WRITTEN TESTIMONY of ROGER W. ROBINSON, JR. before the HOUSE INTERNATIONAL RELATIONS COMMITTEE SUBCOMMITTEE ON THE WESTERN HEMISPHERE

CUBA AND THE JURAGUA NUCLEAR POWER COMPLEX

1 August 1995

2172 Rayburn House Office Building

Washington, D.C.

Mr. Chairman, it is a privilege to appear before the subcommittee on a pivotal issue in our
relationship with Castro’s Cuba and the ultimate transition to a democratic Cuba — the
Soviet-designed Juragua nuclear complex near Cienfuegos (sometimes referred to as the
Cienfuegos project). Over the past decade, I have served as president and CEO of RWR Inc., a
Washington-based consulting firm, and was formerly senior director for international economic
affairs at the national security council under president Reagan. Prior to my government service, I
was a vice-president in the international department of the Chase Manhattan Bank with
responsibilities for Chase’s loan portfolio in the USSR, eastern Europe and Yugoslavia.

Since the American people learned of the advanced stage of’ construction of the first of two
VVER-440 reactors in the spring of 1991 — which was some 60-70% complete at the time–I
have tried to monitor this portentous project and the associated implications for our national
security. In my capacity as a member of the Board of Advisors of the Center for Security Policy,
I co-authored several Decision Briefs published by the Center from May 1991 until the time that
the Cienfuegos project was reportedly mothballed in April 1992 (See for example, “Cienfuegos —
A Hundred Fires”: Muchas Gracias Moscow, But No American Chernobyls, No. 91-P 44,
31 May 1991; A “Ticking” Anniversary Present: Will Russia Give Us a Chernobyl Ninety
Miles Off the U.S. Shore? No. 92-D 41, 23 April 1992; “Hear Us Now and Believe Us
Later”: Business Done with Fidel Means Big Losses When Communists Fall, No. 92-D 51, 8
May 1992; Castro’s Potemkin Nuclear Shutdown: Chernobyl at Cienfuegos Still in
Prospect, No. 92-D 108, 10 September 1992). The bottom line concerning recent reports of the
project’s revival under the sponsorship and coordination of Moscow is simply this: the Juragua
complex is even more frighteningly flawed and unacceptable today — given the passage of time
and corrosive exposure to the elements — than it was some three years ago.

In the course of this testimony, I would like to review briefly why when viewed from a
wide-angle policy lens — the Cienfuegos project is important and emblematic of other past and
present global flash-points catalyzed by energy-related foreign policy dramas. Some of the
troubled legacy of the reactors’ construction and steps reportedly underway to revitalize the
project will likewise be addressed. Finally, I will offer several policy recommendations directed
toward ensuring that the current Juragua complex never comes on-line.

Why Cienfuegos Matters

Today the United States is simultaneously facing several fateful foreign policy crossroads — the
Balkans crisis, China policy, the Middle East peace process, managing Iraq, Iranian nuclear and
oil-related developments, the Korean peninsula and others. The White House has thus far
generally erred on the side of “engagement” as opposed to containment, isolation (e.g., like that of
Iran) or even, in the case of Bosnia, limited military action. China broke the code for Cuba and
other centrally-controlled economies on permitting economic liberalization while maintaining
repressive political control. (Many are now wondering if Beijing has over-played its hand even
with this White House in expanding missile proliferation, contemptuous human rights violations,
saber-rattling over Taiwan and unfair trade practices.) Vietnam certainly took a page from the
Chinese play book in its relations with the U.S. and is now awaiting lavish trade-related and
financial rewards for its gradual economic opening and still-pervasive authoritarianism. This same
cadre of Clinton policy-makers appears today to be working hard to devise a Vietnam-style “road
map” for incremental normalization of relations with Havana.

Although this assertion is vigorously denied by the Administration, the policy tactics and
wedge-building being employed by the State Department and White House are quite familiar.
Indeed, the confusing signals emanating from this Administration concerning its overall Cuba
policy are also manifest in its official position on the Juragua nuclear facility. A recent State
Department release on the project states “in the event construction on the Juragua reactors were
to proceed, however, we would continue to vigorously pursue initiatives that would improve the
safety of the facility and promote its safe operation.” This policy position says, in effect, “we
strongly object to Havana proceeding with this nuclear complex which fundamentally undermines
our security interests but if the Castro government chooses to ignore our diplomatic protests,
please complete the project with as many safeguards as possible.” Regrettably, we will probably
soon be hearing this same basic Administration policy prescription with respect to Russia’s supply
of nuclear reactors to Iran.

