Bringing Ukraine Into the MTCR: Can U.S. Policy Succeed?

Gary Bertsch and Victor Zaborsky


Gary Bertsch is director of the Center for International Trade and Security at the University of Georgia, where he is a professor of political science, Victor Zaborsky is a senior research fellow at the center and adjunct professor at the university.


For good reason, Ukraine's denuclearization dominated U.S.-Ukrainian relations immediately following the dissolution of the Soviet Union. However, even before Kyiv decided in 1993 to rid itself of the massive arsenal of Soviet nuclear weapons remaining on its territory, U.S. and Ukrainian negotiators had begun addressing another area of proliferation concern: Ukraine's missile industry. With one of the largest missile production capabilities in the world—for both military and spacerelated systems—Ukraine can contribute considerably to missile proliferation. With the country facing severe economic hardship, Ukraine's political leaders and economic managers have sought to export goods that can earn hard currency, and Ukraine's military assets have proven to be a source of muchneeded revenue. Given the advanced nature of Ukraine's missile industry and the country's determination to further develop it, Ukraine's fledgling export control system and its unproven nonproliferation record have provided the United States with ample reason for concern.

The U.S.-Ukrainian missile talks, which began in October 1992 and have been conducted through several political and diplomatic channels, have underscored the divergent interests and approaches the two countries have to the issue of missile proliferation. The talks have addressed a number of areas, including space cooperation, but the most critical issue for the United States is Ukraine's commitment to the Missile Technology Control Regime (MTCR), the nucleus for international efforts to stem ballistic missile proliferation. Although both governments are committed to the same ultimate goal—Ukraine's full membership in the MTCR—the two sides have so far been unable to reach agreement on the conditions under which Kyiv will join the regime. The key stumbling block remains the U.S. insistence that Ukraine abandon offensive missile programs, a commitment that Kyiv has steadfastly refused to make.

Despite the continuing divide, U.S. and Ukrainian negotiators have made some progress. In May 1994, the United States and Ukraine signed a memorandum of understanding (MOU) under which Kyiv pledged to adhere to MTCR guidelines. The two sides are also cooperating on developing an export control system in Ukraine that will meet MTCR requirements. Ukraine has also agreed to eliminate all of the former Soviet SS19 and SS24 ICBMs on its territory that are covered by the START I accord (which Kyiv formally joined in 1994), although the treaty and related undertakings do not specifically call for the elimination of these systems.

In large part, the progress made to date can be attributed to the "incentive strategy" pursued by the United States in moving Ukraine toward MTCR membership and toward fulfilling other nonproliferation commitments. This strategy has sought to assuage Ukraine's concerns that its space industry remain one of the major players in the increasingly competitive international space market.

As a result of these dynamics, Ukraine is facing a serious dilemma: comply with the U.S. conditions for full membership in the MTCR—with the resultant prospect for increased space cooperation with other regime members and thereby improving the position of one of the country's most important industries—or continue to be an MTCR "adherent," preserving the right to develop a limited range of military missiles, but thereby restricting cooperative endeavors that could be crucial to the survival of the country's space industry. We believe that the United States can offer Ukraine the "carrots" that will encourage Kyiv to renounce offensive missile programs and join the MTCR in the near future.


Ukraine's Missile Industry

While most of the civilian sector of the Soviet space program was located in Russia, Ukraine possessed a significant portion of the program's scientific and industrial facilities. Although some Russian officials have estimated that Russia's share of the Soviet space industry is between 75 percent and 90 percent, Ukrainian officials estimate that Ukraine's share is actually about 40 percent of the "Soviet space complex's production capacity."1 We believe the latter estimate to be more accurate.

Since the beginning of the Soviet space program, more than 100 Ukrainian enterprises and research centers have actively participated in the design and manufacturing of spacerelated equipment. These facilities developed more than 400 military and civilian satellites, including electronic intelligence and ballistic missile early warning satellites, as well as a number of spacelaunch vehicles (SLVs). The Southern Machine Building Plant Association (commonly referred to as "Yuzhmash"), a collection of research, design and production facilities centered in the eastern Ukrainian city of Dnipropetrovsk, is the world's largest combined satellite and rocket manufacturing venture of its kind. The "Yuzhmash" Mechanical Plant and its affiliated "Yuzhnoye" Design Bureau remain the principal facilities involved in the design and production of the "Zenit" and "Tsyklon" SLVs, as well as for satellites for domestic and foreign customers.

