In April of 1992, Thomas Neff, a research affiliate of MIT’s Center for International Studies, arrived in Moscow and presented himself at Russia’s Ministry of Foreign Affairs without an appointment. He walked up to the guard at the door and handed over his passport and the business card of a senior official of the ministry, whom he’d met the previous fall in Washington, D.C. Minutes later, Neff was standing in the official’s office. Mere months after the breakup of the Soviet Union, one could do business in Russia that way.
Neff was in Moscow to pursue a proposal that would effectively turn Russian weapons into American electricity. The idea was that the United States would buy some of Russia’s weapons-grade highly enriched uranium (HEU), reëngineered as low-enriched uranium (LEU), for use as fuel in U.S. nuclear reactors. It was not a tit-for-tat government initiative but a commercial proposition designed to pay for itself—which is why he thought it could work.
Neff came up with the idea in the fall of 1991, and shortly after suggesting it to American and Soviet officials and scientists, he published an op-ed in the New York Times that he hoped would prompt the necessary action. It didn’t. Instead, he would spend years painstakingly advising both sides, sharing information, coaxing the deal along, writing hundreds of memos. At one point he was told to change his typeface, because everyone who saw his memos lying on a desk would recognize them. He nudged quietly in some cases, providing bullet points for Russia’s minister of atomic energy to include in a letter to the U.S. Department of State. In other cases he was outspoken, writing articles for the journal Arms Control Today to criticize U.S. political and business decisions that threatened to derail the deal.
His sustained work on the 20-year agreement kept it moving forward, and what came to be known as the Megatons to Megawatts program earned him the Leo Szilard Award for Physics in the Public Interest in 1997. Last fall, the deal’s final shipment of uranium from St. Petersburg pulled into port in Baltimore. From 1995 to 2013 some 15,000 metric tons of LEU, diluted from 500 metric tons of HEU, were delivered; it was enough material to make fuel to power the entire United States for about two years.
The Russians, in return, earned $17 billion and relieved the world of the equivalent of 20,000 nuclear warheads.
“It’s certainly been one of the more successful nonproliferation agreements in history in terms of the scale of material it’s dealt with [and] the amount of nuclear weapons equivalents it got rid of,” says Jeffrey Hughes, senior advisor to U.S. Secretary of Energy Ernest Moniz, HM ’11. Hughes, who worked on the deal as an advisor in the U.S. Department of Energy starting in 1994, adds that the program also served as a “lifeline” for Russia’s nuclear industry, paying salaries at a time when the crumbling government’s budget was uncertain and some feared that Russia’s nuclear workers would go rogue simply to put food on the table. At the time, he says, the proceeds “basically were the budget of the Ministry of Atomic Energy of Russia.”
Over the life of the Megatons to Megawatts program, Russian uranium provided almost half the fuel used in American nuclear reactors, which supply one-fifth of the electric power consumed in the United States. But the trade almost didn’t happen.
An Idea Is Born
The improbable collaboration got rolling when Neff, an expert on nuclear fuel markets and former director of the International Energy Studies Program at MIT, was invited to an October 1991 meeting to discuss U.S.-Soviet coöperation on nuclear weapons reduction. (The START I treaty, calling for bilateral reductions in strategic nuclear warheads, had just been signed in July.)
Listening to some of the discussions, Neff thought the Americans and Soviets were “talking past each other.” While the technical people on both sides chattered about tagging, sealing, and tracking the weapons to verify that they were safeguarding them, he wondered, “How are you going to actually do it?”
Meanwhile, he says, the Soviets were desperate for money: “What I heard was ‘Hey, we are bankrupt, we don’t have any money, we have all these weapons, and we don’t know what to do.’” Neff’s op-ed was due to be published in just a few days, and now was his chance to talk to the other side. During a break in the meeting, he approached the head of the Soviet nuclear weapons program, Viktor Mikhaylov, and planted his idea of selling the weapons material to the United States, which could solve both the disarmament and the cash problems at once. Mikhaylov asked how much he could sell. Neff didn’t know how much HEU the Russians had but took a guess, based on his general idea of the U.S. stockpile. “Five hundred metric tons,” he replied. To his surprise, Mikhaylov said he thought he could do it.
Naysayers abounded on both sides. Neff encountered American decision makers who’d say Why would you help them? They are the enemy. And while Russian president Boris Yeltsin was ready to befriend the United States, some Russian engineers and politicians believed that their nuclear arsenal was their “heritage” and should not be dismantled and sold to a former rival, says Anton Khlopkov, director of the Center for Energy and Security Studies, a Moscow-based think tank.