As shrewd observers of the international scene — assisted by the massive Russian
signals-intelligence facility at Lourdes, Cuba — Fidel and his associates have had little difficulty in
judging the time propitious to either complete their existing fatally-flawed VVER-440 reactors or
shake down the U.S. and international community for some kind of substantial compensatory
alternative. After all, what other conclusion can Havana reasonably reach from the cynical,
short-sighted Western policies on display in the North Korean reactor-payoff scheme and the
Russian-Iranian nuclear gambit? In short, it is clear to the Castro government that, with Moscow’s
help, the United States can be had.

To disabuse Havana of its assumption that revival of the Juragua complex will somehow have a
large direct or indirect payoff in the end, it may be worthwhile recalling another world-class
energy deal pursued by the Soviet Union under Ronald Reagan’s watch. Like Moscow’s
two-strand Siberian gas pipeline deal in the early 1980’s, the Cienfuegos complex is an
unprecedented “national project” with potentially decisive implications for the country’s long-term
energy viability, hard currency earnings structure, attraction of other foreign direct investment,
access to international financial institutions and, of course, nationalistic pride. More subtle are the
national security parallels of these pivotal energy deals.

In the case of the Siberian gas pipeline project, Moscow was well aware of the inordinate West
European dependency on Soviet natural gas supplies — ultimately projected to exceed 60% of
total European gas consumption — which would have resulted from the successful completion of
both strands of the twin 3,600-mile pipelines connected to the West European gas grid. More
secure Western suppliers of natural gas would always be underbid by the Soviet gas monopoly
GAZPROM — then headed by today’s Russian Prime Minister Victor Chernomyrdin — because of
the absence of a Western cost structure (e.g., administered prices). The subsequent use of
“energy warfare” by the former Soviet Union against the Baltic states, Ukraine, Azerbaijan and
others who have dared to challenge Moscow’s will are now a matter of historic record. (This kind
of heavy-handed use of energy-related leverage is still regarded as a useful policy tool by Russia,
particularly given Chernomyrdin’s ascendancy to leadership.)

In a somewhat different way, Cuba’s completion of the Juragua reactors could likewise
empower the Castro government with a menacing and even devastating — new policy lever in its
relations with the United States. A Cuban nuclear accident — either of a technical nature or the
result of sabotage — could have a similar effect to the detonation of a nuclear weapon near the
United States, laying down a curtain of radioactive fallout that, depending on the season and
prevailing winds, could either stretch across the lower tier of this country to Texas or race up the
eastern seaboard to Washington D.C. And possibly beyond within the first four days.

A determined stand by President Reagan with Moscow and our allies terminated the planned
second strand of the Siberian gas pipeline deal, delayed completion of the first strand by two years
at enormous cost to Moscow and secured an alliance agreement to establish a strict ceiling on
Soviet gas deliveries to Western Europe (i.e., 30% of total gas supplies) in favor of the
accelerated development of secure Western supply alternatives. In addition, the Reagan
Administration simultaneously — and successfully — acted to strengthen multilateral export
controls on militarily-relevant technology and end subsidized official credits to Moscow. An
equally determined U.S. stand now on the Juragua complex would involve President Clinton and
those seeking the Republican nomination making clear to Havana and Moscow that this current,
unfixable project will not be allowed to come on-line under any circumstances.

There are other characteristics of the Cienfuegos project reminiscent of the now-historic
U.S.-Soviet “pipeline dispute” (this alliance policy dispute has, for several years, been a case study
at Harvard’s Kennedy School of Government):

• European governments, companies and banks simply did not share the U.S. view that Moscow
  should be penalized for its sponsorship of repressive martial law in Poland (and near Soviet
  invasion) in the early 1980’s, but instead should be de facto rewarded with the largest single
  Western taxpayer-subsidized transaction in the history of East-West trade.
• the preponderance of voices in Europe, the media, the global business community and even the
  bulk of the Reagan cabinet called for abandoning the use of economic sanctions to limit Soviet
  policy options and damage its rigid, centrally-controlled economy (a possibility dismissed out of
  hand), arguing that “engagement” or commercial bridge-building would be the key to improved
  Soviet geopolitical behavior.
• a thunderous rejection by most of the foreign policy establishment of the notion that an
  American president’s resolve to take a stand on the twin Siberian gas pipelines, high-technology
  export controls and official financial subsidies could ever hope to slow — much less ultimately
  derail — the Soviet juggernaut as a permanent superpower fact on the political landscape.