Since the collapse of the Soviet Union, Ukraine's space industry has been under severe financial strain because of reduced orders and loss of steady revenue. Yuzhmash has suffered the most losses. According to its director general, Yuri Alexeev, the facility's combined workforce has declined from 52,000 in 1991 to 34,000 in early 1996. Although it has converted some of its capacity to the production of civilian goods such as street cars, these efforts have met with only limited success. Participation in Western commercial ventures has helped to keep the enterprise afloat, as has its newly acquired role as the destruction facility for SS19 ICBMs made possible by the U.S. Cooperative Threat Reduction (CTR) Program (the socalled "NunnLugar" program).

Nevertheless, current levels of production and financial support are far below past levels, eliciting fears that Ukraine's edge in technology and knowhow may be lost. Developing a competitive space industry is considered by the Ukrainian government to be of crucial importance. Officials believe that Ukraine's space industry can improve the very difficult economic situation the country now faces, as well as promote other related sectors of the economy and contribute to Ukraine's international standing.

Politically, the country's space program received a favorable boost in 1994 when Leonid Kuchma, who was Yuzhmash director general for about a decade, was elected president of Ukraine. Kuchma's presidential team, including Prime Minister Pavel Lazarenko, former Defense Minister Valery Shmarov and Vladimir Gorbulin, the president's national security advisor and the secretary of the National Security and Defense Council, is composed of people from the Dnipropetrovsk region and are devoted to preserving and promoting the Ukrainian space complex and missile industry.


The Military Potential

Many of the Ukrainian facilities that were involved in the Soviet space program were also utilized for the development and of missiles for the strategic forces of the former Soviet Union. The Yuzhmash plant was the largest Soviet ICBM factory, where SS19, SS20, SS23 and SS24 missiles were built. Today, with its two million square feet of floor space, it is the world's largest facility of its kind. However, production of military missiles at Yuzhmash has reportedly been suspended since 1991.

In the aftermath of the Soviet Union's dissolution, Ukraine inherited a huge arsenal of strategic nuclear weapons (as well as tactical nuclear weapons) and their delivery systems. These included 46 10warhead SS24 ICBMs and 130 sixwarhead SS19 ICBMs, both with a range of 10,000 kilometers, in addition to a total of 30 BearH and Blackjack heavy bombers that carried 416 nuclear weapons deployed on AS15 airlaunched cruise missiles (ALCMs). Ukraine was also host to a number of shorterrange missiles, including SS21s (with a range of 120 kilometers) and some 130 ScudBs (with a 300kilometer range).

Since late 1994, immediately after Ukraine joined the nuclear NonProliferation Treaty (NPT) as a nonnuclearweapon state, political and military circles in Ukraine have been discussing the possibility of producing and deploying short and medium range missiles, considering these systems to be legitimate means of deterrence in light of the country's nonnuclear status. The Ukrainian military continues to discuss this option, arguing that such missiles, carrying high accuracy, conventionally armed warheads, would provide a more effective and lesscostly deterrent than a defensive posture which relies on tanks and aircraft, an argument that is highly appealing to the cash poor Ukrainian Defense Ministry. So far, the idea of developing and deploying missiles is being debated only in general terms, and no numbers or types of missiles have been publicly mentioned.


Ukraine's Arms Control Obligations

For the moment, Ukraine's 1994 pledge to "adhere" to MTCR guidelines remains the key standard by which to judge Kyiv's commitment to the nonproliferation of ballistic missiles and related technology. Created in 1987 by the Group of Seven industrialized countries (Canada, France, the thenexisting Federal Republic of Germany, Italy, Japan, the United Kingdom and the United States), the MTCR is the cornerstone of U.S. missile nonproliferation policy. A voluntary, nontreaty arrangement, the MTCR seeks to restrict the proliferation of missiles (ballistic missiles, SLVs and sounding rockets), unmanned air vehicles (cruise missiles, drones and remotely piloted vehicles) and related technology capable of carrying a 500kilogram payload at least 300 kilometers (the socalled "Category I" missiles), as well as any system "intended" to carry weapons of mass destruction. Today, 29 countries are full members of the regime, which admits new members only by consensus, and a handful of other states (including China, Israel and Ukraine) have agreed to abide by its guidelines.

