Much has been said about the conversion of the enterprises of the defence complex of Russia. The time for debates and discussions of a general nature is over, and the need for economically sound conversion grows stronger each day. The main thing is that we have finally realised that the success of economic reform in Russian under present conditions will depend largely on the efficiency of the conversion of its military-industrial complex. It is precisely from this standpoint and with a view to the unique features of the research and production complex of the Ministry of the Russian Federation for Atomic Energy that we should discuss the distinctive features of the conversion processes in the nuclear industry.

    The end of the 'cold war' and the speed of nuclear disarmament had their first substantial impact on the enterprises of the nuclear-weapons complex of the Ministry for Atomic Energy. After almost fifty years of research and development in the field of nuclear and thermonuclear weaponry and the related combat systems, the two largest Russian Federal Nuclear Centres - VNIIEF (Arzamas-16) and VNIIFT (Chelyabinsk-70) - began to diversify their activities for broader involvement in non-military research and development projects to promote the development of the industry and stop the recession in Russia. The simultaneous move to market relations and a broad-scale privatisation of the enterprises, however, have necessitated a search for links with the civilian sectors of industry, including joint long-term research projects. The sufficient accessibility of the Federal Nuclear centres, to inspire the trust of clients, will be the main objective in this process.

    The lengthy period of isolation - in line with security requirements - of the cities with a population of almost 100,000 each from the country's civilian industry, not to mention the outside world, and the absence of developed civilian industry in those cities, created exceptional difficulties in the conversion plans, including the problems arising from the official percentage deductions (For R&D projects - Ed.) for the maintenance of the infrastructure in those cities. There are ten of them in the nuclear-arms complex, with almost a million inhabitants.

    The conversion of military production, particularly its nuclear branch, requires an appropriate legislative basis. Plans for the conversion of each enterprise should be made with a view to all the provisions of a comprehensive law on conversion.

    Back in 1990 we had already drafted plans for the restructuring of research and production up to the year 2010 with considerations for the conversion of the nuclear-weapons complex. According to those plans, by the end of 1995 around 60,000 workers at the enterprises would be released from the military programmes and transferred to jobs working for the national economy. We hoped to solve such major problems as the enhancement of safety of the personnel, population, and environment as well as the disposal of radioactive waste, establishment of a base for storing nuclear materials and for dismantling and recycling nuclear weapons. Today, the number of people working for the national economy in this complex is already close to 40,000, but now our plans have to be adjusted with a view to the START II Treaty.

    In essence, the enterprises of the nuclear sector represent links of a single technological chain, 'from the idea to the finished product': the extraction of raw materials, production of fissile materials, fuel fabrication from such materials for nuclear power industry and military applications, and the reprocessing of spent fuel with subsequent localisation and disposal of radioactive waste. A break in the chain would cause irreversible damage to the whole nuclear industry. That is why the ministry's main objective is the preservation of the capability of the nuclear sector, which essentially has to undergo dual conversion because of the sharp cuts in nuclear arms production and relatively slow work on nuclear power programmes. Decline in output at military installations has been equivalent to 40-50% on the average and 80% in some cases. The situation is no better in the nuclear power industry. Between 1987 and 1992, for example, only one power unit with a WWER-1000 reactor was started up at the Balakovo nuclear power plant, although earlier plans had called for the annual start up of two or three.

    The situation is complicated by the fact that many enterprises of the nuclear sector are not slated for re-specialisation, and the temporary suspension of operation there will require huge financial investments. The set of operations to shut down the reactors producing 'weapons-grade' plutonium and decontamination of the enterprises, however, could cost hundreds of billions of rubles.

    Who but the state is capable of allocating tens of billions of rubles today for the decontamination of the territories, the management and safe disposal of nuclear waste, and the recycling of nuclear weapons? Without the guarantee of the state budget funds for these projects, conversion will be impossible.

    Now add the ailments that are common to the country's whole economy - colossal budget disparities, inflation, increasingly unsatisfactory status of settlements between the enterprises, and a serious exacerbation of socioeconomic problems - and you can imagine just some of the problems the Ministry for Atomic Energy is having in its efforts to carry out the necessary conversion projects.

    In accordance with the nuclear arms reduction agreements, the volume of the work related to the dismantlement and recycling of nuclear warheads has increased considerably in Russia and the United States. Dismantling operations are extremely dangerous and time-consuming, and the cost is comparable with assembly costs. The nuclear weapons that have been removed from operational status are being dismantled at the same four plants of the Ministry for Atomic Energy where they were once assembled. Electronic units are recycled or returned to the suppliers, chemical explosives are burned and metallic structures are decontaminated and scrapped. The recycling of chemical explosives is under consideration today. The technology for the production of finely divided diamonds for industrial purposes by detonating them in confined chambers is being developed.

    Our nuclear arsenals have been reduced by more than 10,000 weapons since the mid 1980s. Today we have the problem of handling the substantial quantities of highly enriched uranium (40-90% of 235U) and weapon-grade plutonium that are removed from the weapons. The most feasible option today is a long-term storage of these materials and their subsequent reprocessing into fuel for nuclear co-generating power plants. The safe storage of plutonium and highly enriched uranium, however, would entail substantial expenditure on the construction of long-term storage facilities. The first stage would envisage the future use of highly enriched uranium as fuel for nuclear power plants and propulsion reactors by diluting it with depleted uranium (0. 1-0. 4% 235U) of technological origins (the 'residue' of gas-diffusion and centrifugal plants). Sales of this fuel on commercial terms to nuclear power plants in other countries would create a big political problem for all peace-loving people, but for Russia it would be an opportunity to have sufficient financial security for the conversion of the nuclear-weapons complex, the enhancement of safety of our operating nuclear power plants, and ecological decontamination of contaminated territories.