One does not have to search hard to extract from the line taken by Moscow and the allies in the
pipeline case the bulk of the arguments being used today in the effort to finesse — and, in the end,
live with — the completion of the Juragua complex no matter how defective it is reliably reported
to be. As with the Siberian pipeline deal, if European firms, governments and financial institutions
do not remain in the supply and funding game, Juragua has almost no chance of being realized. It
is important to recall that Castro already has committed some $1.2 billion to constructing this
facility and faces a similar sum required to complete the two reactors — a price-tag equivalent to
almost two years of his country’s total hard currency export income. Accordingly, there will
probably be no near-term end to Havana’s discussions with Russia, Germany, France, Italy, Brazil
and others concerning how and when to revive the Cienfuegos deal, even if it should again be
consigned to mothballs due to robust U.S. congressional opposition. The only way around this
Saddam Hussein-like phenomenon is to put a proverbial stake in the heart of this coming nuclear
nightmare now.

Finally, this Moscow-sponsored Cuban nuclear deal is of a piece with energy-related foreign
policy dramas currently playing an increasingly dominant role in world politics. For example, if
one examines key underpinnings of the Russian invasion of Chechnya (e.g., securing strategic
pipelines), Kremlin efforts to isolate Azerbaijan and Turkey, Moscow’s intention to ignore
provisions of the Conventional Forces in Europe (CFE) agreement in the Caucasus, the escalating
threat posed by Iran and North Korea, China’s increasingly belligerent forays in the Spratley
Islands and Germany’s plans to develop a nuclear research reactor using highly-enriched,
weapons-grade uranium, a common theme emerges–energy. Moreover, most of these potential
front-burner challenges to vital U.S. security interests involve ostensibly civilian nuclear reactor
projects. Consequently, to preserve the credibility of U.S. anti-proliferation efforts and the
message to our allies and potential adversaries that we mean business on ensuring the safe, benign
global development of nuclear energy, it is essential that we view the Cienfuegos nuclear project
as a litmus test of American political will for the 21st century. If we cannot muster the national
determination to take a stand on a nuclear danger in our immediate proximity, how does this
country even hope to protect itself from some two dozen nations which have acquired — or are
projected to acquire by the end of this decade — weapons of mass destruction, some with ballistic
missile delivery systems?

What’s wrong with this picture?

Mr. Chairman, I have discussed several subjects relating to the strategic threat posed to U.S.
national security interests by the Juragua complex, as well as what are — in my view — similar
policy scenarios playing out elsewhere in the world. I would now like to touch briefly on the crux
of this issue; namely, what exactly makes these reactors so unsafe. After all — the argument goes
— we have successfully harnessed atomic power to generate electricity for civilian purposes for
almost half a century with, but for one major exception, no major disasters. What could be so
dangerous about these reactors?

The simple fact is, of course, that virtually everything is dangerous about these reactors.
Several technical experts — some of whom are with us today — have discussed the numerous and
debilitating technical faults of the plant, faults that are so fundamental to the construction and
operation of the reactors that no “fixes” such as a modern control room or IAEA “safeguards”
will be able to remove the danger. It is these critical safety issues that have brought us together
today, so I feel obliged to restate some key areas of concern likely to plague us if Juragua is ever
brought on-line.

