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Tracking Number:  409811

(951004)

Date:  19951004

Text:
*EUR309

10/04/95 (The following information accompanied the press release provided by the Office of the Assistant Secretary of Defense October 3.)

COOPERATIVE THREAT REDUCTION ASSISTANCE TO KAZAKSTAN

Assistance to Kazakstan is being provided through ten unique CTR projects. Notifications to Congress total $131.5 million. To date $45.3 million has been obligated and another $34.4 million is in the process of being obligated.

The following provides a summary of each of the projects in which the United States is engaged with Kazakstan, corresponding to the implementing agreements.

Strategic Offensive Arms Elimination This $70 million project will assist Kazakstan in the safe elimination and clean-up of all SS-18 silo launchers and launch control sites, training silos, and silo test launchers, which will enable Kazakstan to fulfill START I obligations. Technical meetings held in January 1994 determined that an integrating contractor could most effectively oversee and ensure completion of the required dismantlement and site restoration activities. In February 1994, a Request for Proposals for an ICBM silo dismantlement integrating contractor was released to industry and a site visit was scheduled. Due to Russian objections to contractor presence, the visit was canceled.

In May 1994, U.S. and Kazakstan officials agreed on a two-phase approach. In the first phase, Russia would be responsible for destroying the silo head works. No U.S. personnel would be on site during this phase, but the U.S. would be willing to provide assistance to Kazakstan for its tasks. The U.S. would assist Kazakstan in the second phase, clean-up of the destroyed silos, through the provision of a general contractor. Based on this approach, a revised Request for proposal was released on 3 May 95 and a site visit and contractor fair were held during the week of 5 June 1995. Proposals were evaluated 11-20 July 1995 and final contract award is expected by early October 1995. Two contracts, valued at approximately $1.2 million, have been awarded to Kazakstan firms to remove equipment deemed valuable to the government of Kazakstan prior to the destruction of the silos by the Russians.

This agreement was amended in July 1995 to allow the USG to provide other types of dismantlement assistance to Kazakstan, such as elimination of infrastructure associated with strategic offensive arms, the disposition of excess liquid rocket fuel, and the elimination of heavy bombers.

Government-to-Government Communications Link (GGCL) This $2.30 million assistance project provides Kazakstan with the necessary communications equipment and training to facilitate meeting reporting obligations under the START and Intermediate-Range Nuclear Forces (INF) Treaties. Implementation of a GGCL capability is being accomplished in a manner consistent with Defense Information Systems Agency modernization of the Direct Communications Link (DCL) between the United States and Russia, modified as appropriate to meet the unique requirements of individual new independent states such as Kazakstan.

Interim computer equipment was installed and operational in October 1994. The schedule now calls for installation and operation of permanent equipment by October 1995 with final operational cutover scheduled to be activated in November 1995.

Emergency Response Equipment and Training The purpose of this $5.0 million project is to assist the Republic of Kazakstan in the expansion of emergency response capabilities in connection with the return of nuclear warheads to Russia for destruction and the removal. of ICBMs and destruction of their silo launchers.

The initial technical exchange was conducted on 7-11 August 1994 at Los Alamos National Laboratory. The specifications and types/models of equipment required, related training, and delivery schedules were generated during these discussions. The U.S. has completed equipment procurements through existing contracts. Delivery of all equipment is scheduled for this year, with related training to follow. Types of equipment to be provided: VHF portable radios, portable command and control computers, chemical and fire fighting protective clothing, personal dosimetry equipment, Violinist III x-ray and gamma ray instrument kits, and air sampling monitors.

Export Control The export control assistance program in Kazakstan was initiated with the signature of the Implementing agreement on 14 December 1993. An amendment to the agreement was signed on 30 June 1995 for an additional $5.0 million.

The $7.26 million in export control assistance will include efforts to introduce Kazakstan to international export control regimes and to involve them in their creation and propagation. Other initiatives will include assistance in drafting legislation and building the political infrastructure to support and develop export controls. Computers, customs lab equipment and patrol boats procurements will augment that infrastructure. Delivery and training on the Customs laboratory equipment is scheduled to occur in October 1995. The Licensing Automation local-area-network, consisting of four PCs and 2 laptop computers is scheduled to be delivered in October 1995. The procurement process for the automation of the Ministry of Industry & Trade (MIT) was initiated in September 1995. A total of six patrol boats will be procured to assist the Kazakstani Customs Service with their enforcement capabilities on the Caspian Sea. Two 27' Boston Whalers are scheduled to be delivered in December 1995. The remaining three Boston Whalers and one 42' patrol boat will be delivered in Spring 1996. The program is scheduled for completion by the end of Fiscal Year (FY) 1997.