    The unique technology that has been developed in the network of the Ministry for Atomic Energy, the tremendous knowledge and experience of our scientists and designers, as well as high standards of production at the enterprises of the nuclear sector, secured a speedy development of many civilian technologies. Comprehensive ministerial programmes in different fields, some of which were included in federal conversion programmes, were drawn up on the basis of the enterprises' proposals. By 1990 the choice of conversion options for most of our institutes and enterprises had been virtually completed. Programmes were drawn up and approved within the ministerial system for projects in microelectronics, special-purity materials production, fibre-optical communication systems, advanced materials and modem medical equipment production, environmental and territorial rehabilitation, and machine building for milk-processing enterprises in the agricultural-processing complex.

    Cuts in funding for conversion projects were not the only reason for the deceleration of the process, however; dramatic price increases also reduced the demand for products. This called for new and non-conventional solutions, including decisions on the restructuring of the nuclear sector. The appropriate ministerial programme has already been drawn up and will become part of the programme for the restructuring of the Russian economy.

    That programme did not emerge from a vacuum; it was drawn up with a view to the work on the sectorial conversion programmes of 1990. Those two years did not go by in vain. Experimental models of new equipment were designed and the industrial production of equipment for the conversion projects was organised. In 1992, for example, the output of products for the microelectronic industry, computer engineering and automatic systems engineering was equivalent to 2 billion rubles and was more than double the projected indicators of physical volume. The total output of goods for the national economy as a result of conversion alone was equivalent to more than 10 billion rubles in 1992 and was expected to increase 1.4-fold in 1993. The total output of the Ministry of the Russian Federation for Atomic Energy in 1992 increased by one per cent. You will agree that this kind of success in industrial conversion is extremely rare today.

    The basic technologies were developed for the production of semiconductor silicon, gallium arsenide, organometallic materials, and other materials for microelectronics. Our clean rooms, production excimer lasers, and plasma-induction spectrometers meet the highest world standards. The production of electronic consumer goods has been set up: scarce videocassette recorders, video laser discs, home computers and electronic timepieces.

    The technological basis for the domestic manufacture of fibre-optical components and systems is virtually complete.

    Specialists of the nuclear sector have designed unique pieces of medical equipment: computerised tomographs, and radiation therapy and diagnostic equipment with the necessary sources of ionizing radiation. The manufacture of several models of heart valves and artificial kidneys has been mastered for the first time in Russia. Endoprosthetic devices and instruments for periosteal osteosynthesis for orthopaedic, oncological and stomatological applications have been developed and are undergoing clinical tests. Furthermore, they are being used in progressive medical procedure, some of which are unique in the whole world.

    One of the ministry's priority fields of conversion is the production of equipment for this milk-processing industry. This sector requires some major technological breakthroughs in Russia. Equipment for storing and processing milk, cheese production lines, and butter chums are produced by fifty of our enterprises, and convection and microwave equipment is being incorporated for these purposes. Ready for operation mini-plants for receiving and processing milk are built and delivered to the customers, on the ministry's initiative. They can be transported to the site on several trailers and begin making yoghurt, sour cream, kefir, and cottage cheese within a few hours. The design and quality of the equipment are equal to those seen in the best commercial advertisements.

    To our deep regret, the insolvency of consumers has kept us from expanding the production in many cases, and has even forced us to make production cuts in some cases. The absence of necessary financial and material-technical support from the state was and is the main problem in the conversion. Inadequate funding for scheduled work and investment in the production has precluded the commercialisation of scientific and technical results of our development projects. That is why it is extremely important for participants in conversion to find diversified sources of finance. We are actively using the new economic formations, including commercial and banking entities, and are improving the investment recoupment mechanism, but only a few conversion projects can produce quick profits. Most of them are long-term projects and cannot promise an immediate return on investments. The establishment of the production base for the previously mentioned heart valves, for instance, will required investments totalling US$10 million, and endoprosthetic devices will require 20 million rubles over the next few years. The microelectronic centre in Nizhni Novgorod will require more than US$100 million in investments.

    Today the ministry's enterprises and institutes will need over 100 billion rubles in the next three years, not counting funds to cover increases in energy costs, for the conversion of research and development projects and the reorganisation of production. Besides, additional billions will be needed for the payment of wages and other forms of remuneration. The output of the products included in the ministry's conversion programmes could exceed 120 billion rubles by the year 1995, but this will only be possible in an atmosphere of political and economic stability, with the preservation of the earlier stable economic ties in the CIS, and with state credit and tax privileges for the producer during the period of transition to a market economy.

    Under these conditions, the Ministry for Atomic Energy could begin intensive work on the conversion programmes in 1993 with extra-budgetary sources of finance: credits, investments, programme funds and private capital. During this period, the difficulties of the conversion process and the complexities of market relations could be surmounted, and the social tension in the closed cities, which do not have alternative jobs at this time, could be alleviated. During the same period, the increased use of fixed capital would facilitate the transition to full operating capacity.

    A period of production growth and subsequent economic growth in the whole nuclear sector can be anticipated in 1995-6. State finance for the conversion programme of the defence complex of the Ministry for Atomic Energy should be secured, according to sector specialists, by that time.

    The sector's enterprises and institutes have made a tremendous effort to lay a foundation for a broad-scale conversion and a breakthrough to a peaceful future. This has been the result, I would like to repeat, of the unique technologies of the enterprises of the Ministry for Atomic Energy and sufficient financial support from the state. These high-tech enterprises of the defence complex now constitute one of the pillars supporting the Russian economy. Without underestimating the importance of small and medium producers, I have to say that the Russian production base does not depend on them today. The defence complex is capable of attaining any kind of technological objectives and, thereby, creating the basis for a fitting place for the country, and the Commonwealth of Independent States, in the world economy.