• sixty percent of the Soviet-supplied materials used in these reactors are defective, according to
  knowledgeable Cuban defectors from the project.
• integral reactor systems — including the reactor vessel itself, six steam generators, five primary
  coolant pumps, twelve isolation valves and more — were stored outside for up to eighteen
  months, exposed to the highly corrosive tropical sea air and weather. Also, no nuclear reactor of
  Soviet design has ever been constructed in a tropical climate.
• the support structures of key reactor components contain numerous structural defects.
• the containment dome of the first reactor is designed to withstand pressures of only seven
  pounds-per-square-inch (psi), compared to the fifty psi in American reactors, leaving the Juragua
  dome exponentially weaker than an American reactor even in the event that the dome functions
  perfectly as designed — an unlikely prospect in the current situation.
• as many as fifteen percent of 5,000 previously-approved welds in the reactor’s auxiliary
  plumbing, containment dome and spent-fuel cooling systems were x-rayed and found to be
  defective due to air pockets, poor soldiering and heat damage.
  The mere suspicion that even one weld is faulty will earn an American nuclear plant a
  suspension from the nuclear regulatory committee.
• Cuban operators of the facility have received the precious little knowledge they have of their
  future craft from some training on Soviet “slow-response” simulators — deemed inadequate by
  U.S. standards as they do not simulate an actual crisis event in progress or even resemble the
  reactors at Juragua.
• the design of the VVER-440 pressurized water reactor (pwr) is fundamentally dangerous, even
  with the addition of the containment domes. As already mentioned, VVER-440 model reactors
  built by the Soviet Union in then-East Germany were closed as soon as possible by Bonn
  following reunification. Despite these inadequacies, Siemens is reported to be considering the
  possibility of utilizing components from the closed GDR plants in the construction at Juragua.

Also, there are indications that:

• Soviet advisors refused to guarantee to their Cuban hosts that the valves installed in the first
  reactor’s emergency cooling system would function under certain conditions. Many component
  parts originally designed for specific applications have been used to substitute for proper — but
  unavailable — components, increasing the likelihood of a disastrous accident by an unknowable
  factor.
• Cuban intelligence knowingly destroyed x-ray photos and other evidence proving the extent of
  the reactor’s flaws, making it virtually impossible to take effective corrective action to repair the
  welds.
• the Cienfuegos area is seismically active, making it a poor place to put even the safest reactor.

These flaws are illustrative of the myriad technical problems facing the Juragua reactors.
Coupled with Cuba’s inadequate human and technological infrastructure — poor even by the
Soviet standards that gave the world Chernobyl — a rational conclusion can be drawn: any nuclear
facility constructed in Cuba at any time in the future should be constructed entirely from the
ground up, and must not incorporate any construction or components present in today’s Juragua
project.

A syndicated Russian-European restart?

Despite this project’s terminal shortcomings, strong interest remains in bringing the nuclear
complex to completion. It is therefore useful to examine briefly the parties driving this deal and
their likely motivations. As mentioned earlier, this estimated $2-$2.4 billion project is well
beyond the indigenous capability of a destitute Cuba and would require large-scale financing from
European suppliers and Russia. As the architect of the decision to revitalize Juragua, Russia’s
Ministry of Atomic Energy (MINATOM) — with full government support — is reportedly seeking
to syndicate the required financing to complete the project through a consortium of European
suppliers said to include the German giant Siemens, Electricite de France and Ansaldo SPA of
Italy (‘Russians say they are coming to build Cuban nuclear plant,” The Wall Street Journal, 6
June, 1995) . Given Cuba’s atrocious sovereign credit rating, deemed worst in the world in 1994
by Euromoney (Euromoney, “1994 country risk report”), there is little doubt that these firms will
be provided by their respective governments with 100% taxpayer-guaranteed credits and/or
insurance coverage to virtually eliminate the otherwise untenable commercial and political risk
associated with substantial exports to Havana.

Indeed, it can be reasonably expected that official European export support programs like
Hermes of Germany and Coface of France will be pleased to accommodate — under political
guidance — any requests from such major firms to help establish national export beachheads in
Cuba. Accordingly, as this reported “joint stock company” — in Moscow’s parlance — evolves,
careful congressional scrutiny of any Western government risk insurance or official credits/credit
guarantees is warranted. The presence of such taxpayer-underwritten arrangements would make
participating European governments partners in the Cienfuegos restart — with all the attendant
culpability and foreknowledge.