One of the basic features of the MTCR is a "strong presumption" of denial for transfers of Category I items listed in the regime's annex of controlled equipment and technology. Category I items include complete rocket systems, unmanned air vehicles, production facilities for these systems and certain subsystems such as rocket engines or stages and reentry vehicles. Regime members and adherents attempt to control proliferation through the application of their national export control policies. The MTCR is "not designed to impede national space programs or international cooperation in such programs as long as such programs could not contribute to delivery systems for weapons of mass destruction."2

In addition to its commitment to the MTCR's guidelines, Ukraine is obligated under other arms control agreements and unilateral undertakings to restrict its offensive missile programs. As one of the successor states to the former Soviet Union, Ukraine is obligated under the 1987 IntermediateRange Nuclear Forces (INF) Treaty not to produce, test and deploy shortrange (500 to 1,000 kilometers) and intermediaterange (1,000 to 5,500 kilometers) groundlaunched missiles. Ukraine also assumed specific obligations under the first Strategic Arms Reduction Treaty (START I) when it signed the Lisbon Protocol on May 23, 1992, making Kyiv a formal party to the 1991 accord and commiting it to destroy all of its ICBM silos. Although at one time Ukraine expressed an interest in converting a portion of the SS24 ICBMs on its territory to spacelaunch vehicles, which is allowed under the treaty, Kyiv has since agreed to destroy all its SS19 and SS24 missiles, in part because it could ill afford to undertake the costly conversion.


A New U.S. Policy On Missiles

In the summer of 1993, the new Clinton administration found a worrisome problem developing with regard to the MTCR. Since 1987, membership in the regime had practically quadrupled, and it was becoming clear that there was a wide variety of practices among regime members on how to deal with exports to each other. The rules were clear for exports outside the regime, but there was a wide range of policies and practices among members involving exports to MTCR partners. The problem was that some governments were attempting to join the regime in order to obtain bigger missiles and more advanced technology, transfers that would not be available to nonmembers.

Creating a missile nonproliferation regime that allows states to acquire advanced technology and knowhow that could be used for offensive missiles hardly seemed a desirable policy, particularly as the regime was then struggling to coordinate the national export control policies of more than two dozen countries, some of which had only recently implemented comprehensive export controls and were only beginning to establish their nonproliferation credentials. The Clinton administration feared that the regime could turn into a missile bazaar. It was especially concerned about national Category I missile programs because they are inherently capable of delivering weapons of mass destruction.

The administration's response to this problem could have been to try to change the rules of the regime with respect to transfers among members. However, that would have been a very difficult and timeconsuming process, requiring agreement among more than two dozen governments. There was a simpler option. Because membership in the MTCR requires agreement of all members, the alternative was for the United States to set up the controls at the gateway to the regime, effectively establishing new criteria for full membership. This approach would provide the United States with unilateral room to maneuver when considering the regime's expansion, avoiding some of the obstacles inherent to a consensusbased organization.

On September 27, 1993, President Clinton issued a new policy regarding U.S. efforts to prevent the proliferation of weapons of mass destruction and the missiles that deliver them.3 The policy called for maintaining strong support of the MTCR, noting that the United States "will support prudent expansion of the MTCR's membership to include additional countries that subscribe to international nonproliferation standards, enforce effective export controls and abandon offensive ballistic missile programs." The policy meant that in the future new members would have to observe these constraints before the United States would support their accession.

The new policy also said the United States "will not support the development or acquisition of spacelaunch vehicles in countries outside the MTCR." Furthermore, for regime members, the United States "will not encourage new spacelaunch vehicle programs, which raise questions on both nonproliferation and economic viability grounds. The United States will, however, consider exports of MTCRcontrolled items to MTCR member countries for peaceful spacelaunch programs on a casebycase basis."

When considering the imposition of these conditions, the United States has talked in terms of general rules that apply to all governments, and it is unlikely that Washington will make an exception for any country. Importantly, particularly from Ukraine's perspective, these restrictions apparently do not apply to Russia and China, both nuclearweapon states under the NPT, given the practical impossibility of restricting delivery systems for their nuclear weapons.

