1513 COPffiRiBff'fifttJ NATIONAL SECURITY COUNCIL WASHNlTON 0 C 201108 March 1 1994 Deputy Natl Sec ActJllor hnu1111 ACTION THROUGH R NICHOLAS BURN FROM ROSE GOTTEMOE L SUBJECT Ukraine's Ideas on Nunn-Lugar Assistance n Attached at Tab I is a Memorandum to the President that responds r to his interest in Ukralne's ideas abou its FY-1994 Nunn-Lugar assistance program The three key poin s in the subject Z paragraph at Tab A will all be ssues that President Kravchuk --i will want to discuss with the Presider tat their meeting on 0 Friday SS-24 missile dismantlemen space l aunch and Nunn-Lugar Z funds for defense conversion I have therefore taken the opportunity of this memorandum to preview the substance of all r three for the President We will be follcwing up tomorrow with further substance in the emorandum for Friday's meeting CD 0 RECOMMENDATION 0 That you sign the Mernorandum to the President at Tab I - CJ Attachments Tab I Memorandum to the President Tab A Comments on SSD Negotiations in Ukraine Tab Message f rom Kiev on Space Launch Issues I 0 0 n 0 --0 - DECi ASSIFiEO E O 13526 White House Guidelines September u 200G ' By °'7 NAJU Datu l'IJl 0 IJ l t 'i-M --eoHPIBEH'fiftt Dec lassify on OADR From the Nunn-Lugar collection of the National Security Archive MEMORANDUM FOR SAMUEL R BERGER -CONFIBENTIM -G81fFI98Ni IAL 1513 THE WHIT£ HOUSE WASHINGTON MEMORANDUM FOR THE PRESIDENT DECLASSIFIED PER E O 13526 'olOf'i O CJt •M c 5 Su t t FROM SAMUEL R BERGER SUBJECT Ukraine's Ideas for FY-1994 Nunn-Lugar Funds You commented Tab A on UkraLne 1 s ideas for using the $100 n million in Nunn-Lugar funds that we arc prepared to extend to the Ukrainians in FY-1994 There are several points to stress about the Safety Secur i Ly and DJ sman l 1 emen L S50 talks in Kiev on February 17-18 First the insistence that Ukraine wanted to maintain SS-24 s for spa ce launch came from a lower level Ukrainian negotiator who wu s su r p r lsed when hQ heard that Kravchuk's National Security Advioor Anton liuteyko had already submitted to us in January a proposal to use Nunn-Lugar funds to dismant J e Lhe SS-24s Wt h1 uldC d back t o tile lower level negotiator and his colleague6 on the Ukrainian delegation a copy of the Buteyko papeT r The experience of our SST negot i J1 orH J n t hl s case pointed to tile fact that communication among higher and lower levels of the Ukrainian gove rnment ts poor- not that th Ukrainian government is changing its position on this critical issue Nevertheless you will want to clRr -i f y t h i 1 pol nt _ 1 1 h P·reaid nt Kravchuk when you see him on Friday Because decisionmaking seems limited to Kravchuk and his close staff we will need his direct and continued invo 1 vement t o ma i ntain prograss on t his and related SSD quest ions o The issue of space launch is complicated however You will likely hear from President Kravchuk about Ukraine's aspirations to enter the space launch market and its willingness to do so under the guidelines of the Missile Technology control Regime MTCR The Ukrainian government is clearly mindful of the agreements that we reached with Russia which balanced adherence to the MTCR guidelines against access to the commercial space launch market 0 Ukraine's interest in the MTCR is clearly welcome but its commercial access to space presents several serious problems For one thing there are no launch facilities in Ukraine and Ukraine's access to the Baykonur facilities in Kazakhstan must be worked out in the context of the Russian-Kazakhstani agreement on use of those facilities For another the U S -Russian commercial space launch agreement was negotiated to ensure U S market share against low-priced Russian launch vehicles €8Hf BEHf IAL Declassify on cc OADR f 'nl lilnf l ITf n r Vice President Chief of Staff t-1 z -I 0 z r t-1 OJ 0 - r 0 -I 0 n - From the Nunn-Lugar collection of the National Security Archive INFORMATION - - •- 6 f R E 'lat - - - GONFIUfNt t Admitting another non-market economy Ukraine to the launch market would be complicated and would have to be balanced against the interests of the U S launch industry Despite these complexities your conversation with Xravchuk on Friday will present an important opportunity to encourage Ukraine to begin to move toward adherence to the MTCR while we gain a better understanding of Ukraine's aspirations for the commercial space launch market Ukrainian request for more money for defenee conversion although the Nunn-Lugar legislation places some restrictions on how we spend funds for this purpose we have proposed to the Ukrainians that we put $30 million into defense conversion projects in FY-1994 and are currently waiting for their reply This will also be an issue that you will want to discuss further with Kravchuk He will be especially interested in discussing housing for officers under the SSD program we are willing to provide Okraine with the same type of housing projects that we have begun in Russia and Belarus The Nunn-Lugar legislation constrains us to spending no more than $20 million per year of Nunn-Lugar funds on housing Funds from our other bilateral assistance programs are as you know used on housing projects with fewer restrictions NunnLugar projects must have a strict defense conversion link -e g converting a defense production plant to produce modular housing Kravchuk should be intere sted in ·t his idea al though the lower-level negotiators with whom our SSD delegation met asked instead for direct cash subsidies to the existing Ukrainian housing industry- · an approach restricted by the NUnn•Lugar legislation We will be providing points on each of these issues for your discussions with President Kravchuk on Friday n r z 1--t dz r 1--t OJ o 0 -- I 0 0 Tab A Comments on SSD Negotiations in Ukraine n C -0 - CONi'IBBHIXriL f AN lfl NTIAI - From the Nunn-Lugar collection of the National Security Archive On the issue of SSD funding we £aD be flexible about the