Photo Credit: The Economist
By Jonathan Challgren, Columnist
When the legitimate economy struggles, the illicit market often thrives. The collapse of the Soviet Union in 1989 and the subsequent economic challenges faced by Russia in the early 1990’s created a booming illicit market in everything from cast-off military equipment to scrap metal. One such market dealt in nuclear material, which could see a supply-driven resurgence if economic conditions in Russia continue to deteriorate. The increasing sophistication of intermediaries in the market may also ensure that some of this newfound supply reaches prospective buyers, despite law enforcement efforts and new technology. In response, the United States should intensify its nonproliferation efforts to reduce the supply and increase the cost of operating in the market.
The 1989 collapse of the Soviet Union created an illicit market for nuclear materials. Widespread poverty, pension loss, corruption, and lawlessness in a chaotic transition to capitalism incentivized Russian nuclear insiders to sell on the black market. Despite supply abundance, buyers and sellers often failed to connect due to a high level of uncertainty, fraud, and information shortages. While most known insider theft attempts were successful in avoiding detection at the facility, amateur attempts to find buyers often alerted authorities.[i] In 1991, one seller even cold-called foreign companies, faxing out offers to sell red phosphorus, heavy water, and cesium.[ii]
The intermediaries in the market were also highly suspect. In 1993, three undercover Russian journalists investigated the market by posing as mineral buyers at the Moscow Mineral Exchange. They met dealers who promised everything from Highly Enriched Uranium (HEU) to nuclear-armed ballistic missiles to secure smuggling routes around the world. After meeting with 28 dealers however, the reporters only found fraudulent materials, samples of low-grade radioactive junk, and just two dealers who had successfully transacted quality materials.[iii]
Despite these market inefficiencies, there were 14 cases of HEU or plutonium trafficking reported by state authorities or media between 1992 and 1995.[iv] Two of these cases included successful thefts from the same facility, the Elektrostal Machine-Building Plant, in 1994 (3 Kg of 90% HEU) and 1995 (1.7 Kg of 21% HEU).[v] Further, the market possibly supplied the Cesium-137 (C-137) and dynamite mixture used in the Radioactive Dispersal Device (RDD) in Moscow’s Ismailovsky Park in 1995.[vi]
In the 27 years since the fall of the Soviet Union, the market has likely matured to the point where it can more successfully connect sellers with high-grade material to legitimate buyers. Similar to other illicit markets, persistent demand for the product forced efficiency developments. Better security and quality control measures are evident in operations involving couriers with small samples in Bulgaria, Georgia, and Moldova in the mid-2000s.[vii] Furthermore, some intermediaries now carry out a targeted approach, in which traffickers recruit nuclear facility insiders to provide material. In 2003, for example, an individual from St. Petersburg successfully recruited employees at the Kirovo-Chepetsk Chemical Combine to steal 15 Kg of HEU.[viii] While nuclear facility protection and law enforcement has greatly improved, criminal elements operating in the market have also become more sophisticated.
The involvement of transnational criminal organizations (TCO) is part of the reason that linking sellers to buyers has become easier. TCOs have the global reach and market knowledge that enable them to avoid law enforcement efforts through proven logistics channels. They also have the resources to identify buyers and smuggle materials through porous international borders. A model for the effect organized involvement has on the market is the AQ Khan network which organized the supply of nuclear technology and material through several front companies in the Middle East, Europe, Africa, and Asia.[ix] Several TCOs, such as the Russian Balashikha organization and the Italian mafia, were involved in early market activity between 1998 and 2001. Further, 40 cases of illicit nuclear trafficking were associated with ‘organized criminal elements’ from 2001-5.[x] As law enforcement increasingly rely on static means to detect trafficking, such as through Radiation Portal Monitors (RPMs) at borders, TCOs will have an advantage in conducting successful transactions.
