This report is an expanded version of the executive summary of a much larger report, "Defense Industry Restructuring in Russia: Case Studies and Analysis." Many people contributed to that report, and to the underlying research. In writing that report, we did not attempt to reach consensus among the authors on the interpretations to be drawn from the data.

In this study we have looked at some of the most important elements of restructuring involved in the attempt to generate a viable civilian industrial sector from the assets of the military-industrial complex. Many other reform activities must be implemented at the national level to create the environment and infrastructure necessary for the functioning of a restructured industrial sector. Although not addressed here, they are important and difficult to implement. Another issue that we have not addressed is the pandemic presence of organized crime, which is a huge financial "tax" on economic activity as well as a disincentive to entrepreneurship and investment. I join those who believe that this is the largest single problem threatening the economic stability of Russia today.

This report comprises a description, summary, and analysis of an entrepreneurial training workshop for Russian nuclear scientists held at the Lawrence Livermore National Laboratory (LLNL), May 9-20, 1994. This is the third in a series of such workshops. The first workshop was held in Boston, July, 1992. The second was held in Moscow, June, 1993. The workshop was cosponsored by the U.s. Arms Control and Disarmament Agency (ACDA), the U.S. Department of Energy (DOE), and the Ministry of the Russian Federation for Atomic Energy (Minatom).

The goals of the workshop were to provide the Russian scientists with academic and practical background in several basic business areas, and then to assist them, in conjunction with American industry representatives, in the preparation of business plans for possible cooperative projects.

In this book, distinguished U.S. and Russian scholars analyze the great challenges confronting post-Communist Russia and examine the Yeltsin government's attempts to deal with them. Focusing on problems of state- and nation-building, economic reform, demilitarization, and the definition of Russia's national interests in its relations with the outside world, the authors trace the complex interplay between the communist legacy and efforts to chart new directions in both domestic and foreign policy in the years ahead.

Chapter 3 in The New Russia: Troubled Transformation, edited by Gail W. Lapidus.

In April 1994, black and white South Africans for the first time will vote for a nonracial government. This watershed election is one of many recent profound changes in Southern Africa, including independence in Namibia, democratic elections in Zambia, a peace agreement in Mozambique, and renewed civil war in Angola.

The authors explore the sources and dynamics of the political, economic, and diplomatic transformations taking place in Southern Africa. They recount how Southern Africa has long endured costly, violent domestic and interstate conflicts, often complicated and intensified by external interventions and interests. They also analyze the various attempts to resolve Southern Africa's conflicts. They suggest that the democratic transition in South Africa opens the possibility to create a secure Southern Africa, but they also note that past conflict legacies and new unanticipated conflicts could stand in the way. The challenge ahead will be to create new institutions at the national and regional levels that can help political players resolve conflict without resorting to violence.

Based on interviews with participants and research in newly opened archives, the book reveals how the American atomic monopoly affected Stalin's foreign policy, the role of espionage in the evolution of the Soviet bomb, and the relationship between Soviet nuclear scientists and the country's political leaders.

Because of the Soviet Union's heavy emphasis on military prowess and capability, the military-industrial sector in the Soviet Union (and Russia) was larger than its counterparts in other industrialized societies. In addition to military equipment, it produced almost all civilian products with technology content such as appliances, electronic equipment, and aircraft.

With the ending of the Cold War, support for the military production from this sector was radically deemphasized. The necessary adjustment of the military enterprises to this demand shock has been embedded in far more comprehensive economic reforms. As the country has moved to a market economy and privatized much of its economic potential, the managers of the enterprises have found it necessary to convert most of their output to nonmilitary products and services as well as to restructure the enterprises.

The three major areas of restructuring are (1) the relationships of the enterprises with their owners, (2) the internal organization and operational procedures of the enterprises, and (3) the relations between the enterprises and the employees. The degree of success of the national economic reform program and the health of the economy will depend substantially on the degree of success of the defense enterprises in utilizing their residual assets (human, technological, and physical) to generate profitable economic activity.

This report deals with this economic transition, primarily at the enterprise level. We have met the directors of more than forty defense enterprises and worked with approximately ten of them in considerable detail and six in more detail, having spent between one quarter and one person year with managers from each of the six. The report contains case studies of these six enterprises as well as cross-cutting chapters on four critical aspects of enterprise restructuring--privatization, organization, accounting, and social services. These have emerged as the key factors governing the strategies of the enterprises, and they will be some of the primary determinants of the success or failure of an enterprise.

The Soviet Union's economy was overindustrialized and highly militarized, with a disproportionate share of the military industry located in the Russian Republic. It is therefore not surprising that industrial production, including military production, has dropped sharply in the economic environment of the last few years. Many enterprises are shrinking, but few are failing completely or going into bankruptcy, and there is little disaggregation of large enterprises into smaller legal entities. Thus, with the exception of privatization, the general profile of Russian industry has not changed greatly.

The creation of new entrants (new business entities), to the extent that it is occurring, is one of the more promising aspects of the economic transition. However, the managers of many of the large enterprises resist divesting themselves of segments of their business. They fear that subsequent capitalization will result in a major reduction of value of the parent because the parent's contribution to the capitalized spin-off will not command much equity. Directors recognize the need for decentralization of management and financial responsibility, but many of them prefer to create divisions rather than subsidiaries. They also try to bring outside investment into the entire large enterprise rather than into a subsidiary. It is difficult for small groups of employees to simply leave and form a new (start-up) corporation because of the lack of commercial and social services infrastructure, especially capital markets, and the lack of rights to use state facilities.

The end of the Cold War creates both new challenges and new opportunities for improving nuclear weapons safety. Several post Cold War developments are likely to have negative effects on the safety of existing nuclear weapons arsenals. These potentially dangerous trends include an apparent decline of morale in the laboratories and military organizations responsible for weapons safety, the potential proliferation of nuclear weapons to new states, the likely discontinuation of nuclear testing for safety related purposes, and the introduction of new nuclear weapons operations, including large-scale warhead dismantlement and the relocation and long-term storage of large numbers of nuclear weapons.

In an effort to explore such challenges and opportunities, a NATO Advanced Research Workshop was held in Oxford, England from August 25^th through 27^th, 1994. The workshop produced seven specific proposals for consideration to increase nuclear weapons safety and security. The proposals represent a summary of the points discussed at the workshop and are not intended to imply complete consensus of all participants.

Under Article VI of the NPT, all parties agree "to pursue negotiations in good faith on effective measures relating to cessation of the nuclear arms race at an early date and to nuclear disarmament, and on a treaty on general and complete disarmament under strict and effective international control." The purpose of this paper is to consider the meaning of this language.