THE NEW SOVIET THREAT: POLLUTION After 74 years of Communist mismanagement, the former Soviet Union is an environmental menace to the world. The cleanup will cost billions -- and guess who pays.
By Paul Hofheinz REPORTER ASSOCIATE Karen Nickel

(FORTUNE Magazine) – THE COMMONWEALTH of Independent States (CIS) is in even worse shape than you think. Sure, the former Soviet Union's economy is disintegrating, but that may not be its biggest problem. After 74 years of Communist mismanagement, the country that once spanned a sixth of the globe has become an environmental cesspool that is threatening its neighbors in Europe and Asia. Environmentalists are sounding the alarm. Says Kristen Suokko of the Natural Resources Defense Council, based in Washington, D.C.: ''If we don't deal with ((CIS)) environmental problems now, we won't have to worry about dealing with economic problems. The U.S., other nuclear nations, and the international community generally must take drastic and immediate action.'' At the economic summit in Munich in July, Germany and France will be pushing the world's leading industrial nations to commit billions of dollars in environmental aid | on top of the $24 billion of economic assistance they have already pledged. Russia and the other former Soviet Republics need help not only to start cleaning up but also to stop a pattern of environmental abuse. Under the socialist system, Soviet industry was built with little or no regard for the environment. Cars still use leaded gasoline. Manufacturing consumes more than four times as much energy per unit of GNP as in the U.S., reports the Battelle Pacific Northwest Laboratory. The sad irony is that this enormous waste has contributed significantly to global warming and other environmental problems without making life easier for the country's citizens. Russian households consume 90% less energy than their Western counterparts (they have smaller homes and fewer appliances), but this savings is rendered meaningless by the colossal wastefulness built into the inefficient military industrial complex. Says a Western diplomat in Moscow: ''The problem is that the entire nation is like a big polluting machine.'' To the outside world, the biggest danger is still the CIS's controversial nuclear energy program. The Commonwealth has 37 reactors, which provide 12% of its energy. Western experts -- including Ivan Selin, chairman of the U.S. Nuclear Regulatory Commission -- have long warned that at least 15 of them are badly designed and ought to be closed. These reactors are slow to cool during emergencies, which can cause the core to explode. That's what happened at Chernobyl in 1986. Says Zhores Medvedev, a Russian-born nuclear scientist living in Britain: ''These reactors are like huge bombs. And they're getting older and older.'' The Chernobyl plant, in what is now the country of Ukraine, blew up after operators lost control of an experiment. Bad as it was, the accident could have been much worse. Most of the fuel exploded downward, so that only 4% of the reactor core was released into the atmosphere. Even that was enough to spread a radioactive plume across Europe and dump an estimated 700,000 curies of radioactive dust on the Continent. (The 1979 accident at Three Mile Island in the U.S. released less than 30 curies.) The U.S. Department of Energy estimates that the amount of radioactive contamination that fell on the Continent will result in an additional 6,000 deaths from cancer in the European Community over the next 50 years. The Chernobyl accident showed Europe's vulnerability. In Poland, Germany, Austria, and Hungary, nearly $180 million of agricultural produce had to be ! destroyed. In Austria alone, the government was forced to destroy $80 million of leafy vegetables and other farm produce. In the north of Finland, Sweden, and Norway, herds of reindeer had to be destroyed to prevent native Lapps from eating their radioactive flesh. Even in Britain, some 1,350 miles from Chernobyl, the results were detectable. The sale of sheep was banned until radioactive isotopes that the sheep may have picked up from grazing had dissipated. Says Alexander Borovoi, a Russian scientist who helped oversee the Chernobyl cleanup: ''Thank God the fuel exploded downward. If it had flown outward, it would have been the end of everything.'' In the old Soviet Union itself, more than 2.5 million acres of farmland in Ukraine and Byelorus remain contaminated. The area was never properly cleaned up. Some of this land is still being farmed, since local officials have been unable to persuade farmers to leave the area despite the health risks. In any case, there is no spare land for farmers to migrate to. Ukrainian officials say they keep tough control over food sold in local markets, but contaminated food crops up occasionally across the CIS. On a recent inspection, a U.S. embassy doctor found radioactive mushrooms for sale at the central market in Kiev, the capital of Ukraine, 75 miles from Chernobyl. ALMOST AS BAD is the radioactive pileup around Chelyabinsk -- the Soviet Union's top-secret nuclear weapons production site. Since the 1950s, scientists have been dumping radioactive waste in local lakes and rivers. As a result, the Bulletin of Atomic Scientists estimates that a person can get a lethal dose of radiation in less than an hour just by standing on the bank of the once beautiful Karachai Lake. The nearby Techa River is not much better. After years of dumping, Russian officials have tried to seal off the river by surrounding it with a barbed- wire fence. But you can't fence a river. Officials have found radioactive waste in the area where the river empties into the Arctic Ocean 100 miles away. Says Alexei Yablokov, a scientist and adviser to President Boris Yeltsin: ''Radiation contamination is our No. 1 problem. It will take years just to get an accurate picture of the situation'' -- much less rectify it. The CIS has also visited another nuclear