When Neff found no takers on the U.S. side, he helped Mikhaylov write a letter to the U.S. State Department suggesting the swap—which, coming from a high-ranking Russian official, would force the United States to respond. When the letter arrived, Neff got a phone call: “You know that crazy idea of yours? Well, we got this letter …” Neff said, “Oh, really?” and the deal inched forward.
By then the Soviet Union had dissolved; it took until 1993 to get a government-to-government agreement signed, and another year for the governments’ commercial agents to sign a contract that would implement it. Flaws in the contract detailing pricing, annual quantities to be shipped, and the payment schedule—not to mention complications with trade restrictions, legislation, and technical issues—would plague Neff for years as he worked to keep the deal fair to Russia despite the demands of U.S. domestic politics. He made at least 20 trips to the former Soviet Union while he was pursuing other projects at MIT, where few people even knew about the major nonproliferation agreement he was shepherding along.
Keeping Jobs in Russia
Engaging Russia’s nuclear weapons facilities to “downblend” the HEU proved integral to the deal’s ultimate success. The usual uranium enrichment process increases the concentration of the isotope U-235 from 0.7 percent in natural uranium to create low-enriched or highly enriched uranium; Soviet weapons-grade HEU contains about 90 percent U-235. Neff’s big idea was to reverse that process, blending the HEU with slightly enriched uranium to get commercial, reactor-grade LEU (about 5 percent U-235). Reversing the process would also mean that Russian facilities built to make nuclear weapons would now be destroying them.
While Neff favored having the Russians dilute their HEU into LEU, he did suggest an alternative in his op-ed: asking Russia to blend the material partway, to a concentration that would make it safe to transport but difficult to use for weapons, and then finishing the conversion in the United States. Some U.S. commercial companies also proposed purchasing the weapons-grade material and shipping it to the United States themselves. But those approaches “could not have maintained jobs in Russia,” says Mikhail Aboimov, chief risk officer and head of business globalization at Tenex, Russia’s exporter of nuclear material and its commercial agent for carrying out the HEU deal.
Placing big orders for Russian plants to downblend the HEU did preserve Russian jobs, says Aboimov, who helped manage the deal at Tenex starting in 1995. He says the Russians had to create the technology to make market-ready LEU from HEU, then scale up production from 10 metric tons per year to 30. “It really saved our industry,” he says. It also got around the fact that the Russians would never want to give foreigners access to their HEU or reveal its exact composition, which was classified information.
Furthermore, Neff realized that the people in Russia’s nuclear weapons program were the key to keeping weapons-grade uranium from falling into the wrong hands, a prospect that had worried many in U.S. government circles since the collapse of the Soviet system. He had visited the labs and seen that Soviet workers were “just as ethical and dedicated” as those in the United States, he says; in fact, they were “the most disciplined part of the Soviet Union.” Putting money into that historically effective system to pay salaries while the Russian treasury was broke would keep those people from being tempted to sell their nuclear material elsewhere—like to Iran or North Korea—for money to buy milk for their children.
Things Get Complicated
Framing the deal in economic terms made it attractive to both sides. But it also planted a few landmines.
Technicalities in the 1994 contract meant that the U.S. Enrichment Corporation (USEC), which served as the American commercial agent for the deal, didn’t send Russia full payment immediately. Two components figure into the value of LEU: the uranium content and the work involved in enrichment. Under this deal, Russia was to be paid promptly only for its enrichment—or in this case, de-enrichment—services, which represented about two-thirds of the value of the LEU. The value of the uranium content, which was calculated from the amount of natural uranium needed to make the LEU through the usual enrichment process, represented the other one-third. Making sure the Russians were compensated for that component proved a major headache.
Before the start of the LEU deal, U.S. nuclear reactor operators would send natural uranium to USEC to be enriched. USEC would send back the LEU it had produced from that uranium. Once Megatons to Megawatts got under way, USEC started sending its customers Russian LEU instead, so the natural uranium sent by utilities—which might have been mined in Canada or Australia—piled up at USEC.
By U.S. law, the origin of the uranium in LEU that was delivered to USEC’s customers had to match that of the uranium they had sent. So USEC “swapped” those origins, labeling the uranium in Russian LEU as, say, Canadian, while the uranium that a utility had sent to USEC became “Russian.” That meant that the pile of natural uranium at USEC’s door now belonged to Russia.