Russia’s nominal leadership of such a syndicated revival effort would probably be secured by a
modest contribution of’ perhaps $25-$100 million — commensurate with its defaulted creditor
status (read: repeated debt reschedulings). In the 1992-1994 period, Russia began to prime the
pump for Cienfuegos with a $30 million credit line to Cuba, ostensibly to improve the mothballing
of the project. Not only would Moscow like to see prospects improve for much-needed Cuban
debt repayments (no matter how modest) by bringing Juragua on-line, other political and
economic benefits would likely include:

• plaudits from the vast majority of un members, who would likely view Moscow’s Juragua
  initiative — and Russia’s probable success in recruiting “name” European firms — as a heroic effort
  to break the “unfair” economic embargo against Cuba.
• an opportunity to advance Russia’s global reputation as a reliable supplier of nuclear reactors in
  the midst of a cut-throat competition with China and other players in this lucrative marketplace.
• the generation of vast new Cuban goodwill (and future sweetheart deals) that Moscow could
  translate into multi-year renewal of its 1,000-man signals intelligence listening facility at Lourdes
  enabling it to continue to eavesdrop on America’s sensitive commercial and government
  communications.
• A potential future bargaining chip with the U.S. — probably in the context of the
  Gore-Chernomyrdin commission — to secure multi- billion dollar (U.S. taxpayer-financed)
  concessions if the Administration insists on the project’s termination or total reconstruction.
• possible “expressions of appreciation” from select European firms that — thanks to Moscow —
  would have yet another opportunity to cover their business risk exposure in the warm blanket of
  taxpayer-underwritten credit guarantees and insurance arrangements.
• long term preferential treatment for Russian suppliers in a potential expanding Cuban market
  due, in no small part, to the electric power, jobs, infrastructure development and West European
  life-support provided by an operating Juragua reactor complex.

In addition, Cuba probably stands to benefit substantially from even a serious international
discussion regarding the completion of Juragua. Cuba today faces desperate energy and
electricity shortfalls, often leaving civilians — and businesses — without power for hours on end.
Two of the most promising areas of interest to potential foreign investors are the tourism and
mining industries, both of which are electricity-intensive. The ability to assure a long-term,
consistent supply of electricity will be required to attract foreign investment into these — and
other — sectors of the economy. Cuba’s abysmal credit rating — a serious constraint to borrowing
on international capital markets — is not a problem if and when European firms are able to line up
government-backed supplier credits and guarantees to help develop Havana’s energy sector. This
crucial outside assist would, in turn, free up indigenous resources to perpetuate the Castro
regime, albeit at an anemic level. Even if the project is ultimately abandoned, Cuba’s burgeoning
international business profile and likely western compensation package for halting construction
would be well publicized, probably contributing to a weakening of the U.S. embargo.

It is also interesting to note as we discuss who benefits from this project the deafening silence
of what would logically be one of the project’s harshest critics, the world environmental
community. The environmental catastrophe resulting from a nuclear accident at the Juragua
complex could well surpass any in the history of this hemisphere. With NBC Nightly News again
broadcasting a special investigation of the Cienfuegos project on 20 July — at least the third such
network news exposé — it is a mystery why Greenpeace, Worldwatch and other environmental
activists have not already mobilized to oppose the revival of the Juragua reactors. In relative
importance, the dangers to the ecosystem likely to emanate from Cienfuegos dwarf those
associated with the celebrated proposed sinking of Shell’s Brent Spar off-shore oil storage facility.
If this averting of eyes continues, it would be fair to speculate that some twisted sense of political
correctness may be at work here. For example, could it be that a fascination with Castro’s
mystique and revolutionary impulses would be allowed to blur or undermine the environmental
community’s stated global mission? It therefore remains to be seen if impending eco-disasters have
any politically-differentiating characteristics (e.g., big oil and Western governments versus
socialist nuclear developments).

Conclusion & Policy Recommendations

In conclusion, our nation is now forced to decide if the Cienfuegos project is to serve as a case
study of how to shorten the life of tyrannical regimes which deny basic human liberties. In short,
is our policy toward Cuba to be one of “engagement” and expanding Western life-support or
isolation and bail-out avoidance? For those who suggest that the prospects for the success of the
latter strategy are bleak, I have pointed to similar passionate arguments leveled at the first-term
Reagan national security community (i.e., NSC, CIA and the Defense Department), which dared
to formulate a strategy to stress out Soviet economic rigidities (an outline of this Reagan
economic strategy toward the former Soviet Union is provided in a recently published book by
Peter Schweizer entitled “Victory: The Reagan Administration’s Secret Strategy that Hastened the
Collapse of the Soviet Union,” Grove/Atlantic, 1994).