Material Control and Accounting and Physical Protection (MC&A and PP) The basic objective of U.S. assistance under this project is to strengthen Kazakstan's national systems of MC&A and PP in a timely manner. MC&A systems provide capability for detecting possible theft, diversion, or other unauthorized use of nuclear material and deterring such acts by imposing a risk of detection. PP provides capability for detecting, delaying, and responding to adversarial acts, including theft and sabotage. Building upon existing Kazakstan national MC&A and PP policies and practices, the United States is assisting Kazakstan in developing programs and national resources to ensure the effective regulatory oversight of MC&A and PP; enhanced capability for effectively tracking and reporting on nuclear material inventories and transfers, enhanced capability for both national authorities and facilities to determine and account for nuclear material inventories; effective physical protection measures for nuclear materials and facilities; effective technical support for MC&A and PP including resources for training, developing, and implementing technologies and equipment, as well as for providing technical assistance to facilities.

The MC&A and PP program plan was agreed in March 1994 to implement the agreement which was signed in December 1993. An amendment to the agreement was signed on 30 June 1995 for an additional $3.0 million. Current project funding is $8.0 million, and estimated project completion date is in FY 1998. The first technical working group meeting took place in Almaty in July 1994. The first site surveys in Kazakstan took place in September at the Ulba facility in Ust-Kamenogorsk and at the research reactor complexes at Semipalatinsk. A local area network was delivered to the Atomic Energy Agency of the Republic of Kazakstan (AEARK) in August 1995 to start the development of the national information system for nuclear materials accounting. Other procurements have been initiated, based on the regulatory and site assessments performed in late 1994.

Expanded Defense and Military Contacts The objective of this $900,000 project is to promote better understanding and cooperation between the military establishments of the United States and Kazakstan. To date, eight scheduled events have been funded for a total value of $160,162. Three events are scheduled for the remainder of this year and into the next. Types of events include: U.S. Coast Guard aviation team visit, Kazakstan participation in disaster relief conference, U.S. Army General officer visit, U.S. Kazakstan Defense Conversion meeting in Washington, and Kazakstan Navy visit to U.S. Coast Guard.

Industrial Partnerships On 19 March 1991, Secretary of Defense Perry signed the defense conversion implementing agreement. The final list of defense enterprises that would be considered for industrial partnerships, or defense conversion, was agreed to on 30 June 1994. On that same list were 11 additional companies that both governments agreed would be eligible for assistance when additional funds above the $15 million in this project would become eligible. The CBD notice of procurement action came 11 July 1994, with RFP release on 26 July 1994. The Defense Nuclear Agency handled the procurement of U.S-Western companies for partnerships.

A pre-proposal conference was held on 9 August 1994 to introduce eight Kazakstan enterprises to US/Western firms.

On 20 Jan 1995, DNA awarded a $16M cost-sharing contract with the USG contributing $5M and AT&T contributing $11.1M. In addition, AT&T will privately finance $6.5M in operational expenses during the 12-month period. AT&T and KazInformtelecom (KIT) will establish an international and domestic wireless telecommunication service in Kazakhstan, converting the Saryshagan 3-D facility into an international telecommunications down link. Wireless telecommunications will be operational to 11 cities within 12 months. KIT and AT&T signed a Shareholders Agreement and Articles of Association on January 17, 1995 as the first step in their eventual joint venture (JV). KIT is a private, joint stock company.

On 23 March 1995, DNA awarded a $5.82M cost-sharing contract with the USG contributing $2,685,992 and Allen&Associates Int. (AAI) contributing $3,139,620. AAI and their Kazakstani partner, Biomedpreparat, will convert a facility to manufacture, package, and distribute vitamins, pharmaceuticals, and antibiotics. AAI and Biomedpreparat will form a joint venture with at least 50% ownership by AAI. Biomedpreparat is already a private company. The new joint venture will be called KAMED Resources. The joint venture will utilize between 3,300 and 6,500 square feet of facility formerly used for biological warfare production.

