mr. Adamov appeared before Russia's lower house of parliament,
the Duma, to detail his list of woes. The state electricity company pays only
1% of its bills in cash to Minatom power stations. The government coughs up
only one-twentieth of the research funding it gave five years ago. Powerful
financial interests are fighting for control of Minatom's dwindling cash. "A
war is going on," he warned.

American officials briefly cheered when Mr. Adamov, 58 years old, took
over the ministry in March. His hard-drinking, chain-smoking predecessor,
Mr. Mikhailov, who made his career designing and testing nuclear warheads,
was seen as a dangerous and uncontrollable cold warrior, a true baron of the
old nuclear elite. Almost by definition, Mr. Adamov, who rose through the
ranks designing civilian nuclear reactors -- including the kind found at the
doomed Chernobyl plant -- had to be less powerful and more easily swayed.

Mr. Adamov's personal style is certainly very different. He is a taut, almost
ascetic man who speaks good English, has published more than 150 scientific
papers, and can talk knowledgeably about the arts. His wife is a former
ballerina. A recent dining companion says he prefers gin and tonic, in
moderation, to vodka.

Interesting Conversation?

But there is a brittle pride beneath the refined, cosmopolitan surface. After his
first meeting with DOE's Mr. Richardson, Mr. Adamov complained that the
American hadn't paid sufficient attention. "He yawned in such a way that I
could study all the teeth in his mouth, and he had difficulty opening his eyes,"
he said.

Mr. Adamov's flare for commerce has also drawn harsh criticism at home,
and sparked unproven rumors of corruption, especially from the Minatom old
guard. "Atomic power and even atomic weapons are falling into the hands of
people who see nothing but money," sniffs Georgi Kaurov, a former
Mikhailov lieutenant.

For all of Mr. Adamov's enthusiasm, Russia was Iran's last choice for the
Bushehr project. West Germany's Siemens first began building two
light-water nuclear reactors for the Shah's government in 1974, only to have
the project suspended in 1979 by Iran's new fundamentalist rulers. The site
was badly damaged in a half-dozen bombing raids during the 1980s Iran-Iraq
war.

Even before the bombing stopped, Tehran began shopping for a new
contractor to build Bushehr. The U.S. managed to block a bid by a European
consortium and then pressured the Spanish government's nuclear enterprises
into canceling signed protocols. Washington also headed off smaller
component sales by companies in Italy, the Czech Republic and Poland. Only
then did Iran turn to Minatom. A January 1996 agreement called for the
reactor to be finished by 2000 -- a deadline unlikely to be met.

Doubts About Completion

Despite their public protests, American officials privately say they have few
problems with Bushehr itself. For one, they aren't sure that the project, which
has been plagued by financial and technical problems, will ever be finished.
Minatom officials admit that so far they have been paid only $50 million for
their work. The Iranians, who have already invested billions in Bushehr, have
refused to allow the Russians to raze the existing structures, demanding
instead that they fit their very different technology inside the German-built
shell.

If Bushehr is completed, the light-water reactor -- much like an
American-sponsored plant for North Korea -- will be monitored by the
International Atomic Energy Agency. Its spent fuel, even if diverted, would
be difficult to reprocess for nuclear weapons.

What worries U.S. officials instead is the cover Bushehr may provide for
more dangerous trade. Iran insists it has no interest in developing nuclear
weapons. U.S. officials quietly acknowledge that any clandestine program is
still in its infancy, in good part because of American efforts to frustrate their
plans. But U.S. officials also cite a long history of Iranian efforts to procure
weapons-related technology.

Iran has two possible routes if it wants to manufacture its own fissionable
material: an enrichment plant, likely a gas centrifuge, for enhancing uranium
to weapons grade, or a heavy-water or graphite-moderated nuclear reactor
and reprocessing plant for producing plutonium. Iran has tried for both. In
recent years it has attempted to buy a gas centrifuge from Russia and a
conversion plant from China that could produce the uranium gas to feed a
centrifuge or fuel for a heavy-water or graphite reactor. Both deals were
blocked by the Americans.

A Cover Story?

Mr. Adamov makes no secret that he would like to sell Iran more than just
power reactors. He has announced that he is personally lobbying the Kremlin
to allow the export of a light-water research reactor, part of the original
Bushehr deal that was canceled after U.S. protests. That is in addition to the
potentially more dangerous uranium-conversion plant and 40-megawatt
heavy-water research reactor that U.S. officials say Russian nuclear institutes
have been secretly negotiating to provide Iran.

"One would expect a well-thought-out civilian cover story, and there could be
a civilian use for these facilities," including nuclear research and
medical-isotope production, says David Albright, president of the
Washington-based Institute for Science and International Security. "But it
could also give Iran the ability to make plutonium for nuclear weapons.
Without Russian assistance they're at least 10 years away from building this
technology on their own."

U.S. officials say the negotiations and giving of technical advice have been
going on for at least six months but still seem to be in preliminary stages. As
far as the U.S. can tell, no equipment has been shipped. Officials also say that
they are baffled about how the sales could play out. It would be difficult, they
admit, for Tehran to hide either a heavy-water reactor or a conversion plant.
As a member of the IAEA, Iran would have to place any overt reactor plant
under international monitoring, or break out of the inspection regime.

Looking for Leverage

Inside the Clinton administration, a debate has raged for several months on
how hard to press the Russians on the Iranian deals. U.S. officials admit that
they aren't sure what, if any, leverage will work.

If money is indeed the issue, the administration should have considerable
influence. This year, the U.S. spent $230 million on blended-down, highly
enriched uranium removed from dismantled Russian nuclear warheads. The
U.S. is also spending $430 million on dismantling warheads, improving the
accounting and security of Russia's vast uranium and plutonium stockpile, and
trying to find alternative work for Russian nuclear scientists.

The problem is that cutting back on that aid might only increase the dangers.
"It's specifically not in America's interest if a Russian nuclear weapon is
stolen or a Russian scientist is suborned," warns DOE's Mr. Richardson.

While some U.S. officials argue that more aid may be the only way to head
off even greater proliferation dangers, it is far from clear that aid will head
off Minatom's export decisions.

At a press conference after his return from Iran last month, Mr. Adamov
angrily rejected a Russian journalist's suggestion that Minatom is jeopardizing
American assistance by its continued dealings with Tehran. The U.S., he said,
provided only "sops and handouts" to Russia. "The honorable way is to earn
money. Begging and borrowing are dishonorable."
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