Thank you for giving me the opportunity to testify before the Subcommittee on the challenges and opportunities we face in obtaining Russia's cooperation in the nonproliferation field. Preventing the proliferation of dangerous weapons and technologies is among the highest priorities of our foreign policy. Russia, by virtue of the weapons of mass destruction and other military and technological capabilities it inherited from the Soviet Union as well as its own international stature, will be a key factor in the success of worldwide nonproliferation efforts. My objective today is to provide you with a snapshot of where we stand with Russia on these issues.

We have made progress with the Russians over the past four years on our nonproliferation agenda. Russia recognizes that preventing the spread of destabilizing arms and technologies can protect Russian security interests. Russia is a strong supporter of the global nonproliferation regime, and has worked constructively with us to reduce the proliferation dangers created by the collapse of the Soviet Union. At the same time, the exigencies of a monetized, largely privatized economy which no longer operates on the basis of command resource allocations have underscored the importance of foreign sales. Moreover, the uncertain and evolving nature of state controls in Russia has increased opportunities for some "gray market" sales. These factors have at times contributed to serious U.S. concerns about Russian exports of arms and sensitive technologies to third countries.

On the positive side, Russia has been a supporter of, and often a key player in the global nonproliferation regimes:

- Russia strongly supported indefinite extension of the Nuclear Nonproliferation Treaty and a recent agreement to give real teeth to IAEA safeguards, significantly expanding their reach to include access to information and locations that could be related to clandestine nuclear programs.

- Russian assistance was critical to securing the adherence of Ukraine, Kazakstan and Belarus to the NPT as non-nuclear weapons states, and in moving all nuclear weapons from these states to Russia.

- As a permanent member of the UN Security Council, it continues to abide by the Council's embargo on the sale of arms to Iraq and Libya, and supports UNSCOM and IAEA efforts to uncover Saddam Hussein's weapons of mass destruction and prevent the regeneration of those capabilities.

- Russia is a founding member of the Nuclear Suppliers Group that coordinates international export controls on nuclear equipment, materials and technologies. Russia has also supported measures for strengthening NSG controls, most important, the adoption of a policy requiring full-scope safeguards as a condition for nuclear supply and establishment of a dual-use control regime.

- In 1993, Russia agreed to forgo the transfer of certain rocket technology to India and to abide by the Guidelines of the Missile Technology Control Regime. In August 1995, it was admitted to the MTCR.

- Also in 1995, Russia agreed not to enter into any new arms contracts with Iran and to conclude existing contracts within a few years, in connection with becoming a founding member of the Wassenaar Arrangement--a multilateral regime committed to increasing transparency and responsibility in connection with transfers of arms and dual-use goods and technologies.

- President Yeltsin in Helsinki reaffirmed Russia's commitment to ratifying the Chemical Weapons Convention. The Russian parliament has indicated that it will ratify the Convention, most likely sometime in the fall. In addition, Russia has recently enacted a law which provides the legal basis for the destruction of its chemical weapons stockpile and seems to be on a path which will eventually result in the destruction of the 40,000 tons of chemical munitions it acknowledges it holds. - Russia signed the Comprehensive Test Ban Treaty last fall, has stopped producing fissile material for nuclear weapons and has joined the U.S. in calling for negotiation of a Fissile Material Cut-off Treaty in Geneva.

- Russia ratified the Biological Weapons Convention in 1975. President Yeltsin, however, has acknowledged the existence of a decades-old, offensive biological warfare research program. He issued a decree on April 11, 1992 prohibiting any illegal biological weapons activity in Russia. Though we do not doubt his sincerity, we continue to be concerned that the offensive BW program has not been entirely eliminated.

Russia has also taken important steps to address the proliferation risks posed by the large stockpile of nuclear weapons and fissile materials it inherited from the Soviet Union, in many cases working jointly with the United States.

- Highly enriched uranium from dismantled Russian nuclear weapons is being converted into commercial reactor fuel for use in U.S. nuclear power plants. Hundreds of weapons worth of uranium have already been transferred from Russia to the United States.