On 23 March 1995, DNA awarded a $7.6M cost-sharing contract with the USG contributing $3,998,304 and Kras (a U.S. company) contributing $3,698,3O8. Kras and the Kazakstan National Nuclear Center (NNC) will convert a facility into a printed circuit board production plant. Kras and NNC will form a 50/50 privatized joint venture called the National Nuclear Center Conversion Consortium (NNCCC). Kras and NNC are completing a conversion project initiated by the Soviet Union. NNCCC will manufacture and market single and double layer printed circuit boards (PCBs) for the regional and international market. These PCBs are commonly found on simple control systems such as light switches, burglar alarms, phone systems, radios, TVs and other consumer electronics. They will refurbish and install equipment in a facility with over 26,000 square feet.

On 23 March 1995, DNA awarded a $6.27M cost-sharing contract with the USG contributing $2,985,446 and Byelocorp Scientific Inc. (BSI) contributing $3,283,048. BSI and Gidromash will convert facilities to manufacture, service, ship, and distribute valves and American Society of Mechanical Engineers (ASME) certified pressure vessels. The JV will fully utilize the remaining production space at Gidromash, where missile and aircraft systems were formerly produced. (Gidromash has three major production buildings. This JV will use two, and the third is currently being used by an Australian JV to produce copper cable). The JV will utilize 498,000 square feet of space, much of which was previously used for rocket production. The registration of the joint venture BYELKAMIT to convert all of Gidromash to a joint stock company has been a drawn-out process because of the difficulty with receiving approval from various cabinet members. Although the charter has been negotiated and agreed upon with 33% ownership by the Kazakhstani government and 67% by BSI, SUPCO and private persons, JV registration has yet to be finalized. The State Property Committee refuses to approve the JV unless the ownership arrangement is changed to 50/50.

Defense Enterprise Fund On 21 June 1994, the U.S. Secretary of Defense designated the Defense Enterprise Fund (DEF) to assist in the conversion and privatization of excess military/industrial capacity through financial assistance for partnerships. President Clinton appointed Mr. Randolph Reynolds as Chairman, Board of Directors, with Mr. Kevin McDonald as the CEO (Chief Executive Officer). The DEF receives its funds by Nunn-Lugar grants directly. Other than for Nunn-Lugar grants, the Defense Enterprise Fund is an independent not-for-profit U.S. corporation. Enterprises that qualify for DEF investment include: privatized enterprises or spin-offs; defe-use enterprises or laboratories, with priority placed on those previously engaged in activities related to weapons of mass destruction; and partnerships in conjunction with U.S. or Western companies. The types of financial assistance which are available include equity, loans, guarantees, and grants.

On 6 June 1995, DEF Board approved a $3M investment in joint venture between Telecom 21, a U.S. company, and Kazlnformtelecom, a private Kazakstani company. The total deal size is approximately $25M. Negotiations are now ongoing and the DEF expects the deal to be finalized within the next two months. The JV will convert a portion of a Soviet missile tracking site to a commercial telecommunications center and will carry long-distance voice and data traffic, as well as provide local telephone service. Kazakstani employment levels are expected to reach 50-250 people.

International Science and Technology Center Kazakhstan has completed formal accession procedures to become the latest CIS member of the International Science Technology Center (ISTC) as of the sixth board meeting held on 29-30 June 1995. The purpose of the ISTC is to assist in the prevention of proliferation of technology and expertise by providing peaceful employment opportunities for scientists and engineers formerly involved in weapons of mass destruction activities. $9M was notified to Congress, $6M on 14 February 1995 and $3M on 30 May 1995. One project was awarded to Kazakhstan during the sixth Board meeting with funding by Japan for over $200K for the National Nuclear Center of Kazakhstan-Institute of Atomic Energy.

Nuclear Infrastructure Elimination -- Degelen Mountain The purpose of this $7 million program is to assist Kazakstan in the elimination of infrastructure directly supporting strategic offensive arms, and the demilitarization of infrastructure associated with the nuclear weapon test tunnels at Degelen Mountain. The agreement to be signed today (October 3) is for a $6 million project to seal the tunnels used for underground nuclear testing at the Degelen Mountain Test Site is under development. Phase One of this project, to perform site assessments and develop schedules and budgets, is ready to begin. Phase Two will involve sealing of up to 186 tunnels used for over 200 underground tests between 1961 and 1990. Project Sapphire, the purchase of 600 kg of highly enriched uranium from a Kazakstani production facility in the fall of 1994, was partially paid for with $1 million of NIE funds.

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