Moreover, although Russia joined the MTCR as a full member in October 1995, Moscow had signed its bilateral understanding with the United States pledging adherence to the regime's guidelines on September 2, 1993, prior to the introduction of the new U.S. membership criteria.

These U.S. restrictions on offensive missile programs have already been applied to the five most recent MTCR members—Argentina, Brazil, Hungary, South Africa and Turkey. Because Hungary and Turkey do not have indigenous offensive missile or space programs of proliferation concern, their admission did not pose a challenge to the U.S. criteria. Argentina and South Africa both agreed to abandon their SLV programs, but they were in the early stages of development and therefore were not considered by their governments a heavy loss. Brazil's SLV program was more developed than those of Argentina and South Africa, and the United States agreed that Brazil should bring its program into the regime, where it will likely benefit from cooperation with other MTCR members.


Ukraine: A New Test Case?

It will be difficult to translate the experiences of the newest MTCR members to the case of Ukraine. Certainly, none of those countries possessed a domestic space and military missile industry as advanced as that of Ukraine, and the United States has through its incentive strategy offered Kyiv new assistance and opportunities to help its space industry adjust to some harsh new economic realities. What distinguishes Ukraine from these recent MTCR newcomers is that these countries possessed neither Category I missiles nor visible security motivations to have them in the future. In contrast, Ukraine had been a major producer of MTCR-controlled missiles for decades and currently has a sizable force of operational missiles (the former Soviet ScudBs) on its territory. The major obstacle facing U.S. and Ukrainian negotiators is Kyiv's insistence that it be allowed to join the MTCR without giving up its current stockpile or the future right to develop and deploy missiles with ranges between 300 and 500 kilometers, and Washington's adamant opposition to Ukraine maintaining these capabilities.

The Ukrainian government is strongly opposed to this U.S. condition, arguing that: 1.) the MTCR is essentially an export control regime and not a disarmament agreement; 2.) Ukraine may potentially need these missiles for strengthening its defense capability; 3.) such a request is of a discriminatory nature, since it is not applied to all MTCR members; 4.) this U.S. condition was not supported by other MTCR members; and 5.) Ukraine had been producing Category I offensive missiles since the early 1960s and has developed outstanding technological potential and human expertise in this area. Forswearing future production of these systems could further undermine the country's already shaky missile industry and consequently lead to social challenges.

For the Ukrainian government, it is difficult psychologically to make a decision to give up forever production of missiles with ranges of up to 500 kilometers. Such a decision is especially difficult for President Kuchma with his Yuzhmash background, for it could result in clashes with the "Dnipropetrovsk lobby," with the military and with the parliament. During a May 16 press conference following the first meeting of the United StatesUkrainian Binational Commission, a newly created forum cochaired by Kuchma and Vice President Al Gore, the Ukrainian president clearly reiterated Kyiv's position: "The Ukrainian side expressed its point of view [during the meeting], saying that for the national interest, in the future, Ukraine was going on developing and producing the mediumrange missiles, the range of which is 300 to 500 kilometers."

Many Ukrainians already feel a kind of psychological trauma, having been forced by the West to denuclearize; they strongly oppose making another concession by giving up a part of the nation's missile potential. As one Ukrainian diplomat said, "The Americans have denuclearized Ukraine, now they want us to give up our missile program. What will they demand next: to give up machine guns?"4

Ukraine's approach to the missile negotiations is in line with its general policy of preserving its space and militarymissile capabilities. Ukraine has pursued a strategy that essentially stipulates that everything which is not currently prohibited by arms control treaties is allowable. Based on this interpretation, Ukraine is insisting on its legal right to keep the ScudB missiles now deployed and to develop and deploy nonnuclear variants of the following systems:


  • groundlaunched ballistic and cruise missiles with ranges up to 500 kilometers;
  • airlaunched cruise missiles with ranges up to 600 kilometers; and
  • sealaunched ballistic or cruise missiles with no range limitations.

Differing Threat Perceptions

One key factor underlying the continuing disagreement between the two countries is that Ukraine's perception of the missile proliferation threat differs from that of the United States. U.S. interests regarding missile proliferation are based on the perceived threat posed by such systems to the territory of the United States, to its allies and to U.S. troops deployed overseas. Currently, among potential adversaries, only Russia and China have the capability to strike the continental United States with landbased ballistic missiles. However, according to the 1996 National Intelligence Estimate "Emerging Missile Threat to North America During the Next 15 Years," a deliberate attack by these countries is considered extremely unlikely.

