Following is the text of Lugar's prepared remarks:

SPEECH BY SENATOR RICHARD LUGAR
NUNN-LUGAR -- A Tool For the New U.S.-Russian Strategic Relationship
Carnegie Nonproliferation Conference

THE CURRENT THREAT ENVIRONMENT:

The strategic environment during the Cold War was characterized by high-risk but low-probability of a ballistic missile exchange between the superpowers. Today, however, with the dissolution of the Soviet Union, the opposite is the case -- we live in a lower-risk but higher-probability environment with respect to ballistic missile exchanges. Whereas previous strategic calculations assumed more or less rational actors, experiences with Saddam Hussein, Osama bin Laden, and others make this assumption less plausible today.

Long-range missiles are seen as a cost-effective deterrent for countries who decry American "hegemony" or seek to deter international peacemaking efforts. If a future aggressor were to have ballistic missiles capable of reaching U.S. or allied territory, hostile powers might be tempted to blackmail the U.S. into standing by in the face of aggression. In fact, hostile powers possessing these dangerous weapons could fundamentally change the decision-making process with regard to international engagement of the United States.

In short, the proliferation of weapons of mass destruction is the number one national security threat facing the United States and its allies. More so than at any other time in the past, the spread of weapons of mass destruction and their means of delivery constitutes a profound and urgent threat at home and abroad. These weapons are seen by potential adversaries as possessing substantial utility, either for use against neighbors or as instruments of asymmetric warfare designed to overcome the conventional military superiority of the United States. They are becoming the "weapons of choice" rather than the "weapons of last resort". This more complex and dangerous environment requires us to rethink our strategies and the continuing utility of the traditional tools available to counter the threats our nations face.

THE BUSH ADMINISTRATION'S APPROACH:

On May 1, at the National Defense University, President Bush shared his thoughts on the need to fundamentally change the parameters of strategic deterrence. I share the President's view that the U.S. needs to develop new concepts of deterrence that rely on both offensive and defensive forces to ensure the safety and security of the American people in the future. Deterrence can no longer be based solely on the threat of nuclear retaliation.

Agreements between the U.S. and Russia on missile defense and continued offensive arms reductions are important goals, but they are only part of the solution. Missile defense is not a silver bullet that, by itself, can adequately protect the United States and its allies from the enhanced threats posed by ballistic missile proliferation and the spread of weapons of mass destruction. But it is an important component that gives added credibility to the other elements of U.S. strategy as well as a means to protect the American people if our nonproliferation and diplomatic efforts prove less than perfect. Equally important, agreements and unilateral declarations on reductions of offensive arms are only successful if they are fully implemented by both sides and can be verified. Only then will security and stability be enhanced.

DEFENSE IN DEPTH:

I approach the response to these threats to American security through the prism of a "defense in depth". There are four main lines of defense against weapons of mass destruction and ballistic missile threats. Individually, each is insufficient; together, they help to form the policy fabric of an integrated defense-in-depth.

The first is prevention and entails activities at the source such as the Nunn-Lugar/Cooperative Threat Reduction program that has deactivated over 5,500 nuclear warheads and efforts to stop the spread of weapons of mass destruction and associated knowledge.

The second is deterrence and interdiction and involves efforts to stem the flow of illicit trade in these weapons and materials at foreign and domestic borders.

The third line of defense is crisis and consequence management and involves greater efforts at domestic preparedness such as the Nunn-Lugar-Domenici program, which has supplied more than 100 American cities with the training to deal with the consequences, should such threats turn into hostile acts.

The fourth line of defense must include limited missile defenses against the growing ballistic missile capabilities of so-called rogue states.

Together, all four lines help form the policy fabric of an integrated defense in depth.

THE REVIEW:

In addition to announcing his intentions to pursue a dialogue with Russia on missile defense and continued offensive arms reductions, President Bush requested a comprehensive review of U.S. policy towards Russia and our cooperative nonproliferation programs. In other words, as the President commences diplomatic discussions on the fourth line of defense, the Administration is reviewing the other three lines to ensure they are credible, efficient, and effective. I applaud this initiative because our challenge is to find the right balance between planning for the threats of the future and meeting those that are here and now! As my partner, Sam Nunn, noted recently:

"A limited missile defense has a place in a comprehensive, integrated plan of nuclear defense, but it should be seen for what it is -- a last line of defense. Our first line of defense is diplomacy, intelligence and cooperation among nations, including Russia."

Secondly, it is imperative that our debates over and funding for limited missile defenses be embedded in a revised and more all-encompassing nonproliferation strategy designed to reinvigorate U.S. efforts to prevent countries from acquiring weapons of mass destruction and their means of delivery in the first place. Enhanced export controls, arms control regimes and regional security alliances still have a role to play if employed selectively.