While the market itself is maturing, Russian economic conditions continue to be a prime factor in supply availability. As the Russian economy suffers, supply-driven black market activity tends to increase. Other activity in the greater Russian underground economy, estimated at 46% of GDP, also correlates with periods of economic decline.[xi] One way to approximate the supply in the market is through the IAEA’s Incident and Trafficking Database (ITDB), which records a wide range of illicit nuclear activity from trafficking and possession (category 1) to theft and loss (category 2), to improper disposal and shipping (category 3). Russian economic declines in 1998, 2008-10, and 2012 to present are loosely correlated with increases in category 1 and 2 events (see Fig 1).
The correlation between economic decline and illicit activity is not perfect; increased worldwide awareness, use of sensors in the wake of 9/11, and law enforcement activity also significantly contribute to an increase in detection. Much of the increase in reports from 2005-7 is attributed to new RPMs at international borders.[xii] Further, many reported incidents are unrelated to market activity. For example, a June 2015 theft of construction equipment containing a small amount of C-137 from a job site in Georgia would be a category 2 event. Therefore, reported incidents alone are only a rough approximation of activity.
While ITDB data only approximates the nuclear black market, it is the best publically available indication of market change. Of IAEA-reported nuclear trafficking cases, 9% were profit-motivated from 1993-2010. With 2,734 total incidents since 1993, there are approximately 250 known cases alone.[xiii] Successful activity is, of course, unreported. The Russian Federal Security Service estimated in the mid-1990s that they could only intercept 30-40% of all diverted nuclear materials.[xiv] Despite the fact that cataloguing all illicit nuclear activity is difficult, the market’s history and on-going activity indicate that economic factors continue to drive supply.
The combination of increased supply and more secure markets presents a significant risk to US national security. Although many adversaries would choose not to acquire nuclear capacity for a variety of moral, material, or strategic reasons, several state and non-state adversaries have expressed a desire for nuclear capabilities. [xv] Al-Qaeda (AQ) has justified the acquisition of a nuclear bomb as a religious duty, consulted with nuclear experts, and tested conventional explosives for use in a nuclear bomb.[xvi] Ayman al-Zawahiri, AQ’s current chief, bragged to a Pakistani journalist that he could acquire nuclear capabilities on the black market for $30 million.[xvii]
After acquisition of sufficient material, Improvised Nuclear Device (IND) construction is relatively simple. According to the Office of Technological Assessment, “[a] small group of people, none of whom have ever had access to the classified literature, could possibly design and build a crude nuclear explosive device.”[xviii] The 38 Kg of weapons usable material involved in incidents prior to 2010 would have been more than sufficient for a functional nuclear device similar to one used in Hiroshima.[xix] The sheer amount of low-grade radioactive material on the market also presents an opportunity to construct an RDD to spread radiological contamination over a high value area. The combination of intent and easy construction makes the increased chance of acquisition a significant threat to US interests.
The United States should respond to the challenge of the nuclear black market by working to decrease the supply through regional nonproliferation efforts and disrupting the market. As criminal actors on the market are profit-motivated, decreasing supply will drive up price and curtail market activity to only the most well-funded organizations. The United States already has programs such as the EPA’s Orphaned Source Initiative and the DOE’s Off-site Recovery Project that reduce available supply. Unfortunately, Russia recently ended its cooperation with the United States on one of the most effective measures to reduce available market supply, the Nunn-Lugar Cooperative Threat Reduction. This $2 billion program assisted Russia in destroying nuclear stockpiles, securing facilities, installing RPMs, and paying the salaries of nuclear employees.[xx] Restarting this program would be a popular and effective effort to reduce the availability of supply. Ultimately, however, efforts to curtail supply can reduce the number of actors in the nuclear market but cannot prevent all activity.
US efforts to disrupt the market by deterring TCOs from participating would reduce the risk of sellers connecting to buyers. The United States could credibly convey the message that it will dismantle any criminal organization that engages on the nuclear black market. Imposing high costs on these organizations through scrutiny and prosecution would deter other actors from entering the market. Increased strategic focus on the Black Sea and Eastern European regions through FBI Legal Attachés and the US Energy Department’s radiological detection training programs would provide useful counter proliferation means to regional states. Meaningful information sharing on TCO operations and trafficking incidents would also help to identify and neutralize the most active members in the market. Additionally, carefully vetted covert actions that introduce false buyers, sellers, and information into the market would disrupt effective market functioning. Cooperative efforts to limit available supply and deter entry can reduce the threat of successful acquisition.
