The following is an overview based on a report prepared by the Center for
Nonproliferation Studies of the Monterey Institute of International Studies
in January 1997 under a grant from the United States Department of Energy's
Office of Nonproliferation and Arms Control. The views expressed in this
report are those of the authors alone, and do not necessarily represent the
views of the Department of Energy or the United States Government.
Although Russia has created an impressive export control system over the past five years, one should not assume that the relevant laws, decrees and "sublaws" are being effectively implemented.[2] Doubts about the reliability of the Russian export control system have been raised both inside and outside Russia. These doubts are due in part to a number of well-publicized cases, including the proposed sale of nuclear reactors to India, a non-party to the NPT and one without full-scope safeguards in place.
Both Western and Russian experts have blamed ineffectual nonproliferation export controls on a number of factors, including incomplete transition to the rule of law, an imperfect export control system, widespread corruption, and low morale and discipline. These explanations, however, are incomplete since they imply that once corruption is rooted out, civil servants are better paid, and the transition toward democracy is complete, the export control system will work effectively. This is unlikely to be the case.
In order to understand the long-term characteristics of the Russian export control system, one should pay attention to a few of the fundamental realities of the emerging Russian political and economic system:
1. The transition toward democracy has produced relatively independent social groups, corporations, and regional governments, all of which are free to pursue their intrinsic interests. These interests are not necessarily benign and do not always coincide with the policy of the government;
2. Under the political system developing in Russia, non-governmental actors are becoming more influential than similar actors in the United States, while the government is relatively more susceptible to pressure. The government is likely to compromise frequently, as it attempts to chart a course between the demands of domestic actors and the requirements of national security or pressure from foreign states;
3. The interagency mechanism, whose operational principles date back to the Soviet tradition, is highly vulnerable to penetration by non-governmental actors. The presence of laws and regulations does not always provide a sufficient barrier to questionable deals. Many issues require that a consensus be reached among all concerned agencies, and the balance can easily be tipped in favor of proponents of more active trade in controlled products.
In other words, the Russian government is likely to find it difficult to implement its own export control regulations or, for that matter, to respond to international pressures. Although outright violations of the nonproliferation regime will be increasingly rare (and they are quite rare even today), there will always be attempts to test the limits, reinterpret various provisions, and compromise on the rigidity of restrictions. The export control system will be dynamic, continuously under stress, and permanently require attention.
Undoubtedly, it is essential to continue efforts aimed at strengthening law enforcement and creating disincentives to imprudent or illegitimate deals. But it would also be useful to recast US policy in terms that would address the new political realities. Policy in this area should be approximately the same as that toward Germany or Japan; addressing Russia as a slightly modified Soviet Union or a "wild east" has limited value and can not be continued indefinitely.
NEW ACTORS IN THE WORLD OF RUSSIAN POLITICS
As is often noted, Russia is an emerging democracy and has made enormous steps toward the development of a market economy. This statement, however, is too general to be useful for policy planning. Democracies vary greatly, as do market economies. Russia is moving toward a system which will be significantly different from that of the United States. Thus, policy planning based on the American experience will not necessarily be relevant.
Politically, Russia is developing into a corporatist (or cartelized) democratic system, which is characterized by the very strong influence of regional elites, social groups (such as labor unions and associations of industrial managers), and interest groups. In a simplified form, the principal difference between the emerging Russian system and the one that exists in the United States is in the size of the "win-set," the minimum size of the domestic coalition required for successful policy. In the United States, the win-set is something close to a majority rule: a coalition with sufficient resources, influence and size to approximate the majority of relevant actors.[3] A corporatist policy-making mechanism is closer to logrolling, consensus principle. If a relevant actor is not "on board," the government has few instruments to bring it in line.
The Russian government is obviously weaker than its US counterpart and is likely to stay that way. When a region with a defense industry sector or a strong labor union demands a more liberal export policy, the government has to bear in mind that it could be hurt in many ways with impunity -- in tax collection difficulties or in labor unrest, for example. Beginning in 1997, the government will have to deal with elected regional governors which will make it even more vulnerable to the pressures of regional elites.[4]
Enterprises have emerged as a particularly relevant actor. They are no longer subject to daily management by governmental officials and increasingly behave like Western corporations. However, Russian "corporations" on average are larger and are often monopolists in their particular field. Their political power is enormous, especially due to the corporatist nature of the political system. While in the West it might be necessary to coordinate the political activities of dozens of companies in order to affect government policy, in Russia a similar effect might require only a few "corporations." According to some Russian estimates, between only seven and fifty business leaders dominate the market and, to a large extent, policy-making. These include managers from both former state-owned companies and newly established private businesses.