Most importantly, the Administration must ensure that programs and projects that compose our first and second lines of defense are managed effectively and funded properly. We must continue to place a priority on redressing the instability of the former Soviet arsenal by expanding joint approaches to eliminating weapons of mass destruction in Russia and in other countries all over the world.

The Administration should also determine how funding can be increased to accelerate non-proliferation efforts. The Bush administration should use its nonproliferation review to develop a comprehensive plan that sets mutual goals for securing the Russian arsenal and prescribes a step-by-step time frame for achieving those goals. Today, we spend less than one percent of our annual defense budget on non-proliferation efforts. Let me say that again, the U.S. spends less than 1% of our defense budget on the first line of defense against the proliferation of weapons of mass destruction and their means of delivery.

This is unacceptable. It is far more effective and much cheaper to eliminate threats at their source than attempting to deter or defend against them later. This is not to say that other lines of defense don't have a critical role. Rather, at this point in time there is no better U.S. investment in combating this threat than the Nunn-Lugar Cooperative Threat Reduction program.

THE NUNN-LUGAR PROGRAM:

As the former Soviet Union began to break apart in 1991, mutual acquaintances in Russia came to former Senator Sam Nunn of Georgia and me and pointed out the dangers of the dissolution of a nuclear superpower. Weapons and materials of mass destruction were spread across four newly independent states of the former Soviet Union. Russian leaders requested our cooperation in securing and protecting these weapons and materials. This was the genesis of the Nunn-Lugar program.

This was not a problem that Congress wanted to deal with in 1991. Members were highly skeptical of committing funds to any program that seemed to benefit Russia. The atmosphere was decidedly hostile to any initiative that focused on a foreign problem. Americans were weary of the Cold War and the Gulf War. Both Congress and presidential aspirants had decided that attention to foreign concerns was politically risky. The House of Representatives had previously rejected, in a rather summary fashion, a plan to commit one billion dollars to addressing the problems of the former Soviet Union. That outcome did not give Senator Nunn and me much of a springboard for our initiative.

Yet we brought together a bipartisan nucleus of Senators who saw the problem as we did. We developed a plan to commit a small portion of Defense Department resources each year to the cooperative dismantlement of the old Soviet nuclear arsenal. Remarkably, the Nunn-Lugar program was passed in the Senate by a vote of 86 to 8. It went on to gain approval in the House and was signed into law by President Bush.

At a cost of less than two-tenths of one percent of the annual U.S. defense budget, the Nunn-Lugar program has facilitated the destruction of 423 ballistic missiles, 383 ballistic missile launchers, 85 bombers, 483 long-range nuclear air-launched cruise missiles, 352 submarine missile launchers, 209 submarine launched ballistic missiles, and 19 strategic missile submarines. It also has sealed 194 nuclear test tunnels. Most notably, 5,504 warheads that were on strategic systems aimed at the United States have been deactivated.

When the Soviet Union collapsed, Ukraine, Belarus, and Kazakhstan became the third, fourth, and eighth largest nuclear powers in the world. Without Nunn-Lugar, they would still have thousands of nuclear weapons. Instead, all three countries are nuclear weapons-free. To put this into perspective, Nunn-Lugar has dismantled more nuclear weaponry than the countries of Great Britain, France, and China currently possess in their stockpiles and arsenals combined.

Not only has the Nunn-Lugar program made important contributions to our security, it has also provided a diplomatic basis for relationships with Russia. The last ten years have seen a series of high points and low points in the relationship. NATO operations in Kosovo, Russian military activity in Chechnya, and spy scandals have led to crises and stalemates. In some cases, these low points have led to the cessation of diplomatic contact. Talks were broken off, trips were canceled, and relations dropped precipitously. But through the ups and downs of the relationship, there has been one constant: the Nunn-Lugar program. Even during the moments of greatest tension, Nunn-Lugar has continued its important work. In many ways, the Nunn-Lugar program has represented the cornerstone and, at times, almost the totality, of the U.S.-Russian relationship. It has given expression to an area of cooperation where only competition might have existed were it not for our common goal of dismantling the weapons of the Cold War.

But the Nunn-Lugar program is a tool, a means to an end. Nunn-Lugar has prospered when U.S. policy towards Russia has been guided by a firm hand and a logical policy prescription. Nunn-Lugar cannot take the place of effective and coherent policy; in fact, it cannot operate without effective policy guidance.

Despite the success of Nunn-Lugar, the threat to U.S. national security from proliferation remains. Nunn-Lugar alone is insufficient to safeguard American security. But absent significant progress in the other lines of defense, it will remain the most efficient and cost-effective response to the threat. During his recent campaign, President George W. Bush underscored the importance of these efforts. He said: "I will ask the Congress to increase substantially our assistance to dismantle as many of Russia's weapons as possible as quickly as possible."

