Swords to Soda: How US Hopes To Help Russia Move to Peace

ONCE, Moscow-based NPO Mashinostroyenia built nuclear missiles that were pointed at the US. Now, with the help of the US government, the Russian manufacturing firm may produce another sort of product to aimed at Russian markets: soda pop.

NPO Mashinostroyenia is one of the first participants in a controversial Clinton administration program intended to convert former Soviet weapons plants into civilian manufacturing. The ex-missile builder and Double Cola of Chattanooga, Tenn., are prospective partners in a joint venture to bottle and market cola. Seed money for the effort would come from the Pentagon.

''As far as consumer products are concerned, and soft drinks specifically, the market has tremendous opportunities,'' says Boris Farley, the international vice president of Double Cola, the No. 10 cola manufacturer in the United States.

The program is one facet of an initiative in which millions of US tax dollars are being spent to help Russia, Ukraine, Belarus, and Kazakhstan reduce the massive cold-war arsenals and military infrastructures they inherited from the former Soviet Union.

The US initiative also finances the destruction of former Soviet bombers, missiles, launching systems, and chemical weaponry; creates better security for weapons-grade nuclear materials; and spurs the construction of housing for former nuclear-missile officers. Washington has spent about $514 million for so-called Cooperative Threat Reduction (CTR) and the Pentagon envisions spending a total of $1.2 billion by 2000.

Defense Secretary William Perry hails the effort as ''defense by other means.'' His current week-long trip to parts of the former Soviet Union is partly designed to promote the initiative.

So far, the program has helped in the removal of more than 2,500 nuclear warheads from long-range missiles, the withdrawal of more than 780 missiles from their silos, and the destruction of more than 630 bombers and missile launchers.

But the administration is facing a fight on Capitol Hill over the $371 million it wants in fiscal 1996 for CTR. The initiative is funded under legislation sponsored by Sens. Richard Lugar (R) of Indiana and Sam Nunn (D) of Georgia.

There is little opposition to new funds for destroying former Soviet nuclear weapons. But many Republicans object to funding the defense conversion and housing components.

The objections mainly involve Russia. Critics charge that with the US underwriting its housing and defense conversions, Russia can spend more for new weapons and the war in Chechnya.

''This is not a proper use of defense funds, and all the more at a time when Russian strategic modernization continues and the Russians are waging war on their own people,'' says Rep. Floyd Spence (R) of South Carolina, the chairman of the House National Security Committee.

Russia's chaotic markets

Citing Russia's chaotic transition to a market economy, critics also question whether US-aided joint ventures like that being negotiated between Double Cola and Mashinostroyenia can survive.

House Republicans have already given a preview of the upcoming CTR budget battle. Last month, they voted to cancel $80 million in unspent fiscal 1995 funds for defense conversion and housing.

Administration officials argue that building housing for former Soviet rocket forces officers is vital to accelerating the destruction of missile bases under US-Soviet arms treaties.

Laws in Russia, Ukraine, Belarus, and Khazakstan require that homes be provided to officers before they move off of missile bases slated for destruction. Because of those states' chronic housing shortages, US aid is needed.

The US funds are being used to help US firms and former Soviet defense factories start joint ventures to produce prefabricated housing. One such venture, in the Ukrainian town of Pervomaysk, the site of a major missile base, produced its first modular home last week.

The venture with Fregat, a Ukrainian naval equipment manufacturer, began with $10 million in US funds, says Eric Agnew of Bill Harbert International Construction Company, the Alabama-based partner. After finishing 260 homes for officers in Pervomaysk, the venture will be free to produce for local and foreign markets.

''We feel we can have a viable factory for years to come,'' says Mr. Agnew.

US officials see another reason for helping to build homes for former Soviet officers. Unless they are kept content, officers could be tempted to enrich themselves by helping criminals steal nuclear materials. Or they could sell their skills to states seeking nuclear weaponry.

''We know that that world is out there and willing to make deals and that's what worries us,'' says a senior US defense official. As for defense conversion, US officials concede that US-aided joint ventures face myriad problems due to the rocky economic transitions in Russia, Ukraine, Belarus, and Khazakstan. But they say the effort is worthwhile in eliminating military threats.

''This is not just casting wheat upon the stone. These are the industries we most fear,'' explains another senior US defense official. He says the administration wants to expand the current $7.8 million seed money program to about $100 million over the next three years.

CIA picks the firms

Mr. Farley agrees that the program should be pursued, but there are also problems in how the program is being run.

One major problem, he says, is the way US firms are matched with prospective partners among 82 former Soviet defense firms chosen by the Central Intelligence Agency for joint ventures. ''There were no in-depth looks before the selections were made,'' says Farley.

Mashinostroyenia was matched with Double Cola because it has high-speed machine tools. But US and Russian officials provided flawed data about its suitability for cola production.

For example, Farley says: ''There were buildings there that we were told were suitable. We later discovered that one building did not exist and one was not suitable and has to be rebuilt.''

Because of the snafus, he says, Double Cola has still not signed a formal contract with Mashinostroyenia after months of talks.

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