The enterprises have forged important strong alliances with regional governments and the two often act together. Enterprises also enjoy strong personal connections in federal governmental agencies and enterprise employees often join the government itself. Two of the best known examples are Viktor Mikhailov, the former director of a large design bureau and now the Minister of Atomic Energy, and Vladimir Potanin, a banker turned deputy Vice-Premier.
As early as 1992, defense-industrial enterprises created a number of organizations specifically to influence policy: the League of Defense Enterprises, the Industrial Union, the Union of Commodity Producers, etc. In some cases the enterprises are tightly associated with a governmental agency and do not need a special organization to represent their interests. The best known example is the Ministry of Atomic Energy (Minatom), which controls all nuclear related enterprises in the government. Minatom enterprises, however, also can belong to non-governmental organizations. More recently, new trends in monopolization have led to the emergence of "financial-industrial groups" (FIGs) that combine vertical monopolies in industry with banks. As of December 1995, 27 FIGs existed in Russia.
The role of enterprises is often reflected in their top managers, who are, as a rule, more influential than their counterparts in the West. This is a result of a unique (and, hopefully, transitional) situation: managers are no longer accountable to the government but are not yet accountable to stockholders. As a rule, the directors are themselves important stockholders: according to the rules of privatization they were able to acquire 5-10 percent of their enterprises’ stock and many bought additional shares as well. In addition, there has been impressive stability in the directors’ corps: according to some estimates, turnover rate has been only five percent a year since 1991.
The managerial elite in Russia tends to put interests of their enterprises above the more general interests of the country. Russian enterprise directors differ from their American colleagues, in that they have a relatively low level of belief system constraints.[5] This can make it difficult for industrial managers, who do not have much experience in or knowledge of international relations, to relate the pursuit of their intrinsic interests to possible negative international consequences. This phenomenon is not unknown in the West, of course, but in Russia the gap is more pronounced. A graphic example is an advertisement in Rossiiskaia Gazeta, which advertised centrifuges for enrichment of uranium and announced that interested persons could obtain additional information for the sum of $18.60.[6]
NEW CHANNELS OF INFLUENCE UPON GOVERNMENTAL POLICIES.
But how does the power and influence of these non-governmental actors translate into policy? The "transmission belts" of the system are channels of influence, through which various pressure groups can access decision-making bodies, make their preferences known, and cut various types of deals. Unlike during the Soviet period, multiple, independent channels of influence are now available. Whereas in the Soviet Union a decision of the government was final, it is now possible to "replay" the bureaucratic "game" and convince the government to revisit its initial decision.
Enterprises, coalitions of interest groups, and regional authorities can easily access those governmental agencies which have a vested interest in their well-being. An obvious example is Minatom, which directly represents producers of equipment and materials whose export is controlled. Enterprises which act as suppliers to Minatom can approach the Ministry of the Economy and convince it to support Minatom on particular export opportunities. Similarly, the chemical industry can affect the Ministry of the Economy and induce a favorable attitude toward export of controlled substances. The recently created Ministry of Defense Industry[7] considerably enhances the accessibility of the government, as does the Commission on Scientific-Technical Issues of Defense Industry, which exists within the Security Council. Trade unions can reach the highest levels of the government and demand preservation of jobs, even at the expense of compromising export control regulations. The pattern of decision-making, which makes the government relatively vulnerable to such pressure is discussed below in greater detail.
It is even easier to affect the position of the Russian Duma (Parliament). Many individual legislators or whole factions might support a "softer" approach toward export control. The government, however, might well disregard the position of the Duma, which makes this channel of influence relatively less effective than governmental agencies. The Duma might be most useful when used in conjunction with a governmental agency.
Endorsement of the media is even easier to ensure but is the least effective channel of influence, since building an effective media campaign demands considerable time and resources. Furthermore, the media is under the heavy influence of a stable coalition of interest groups, which generally support the government. One might note, however, that even the politically moderate print media are not averse to supporting questionable export projects, which indicates that some groups with interest in weapons of mass destruction-related exports are present at the core of the pro-government coalition.
Corporations and regional elites can choose between a number of methods to affect government policy and often combine several. The 1992 cryogenic engines deal with India is a textbook case of such an approach. Initially, Russian producers of missile equipment enlisted Glavkosmos, a governmental trade agency, to assist in concluding the deal. When the government seemed on the verge of denying implementation under the pressure of the United States, the missile producers enlisted the help of the parliament, along with the conservative, and later, moderate press. As a result of these political maneuvers, the deal was sustained, although with some important modifications, and at the price of moderate US sanctions.