- With U.S. support, Russia has expanded the program to improve security at facilities where fissile material is located to now over 40 sites. Hundreds of tons of weapons

- usable nuclear material are now subjected to substantially upgraded security.

- With critical U.S. financial assistance, Russia is constructing a modem facility at Mayak for the safe, secure storage of fissile materials released from the dismantlement of nuclear weapons.

- Russia has committed to disposing permanently of its surplus weapons plutonium, and is working with the U.S. and France to develop technologies for converting plutonium weapons components into a form suitable for final disposition and international verification.

- Russia has furthermore ceased use of newly-produced plutonium for weapons purposes. The U.S. and Russia are negotiating a cooperative arrangement to convert Moscow's plutonium production reactors so they no longer produce weapons-grade material.

- Russia is working trilaterally with the U.S. and the IAEA to develop means of verifying that weapons-origin and other relevant fissile materials declared excess to defense needs are not returned to nuclear weapons programs.

- Russian law enforcement officials and scientists are working with their American counterparts to share information on illicit nuclear trafficking and improve laboratory analysis of nuclear materials seized from smugglers. - Through the International Science and Technology Centers and the Initiative for Proliferation Prevention, more than thirteen thousand former weapons scientists, the majority Russian, are engaged in peaceful scientific projects that reduce the risk they will be lured away by money from rogue or terrorist states.

As it transforms its economy, Russia recognizes the need to establish an export control system comparable to those of other major industrial countries. It has committed to doing so in several international settings, has enacted the necessary legislation, and has set up the necessary internal mechanisms, including improved border controls and customs surveillance aimed at restricting unauthorized transfers of equipment and technology related to weapons of mass destruction. The U.S. and others are helping Russia in this effort. There are still major challenges ahead, however, particularly in view of the economic pressures facing Russian industry and the responsibilities placed on new, untested Russian institutions charged with implementing export controls.

At times, however, Russia has demonstrated an unwillingness to forgo profitable transactions for the sake of nonproliferation. After the break-up of the Soviet Union, Russian market share of defense exports dropped precipitously, primarily because Russia could no longer afford to sell defense-related equipment at below market prices. Russia is actively seeking to replace those markets with clients willing and able to pay hard currency. In addition, Russian firms, sometimes operating with little or inadequate oversight from Moscow, are targeted by states seeking to circumvent the more restrictive export policies of the U.S. and Western Europe. We can expect Russian exporters to continue to pursue aggressively market share and hard currency through arms and technology.

While economic incentives are the principal reason for the export of sensitive goods and technologies, Russia can see the political value such sales bring in tinning up ties with regional powers such as China, India and Iran.

We have followed carefully the recent expansion of Russian trade in arms and proliferation-sensitive technologies with a variety of recipients.

In the case of the growing relationship between Russia and China, which has become Russia's number one customer for conventional weapons and military technology, the questions raised are not directly proliferation-related because China already possesses the relevant capabilities. Moreover, we do not question the right of either party to engage in legitimate defense cooperation. Instead, we believe it is important to focus on the implications of such cooperation for the stability of the Asia-Pacific region, a concern we have raised, and will continue to raise, on a case-by-case basis with the parties involved whenever we believe it to be warranted.

Our proliferation-related concerns with Russian exports have applied largely to Russia's nuclear and missile cooperation with certain states, primarily Iran. Russia maintains that it confines its cooperation with Iran to areas that are not of proliferation concern and do not threaten others. We have raised with Russia reports that call into question these assurances.

