By Fuller, James
Arms Control Today , Vol. 32, No. 1
Debt-for-nonproliferation swaps are potentially powerful tools that could leverage current financial conditions to reduce the security threat from Russia's weapons infrastructure.
Debt restructuring and reduction, whereby the terms of a loan are changed or part of a loan is forgiven, ar common tools used by creditors for a variety of purposes. wealthier creditor nations, such as the United States, often restructure and reduce debt owed by developing nations in order to bring about positive economic change in a debtor country. Similarly, the private financial sector restructures private debt owed by nations when it makes financial sense to do so. International nongovernmental organizations (NG0s) and others have also worked with government and private creditors to use debt reduction to accomplish more philanthropic goals that can benefit both public and private creditors in less tangible ways.
Indeed, "debt swaps"-a term used loosely here to denote a creditor forgiving monetary debt in exchange for specific actions by a debtor-have been an effective tool for improving global conditions in a number of ways.1 The international environmental community, in particular, has been very effective in encouraging and leveraging debt conversion to help meet global environmental objectives since 1984, when the World Wildlife Fund conceived of "debt-for-nature" swaps.2 In these exchanges, a portion of a country's restructured debt-either commercial debt or official debt owed another country-is forgiven in return for the debtor dedicating an agreed-upon amount of local currency to an environmental project.3 Over the last two decades, nearly $1 billion in debt-for-- nature swaps have been implemented.4
Another important area that would benefit from this relatively new and innovative funding mechanism is nuclear, chemical, and biological weapons proliferation prevention. Since 1992, the United States has directly underwritten about $10 billion in threat reduction activities in Russia and the former Soviet Union, but the situation demands even greater investment. Russia's financial problems and security needs, which demand the formation of a sustainable Russian infrastructure to prevent the proliferation of weapons of mass destruction after direct U.S. assistance stops, both argue for increased involvement by other industrialized nations and the private sector. "Debtfor-nonproliferation" swaps are potentially powerful tools that could leverage current conditions to reduce further the security threat from Russia's weapons infrastructure.
The Need for Increased Investment
Currently, there are more than 30 U.S.-- Russian threat reduction programs administrated by three different U.S. departments, with a budget totaling $750 million for fiscal year 2001. But the September 11 terrorist attacks on the United States, the ensuing revelations as the war on terrorism progresses, and the use of anthrax in the U.S. mail system have called into question the pace with which threat reduction work in Russia is being completed. The human losses endured and the costs to the U.S. economy as a result of the September 11 terrorist attacks would likely pale in comparison to a successful attack using a weapon of mass destruction.
In January 2001, a bipartisan task force co-chaired by Howard Baker and Lloyd Cutler strongly recommended that investments in U.S. Energy Department nonproliferation activities be increased to roughly 1 percent of the annual U.S. defense budget over the next 10 years. Energy Department nonproliferation programs help Russia dispose of weapons plutonium; protect, control, and account for nuclear weapons material; stabilize the economic situation in Russia's "nuclear cities"; and promote nuclear warhead safety and security. The importance of these programs cannot be overstated, and the Baker-Cutler report indicated that its 1 percent recommendation would total about $3 billion per year, or $30 billion over the ensuing decade. …