Tuesday, April 27, 2010

Profit, Loss, and Proliferation

Risk and Demand - Not the Same Thing

by Molly Cernicek and Cheryl Rofer

In the past few weeks, we have been barraged with messages stating the risk of nuclear terrorism. Arrests for trying to sell nuclear material and, of course, what could happen if nuclear material, components, or devices end up in the wrong hands. Too much nuclear material is still too poorly secured, and the idea of a mushroom cloud over New York may appeal to some terrorist groups. But risk is not the same as demand. Within the context of nuclear terrorism, risk is a source of danger while demand is the ability and desire to purchase or steal goods and services.

Securing the Bomb chapter “The Threat: The Demand for Black Market Fissile Material” states in its first paragraph:
None of the confirmed cases of seizures of stolen nuclear material includes clear evidence of a particular buyer—whether a state seeking nuclear weapons or a terrorist group. Nevertheless, there is significant evidence that both terrorist groups and states hostile to U.S. interests have sought stolen nuclear weapons or weapons-usable nuclear materials, and have attempted to recruit nuclear-weapons expertise.
Those two sentences seem to contradict each other. Three specific instances follow, supposedly illustrating how
demand is becoming more focused and sophisticated and may be overcoming the gap between buyers and potential sellers.

1. Incidents of terrorist teams carrying out reconnaissance at nuclear weapon storage sites and on nuclear weapon transport trains in Russia, whose locations and schedules are state secrets;

2. Reports that the 41 heavily armed terrorists who seized hundreds of hostages at a theater in Moscow in October 2002 considered seizing the Kurchatov Institute, a site with enough highly enriched uranium (HEU) for dozens of nuclear weapons;

3. The 2003 criminal case involving a Russian businessman who was offering $750,000 for stolen weapon-grade plutonium for sale to a foreign client—and succeeded in making contact with residents of the closed city of Sarov, home of one of Russia’s premier nuclear weapons R&D centers.
But none of these examples illustrates demand in the context of buying or acquiring material or a device. Incidents #1 and #2 show the potential risks of a criminal or terrorist act. In fact, the Chechen terrorists described in incident #2 entertained the idea of taking control of Kurchatov’s nuclear power plant and threatening to blow it up. They instead chose to take over Moscow's Dubrovka Theater with 900 hostages and were gassed by the Russian authorities. Example #3 points to the development of a supplier network. The “foreign client” may very well have been an intelligence agent as the criminals involved in supplying the material were apprehended by Russian authorities. No foreign buyer was identified or apprehended.

Ironically, the frequent discussion of the demand for nuclear weapons and materials in the media could be sending a message to potential suppliers that the market is bigger than it really is. Could this be an intelligence strategy to go after would-be suppliers? Some percentage of employees in every organization that handles nuclear materials may be willing to risk all for a perceived payout. The numbers of arrests of would-be sellers of nuclear material support this possibility.

Corruption is certainly mainstream in multi-national companies. In a 2007 report, PriceWaterHouse Coopers found that 63% of the 390 companies they assessed had experienced some kind of actual or attempted form of corruption within their ranks. The study findings shocked the executives who agreed to be part of the study as most of the companies affected by corruption had no deterrence in place for the kind of corruption they experienced. These companies had misjudged how much risk some of their employees were willing to take for a bigger payoff of some kind.

Countries where corruption is ingrained in common business practices, like Russia, also have this problem. The country tops PriceWaterHouse’s 2009 Global Fraud Survey. In spite of this culture, Russia’s lack of modern infrastructure, lack of labor mobility, and lack of trust have created significant obstacles for would-be nuclear smugglers thus far. US programs focused on materials protection, security and accountability have made a huge impact on Russia, but there is more to do in this area. It wasn’t until relatively recently that the Russian government considered a nuclear threat likely to emerge within its borders. Attacks by Chechen groups have motivated the government to be far more vigilant of their nuclear security.

The demand for illicit nuclear materials, devices, and knowledge in actuality seems to be very low and very specific. Any terrorist group with nuclear aspirations is unlikely to be a repeat customer to avoid the risk of getting caught, mishandling material, recruiting participants with inadequate education, and implementing a difficult attack strategy that they will most likely not survive. If a group can get enough material to pull off a nuclear-related attack, the chances are high that they use it in a much simpler dispersion device. States that build nuclear weapons illegally may pay for outside expertise, material and technology, but if they are to control their risks they need to develop their own competencies in house.