Figure 1: Derived from 2015 World Bank Data, “GDP per Capita Growth, PPP” & and IAEA Incident and Trafficking Database (ITDB).
Category 1, Illegal possession and movement of nuclear material (Material Category I-V)
Category 2, Theft or loss of nuclear material (Material Category I-V)
*Indicates incomplete data based on IAEA ITDB methodology; figures likely to increase with after year reporting.
[i] MG Lawlor, Bruce (ret.), The Black Sea: Center of the nuclear black market. (Bulletin of the Atomic Scientists, 67 (6), 2011) 73-80
[ii] Belyaninov, et all, Nuclear Nonsense, black-market bombs, and fissile flim-flam. (Bulletin of the Atomic Scientists, Mar/Apr 1994), 44-50
[iii] Belyaninov, et all, Nuclear Nonsense, black-market bombs, and fissile flim-flam. (Bulletin of the Atomic Scientists, Mar/Apr 1994), 44-50
[iv] Zaitseva, Lyudmila, Nuclear Trafficking: 20 Years in Review. (PMP-MTA, 2010) 7-10
[v] ITDB data in Zaitseva, Lyudmila, Nuclear Trafficking: 20 Years in Review. (PMP-MTA, 2010) 7-10
[vi] Allison, Graham, Nuclear Terrorism: How Serious a Threat to Russia. (Russia in Global Affairs, Sep/Oct 2004)
[vii] See discussion in Lawlor, Bruce. “The Black Sea: Center for the Nuclear Black Market” Bulletin for Atomic Scientists. 2011.
[viii] CNS, Uranium Theft Blocked in Kirovo-Chepetsk Russia (James Martin Center for Nonproliferation Studies, 2004)
[ix] David Albright and Coery Hinderstein, “The A.Q. Khan Illicit Nuclear Trade Network and Implications for Nonproliferation Efforts” (Strategic Insights, Volume V, No 6), July 2006
[x] Association with organized crime elements is defined as involving at least three actors with physical radioactive materials involved in a continuing illegal activity for profit by the FBI, (Zaitseva, Lyundmila, “Organized Crime, Terrorism and Nuclear Trafficking” (Strategic Insights, Volume VI, Issue 5), August 2007
[xi] Dev Kar and Sarah Freitas, “Russia: Illicit Financial Flows and the Role of the Underground Economy,” (Global Financial Integrity, Feb 2013)
[xii] Border control interdiction rose from 64 cases between 1990-2000 and 454 cases between 2000-10, mostly due to radiological detection equipment Zaitseva, Lyudmila, Nuclear Trafficking: 20 Years in Review. (PMP-MTA, 2010) 7-10
[xiii] IAEA, IAEA Incident and Trafficking Database (ITDB) Incidents of Nuclear and Other Radioactive Material out of Regulatory Control. (IAEA, 2015) 1-4
[xiv] Mid-1990s assessment by FSB in Rensselaer W. Lee, Smuggling Armageddon: The Nuclear Black Market in the Former Soviet Union and Europe (New York: St. Martin’s Griffin, 1999), p. 2.
[xv] Reference AQ Khan’s lateral proliferation efforts on behalf of Pakistan in Rens, Lee, “Why Nuclear Smuggling Matters” 2008. 18-32
[xvi] Lawlor, Bruce. “The Black Sea: Center for the Nuclear Black Market” Bulletin for Atomic Scientists. 2011.
[xvii] Ayman al-Zawahiri in Graham, Allison, “Nuclear Terrorism: The Ultimate Preventable Catastrophe” 2004.
[xviii] Office of Technology Assessment, Nuclear Proliferation and Safeguards (U.S. Congress, Jun 1977), 44-45
[xix] ITDB and DSTO data in Zaitseva, Lyudmila, Nuclear Trafficking: 20 Years in Review. (PMP-MTA, 2010)
[xx] Bender, Bryan, Russia ends US nuclear security alliance.(NYT, 1/19/15)