threat on its neighbors. Last year a Russian scientist from Murmansk disclosed that contrary to official denials, the Soviet navy had been dumping nuclear waste in the Barents Sea for nearly 30 years. The dumping site, he claimed, was several hundred miles from the Norwegian coast in a known fishing area. Even worse, the barrels of nuclear waste at first floated. So what did the Russians do? They punctured the protective containers, apparently so the highly toxic barrels of radioactive waste would fill with sea water and sink. In a more mundane case, the Norwegians claim that a Russian nickel-smelting factory on the Kola Peninsula near its border belches out more pollution over Scandinavia than does all of Norwegian industry. Norway is currently negotiating with Russia to impose better pollution controls at the nickel factory. It also wants to conduct a joint operation to retrieve the Soviet navy's nuclear waste. For all that, most of the ecological calamities have been confined to the CIS's vast territory. The depths of Soviet damage to the environment can boggle the imagination, as the pictures on these pages show. Most unusual is the Aral Sea, which borders on the republics of Kazakhstan and Uzbekistan. In just three decades, economic planners destroyed a body of water bigger than Lake Huron. As a consequence of a 30-year irrigation project, the once beautiful sea has shrunk to less than half its original size, leaving ships surreally stranded on mounds of sand. The former port city of Muynak is now 44 miles from the water's edge. The shrinking sea has changed the local climate as well by releasing carcinogenic salts from the former seabed into the air. Combined with heavy pesticides, these salts have led to an upsurge in local infectious diseases for both plants and humans. Hospitals report an increase in infant mortality and throat cancers -- especially among children, whose immune systems seem less able to fight off the effects of the salts. If the CIS does get emergency environmental financing from the industrialized nations, there will be opportunities for companies that can help with the cleanup and restructuring. In testimony before the U.S. Senate Foreign Relations Committee, William Chandler, a scientist at the Battelle Lab, claimed that the CIS could create 20 gigawatts of energy (enough to make up for the energy provided by the 15 nuclear reactors) by replacing them with gas turbine power plants -- which the U.S. makes. This would allow Russians to use their vast gas reserves (bigger than Saudi Arabia's). The estimated cost of building enough gas turbines to close all the nuclear plants: around $9 billion. Similarly, Greenpeace has submitted a plan to the Russian government that would rework existing electrical grids to make better use of hydrocarbon power plants. SOME Western companies, like Conoco, see opportunities for profit in Russia's environmental problems. To strengthen its bid to develop a proven 100 million barrel field in Arkhangelsk, the Houston oil giant has sent a team of 14 environmentalists to study the area and recommend ways of drilling without harming the area's forests. Says James Matheson, a Conoco environmentalist: ''They know our track record as an environmentally friendly company. It definitely has given us a competitive advantage.'' Frank Silvestro, co-founder of Ecology & Environment, a New York consulting firm, also sees a lot of potential business. He has been virtually commuting to Moscow to offer his services in such areas as disposal of nuclear and other hazardous wastes, and air and water pollution control. Says he: ''With our experience we could help them. They have the talent; they just don't know what to do with it. They don't need labor, they just need help.'' Other Western companies are already jockeying for pieces of the massive refitting job that Western experts say will be needed to bring the CIS's nuclear reactors up to global safety standards. Siemens, the German industrial giant, believes that at least 18 of the Soviet-built reactors could be refitted with hardened silos and sophisticated control rooms to make them safer. Estimated cost: around $150 million per unit. Siemens has lobbied aggressively for portions of any deals to refit the CIS reactors, but the company will have plenty of competition for contracts. Orders for nuclear reactors are slow in Europe. Among others, the highly competitive Swedish-Swiss industrial powerhouse ASEA Brown Boveri will be looking for part of the Soviet business. The Ukrainian government will soon take bids for a huge contract to bury, finally, the still hot Chernobyl plant. Shortly after the accident, a vast concrete sarcophagus was erected over the estimated 180 tons of radioactive fuel, but it was never fully sealed. Rain drips onto the reactor wreckage, threatening to set off particle dust storms. The rain could also trigger another spontaneous nuclear reaction in the unspent fuel. It would be nothing like the first Chernobyl explosion, but it would release some radioactivity into the air. Foreign firms are welcome to bid on the rebuilding project, which could cost , Ukraine more than $100 million. But the job won't be easy. Because of the presence of nearly 650 kilograms of plutonium, which has a half-life of 24,000 years, scientists estimate that the rebuilt sarcophagus will have to last a lot longer than the pyramids.

Money will be a problem too. Says Percy Barnevik, CEO of ABB: ''The financing must come from the West. Otherwise, the urgently needed rebuilding and modifications will simply not happen.'' Adds Silvestro, the environmental consultant: ''They have a substantial mess, but what they lack is hard currency to pay for any cleanup. Cost is the stopper.'' Even with foreign aid, responsibility for the cleanup will have to fall on the citizens of the former Soviet Union, who have yet to go through the painful process of learning that the earth's resources are not inexhaustible.