For Washington, the greater concern is the threat to U.S. troops deployed overseas and to U.S. allies from some Third World countries with ballistic missiles capabilities. Some of the countries which currently possess missiles, like Egypt, India, Israel, Pakistan, Saudi Arabia and South Korea, as well as states that are capable of building missiles, like Argentina, Brazil and South Africa, are very unlikely to pose a threat to U.S. interests. The countries that are of real concern to the United States are the socalled "rogue" states of Iran, Iraq, Libya, North Korea and Syria. The missile potential of these countries, although not now posing a direct threat to the territory of the United States, can have important consequences in regions where the United States has security commitments and vital interests, including Europe, the Middle East, East Asia and South Asia.

In contrast, Ukraine does not have security interests in different parts of the world, nor does it have an extensive network of military alliances and obligations. Acquisition of longerrange missiles by Iran, Iraq, Libya, North Korea or Syria is not viewed by Ukraine as directly affecting its military security interests. According to Alexander Negoda, director general of the National Space Agency of Ukraine, "For other countries, transfer of their missile technologies means transfer of secrets and a threat to their national security interests. For Ukraine, there is no direct threat to its national security from the sales of its missiles and related technologies. That makes Ukraine a unique country. In fact, having taken obligations on missile nonproliferation, Ukraine contributes to the security of other countries more than it does for its own security."5

Presently, the Ukrainian government is struggling in its effort to formulate an effective national export control regime—another U.S. condition for supporting MTCR membership and a commitment made by Kyiv in the May 13, 1994, bilateral MOU signed in Washington. In July 1995, Ukraine's Cabinet of Ministers approved the "Regulations Guiding the Control Over Export, Import and Transit of Missile Technology Items, As Well As of Equipment, Materials and Technology Used in the Manufacture of Missile Weapons," which is considered the legal basis for the country's current export control system. But Ukrainian export control institutions are inadequately manned, equipped and financed; the potential for issuing licenses for bribes is high; and poor border control encourages smuggling. The government is currently drafting a comprehensive law on export controls covering ballistic missiles and related equipment as well as other proliferationrelevant technologies, which will require parliamentary approval unlike the Cabinet of Ministers' current regulations.

While U.S. and Ukrainian officials have discussed Kyiv's MTCR aspirations, press reports have suggested that Ukraine's nonproliferation credentials may merit closer examination. In December 1996, The Washington Times reported on a leaked CIA document which alleged that Ukraine had agreed to sell SS21 or ScudB missiles to Libya for $510 million.6 The transfer of either missile would violate Ukraine's pledge to adhere to MTCR guidelines; the ScudB is covered by the regime's rangepayload parameters while the SS21s could be used to deliver weapons of mass destruction. Libya is believed to have the capability to produce chemical warheads. The Ukrainian government has denied that any contract for missile systems has been concluded with Libya. At the same time, however, Ukrainian officials admitted that the private arms manufacturing company "Montazhelectro," on its own initiative, offered to construct missile launchers for Libya but negotiations were interrupted by state export control agencies. In early 1996, Russian press reports suggested that Ukraine had offered SS21 missiles to India and Pakistan, which Ukrainian officials also denied.

Other reports have suggested that Ukraine may be interested in exporting missile technology to countries with advanced missile capabilities. In mid1996, the United States, in a highlevel demarche to Ukrainian officials, warned Kyiv against selling SS18 ICBM components or technology to China. The most powerful landbased missile in the former Soviet missile arsenal, SS18s were assembled in Ukraine. The transfer of the missile or certain components would violate Ukraine's START I commitments as well as its pledge to adhere to MTCR guidelines. China has reportedly made several approaches to Yuzhmash officials, fuelling U.S. concerns that China, described by Kuchma as Ukraine's most valuable partner in the area of space cooperation, was seeking new sources of missile technology and knowhow.