THE DIPLOMATIC SCENE:

Efforts to deploy a missile defense system will be a technological challenge for the United States but we must also look beyond the domestic stage in our preparations. I was pleased to learn of the President's intention to consult closely with our friends and allies in Europe and Asia. Administration officials have returned from a first round of meetings and consultations on the subject. Although breakthroughs were not achieved, an important first step has been taken.

The cooperation of like-minded nations is imperative if we are to fully enjoy the benefits of defense against missiles while maintaining multilateral efforts to stop or limit their spread. The President also pointed out that the U.S. will work closely with Russia in hopes of reaching an acceptable conclusion in the arms control arena. Let there be no doubt, this will require heavy lifting. Negotiations will not be easy or quick. A successful conclusion to these negotiations will require great patience and even better statesmanship. But I believe this Administration is up to the task and ultimately will be successful.

Many have characterized this process as a one way street, measured by U.S. gains and Russian losses. I disagree with this analysis. Russian interests continue to be served by the reduction of strategic offensive weapons systems. Furthermore, a strong case can be made that Russia is under an equal, if not greater, threat from the proliferation of weapons of mass destruction and missile attack.

Meetings in Moscow last December that I enjoyed with General Kvashnin, Chief of the Russian General Staff, and General Yakovlev, then-Commander of the Strategic Rocket Forces, centered on the costs associated with continued Russian reductions. Both pointed out that Russia will dramatically reduce its deployed warhead levels to 1,500, as announced last fall. We discussed a number of ways to meet these new force levels, repeatedly noting that the biggest hurdle in their plans was dismantlement costs. I believe the United States and Russia are on the same page on this issue.

LOWER OFFENSIVE NUMBERS:

As President Bush explained in his recent speech, he is "committed to achieving a credible deterrent with the lowest possible number of nuclear weapons consistent with our national security needs...". His goal is to move quickly to reduce nuclear forces. As a means of accomplishing these goals, the Administration has indicated a willingness to explore a unilateral but parallel method of reductions as opposed to seeking to expand the more traditional bilateral arms control process.

There are good reasons for pursuing a unilateral but parallel strategy. It is more flexible and better suited for faster action. Protracted negotiations would keep many weapons on station longer than is necessary. To be sure, a unilateral but parallel process is not perfect. But its strengths may make it a better approach than the more traditional ones in the current strategic environment. That is not to say that such a strategy does not have its drawbacks. It does. The lack of some degree of irreversibility and agreed-upon verification regime make it a less than a perfect solution. But I believe some of these weaknesses can be overcome by utilizing other tools.

Nunn-Lugar in a Unilateral but Parallel Framework

For example, I am convinced that Nunn-Lugar and other nonproliferation programs can play a critical role in overcoming the inherent limitations of a unilateral but parallel approach to offensive force reductions. Let us not forget, Russians will face many of the same challenges under a unilateral but parallel process as they do under current treaty frameworks. They cannot afford to dismantle their weapons systems. Currently, Nunn-Lugar is the means by which this task is accomplished. Absent an unexpected economic revival in Russia, the need for dismantlement assistance will continue. But Nunn-Lugar could also prove useful in providing verification in a unilateral but parallel arms reduction process.

Through the Nunn-Lugar program, the United States could maintain a window of observation into Russian dismantlement, as well as serve as a venue to provide Russia with an understanding and view of American reductions. It would not be capable of completely replacing a treaty verification regime, but it would be tremendously valuable tool. In addition to the utilization of national technical means, Pentagon contract inspection and acceptance visits as well as audit and examination visits could provide an effective verification tool.

Anyone who has witnessed the contractual negotiating process involved in undertaking and implementing a Nunn-Lugar project as well as the role of American firms in managing such projects on site and the auditing practices to ensure proper utilization of U.S. funds, can attest that the inspection and verification procedures associated with the program are every bit as stringent and intrusive as similar measures under an arms control regime.

AREAS IN NEED OF ADDITIONAL ATTENTION:

Chemical Weapons Elimination

Despite the tremendous progress Nunn-Lugar has achieved and the real prospects for additional contributions in the future, there are areas that require additional attention and support. In my opinion, chemical weapons elimination in Russia is at the top of this list.

The United States has agreed to assist Russia in the elimination of its chemical weapons arsenal. Specifically, the Pentagon will construct a chemical weapons elimination facility at Shchuchye near Chelyabinsk. In December, I visited the Russian facility there and toured the site of the proposed Nunn-Lugar destruction facility. Located nearly a thousand miles from Moscow, it is home to a staggering two million chemical artillery shells and warheads.

Shchuchye houses 50 percent of the former Soviet modern ground-launched chemical weapons arsenal. The weapons varied from compact 85 mm chemical artillery shells to much larger warheads carried on "SCUD" missiles. These modern, ground-delivered munitions -- filled with sarin, soman, and VX -- are in excellent, ready to-use condition and, for the most part, are small and easily transportable.