We remain opposed to Russia's nuclear cooperation with Iran, and have pressed Russian leaders at the highest levels to refrain from any such cooperation. Russia began construction of the first reactor at the Bushehr complex in 1995. While we remain opposed to the project, we have seen indications that Moscow has limited the scope and pace of its nuclear cooperation with Iran. President Yeltsin has stated that Russia will not provide nuclear technologies to Iran that are directly useful militarily, including a gas centrifuge uranium enrichment facility. Russian leaders have also assured us that they would not supply Iran with a heavy water-moderated nuclear reactor. Such reactors raise particularly serious proliferation concerns because of their potential for plutonium production. We will continue to monitor this closely and will press Russian authorities on any reports we receive of cooperation between Russia and Iran in the nuclear field. We are especially concerned about reports of cooperation by Russian entities with Iran on long-range ballistic missiles. We take these reports very seriously. Iran's acquisition of a long-range missile delivery capability, coupled with its continued pursuit of nuclear weapons and other weapons of mass destruction, would pose a grave threat to U.S. forces and friends in the region, and to regional stability generally. Transfers would also be inconsistent with Russia's commitments to the MTCR, and could raise serious issues under U.S. sanctions laws. We do not believe that Russia has transferred any long-ranged missiles to Iran. But Iran is now not giving priority to importing complete missiles. Rather it is actively seeking various types of technical assistance and cooperation that would enable it to produce its own long-range missiles indigenously. It is reports of such technical interactions between Iran and Russian entities that concern us. We have raised such reports with Russia at the highest levels, including during President Clinton's recent meeting with President Yeltsin in Helsinki. The Russian leadership has told us that it does not support assistance to/ran's ballistic missile program. While we appreciate such assurances, we remain disturbed by the discrepancy between them and what reportedly is occurring. Given the far-reaching implications of this matter, we will continue to pursue it at the highest levels.

We are also concerned by reports that Russian entities may intend to transfer surface-to-air missiles to Iran. President Yeltsin pledged in 1994 that Russia would not enter into any new arms contracts with Iran and would conclude existing contracts within a few years. In 1995, Vice President Gore and Prime Minister Chernomyrdin made formal that commitment.

At the time that the agreement with Prime Minister Chernomyrdin was reached, Russia informed us that one Kilo-class submarine was expected to be delivered to Iran, and that other old contracts including those for tanks, would be fulfilled. Prior to concluding the 1995 agreement we made certain that the contracts in the pipeline that would be concluded within a few years did not involve any new weapons systems, and would not alter the regional balance or compromise the ability of the U.S. and our allies to protect our mutual interests. Any transfers to Iran of advanced anti-aircraft missile systems would be inconsistent with the 1995 agreement. We raised this issue with Russia in March at the Helsinki Summit, and President Yeltsin reaffirmed his commitment to the 1995 agreement. The U.S. has not determined that Russia has transferred to Iran any advanced missiles, although we continue to monitor this carefully.

In conclusion, Mr. Chairman, Russia has, for the most part, been a strong partner in the effort to prevent proliferation, as reflected in the constructive approach Moscow has taken on the international regimes as well as in the responsible manner with which it has dealt with the challenge of securing the fissile and other sensitive materials on its territory. The difficulties we have encountered have been in the area of questionable sales to certain countries of proliferation concern, particularly Iran.

We believe the United States and Russia have a strongly shared security interest in preventing the spread of weapons of mass destruction and other sensitive goods and technologies. But Russia's ability and determination to pursue its commitment to nonproliferation may sometimes be eroded by a combination of powerful economic pressures, the evolving relationship between central governmental authorities and an increasingly privatized and export-dependent industrial sector, and a relatively new, understaffed, and still- unproven system of export controls. Improved Russian economic performance and institutional reform will help alleviate these problems--but basic changes will not be achieved overnight. In the meantime, the Russian Government must take effective steps to ensure a more accountable and conscientious approach to export control. And it should better appreciate the risks of engaging in even seemingly benign cooperation with determined proliferators such as Iran.

Encouraging Russia to adopt a more effective and responsible approach to cooperation with third countries will remain one of the Administration's highest nonproliferation priorities. We will continue to press our case at the highest levels, making clear that cooperation on nonproliferation matters is an essential element of the strong bilateral relationship both sides seek. Pursuing our nonproliferation agenda with Russia will involve both incentives and disincentives, including the implementation of our sanctions laws, whenever applicable. However, the use of certain "sticks," such as cutting off or curtailing our assistance programs to Russia, would only be counterproductive. Not only would they be unlikely to achieve our nonproliferation goals; they would also undercut key programs to promote democratization and market reform, as well as to ensure that the process of disarmament takes place in as safe, secure, and accountable a manner as possible.