The U.S. Incentive Strategy

Current U.S. policy is based on the presumption that a guaranteed share of the international spacelaunch market—established through quotas for space launches at comparable prices—and an expansion of cooperative space ventures could make the Ukrainian missile industry more controllable and predictable and discourage it from illegal trade. Washington has pursued a similar strategy with Russia and China to reduce the proliferation incentives of their space industries. The initial agreement with China, a sixyear pact that expired December 31, 1994, allowed China to launch nine commercial payloads into geostationary orbit. A new SinoU.S. agreement, signed in January 1995, gives Beijing the right to launch 15 payloads into geostationary orbit through 2001 at prices within 15 percent of those offered by Western firms. The U.S. agreement with Russia, signed in 1993, limited Moscow to the launch of eight payloads into geostationary orbit through 2000 at prices within 7.5 percent of what Western companies charge.7

At their November 1994 summit in Washington, Presidents Clinton and Kuchma signed an "umbrella" space agreement which initiated negotiations on a bilateral launch pact. The final agreement, signed by Kuchma and Vice President Gore in February 1996, allows Ukraine to sell up to five geostationary launches on its Zenit and Tsyklon SLVs through the end of 2001, and one additional launch if market demand grows. The agreement also allots 11 launches to the "Sea Launch" venture, with the possibility of three additional launches based on launch demand.

Participation in the Sea Launch program is probably the most ambitious of Ukraine's aspirations. The venture, launched in May 1995 by Boeing Commercial Space Company of Seattle; Kvaerner A.S. of Oslo, Norway; RSCEnergia of Moscow; and Ukraine's NPOYuzhnoye, is converting a 31,000ton former oil rig into a mobile, selfpropelled launch platform. Boeing is the lead investing partner and is serving as overall system coordinator. Yuzhnoye will supply a twostage Zenit booster while Energia will provide the upperstage Block DM engine. Kvaerner is now modifying the oil rig and building a command ship. According to a Sea Launch official, the joint venture hopes to launch its first satellite from the Pacific Ocean in June 1998.

Boeing will hold a 40 percent share of Sea Launch, Energia will hold a 25 percent share, Kvaerner a 20 percent stake and Yuzhnoye a 15 percent share. Russia's share is larger than Ukraine's because 60 percent of the Zenit's components actually come from Russia, including the "Energomash" supplied engines. (Technically speaking, Russia is less dependent on Ukraine in space projects than Ukraine on Russia. However, neither can run their space programs independently.) So far, Sea Launch has announced 18 firm launch orders: 13 from Hughes Space and Communication International, Inc. of Los Angeles, CA, for the launching of communications satellites and five from Space Systems/Loral of Palo Alto, CA. Sea Launch hopes to eventually launch six to eight payloads a year.

The Clinton administration does not consider Sea Launchrelated cooperation with Ukraine to be a violation of its September 1993 policy pronouncement for two reasons. First, the United States and other partners do not support Ukraine's "acquisition of SLVs" because Ukraine possessed SLVs long before the policy was introduced. Second, the other Sea Launch partners are MTCR members, and exports for the project are viewed as exports to a multinational enterprise.

Another contribution to Ukraine's disincentives to proliferate is its entering the U.S. lowearth orbiting (LEO) market. Space Systems/Loral and Yuzhnoye agreed in May 1995 to use three Zenit rockets to lift 36 Globalstar satellites into low earth orbit beginning in 1998. Each Zenit booster will carry 12 satellites in a configuration composed of three tiers of four satellites each, allowing each craft to be deployed sequentially—a method derived from multiple independent reentry vehicle technology developed for ICBMs. U.S. officials estimate that the cost of a Zenit launch at around $40 million. (LEO launches were not included in the U.S.Ukrainian pact and will be handled separately.)

In addition, the National Space Agency of Ukraine (NSAU) and NASA are working on other projects. One of them is the International Space Welding Experiment, which will test an electron beam welding tool for emergency repairs on the International Space Station. The Paton Welding Institute in Kyiv is developing this tool. Another cooperative project involves carrying a joint NSAUNASA payload on a Space Shuttle mission in November 1997 along with a Ukrainian astronaut. If Ukraine's plans remain on track, its National Space Program would turn a profit within the next three years. This hopeful outlook is due, in large part, to the U.S. incentive strategy.


Will the Strategy Work?

As in the case of China and Russia, the U.S. incentive strategy toward Ukraine has not eliminated the proliferation threat completely. Although this strategy and closer U.S.Ukrainian cooperation on export controls will not solve the problem completely, they are likely to help reduce it significantly.

