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Elena Sokova, CNS Research Associate
INTRODUCTION Since the collapse of the Soviet Union in 1991, one of Russia's most pressing concerns has been the fate of the so-called "nuclear cities," home to 600,000 residents and workers.[1] It was in these 10 secret, highly restricted cities that the Soviet Union designed and produced its nuclear weapons stockpile (for a list of the 10 nuclear cities see below or the closed cities map and table). Once generously funded by the Soviet state, the nuclear cities have been forced to grapple with enormous funding problems over the past decade of political, social, and economic difficulties in Russia. Formerly well-paid nuclear specialists were being paid meager wages that were often delayed for several months; the standard of living in the closed cities dropped significantly. This problem came to the forefront in the mid-1990s because of repeated strikes by nuclear workers in closed cities over back wages, attempts at nuclear smuggling and theft, and the "brain drain" of scientists.[9]RUSSIAN ATTEMPTS AT REFORM The Russian government has attempted several fiscal reforms to help alleviate the worsening condition of the nuclear cities. Most notably, in its 1998 amendment to the law On Closed Territorial Administrative Entities, the Russian government allowed nuclear cities to keep their tax revenues instead of turning them over to the federal government. It was hoped that by taking this measure, the closed territories would be able to reinvest the tax revenues locally and generate profits by converting production to more marketable, consumer-oriented goods.[3,4] In the end, however, this particular reform was not successful in terms of generating self-sufficiency and instead led to charges of corruption on the part of local officials who took kickbacks for allowing non-local firms to register in their cities and thus avoid taxes.[5] In 2001, the Russian government eliminated the tax benefits to the closed cities. The former Soviet Union's nuclear weapons facilities remain heavily subsidized by the state and attempts at genuine economic reform have produced little progress. NUCLEAR CITIES INITIATIVE Several US assistance programs, such as the MPC&A program, Initiatives for Proliferation Prevention, and the International Science and Technology Center research grant program, have provided crucial temporary support to some of the scientists from the closed cities and engaged them in alternative, non-military employment. But none of these programs specifically targets the creation of sustainable civilian jobs for nuclear scientists and workers in the closed cities. The Nuclear Cities Initiative (NCI) sought to fill this gap. The concept of the NCI was largely based on a proposal issued in September 1997 by the Russian-American Nuclear Security Advisory Council (RANSAC), a nongovernmental organization devoted to nuclear issues in the former Soviet Union. The RANSAC report recommended, among other things, "improve[d] Russian-American cooperation on the commercialization of products produced by the nuclear cities and the establishment of new self-sustaining commercial enterprises."[8] Shortly after the RANSAC report was issued, talks began between the US Department of Energy (DOE) and the Russian Ministry of Atomic Energy (Minatom), and by late March 1998, both agencies were pledging their support for the plan.[2] The motivating idea behind the initiative is the creation of new economic opportunities in the nuclear cities through foreign investment and conversion of existing weapons facilities (including labs and production facilities). Thus, the downsizing of the Russian nuclear military complex could be accelerated and the danger of the spread of nuclear know-how by unemployed and unpaid nuclear specialists from the closed cities minimized. It was hoped that the NCI would help the cities to become more self-sufficient by converting production to reflect the demands of a consumer-oriented market, by creating jobs in the civilian sector, and by attracting private investment to aid in the conversion process. During the September 1998 summit in Moscow, US President Bill Clinton and Russian President Boris Yeltsin approved the basic concept. The deal was formalized on 22 September 1998, when US Secretary of Energy Bill Richardson and Russian Minister of Atomic Energy Yevgeniy Adamov signed the Nuclear Cities Initiative Agreement.[7] While the agreement covers all 10 nuclear cities, three pilot cities were selected for the initial stage of the program: Sarov (formerly Arzamas-16), Snezhinsk (formerly Chelyabinsk-70), and Zheleznogorsk (formerly Krasnoyarsk-26).[6] The program had a slow start due to delays in obtaining initial funding to launch the effort in 1999 ($15 million were taken from other US assistance programs for this purpose), the absence of well-developed city-specific conversion and economic development plans, and a lack of necessary institutional and business infrastructure in the three selected cities. The progress of the program was hindered by the August 1998 financial crisis in Russia and the decision by the US Congress to limit the funding for the NCI in FY 2000 to $7.5 million. Restricted access to the closed cities, their remote locations, and the unstable and poorly defined legal and economic environment in Russia continue to be the major stumbling blocks in attracting investment from private business. Despite these difficulties, several projects under the NCI framework have been successfully implemented. Among them are Open Computing Centers in Sarov and Snezhinsk, International Development Centers in Zheleznogorsk and Snezhinsk, a new technopark on the territory of the Avangard plant in Sarov (where a dialysis machine production line will be built), an agreement with the European Bank for Reconstruction and Development (EBRD) to provide access to more than $100 million in EBRD loans for small business development in the closed cities (by April 2001, nearly $1.5 million in EBRD loans had been granted to businesses in the three pilot closed cities), and several other small business projects in the three cities.[10,12,15] In 2000 and 2001, the NCI continued to
be limited under US law to Sarov, Snezhinsk, and Zheleznogorsk and to two serial warhead
assembly and disassembly facilities--Avangard in Sarov and Start in
Zarechnyy; Russia, however, rejected NCI efforts to begin work at the latter,
requiring that the program first demonstrate success at the Avangard facility. For FY 2001, $26.6
million was appropriated for the Nuclear Cities Initiative in the US budget,[11]
including $10 million to facilitate the closure of the Avangard and Start warhead
production plants. However, the US Congress made the availability of $10 million for closure of warhead
production facilities conditional on DOE's completing an
agreement with the Russian government under which Russia would agree to close some
of its facilities engaged in weapons assembly and disassembly in exchange for
receiving assistance under the NCI. As of October 2001, that agreement had not
been completed. According to estimates based on Minatom
information, $10 million is only one-tenth of the amount needed to complete
closure of these plants and create 10,000 civilian jobs for the workforce that
will be freed up.[12] Table I: Nuclear Cities Initiative Funding
For additional information on the Nuclear Cities Initiative, please visit the following websites:
RUSSIA'S TEN NUCLEAR CITIES: Sarov (location of VNIIEF-Federal Nuclear Center and Avangard Electromechanical Plant).
Formerly known as Arzamas-16. For general information on the facilities,
click here.
Page last updated 2 February 2005 Comments or questions? Contact Elena Sokova at MIIS CNS: esokovaATmiis.edu 
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