Going Nuclear The Illicit Trafficking of Nuclear Materials

Energy Law Presentation Fall 2010, Professor Bosselman

Prepared By Lauren BeanTime: 22 minutes

E: LaurenBean2005@gmail.com

Images, clockwise from the left: A.Q. Khan; A member of the Italian Mafia ‘Ndrangheta; Kim Jung Il; Iranian President Mahmoud Ahmadinejad; Viktor Bout, a.k.a, the Merchant of Death

I. Actors

II.Procurement Methods

III.Points of Impact

IV.Security Challenges

V.Response

Presentation Structure

Overview• What is the nuclear black market?

• Illicit nuclear trafficking is an enduring and pervasive threat to global security.

• A Turning Point: The Fall of the Soviet Union and the Demise of the Russian Nuclear Complex

• Smugglers use traditional networks (transportation, communication, and financial) to obtain and move nuclear materials.

• The crossover of different violent actors and organizations represents a particularly complex challenge for thwarting smugglers, who seek to acquire a range of nuclear materials.

State Actors

Russia• Russian stockpiles are a primary source of nuclear materials

purchased on the nuclear black market.

• Russia owns at least 950 metric tons of highly enriched uranium and approximately 145 tons of weapons grade plutonium.

• State efforts to protect nuclear stockpiles and thwart illicit procurement efforts have been ineffective.

• Stronger regulations and export controls are required, in addition to a consolidation of stockpiles and data.

Iran• Iran’s nuclear weapons program has been in existence for more

than three decades.

• Iran’s procurement regime is thought to be controlled by its top tiers of government, including its Ministry of Defense and Armed Forces Logistics, Ministry of Energy, and the Ministry of Education.

• Iran, like Pakistan, has invested in foreign companies from Namibia to Germany for the development of its nuclear weapons program.

• In the last year, more than three arrests have been made for successful or thwarted attempts to smuggle nuclear materials, technology and equipment to Iran.

North Korea• North Korea is both a host country and supplier of nuclear weapons

material.

• International efforts to dismantle North Korea’s nuclear aspirations have been wholly in effective.

• North Korea directly enabled the development of Syria’s covert nuclear reactor program for the last two decades, which was subsequently destroyed by Israel.

• Most recently, North Korea has tested two (2) nuclear devices and may be preparing to test a third device.

Pakistan• The history of Pakistan’s nuclear weapons and procurement

program is perhaps the most infamous.

• Pakistan and North Korea (and India) have refused to participate in the Nuclear Non-Proliferation Treaty (NPT), an international treaty to limit the proliferation of nuclear weapons; there are 189 countries that are party to the NPT.

• Pakistan has allegedly provided illicit nuclear materials to al Qaeda in Afghanistan.

• Dr. Abdul Qadeer Khan, or A.Q. Khan, a Pakistani nuclear scientist, operated the most extensive illicit nuclear network to this day.

• Pakistan is estimated to have 55-90 nuclear weapons and increasing stockpiles of HEU and plutonium.

India• India is also a non-party to the NPT.

• Although the U.S. has facilitated the develop of India’s civilian nuclear energy program as agreed to within the civilian nuclear trade agreement, India continues to illicitly secure items for its nuclear weapons program.

China• It is alleged that China continues to engage in illicit trade activities

after agreeing to halt illicit efforts in the 1990s following pressure from the United States.

• It is further alleged that China is using stolen U.S. plans and technology; in 1999, Congressional researchers declared China’s next generation of nuclear weapons would likely integrate stolen US design information.

Non-State Actors

Terrorist Organizations

• While terrorists may not have the readily accessible capacity to build a nuclear explosive or nuclear weapon, ease of communication via the Internet, the lack of strong international export controls, and the amount of available nuclear materials suggests that the opportunity may be more ripe today then it was just a few years ago.

• Terrorist have already developed simple yet sophisticated systems for transferring cash funds that could be used to purchase nuclear materials on the black market. Hawala is an international covert banking system that allows funds to be transferred into bank account without a paper trail.

• Additionally, a growing willingness to cooperate with violent global counterparts may provide a new avenue for terrorists and new source of revenue for rogue state actors seeking purchasers.