The current Russian model is different in many important respects from both the Soviet and the American patterns. In the Soviet model, the decision of the government was final and could not be contested: if the government wanted strict export control policy, it would have strict export control policy. On the other hand, it was relatively easy to change policy once one acquired direct access to high levels of the decision-making structure. Now, many groups can acquire access, but they have to compete with each other. Thus, influencing government takes considerable resources.
It still takes less resources to influence government policy in Russia, than it does in the United States. Pluralistic societies provide the easiest access to decision-making bodies, but, consequently, it takes enormous resources to effect a change of policy, and so an extensive coalition-building effort is needed. It would be folly to approach the Russian export control scene using the same criteria as those traditionally applied to the Soviet Union or with the criteria derived from experience in US domestic politics. Germany, and probably to an even greater extent Japan, are likely to provide better clues.
INTERAGENCY MECHANISM: DECISIONS "BY WAY OF EXCEPTION."
It is instructive to return to the cryogenic engine deal with India, and to examine how the Russian government came to approve it in the first place. According to most non-Russian or Indian accounts, the deal ran counter to the MTCR and appeared to be at odds with the official government position in favor of that regime.[8] In the interagency conflict over the deal, the Foreign Ministry insisted on strict compliance with the MTCR. But Glavkosmos, the Ministry of Foreign Economic Relations, and the Ministry of Economy -- all agencies with a vested interest in the contract -- were able to prevail. Only after US intervention was the deal partially revised.
An important question is, why didn’t the officially declared policy prevail? Theoretically, even the checks then in place should have led to the cancellation of the deal. An important part of the picture is that the interagency mechanism in Russia continues to operate on the basis of the same principles as prevailed in the Soviet Union. This means that the presence of laws is only part of what is required for policy to be implemented. It is also necessary for a consensus to exist among all relevant agencies with an institutionalized role in decision-making on a particular issue-area. Decisions in a Soviet-type interagency mechanism are made on a case-by-case basis, within very general policy guidelines, which permit broad interpretation. A considerable number of decisions are made "by way of exceptions" (v poryadke isklyucheniya), a favorite phrase of Soviet and Russian bureaucrats, and one that means political expediency, rather than principle, is the criterion for choice.
In parallel to the regular process of applying for an export license, an enterprise can bring a proposed deal to the attention of "its" agency. The agency will then send a memorandum (zapiska) to other relevant agencies defending the proposal on the grounds of national security, for example, or creation of jobs. The memorandum is also likely to assert that the proposed deal does not contradict the nonproliferation policy and other international obligations of the country and if it does infringe on those, it is only a little, and such an exception is still advisable. Thus the issue immediately graduates from regular bureaucratic channels to the interagency level. Instead of a formal, "semi-automatic" review of whether the proposal meets certain preestablished criteria, it becomes a subject of substantial discussion with an unhealthy dose of politics. It also means that interagency deliberations begin in the absence of consensus.
The issue is usually considered at a working level, i.e., at the level of the agencies’ representatives in the Export Control Commission, which never exceeds the level of deputy minister. Decisions at that level normally depend on the constellation of personal and institutional power at any given moment. Furthermore, those in favor of a strict approach to export control are automatically at a disadvantage because they are vulnerable to charges of depriving enterprises of contracts for the sake of more general, vague foreign policy interests. If the proposal is approved, it is likely to feature such phrases as "in the national interest" or "by way of exception."
The result, as always happens in bureaucratic systems, depends on the concentration of interest, salience of the issue, and resources. If sufficient pressure is applied, the result could very well favor the enterprise, unless one of the agencies decides to introduce the issue at a higher level in the government. However, this does not happen very often. The representative of the agency opposing the questionable deal would have to involve the minister, who would need to put his authority and political influence on the line; if the minister were to lose, he would have to take the disagreement to the President. In other words, solving the disagreement at an increasingly high level is politically costly and all players are likely to try to avoid it. This means that a sufficiently committed agency -- the proponent of the deal -- is likely to obtain at least part of what it wants.
Furthermore, even the President is likely to be vulnerable to domestic pressures and to try to avoid offending important domestic players. Essentially, the interagency decision is only likely to be revisited in the case of interference by another state, as in the deal to sell a nuclear reactor to Iran. The influence of a foreign state, then, would counterbalance, to an extent, the domestic input. But under the Russian political system, a favorable result is far from guaranteed.
