FOR IMMEDIATE RELEASE
September 22, 1998

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Richardson and Adamov Reach Agreement on Nuclear Cities
and Framework for Resolving Problems with the HUE Deal

Vienna, Austria -- After a series of intensive negotiations, Secretary of Energy Bill Richardson and Russian Minister of Atomic Energy Yevgeny Adamov today signed an agreement to bring commercial enterprises to Russia's closed "nuclear cities" and a joint report that outlines a framework to resolve the problems with the agreement for U.S. purchase of uranium from Russian nuclear weapons (the highly enriched uranium, or HEU deal). The negotiations and signing ceremony took place during a meeting of the International Atomic Energy Agency General Conference in Vienna, Austria.

"These successes are important to our national security interests and represent significant progress in our nonproliferation cooperation with the Russians," said Secretary Bill Richardson.

Nuclear Cities
The ten "nuclear cities" were among the most secret facilities in the former Soviet Union. Behind their walls, thousands of scientists and engineers worked on the design, assembly and production of the Soviet nuclear arsenal.

Under the Nuclear Cities Initiative, the United States and Russia will join forces to bring jobs and commercial enterprises to Russia's secret "nuclear cities." The United States will lend its private enterprise experience to the ten Russian cities and matchmake private sector companies with the Russian facilities for manufacturing, marketing and sales of commercial goods.

"This is a Russian-led effort to 'rightsize' their nuclear complex and use the valuable skills of their scientists and engineers to promote economic development and new enterprises -- to turn the scientific and technological expertise that resides in their premier weapons facilities toward peaceful uses," Richardson said. "I can not emphasize enough how important it is to us all that economic hardship not drive Russian nuclear weapons scientists into employment in places like Iran and North Korea."

The initiative draws on the experience of the United States in restructuring the former nuclear weapons laboratories and production complexes. The Department of Energy will share the experience in restructuring that has taken place at U.S. nuclear sites such as in Hanford, Washington and Oak Ridge, Tennessee, and will provide business training and support for development at the nuclear cities and institutes in Russia affected by downsizing. The United States technical assistance will include training in business planning, methods to attract business to the area, and ways to get new businesses off the ground.

"The success of the Nuclear Cities Initiative will also serve our mutual arms control goals," Richardson said. "We have both had to worry about 'rightsizing' our nuclear complexes as our nuclear arsenals come down in size. We hope our experience will be a big help to the Russians as they start to close nuclear facilities."

HEU Joint Report
"The HEU purchase agreement is important to both our nations because it gets nuclear weapons grade material out of circulation and brings much needed hard currency to the Russian economy," Richardson said. "The joint report we are signing today provides the framework to remove potential obstacles to implementing the agreement -- it is important because it is based on the premise that the solution is a commercial agreement between Russia and a group of western uranium companies."

Under the HEU Agreement that was signed in 1993, Russia is converting highly enriched uranium extracted from dismantled nuclear weapons to low-enriched uranium which is delivered to the U.S. for use in commercial nuclear reactors. Russia receives substantial payments for this material from the U.S. Enrichment Corporation (USEC).

At the summit in September, Presidents Clinton and Yeltsin recognized the need to address additional payments to Russia as compensation for the value of the natural uranium used to produce the reactor fuel delivered to the U.S.

The United States has agreed to take a number of steps to encourage and facilitate a deal between Russia and the western companies. These steps include:

• deferring sales of uranium by the Department of Energy;
  
  
• arranging an advance payment to Russia to be repaid through future deliveries of enriched uranium; and
  
  
• assistance in returning a portion of the natural uranium to Russia.

In turn, Russia commits to conclude an agreement with the group of western companies that will allow Russia to realize fair value for the Russian material.

The United States is committed to continuing to work with both Russia and the western companies to reach a mutually acceptable commercial solution. The framework in today's joint report will ensure that smooth implementation of the HEU agreement will continue for the next months while all parties seek agreement on commercial terms for fair payment to Russia.

Closed Nuclear Cities of the Russian Federation

Arzamas-16, Sarov
Nuclear weapons design, assembly and plutonium storage

Penza-19, Zarechnyy
Nuclear weapons assembly, disassembly, plutonium and highly enriched uranium storage

Sverdlovsk-44, Novoyouralsk
Uranium enrichment, highly enriched uranium storage and blenddown

Sverdlovsk-45, Lesnoy
Nuclear weapons assembly, disassembly, plutonium storage

Chelyabinsk-65, Ozersk, Mayak Site
Fuel fabrication, mixed oxide fuel, plutonium production reactors, reprocessing, waste management

Chelyabinsk-70, Snezhinsk
Nuclear weapons design, plutonium and highly enriched uranium storage

Zlatoust-36, Trekhgornyy
Nuclear weapons assembly, disassembly, plutonium and highly enriched uranium storage

Tomsk-7, Seversk
Uranium enrichment and reprocessing, plutonium production reactors, waste management

Krasnoyarsk-26, Zheleznogorsk
Reprocessing, plutonium production reactors, waste management

Krasnoyarsk-45, Zelenogorsk
Fuel fabrication (military), uranium enrichment-