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Weapons of Mass Destruction (WMD)

25 July 2002

Larson Praises G-8 Initiative on Weapons of Mass Destruction

(Plan calls for $20,000 million commitment over 10 years) (2060)
The agreement by the Group of Eight (G-8) industrialized nations to
raise up to $20,000 million over 10 years to combat the proliferation
and spread of weapons of mass destruction, improve nuclear safety, and
counter terrorism, was "the most notable achievement" of the recent
G-8 summit in Canada, a senior U.S. Department of State official says.
"The United States has agreed to provide half of this sum; our
partners will contribute a matching amount. This initiative will make
possible substantially increased nonproliferation efforts, through new
and expanded multilateral and bilateral projects," said Under
Secretary for Economic, Business and Agricultural Affairs Alan Larson.
Testifying July 25 before the House International Relations Committee,
Larson said this commitment made during the recent G-8 Summit in
Kananaskis, Canada also includes a provision to prevent terrorists
from gaining use or control of weapons or materials of mass
destruction.
Larson said the G-8 Global Partnership Against the Spread of Weapons
and Materials of Mass Destruction will initially focus on
non-proliferation, disarmament, counterterrorism and nuclear safety
projects in Russia.
"Partners will coordinate their projects to obtain the broadest
coverage of non-proliferation requirements, avoid gaps or overlap, and
help resolve any implementation problems," Larson said.
As part of the general plan, Larson said that the United States would
agree to waive collection of a specified amount of Russia's Soviet-era
debt owed to the United States to allow Russia to spend more of its
budget on agreed non-proliferation activities.
"The financial and budget mechanics would be worked out in
negotiations with Russia, subject to the requirements of U.S. law," he
said. And, he added that the Bush administration will consult closely
with Congress on this program.
He said that Russia is interested in applying such a debt arrangement
to part or all of its Soviet-era debt to the United States.
"The Administration has agreed to consider this exceptional financing
option for Russia because of the unique burden Russia bears from the
Cold War," Larson said. "It is not in our interest that Russia should
face alone the harsh choice between the basic needs of its population
or eliminating chemical weapons or excess plutonium."
Following are abbreviations and acronyms used in the text:
-- G-8: Group of Eight, which includes Britain, Canada, France,
Germany, Italy, Japan, Russia, and the United States.
-- billion: 1,000 million.
Following is the text of Larson's remarks:
(begin text)
Testimony of Under Secretary of State For Economic, Business and
Agricultural Affairs Alan Larson Before the House International
Relations Committee
July 25, 2002
I would like to thank Chairman Hyde and other distinguished committee
members for the opportunity to testify on the G-8 Global Partnership
Against the Spread of Weapons and Materials of Mass Destruction. My
testimony will focus on one of the possible means of financing this
important initiative -- the waiver of U.S. collection of Russia's
repayment on its Soviet-era debt to the U.S. in order to finance
Russia's implementation of expanded non-proliferation programs.
Let me step back from the debt issue for a moment and underscore two
very important reasons for expanding cooperation to promote
non-proliferation. The first is the national security imperative of
destroying or bringing under responsible control the materials and
technologies that could let hostile powers threaten the United States
with weapons of mass destruction. The attacks of September 11 have
given us a glimpse of the terror that such weapons, in the wrong
hands, could inflict on the American people, or on the people of any
country.
The second reason is the new opportunity opened by the U.S.-Russia
strategic relationship. Over the last year Russia has confirmed its
position as a partner in the war against terror and is cooperating
with the United States on many issues. In particular, the Russian
leadership has made clear its interest in doing more, cooperatively,
to eliminate or secure weapons of mass destruction and related
material, equipment and technologies
One fruit of this new spirit is the G-8 Global Partnership Against the
Spread of Weapons and Materials of Mass Destruction. This agreement
between Russia and the other G-8 countries was the most notable
achievement of the G-8 Summit in Kananaskis. It will focus on
non-proliferation, disarmament, counterterrorism and nuclear safety
projects, initially in Russia. The U.S. played a leading role, but all
of our G-8 partners -- Russia, Germany, France, the United Kingdom,
Italy, Japan, the European Union, and, of course, Canada - deserve
great credit for seeing and grasping a historic opportunity.
The Global Partnership commits the G-8 to raise up to $20 billion over
10 years for cooperation projects to address non-proliferation,
disarmament, counter-terrorism and nuclear safety issues. The United
States has agreed to provide half of this sum; our partners will
contribute a matching amount. This initiative will make possible
substantially increased nonproliferation efforts, through new and
expanded multilateral and bilateral projects.
The initiative also includes a commitment to a set of principles
designed to prevent terrorists from gaining access to weapons or
materials of mass destruction. And the G8 partners agreed on
guidelines for new or expanded cooperation projects to provide for
more effective implementation. Partners will coordinate their projects
to obtain the broadest coverage of non-proliferation requirements,
avoid gaps or overlap, and help resolve any implementation problems.
The initiative allows each partner the flexibility to finance and
carry out projects in a manner consistent with its program priorities,
national laws and budgetary procedures. Bilateral debt for program
exchange is an option for financing projects under the Partnership. We
do not know at this point whether others will use debt exchange or
more conventional assistance or a mix of both. We do know that debt
exchange will be difficult for some of our partners. The
Administration will consult closely with Congress on the formulation
of non-proliferation and threat reduction programs and projects and on
the choice between debt or more traditional assistance as a funding