The cryogenic engine deal with India followed that pattern. The internal conflict quickly graduated from the "working level" (deputy ministers) to the Cabinet level and then reached the President. But even the President was reluctant to enter a politically costly battle. The compromise solution was based on a legally questionable argument; namely, that since the cryogenic engines could not be used in a combat missile, the deal did not contradict the MTCR. In fact, the letter of the regime was violated.
The sale of a nuclear reactor and related technology to Iran is a similar case, albeit one that does not involve the violation of international or domestic regulations. Some important players had second thoughts about the project: the Ministry of Defense traditionally had been cautious about selling modern technology and weapons to Iran,[9] and the Foreign Ministry (at least under Andrei Kozyrev) was worried that the nuclear deal with Iran could adversely affect US - Russian relations and strengthen a fundamentalist Islamic country. Still, the minimalist, permissive interpretation, favored by the Ministry of Atomic Energy, prevailed. In the end, only the more controversial aspects (such as the proposed sale of a gas centrifuge) were removed -- and even that required the interference of the United States to tip the balance.[10]
The same pattern can be detected in the on-going negotiations between Russia and India regarding the sale of two nuclear reactors to Koodankulam. The original deal did not provide for full-scope IAEA safeguards, and that issue seems to occupy a secondary place on the agenda today. Again, at stake are considerable economic benefits which are successfully competing with legal and national security considerations. As there are better export control regulations in place today than there were in 1992, Russia might be expected to abide by both international and domestic rules. But it is equally possible that the interpretation of the legal restrictions will be stretched to the limit.
The three deals (two with India and one with Iran) display some common traits. First, decisions are made on a case-by-case basis and follow the pattern of logrolling, whereby each institutional player gets something from it. Second, economic and sometimes short-term foreign policy interests receive more prominence than legal considerations (deals with India are often defended on the basis of the long-standing cooperative relations with the country). As a result, the Russian approach has been characterized by permissive interpretations of legal restrictions, under the principle that everything not expressly prohibited is permitted. A better legal basis for export controls will improve the situation only to a certain extent: there still will remain the opportunity to recast an issue in non-legal terms and apply a broad interpretation.
POLICY IMPLICATIONS
Gross violations of the nonproliferation export control regime are unlikely to be common in Russia, given its well-developed infrastructure of controls and personnel. There will always be attempts, however, to stretch the system to its limits and to reinterpret regulations. Well-publicized problems, such as corruption, low discipline in the government, and the lack of funding exacerbate the situation. Indeed, implementation often is a form of decision-making. But contrary to wide-spread beliefs, improved economic conditions and better funding of Customs, Border Guards, and relevant civil servants will not eradicate the potential for export control problems.
An improved overall economic situation, for example, will not necessarily translate into greater well-being of producers of WMD-related products; even if they diversify their line of products, the lure of "big ticket" contracts may prove too strong. These enterprises will continue to enjoy access to decision-makers and will be able to influence export policy. When the current economic crisis is overcome, Russia will still have to grapple with the same problems in its export control policy as other developed countries such as Germany, France, Japan, or, for that matter, the United States. The process will be lengthy and painful and, as in the West, without a final solution in sight.
Assuming reforms are not reversed, what can be expected from a politically and economically stable Russia? In a corporatist democracy, the government will remain under the strong influence of managerial elites and regional leadership. Consequently, it will be much less responsive to direct outside pressure. The business of influencing the Russian government will be about addressing the intrinsic interests of the private players who stand behind it. If they are satisfied, the government is likely to fall in line, but if they are not, the government will resist outside pressure.
This is fundamentally different from the experience of dealing with the Soviet Union. The Soviet government, despite its seeming intransigence, was able to compromise with relative ease. The dramatic breakthroughs under Gorbachev were possible only in an authoritarian regime and will not be repeated in a democratic Russia.
Two particular aspects of this comparison deserve elaboration. First, face-saving solutions will be less likely to work. Such solutions are convenient for the government but, as a rule, do not address intrinsic interests of relevant non-governmental players and are thus unlikely to change their position. It is worth noting that both in the Indian and Iranian deals the main players retained part of the original plan; this trend will continue into the future. Second, package deals, when concessions in one area are offset by matching "rewards" in another area, also will be less likely to work. The reason is the same: it is the interested parties that need compensation, not someone else.