Without a continual demand for nuclear knowledge, material and parts, there will never be a sophisticated supplier network because small and indeterminate demand provides no profits on a recurring basis. Reducing the supply of nuclear material and devices will reduce the number of employees associated with them (replacing them with technology) and increase the risk to those interested in supplying these goods illegally. Stating publicly that there is not a great demand for nuclear material and parts is likely to reduce the number of would-be suppliers as well. A reduced supply should increase the costs and risks of potential nuclear terrorists. There will always be some risk of nuclear terrorism as long as we have nuclear material and devices. But we can lower our risk while raising terrorists’ risks further by communicating a more realistic illicit nuclear materials and technology market. It may reduce the supply of frightening articles to the media’s demand, but that’s a risk worth taking.

Update: Here's the same news in English as in that Postimees article.


Arnold said...

"If a group can get enough material to pull off a nuclear-related attack, the chances are high that they use it in a much simpler dispersion device."

You need to explain that particular statement. If a group is seeking, and obtains, either HEU or Pu, it is much more likely they are seeking to attempt a nuclear terrorist attack. If they want to default to a RDD, why try to obtain such hard to get materials when Cesium and Cobalt are available much more readily in hospitals and constructions sites all around the world?

In fact, HEU would be an ineffective dirty bomb ingredient as it is not all that radioactive.

Or are you lumping the two together?

And while I know you'll disagree with his assessment, Rolf Mowatt-Larssen has put together a time line of terrorist attempts to obtain nuclear materials. Without pointing out George Smith's critique (which comes down to one entry in the time line in one specific case), I would be interested to hear how you refute the idea that if not obtaining the capability, AQ has seeked the specific ingredients for a nuclear weapon and not a RDD.

Also, your definitions of risk and demand seem to be set up to specifically downgrade the danger of nuclear terrorism. Why does demand require both the "ability and desire?" Why can't a group desire but not currently have the ability, but be actively engaged in seeking it? Would that still not be demand? And how is risk so generalized to a "source of danger?" In terms of nuclear terrorism it is generally understood to be that if unlikely, it is still possible that a non-state actor could carry out a nuclear attack. The consequences would be so high, and while low the probability is not zero, so something should be done.

I would also suggest that if you are going to critique Matthew Bunn's publication, you should point out who he is as the author, his publication history, work experience, and other related topics of interest...

Cheryl Rofer said...

Arnold, thanks for the substantive comment.

As to your first question, terrorists take the easiest path to their chosen objective. So different groups might do different things. However, because of the general overreaction to radioactivity, a dispersal device could be quite effective. Only a group with a very persistent desire to cause a nuclear explosion and significant personnel and monetary resources would go the full route. Al-Qaeda has said some things about such a desire, but, faced with the difficult reality of fashioning a nuclear weapon, they might well give up and go to a dispersal device. We agree that enriched uranium would be a poor choice for such a device, but plutonium has the reputation of being “the most poisonous substance on earth,” of which one tiny particle can kill. Its dispersal would cause a great deal of terror, certain to be amplified by the media, but it also offers enormous challenges and risks for those preparing, transporting and launching such a device.

Could you give us the link to Mowatt-Larsson’s time line?

The customary definition of threat requires both capability and desire. So a disturbed adolescent, fantasizing at a Wikipedia page, is not a threat. In the case of demand, that adolescent might well buy a critical mass of fissionable material if he had several million dollars or if it came up on EBay for fifty dollars or so. Since he doesn’t have the several million dollars, or a connection to a seller, he doesn’t constitute demand. Serious suppliers do not count customers with desire in their market assessments, just those who are most likely to buy.

Bunn has also answered your concerns about demand, as we quoted in the post: "None of the confirmed cases of seizures of stolen nuclear material includes clear evidence of a particular buyer—whether a state seeking nuclear weapons or a terrorist group." The three examples that follow do not constitute demand. Perhaps you could explain what “clear evidence of a particular buyer” means and why the examples do not show that “clear evidence of a particular buyer.”

We acknowledge that there will always be a risk of losing control of nuclear weapons technology and materials to terrorist groups as long nuclear weapons exist. Every terrorist group has dreams of creating significant disruption and damage, but market factors play a role in what terrorists can and cannot accomplish. Market forces are at play for illicit weapons and materials just as they are for any other product. Desire is not a factor in potential markets unless that desire includes the resources to sell or buy.