The Ukrainian government has two options at this point. First, it can decide not to join the MTCR and keep the right to manufacture a limited range of Category I missiles. Under this scenario, Kyiv will become ineligible for certain types of U.S. military assistance, and will place itself in a less favorable position than Russia with respect to future space cooperation agreements with the West. Because Ukraine would still be bound by its 1994 MOU with the United States not to export missiles capable of delivering a 500kilogram payload to a range greater than 300 kilometers, any Ukrainian program to develop a missile with a range of 300 to 500 kilometers would limited to a national defense role.

While Ukraine may perceive a need for missiles of that range as a deterrent in case of confrontation with Russia, it is likely that open deployment of such systems would reduce, rather than enhance, Ukraine's security visavis Russia. Moreover, Ukraine's continued reluctance to renounce Category I missile programs could put into question the financial assistance Ukraine receives from international financial institutions.

Should Ukraine pursue this option, such deployments would definitely run counter to U.S. security interests. Ukrainian missiles with a range of 500 kilometers could be aimed at Moscow, thus destabilizing RussianUkrainian relations. This could affect European regional stability, as well as Russia's commitments under U.S. Russian arms control treaties. Such missile programs could also lead to exports of missiles or (more likely) missile technology, violating Ukraine's MTCR commitments and undermining U.S. nonproliferation efforts.

Kyiv's second option is to agree to the U.S. criteria and join the MTCR. Of course, that would be a psychologically painful decision, and many in Ukraine, especially the "Dnipropetrovsk lobby" and the military, would be strongly against it. However, this decision would give Ukraine access to the technology and expertise of MTCR members and a voice in the consensusbased regime. The U.S. criterion permits new MTCR members to produce and possess SLVs, which means that Ukraine does not have to forgo its major industrial activity and its associated moneymaking potential. Joining the MTCR would also facilitate Ukraine's participation in international space projects, which thus far has been rather limited because of Kyiv's status as a nonmember, and enhance the country's political status and international legitimacy. Finally, MTCR accession would complement more effectively the other activities Ukraine is undertaking to enhance its security than would the development of missiles that can reach Moscow.

U.S.Ukrainian grappling with the future of Ukraine's missile and space industries has much in common with the bilateral negotiations over Ukraine's denuclearization in 1992 to 1994. The Ukrainian government is still shaping its national security interests and defense strategy, evaluating the military and civilian heritage left after the collapse of the Soviet Union, and figuring out how to use it as a bargaining chip in negotiations with the West. Kyiv is reluctant to assume any obligations which would cut down its industrial and technological potential, preclude some options in military developments and limit its room for maneuver in the future. But it seems unlikely that the United States would make concessions to Ukraine and let it join the MTCR prior to its giving up its Category I offensive systems.

It is obvious that Ukrainian government and industry leaders are more sensitive to the political and economic aspects of the National Space Program than to missile production and exports. Incentives promoting their economic and political interests can resolve the deadlock. An agreement with the United States and other Western nations could persuade Kyiv that Ukraine's advanced rocket industry has been recognized and respected. Cooperation with the West could also bring more economic profit than could illicit missile trade with rogue nations. Thus, there is reason to hope that Ukraine will accept the "carrots" offered by the United States, renounce all offensive Category I programs and join the MTCR in the near future.



1. Yevgenii Sharov, "Ukraine and the MTCR," The Monitor, Center for International Trade and Security at the University of Georgia, Volume 3, Number 1, p. 1.

2. Missile Technology Control Regime Guidelines and Annex, June 11, 1996, p. 1.

3. Fact Sheet on NonProliferation and Export Control Policy, Office of the White House Press Secretary, September 27, 1993.

4. Interview with Ukrainian Foreign Ministry official, April 1995.

5. Interview, April 1995.

6. Bill Gertz, "Kiev Imperils U.S. Aid With Libya Arms Deal," The Washington Times, December 9, 1996, pp. A1 and A12.

7. In January 1996, the United States and Russia concluded a deal that allows Russia to launch 16 to 20 U.S. commerxcial payloads, depending on launch market conditions. See Joseph Anselmo, "U.S., Russia Reaching Launch Pact, Station Deal Pending," Aviation Week and Space Technology, February 5, 1996, p. 84.