It might have seemed fair to pay Russia for that stockpiled uranium, which was equivalent in value to the uranium content in the Russian LEU. But USEC claimed control of the uranium, and under the contract, it only had to pay when it sold or used the material. U.S. trade restrictions made it impossible to sell Russian uranium in the United States. And USEC, which was in the process of privatizing and thus essentially competing with Russia as an LEU provider, chose not to use the material. The Russians—who desperately needed the money—were justifiably peeved that they were earning only two-thirds of what they were originally promised.
Though LEU shipments were disrupted several times because of nonpayment, Aboimov and his colleagues at Tenex devised many legal but, as he puts it, “creative” solutions to keep LEU coming to the United States; they knew that their company’s reputation depended on maintaining the delivery schedule even when they were not getting paid for the uranium content.
Meanwhile, Neff helped draft legislation that, as a condition of USEC’s privatization, forced USEC to purchase the stockpiled natural uranium associated with Russian LEU deliveries in 1995 and 1996. The legislation also overruled trade restrictions, allowing Russia to gradually start selling its natural uranium in the United States.
By the summer of 1998, the utilities had sent USEC an additional 11,000 metric tons of natural uranium, which became Russia’s. But Tenex was unable to finalize contracts with potential buyers for it. And USEC didn’t use it—or pay for it. So the Russian Ministry of Atomic Energy halted LEU shipments to the United States, and that September, Yeltsin informed President Bill Clinton at a summit in Moscow that he was going to announce the failure of the HEU deal. Blindsided, Clinton urged Yeltsin to wait a bit, expressing confidence that they could reach an agreement.
The crisis was resolved through further legislation Neff helped initiate: in October 1998, Congress appropriated $325 million to purchase the uranium stockpiled in 1997 and 1998 as long as Tenex agreed to find other buyers for most of the natural uranium associated with future shipments.
Neff’s MIT colleague Moniz, then the U.S. undersecretary of energy, acted quickly to help Tenex meet that condition by successfully mediating the contract negotiations between Tenex and a handful of Western commercial companies that would purchase the Russian natural uranium. The negotiations wrapped up just in time. On the eve of impending NATO strikes on Yugoslavia in March of 1999—strikes that would strain U.S.-Russian relations—all parties signed the contracts.
A Product of Its Time
Despite these myriad challenges, Neff was always determined to act. “You don’t just propose an idea,” he says he came to realize. “You go do something about it.” He is at work on a book that will detail the dramas of “soap opera” proportions that seemed to dog the deal at every turn.
The DOE’s Hughes says that while both sides had real incentives to make the deal happen, Neff was the “persistent catalyst.” “He was sort of like the Sherlock Holmes of the enterprise,” Hughes says. “He had his own independent standing, his own sources of information, his own reasoned analysis that he would bring to the impasses that would arise along the way. Many people that were party to trying to make this happen in the government would welcome his insights and advice. Even those who didn’t had to take stock of it.”
The Russians, too, learned to trust Neff as he suggested potential solutions when the U.S. government process slowed things down. Khlopkov says that while the two countries’ nuclear industries were the main movers of the deal, Neff’s vision and problem-solving skills were crucial. “This was a unique situation when one intellectual was able to design such a huge project,” Khlopkov says. Neff efficiently persuaded both sides “that this was not just an idea, but an idea which could work.”
One reason it worked is that unlike traditional arms control, which requires equivalent actions like reducing the same number of warheads on each side, the commercial deal gave each side something it truly needed: money for Russia and electric power for the United States. “Governments tend to argue things on a political basis, rather than on an economic basis,” Neff says. But to get things done, “you have to find the equation that says, Well, we’ll trade you this thing you’re interested in for this other thing we’re interested in.”
That approach also helped disarm Ukraine, which after the breakup of the Soviet Union suddenly found itself with the third-largest nuclear arsenal in the world. The Russians asked Neff to work on a proposition that would provide Ukraine with fuel for its Soviet-made nuclear reactors if it returned strategic nuclear warheads to Russia, which would avoid adding another nuclear nation to the world’s tally. That one “worked out nicely,” Neff says.
Although Aboimov, Khlopkov, and Neff all agree that it’s in the best interests of both Russia and the United States to keep coöperating, Neff says that Megatons to Megawatts was a unique product of its time. In the disarray following the financial and political breakdown of the Soviet Union, Russian government officials could act unconventionally and independently, without being bound by slow-moving U.S. interagency machinations or the equally complex political processes of today’s Russian Federation. Back then Mikhaylov, the Russian minister of atomic energy, was able—in fact, obliged—to go out and finance his weapons program any way he could. And Neff, an academic who showed up at the Russian Foreign Ministry with nothing but his passport and a business card, could—and did—achieve results.
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