The results of this earlier effort are clear: the brittle, centrally-controlled Soviet system could not
withstand significant contraction in Western life-support in the areas of officially subsidized
financing, access to high technology and energy-related assistance and markets. I would also
argue that Fidel has considerably fewer options to cope with the denial of Western subsidies than
the resource-abundant Soviet Union, which lumbered on for another eight years.

Castro is likely calculating — as a minimal fall-back position — that the presence of this
profound new danger off our shores will ultimately result in U.S. “Engagement” advocates
rushing forward with a proposal to “make the reactors safe” and take advantage of this important
new “window of bilateral cooperation.” Thus far, he has probably been encouraged that yet
another Clinton Administration reactor buy-off gambit is in prospect. It will probably be up to the
Congress to prove him dead wrong. Falling into a calculated policy trap of this dimension would
be comparable to the utter fecklessness and miscalculation on tragic display today in Bosnia.
Simply put, what the beleaguered Cuban people need now is to have the Castro government put
out of business, not given a new, taxpayer-financed lease on life.

On the matter of “hot-button” issues for the international business community like contract
sanctity, extra-territoriality, unilateralism and import controls, some new global realities have to
be faced squarely. With some twenty or more countries actively seeking to acquire weapons of
mass destruction and ballistic missile delivery systems — primarily through Iraqgate-style covert
procurement networks — it is an unaffordable luxury to respect these strongly-supported features
of the international trading system in circumstances of overriding peril to our nation’s fundamental
security interests. Like Conoco’s ill-fated Iranian venture, this project represents such a
circumstance.

Accordingly, those Western and Latin American companies and banks working to advance the
completion of the Cienfuegos nuclear complex should be subject to swift and decisive penalties by
the Congress. Import controls should probably be the sanction of choice for private sector
Western entities supplying Juragua, requiring an executive decision by the management of these
firms between doing business in the American market or the Cuban market. (U.S. import controls
were imposed for several months on five European firms — three of which subsequently failed —
which supplied the Siberian gas pipeline project over the Reagan administration’s objections with
the desired result of leveraging a new, security-minded allied East-West trade policy.)
Governments choosing to back-stop such companies and financial institutions should have more
than one bilateral priority put at risk by the Congress, if the Executive branch fails to demonstrate
adequate resolve.

Finally, the Russian government needs to understand forthwith that continuing to support this
MINATOM initiative to revive the Juragua reactors — much like its efforts to complete Iran’s
light-water reactors — will have severe consequences. For example, MINATOM’s eligibility to
serve as a partner with the U.S. Enrichment Corp. in the $12 billion U.S.-Russia uranium deal
would need to be reexamined. If necessary, Congress should utilize upcoming legislative
opportunities to suspend — and even terminate — this deal with MINATOM contingent on that
Russian agency’s handling of this Cuban reactor deal. The American people should not be asked
to bridge-finance Russia’s Atomic Energy Ministry when it is simultaneously engaged in
supplying, and eventually fueling, a burgeoning nuclear threat to the United States.

Other bilateral initiatives in the energy area — such as U.S. Eximbank and OPIC financing,
guarantees and insurance coverage to support expanded Russian oil and gas production — should
likewise be put at risk by the Congress, pending Moscow’s immediate disengagement from this
prospective Cuban Chernobyl. Any attempts by Russia or other governments to fuel completed
reactors in Cuba should be interdicted by the United States, by any measures deemed necessary.

In closing, Congress should demand that Russia’s announced intention to complete the Juragua
nuclear complex be placed at or near the top of the agenda of the next session of the
Gore-Chernomyrdin commission. Indeed, the absence of this agenda item ought to be viewed
with profound concern. Finally, all of the presidential candidates should, in the course of their
respective 1996 campaigns, pledge to the American people that they will not permit — through
announced disincentives for Moscow and allied firms or, failing that, direct interdiction — the
irretrievably-flawed nuclear reactor complex at Cienfuegos to be completed, fueled and brought
on line, at least not on their watch.