vehicle.
The Administration's concept for how a debt option might work is
straightforward. The United States would agree in advance to waive
collection of a given amount of debt payments owed by the Russian
government to the United States government on Russia's Soviet-era
debt. As a consequence, Russia would be able to make expanded
budgetary expenditures for agreed non-proliferation activities. The
financial and budget mechanics would be worked out in negotiations
with Russia, subject to the requirements of U.S. law. We know the
Russian authorities are interested in applying such an approach to
part or all of their Soviet-era debt to the United States. Beyond
that, there are still many details that would need to be worked out.
We need to determine under what conditions we could offer such an
option to Russia. The Russians will need to decide whether such a deal
would be advantageous for them, relative to other options.
I would like to highlight one point, that the Administration does not
consider this kind of a financing vehicle as debt relief, per se.
Financially, Russia does not require further debt relief. Since its
financial crisis in 1998, Russia has adopted improved economic
policies and has benefited from relatively high world oil prices.
Although it remains a country with serious poverty and pressing needs,
it can and is paying its bills.
At the same time, Russia cannot afford to do everything we would like
it to do. In the wake of the breakup of the former Soviet Union,
Russia chose to take over the assets and liabilities of the Soviet
Union. This decision saddled Russia with a number of burdens, among
them a vast and decaying collection of Soviet-era weapons and
production facilities. In addition, Russia assumed the entire Soviet
debt in exchange for title to all Soviet assets abroad. A decade
later, these decisions and a changing global environment have left
Russia with many responsibilities: to destroy chemical weapons in
compliance with international obligations; to close down plutonium
production facilities and dispose of excess fissile material; to
dismantle old ballistic missile submarines and other strategic launch
systems. It must secure remaining WMD or materials. These tasks remain
despite U.S. assistance of $7 billion to Russia and other former
Soviet states for these purposes.
While Russia's fiscal position has strengthened enormously over the
past three years -- it is now running budget surpluses -- Russia is
pursuing an ambitious set of structural reforms that will involve
significant fiscal outlays over the medium term. The World Bank's new
country assistance strategy records how costly and painful the
transition from a command economy has been.
Between 22 and 33 percent of Russians live in poverty. The life
expectancy of a man declined from 64 years to 59 over the past decade.
The government must cope with persistent financial demands to update
its antiquated education and health systems. While Russia has been
devoting its own resources to the destruction and control of dangerous
materials, budget pressures have made it difficult to proceed with
these tasks as fast as the Russian leadership and we believe is
necessary.
The Administration has agreed to consider this exceptional financing
option for Russia because of the unique burden Russia bears from the
Cold War. It is not in our interest that Russia should face alone the
harsh choice between the basic needs of its population or eliminating
chemical weapons or excess plutonium. This is why we provide
assistance, and this is why we would agree to allow Russia to use
funds that it would otherwise pay us in order to achieve our mutual
objectives.
Only in Russia do we confront so starkly the combination of Cold War
debts and the proliferation threat. We see debt exchange for financing
non-proliferation efforts as a possible approach unique to Russia. It
would use Soviet-era debt to help Russia address Soviet-era problems.
Under the G-8 Global Partnership, other types of financial assistance
-- notably provision of goods and services -- can be made available to
other countries of the former Soviet Union. The United States is
committed to continuing and expanding our current non-proliferation
programs in Ukraine, Kazakhstan, Uzbekistan and other former Soviet
states, and we encourage our G-7 partners to expand their own efforts
there.
Members of the committee understand the priority we accord to
cooperative non-proliferation and threat reduction activities in
Russia. We appreciate your willingness to hold this hearing on
addressing those needs by facilitating debt exchange. I would like to
describe more specifically some of the preliminary ideas we have on
this issue. And we would be happy to work with Congress as the
Administration moves forward with this initiative to shape the
language of this bill, which does, in our view, need some technical
revisions to make it more suitable for this purpose.
A debt exchange arrangement would be a contract between the United
States and Russia. First, the contract would be based on a mutually
agreed upon price for a clearly defined product, just as is the case
with our current assistance programs. For instance, if the U.S. and
Russia agreed that a specific project would cost $50 million over
three years, then the U.S. would relieve Russia of the obligation to
make $50 million of debt payments over three years -- a
dollar-for-dollar proposition. There would be an agreed timeline for
delivery, with clear benchmarks for tracking specific projects. We
would insist on effective monitoring and accountability, a key part of
our DOD, DOE and State programs. The contract would include provisions
for suspension, and even termination, of the debt exchange, in the
event of non-performance. The Committee should note, however, that as
provided under the Credit Reform Act, the Administration would request
that Congress provide the costs of this contract at the outset of the
program.
In closing, I would like to emphasize that this initiative is a work
in progress. Many details remain. But it is an innovative option that
the administration would like to have available for working with the
Russian Federation on addressing Soviet-era threats to our mutual
advantage.
Although much work is still necessary to develop the technical aspects
of this proposal, I would be happy to answer any questions, to the
best of my ability.
(end text)
(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)
      



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