When they entered the hall, the Americans saw right away what was happening. “Various elements of the national security establishment were maneuvering to privatize themselves and go into business,” recalled Christopher E. Paine, of the Natural Resources Defense Council, who attended. “The elements of the Soviet state that you would almost least expect to be rushing into business were in fact the ones that were doing it, and trying to earn a buck off whatever asset they had, including surplus nuclear weapons. A lot of the people we met from the weapons laboratories were kind of innocent in a strange way, innocent in the ways of the world. They lived in this bubble all of their lives, and they didn’t have an idea of business, they didn’t know what it was.”
One of the Soviet officials at the banquet was Alexander Tchernyshev, who had worked for many years with Mikhailov on Soviet nuclear tests. Tchernyshev headed an office at Arzamas-16, but also represented Chetek. It was hard to see where the government-operated nuclear weapons laboratory ended and the private company began. Tchernyshev presented the Americans with a Chetek business card that also carried his Arzamas affiliation.
When Fred Hiatt of the
According to its advertising literature, Chetek planned to bring in clients and finance the research for blasting the wastes, while the government would actually handle the explosions. The first demonstration was planned for 1992 at Novaya Zemlya, the Soviet nuclear weapons testing range in the Arctic. In the end, Chetek never carried out the demonstration because of a test ban that remained in place, but it was an early and ominous example of what could happen if desperate weapons scientists went into business. It was also a harbinger of a phenomenon that would spread like wildfire in Russia in the 1990s: the hijacking of state resources and expertise for private gain.
As the Soviet economy nose-dived in the autumn of 1991, Nunn and others wondered whether the gargantuan Soviet military-industrial complex could be transformed to serve the civilian economy. This idea was known as “defense conversion” and Gorbachev once harbored great hopes for it: retooling tank factories, shipyards and missile design bureaus to churn out refrigerators, washing machines and computers. Gorbachev had first begun to push for conversion in earnest after his United Nations speech in 1988, but it proved difficult to convert swords to plowshares. The military and its complex of factories stiffly resisted. Typical was Alexander Sarkisov, chief engine designer for Soviet fighter jets. “Look, in the world market, a kilo of a modern fighter plane costs over $2,000, and a kilo of saucepans, $1.” It didn’t make sense, he added, to switch from jet fighters to saucepans. Some defense factories made shoddy civilian goods; others simply atrophied.31
In the end, Gorbachev ran out of time. By late 1991, the radical reformers around Yeltsin were determined to make the leap toward free markets and destroy the Soviet state. In a landmark speech October 28, Yeltsin said he would set prices free, and pledged “deep conversion,” shutting down defense enterprises altogether and converting others totally to civilian purposes. The new market system, just taking shape, injected yet another wild card into the chaos of the reverse arms race. For decades, the sprawling military-industrial complex was dependent on the state, fed subsidies from the center and protected by the Communist Party. Factory bosses did not worry about prices, markets or efficiency. But now, they had to rethink everything: not only how to reengineer themselves to construct a washing machine, but how to accomplish it in an entirely different and unfamiliar economic system, without subsidies and without the godfathers of the party. The CIA produced a classified report in early October that captured all the doubts: “Soviet Defense Industry: Confronting Ruin.”32
On a freezing day in the remote industrial city of Perm, William F. Burns got a glimpse of the reality, and it was not promising. A retired army major general, Burns had served as an arms control negotiator, and later director of the Arms Control and Disarmament Agency at the State Department.33 In December 1991, the National Academy of Sciences sent him to examine Soviet defense factories and evaluate their potential for conversion. “The whole point was to see if this was an irreversible transition, or whether it was just sort of a sideline,” he said. Burns toured a decrepit former munitions factory in Perm where the managers were trying to manufacture bicycles. Inside the U-shaped building, low-wattage electric lightbulbs hung from the ceiling, the factory floor was cold, workers were dressed in winter clothes, wearing gloves with their fingers protruding, as bicycle parts moved about on a conveyor that used to hold 203-mm artillery projectiles.
As Burns recalled later, the factory manager didn’t have a clue what would happen to the bicycles. Rather plaintively, he asked Burns if they might sell in the United States. Burns thought to himself the primitive bicycles looked like his own bike when he was eight years old in 1940. “He was trying to be a western businessman,” Burns recalled of the manager, “but he didn’t know the language.”
Burns asked what price the manager would set for the bicycles. “Three hundred eighty rubles,” he replied.
“How did you arrive at the price?” Burns asked.
“Well, I did it the capitalist way,” the manager replied. “I added up the cost of production. I added up the wages and divided by the number of bicycles. It comes to 380 rubles.” He smiled, Burns recalled, pleased with himself.
“Well, how about investment?” Burns asked.
“Investment?” the manager replied. “What is investment?”
“What about profit?” Burns asked. “If you are trying to run a business the capitalist way, then profit is a very important thing.”
“How do you calculate the profit?” the manager asked.34
At Obolensk, Sergei Popov sat in his office, depressed. He had given the system years and years of his best efforts, but by 1991, government funding was running out. Salaries were paid late, or paid in kind with sugar, or eggs from a local poultry farm. Biopreparat was no longer isolated from the economic collapse in the rest of the country. The scientists were told by the government to convert to civilian research.
Popov felt fortunate that his laboratory could generate some ideas for projects beyond biological weapons, but he knew others who could not. “It was just impossible if you dealt with anthrax or plague weaponization,” he remembered. “What could you suggest would be the practical purpose?” Popov joined a cooperative, the pioneering, small private businesses created by Gorbachev’s reforms. They developed a microbial powder for veterinary use, using the facilities at Obolensk. Instead of growing plague or other pathogens, they cultivated intestinal bacteria and sold it as a supplement to cattle and chicken feed. They made a profit right away, since their overhead was free. Popov also created a new variety of interferon that could boost the immune system response against viruses. “We found it could be a good additive to chicken feed, because chickens suffered heavily from viral infections,” he said. They could even aerosolize the preparation to spray whole poultry houses, just as they had considered doing with biological weapons. Popov applied for a patent.
In the laboratories, the weapons research lapsed into a twilight zone. It wasn’t stopped, but as scientists struggled to survive, they spent less time creating agents for the military. Popov said he was “almost completely refocused” on trying to make ends meet. “We were still under serious restrictions. We could not tell anybody what we did before. We could not disclose our secrets. But the overall situation was that nobody cared very much about it anymore.” Popov and his wife planted potatoes and vegetables, picked forest mushrooms and ferns. One winter day, wolves attacked and killed rabbits being kept for biological weapons experiments at the laboratory. The wolves didn’t eat the rabbits, just killed them for sport, and left an awful scene, spattered with blood. Popov gathered them up, skinned them and put them in the freezer to feed his family.
Then the chicken feed business collapsed. “It ended very suddenly because these farms had no money to feed chickens at all,” he said. “There was no sense adding anything to the chicken feed, because there was no money. It was a time of financial crisis, cash was in short supply, nobody paid anybody. There was a bank crisis and no honest business had a chance to survive. The cooperatives and those poultry farms went bankrupt simply because there was no means to pay, and no means to get a profit.”
Popov and his wife, Taissia, were desperate. “I realized that all my efforts were fruitless,” he said, “and I saw no future for myself.” She feared for their daughters, then seven and seventeen. “I realized there was no money to support the children,” she said. “I was scared. I said to Sergei, we need to do something.”
Twelve years earlier, when he had spent six months in Cambridge, England, Popov worked in the laboratory