Critics of U.S. involvement argue that the weapons stored at Shchuchye pose no more than an environmental threat to the local Russian population. Nothing could be further from the truth. The size and lethality of the weapons I observed are clearly a threat. A Russian Major and I demonstrated the proliferation threat posed by these weapons by easily fitting an 85 mm shell, filled with VX, into an ordinary briefcase. Room was available for at least two more shells. One briefcase alone, could carry enough agent to kill thousands of Americans.

Under the Chemical Weapons Convention, Russia has declared a stockpile of 40,000 metric tons of chemical weapons. These munitions have been collected and stored in seven sites across Russia. But not one has been destroyed primarily because of Russian budget shortfalls. The proposed U.S. facility would be capable of destroying 800 metric tons of weaponized agents each year.

The Pentagon has tried unsuccessfully over the last several years to launch this project. The Senate has supported these efforts, but the House of Representatives has objected. In an attempt to find a compromise the Senate adopted a plan that required specific conditions to be met prior to the release of U.S. funds for the project. Despite the fact that the House refused to accept this proposal, the Senate's efforts have triggered considerable action in Russia. First, Russia increased funding for chemical weapons elimination six-fold to over $100 million and is completing installation of the infrastructure necessary for facility operations.

Secondly, U.S. efforts to attract additional international assistance from other nations have proven successful. Thus far Italy, The Netherlands, The United Kingdom, the European Union and Canada have pledged to provide assistance. Others have indicated interest in contributing to the cause. Each nation has indicated that its contribution would be contingent on continued U.S. leadership in the project. In addition to Shchuchye, many foreign governments are actively supporting CW destruction efforts at other locations in Russia.

Finally, Moscow has agreed to consolidate the weaponry stored at seven sites into three primary or central elimination sites; this is an abandonment of its previous position which cited Russian domestic law as forbidding the transportation or movement of chemical weapons and agent in Russia. As a result the Nunn-Lugar destruction facility will be impelled to not only destroy the weapons stored at Shchuchye but those at other storage locations as well.

It is time to utilize the window of opportunity to destroy these dangerous weapons. It is imperative for Americans, Russians, and the world that Russia's vast stores of chemical weapons do not end up in the hands of rogue nations or terrorists. We are losing precious time to eliminate these dangerous weapons. Securing the necessary authorization and appropriations for the construction of the destruction facility is my highest priority this year.

Brain Drain

A second area in need of additional attention and funding concerns efforts to employ former Soviet weapons scientists in peaceful pursuits. Programs such as the International Science and Technology Centers administered by the Department of State and Initiatives for Proliferation Prevention administered by the Department of Energy seek to employ these scientists in non-weapons-related work. In many ways, destroying weapons of mass destruction is the easy part; ensuring that the person who created them never does so again is harder. These programs are the best tools we have at our disposal to encourage these scientists to enter an open marketplace while remaining at the institutes and laboratories working on peaceful programs. That is not to say these programs cannot be improved, managed better, or implemented more effectively. They can and they should.

To date, tens of thousands of former Soviet weapons scientists have been employed through these programs. Considerable success has been realized, but with a renewed commitment of resources and leadership, the U.S. can make dramatic progress in ensuring that former scientists forego the temptation of returning to their former careers of producing materials and weapons of mass destruction in Russia or rogue states.

But these programs are transition measures, not long-term solutions. They are vehicles to move scientists from weapons research to peaceful work. The private sector must be the ultimate destination. Only when these scientists have long-term employment in peaceful pursuits and succeed in domestic and international markets, will we able to scale back our efforts. The private sector is the best long-term option.

American and European corporations have much to gain by cooperating with government efforts like the Nunn-Lugar/CTR program. I have proposed that American companies explore the possibility of purchasing or establishing long-term contractual relationships with these Russian chemical and biological laboratories in order to provide the best scientific minds with employment in peaceful endeavors. These facilities would be an excellent investment in hardware and production technology. Our corporations would enjoy association with some of the finest minds in Russia.

The Administration, NATO and the European Union must explore options to encourage and trigger greater private sector investment. Considerable thought and planning should be given to overcoming Western corporate hesitancy and an inhospitable Russian investment environment. It will not be an easy sell but we must convince the private sector to get involved in the response. Their role is critical to a successful nonproliferation end-game.

CONCLUSION:

The U.S. and Russia have a difficult road ahead, one that will require compromise and sacrifice. The last ten years have shown that nothing is impossible. Let us approach the continued reductions of offensive arsenals with creativity and a willingness to cooperate, even as we search for areas of agreement on missile defenses.

We have a window of opportunity to reduce the threat of former Soviet weapons of mass destruction left over from the Cold War. The fundamental question is whether there exists sufficient political will in Moscow and Washington to devote requisite resources and leadership to these efforts. Statesmanship and patience will be required over many years.