Guerilla Organizations

• Guerilla organizations such as the FARC, the Revolutionary Armed Forces of Colombia, has also sought nuclear materials on the black market.

• In an effort to combat nuclear procurement operations, the Colombian government implemented the first counter-nuclear arms unit to prevent illicit activity.

• To date, Colombian officials have uncovered email communications indicating FARC’s illicit operations. However, for reasons discussed in subsequent slides, thwarting these operative before they secure goods is extremely difficult.

Organized Crime• The Italian mafia, which includes both Cosa Nostra (Sicilian safia)

and ‘Ndragheta (Calabrian mafia), represent a unique case study.

• The Italian Mafia is known by some as the “Ecomafia” due to their environmentally-unfriendly modus operandi. For example, the ‘Ndragheta will load derelict cargo ships with high-level nuclear wastes and used reactor cores and sink them off the Mediterranean and African coasts, charging a revenue for their services.

• Italian officials estimate that more than 600,000 tons of radioactive waste have been deposited on the floor of the Atlantic Ocean and along the coast of the Western Sahara.

• Mafia target the nearby seas of countries with weak or nonexistent governmental structures such as Somalia. A group of Somali pirates, however, capitalized on the mafia’s waste-dumping activities and brokered a joint piracy business at the port of Eyl.

Rogue Individual Actors

A.Q. Khan• Pakistani nuclear scientist, Abdul Qadeer Khan (a.k.a. A.Q. Khan),

built and operated the largest nuclear black market for nearly three decades before his dramatic arrest by an international coalition of officials in 2004.

• His network spanned three continents and sales of sensitive nuclear technology components, materials, and design data were sold to the most dangerous regimes, including Iran, North Korea, and Libya; Iran, excluding Pakistan, was Khan’s first major client.

• It has been documents that Khan traveled to Afghanistan in the late 1990s and early 2000s and there are concerns that he has sold nuclear designs to terrorists, including Al Qaeda.

• Khan remains a national hero to his country of Pakistan.

The Merchant of Death

• Viktor Bout, a Russian arms dealer, has become notoriously known as “The Merchant of Death.”

• Bout is accused of selling arms to countries from Afghanistan to Libya. He is also accused of arming the Democratic Republic of Congo, Sudan, Sierra Leone, and Rwanda. The estimated value of his arms empire is US $6 billion.

• Furthermore, he is accused of conspiring to kill American citizens.

• He was arrested in 2008 in a joint Thai-U.S. sting operation called “Operation Relentless” and awaits trial. The U.S. Drug Enforcement Agency has stated that Bout could not have acquired the weapons system he did without the complicity of the Russian government and military.

II. Procurement Methods

Procurement Methods

• Most procurement operations are intended to arm already proliferant states.

• Iran, North Korea, and Pakistan are currently at the center of the illicit procurement market.

• A combination of operatives willing to sell nuclear materials and buyers willing to pay cash drives the nuclear black market.

• Export controls only curtail a small percentage of the types of goods that might be acquired by nuclear actors (e.g., entire reprocessing or enrichment plants). Actors can still acquire valuable subcomponents or “dual use” goods that are not subject to export controls.

• Countries with weak governmental infrastructures and export controls become major transshipment conduits for nuclear actors.

The Simple Scheme

A Complex Scheme

• Multi-Company Supply Chain

• Some trading companies are unaware of the nature of these activities; others are aware.

Domestic Domestic Trading Trading

CompanyCompany

Foreign Foreign Trading Trading

CompanieCompaniess

SupplierSupplier

A Deceitful Scheme

• Nuclear actors convince manufacturing companies to purchase goods for them.

• Or, in an effort to circumvent export controls, actors will engage off-shore companies to purchase equipment, materials, and technology under a civil nuclear arrangement guise. These companies will then ship the items to their country, sometimes via a circuitous route. Off-shore companies may be a post office box, a trading company, or a major institution involved in producing legitimate goods for legitimate usages.

• A.Q. Khan has said that his gas centrifuge program depended largely on a number of off-shore “front” companies, including companies in Japan and Singapore.