Under the influence of domestic actors, Russia is likely to adhere to a minimalist, permissive interpretation of relevant international agreements. Its national legislation is unlikely to provide stricter limitations than international law and it will be very difficult to get Russia to agree to more restrictive international rule. The propensity for a minimalist approach is likely to bring Russia into conflict with the United States, which generally follows a stricter interpretation of international regimes, at least in some cases, such as the deal with Iran.[11]
This interpretation does not mean that the situation is hopeless. Russia as a whole will continue to be interested in a strong WMD nonproliferation regime. This policy will enjoy the support of many relevant actors, such as the military, at least on national security grounds. Furthermore, there exist important interests and players who would oppose steps capable of undermining profitable foreign trade in non-strategic products (essentially, the non-defense sectors of the economy, most recently the oil and gas industry and metallurgy). Intrinsic interests of producers of WMD-related products can be satisfied within the domestic market and through legitimate export deals, which is good news as well. Essentially, much will depend on whether enough important players can find a market without engaging in questionable activities.
Russia has a long way to go until it develops into a full-fledged stable market democracy. In the meantime it is essential to continue efforts to strengthen law-enforcement and create disincentives to imprudent or illegal exports. The International Science and Technology Center, which subsidizes civilian projects of Russian nuclear scientists, is an all too rare example of creative efforts to counter strong incentives today to export anything -- including technical know-how -- for the right price. In order for US assistance efforts in the export control area to have a desired effect, they will have to be sensitive to the new Russian political realities. Sources: [1] This section is based on a paper by Nikolai Sokov, "The Export Control System in Russia: Why Does It Work the Way It Does?" unpublished manuscript, Center for Nonproliferation Studies, Monterey Institute of International Studies, (December 1996). [2] The legal foundations of the export control system consist of three classes of legal documents: laws (adopted by the parliament and signed by the president), decrees of the president (which substitute for laws in a particular area until a regular law is adopted), and instructions, or guidance, issued by the government or governmental agencies, which supposedly elaborate on implementation details of laws and decrees. A particularly Russian (and Soviet) feature of the latter category, which in Russian legalese is called "sublaws" (podzakonnyi akty) is that these instructions can often change the intent and sometimes even the substance of laws. [3] Influence does not depend solely on the size, that is why simple majority is not a necessary prerequisite. It also depends on the relevance of a particular issue area to each actor and the willingness to commit resources. The win-set, thus, might be less than 50 percent of the relevant actors. [4] Until the fall of 1996, practically all regional governors had been appointed by the President. [5] The notion of belief constraints refers to the degree of coherence of belief systems, i.e. the ability of a person to detect and accommodate the contradictions between various issues. For example, the sale of nuclear technology to Iran would bring short-term economic benefits, but might create a nuclear state on Russia’s borders. A person with highly constrained beliefs is likely to note the contradiction and act on it; a person with a low degree of constraints is likely to ignore it. Another example involves a number of retired Russian generals who recently signed an appeal for elimination of nuclear weapons, but simultaneously insist on developing and deploying a new generation of tactical nuclear weapons. [6] Gary Bertsch and Igor Khripunov, "Privatization Carries Cost: Russian Firms Shrug At Proliferation Concerns," The Monitor, Vol. 2, No. 4, (Fall 1996), p. 17. [7] The Ministry of Defense Industry was created on the basis of a State Committee for Defense Industry. One should distinguish between the Russian ministry and a Soviet agency with the same name. In the Soviet Union, the Ministry of Defense Industry was one of the "Nine" -- the ministries, which were officially recognized as part of the defense-industrial complex. In Russia, it is an umbrella organization, which embraces a considerable part of the defense-industrial complex, excluding the Minatom enterprises (the former Ministry of Medium Machine-Building). [8] The MTCR was created in 1987. Initially the Soviet Union sought to amend it, but in 1990 Mikhail Gorbachev announced that the Soviet Union would abide by it. The wording of his declaration, however, was intentionally general and designed to preserve flexibility, including room for the deal with India on cryogenic engines. Only in January 1992 did Boris Yeltsin commit Russia to strict observance of the MTCR guidelines. [9] For example, the military has been rather unhappy about the sale of submarines to Iran, although it has preferred to maintain silence in public. [10] According to some reports, Minatom did not have proper authorization to negotiate the sale of a centrifuge. This probably helped the case to remove it from the final contract. [11] A former high-placed official in the Clinton Administration, speaking on condition of anonymity, noted that the United States and Russia clearly had fundamentally different approaches to the deal with Iran: the United States opposed any deal whatsoever, while the Russian government pressed on with those elements of the deal which did not directly violate IAEA guidelines.
To return to the
current
Russian export controls section, see the 