III. Points of Impact

Russian Stockpiles

• The largest inventory of highly-enriched uranium (HEU) and plutonium are located in Russia.

• Smaller stocks are located in Kazakhstan, Belarus, Ukraine, and Uzbekistan.

• Much of Russia’s materials are contained in the form of nuclear weapons, but some of it (an estimated 600 tons) is stored in non-weapon form at an estimated 50 different storage sites.

• Since the collapse of the Soviet Union and the demise of the former Soviet Nuclear Complex, numerous successful or thwarted theft attempts have been reported by the International Atomic Energy Agency (IAEA), and other watchdog organizations such as the Nuclear Threat Initiative (the chart on the next slide shows incidents from 2009).

Illicit Procurement and Trafficking Incidents

IV. Security Challenges

Security Challenges• The primary challenge to state governments, intelligence agencies, or

cooperative global law enforcement and intelligence efforts is detection.

• The amount of materials available and the willingness of operatives, compounded by the number of trading and manufacturing companies (some or most of whom are not equipped with internal intelligence detection programs), makes tracking such operations nearly impossible.

• New suppliers and emerging technologies are simplifying both the procurement methods and nuclear develop and design methods.

• The crossover of different violent actors, all of whom have developed particular methods by which they avert officials, presents a more daunting challenge. “Following the green” has become increasingly difficult.

V. Response

Export Controls• Experts have called for a universal export control system (David

Albright, Author of Peddling Peril).

• Export controls, however, are generally disfavored by industry.

• Additionally, some countries do not have any existing export control system, despite the United Nations Resolution 1540 which mandates all countries to develop controls.

• Moreover, coordinating a universal export control system among countries with different goals, companies with competing interests, and individuals may not be a feasible option.

A Legal Framework

• In order to deter potential operatives, governments must prosecute major export violations.

• However, a comparative law analysis indicates that export control, evidence-sharing, and access to foreign witness testimony laws vary among countries.

• Furthermore, the crime of illicit trade activity receives a mild penalty in some countries.

• An effective international legal regime must begin with some consensus regarding the nature and penalty for export crimes.

Diplomacy

• Diplomacy as a stand alone tool will not be effective with countries such as Iran and North Korea, as has been shown by recent events.

• However, with those countries that share similar interests (e.g. India and the U.S.) diplomacy can have an impact.

• For example, Israel, which rivaled Pakistan with its procurement program, halted its illicit activities under pressure from the U.S. (although allegations still surface regarding illicit activities).

Industry Cooperation

• Enhanced corporate awareness is critical to ending illicit procurement efforts.

• Companies are often resistant to information-sharing efforts with intelligence agencies or other officials because of potential prosecution concerns and concerns regarding export penalties.

• Companies are often unable to detect suspicious or illicit efforts to purchase goods because staff are not trained intelligence analyst with access to a breadth of important data.

• Attempts by agency officials to provide companies with key data are often out-of-date before they reach the desks of company staff.

Early Detection• U.S. intelligence efforts have been relatively effective at detecting

illicit activity; however it took U.S. officials and other nations decades to topple A.Q. Khan’s network and analysts are still unraveling his intricate web of suppliers and purchasers.

• Participant states of the Proliferation Security Initiative (PSI) can be consistently engaged to prohibit transnational trafficking. Again, this would require greater consensus on the crime of illicit trade and a developed system of export controls.

• Suppliers, manufacturers, and trading companies must be trained to detect suspicious activity when it arises, and intelligence agencies must work with companies to develop a realistic system to facilitate information-sharing across industry lines transnationally.

Conclusion• The illicit trafficking of nuclear materials is a complex scheme

composed of several states, many actors, and a complex system by which materials are traded.

• Global counter-arms efforts alone will not be sufficient to topple the nuclear black market ; industry buy-in is required.

• Stronger export controls coupled with the backing of participant countries is required, in addition to a more consistent application of the laws against these crimes.

• Still, countries who seek to acquire nuclear weapons programs and actors who seek to disrupt global security with nuclear materials will continue to challenge international officials and agencies.