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Latvia is a country that has come through a crisis before; can it do it again? Professor Stranga examines the current crisis in Latvia, a country much evolved over the past 50 years. He focuses on a variety of social, economic, and political factors in assessing how Latvia can move forward.

Synopsis

Prof. Stranga begins by examining what he calls Latvia’s “first great crisis” from 1929-1933. At the time, Latvia was a democracy, a member of the League of Nations, but critically had no security guarantees and was stuck between Nazi Germany and Soviet Russia. Prof. Stranga explains that this crisis was overcome by the dictatorship of Karlis Ulmanis, whose regime lasted from 1934 until the Nazi occupation. Those years were seen as the ‘Golden Years,’ times of economic flourishing and national freedom from occupation. Prof. Stranga reveals this period had long lasting effects on the national psyche of Latvia.

To Prof. Stranga, Latvia is in a very different situation today. He argues that these are times of very limited sovereignty, particularly for his country. Prof. Stranga explains that this is mainly due to Latvia’s dependence on the EU, NATO, and the IMF which provide economic and military security. Prof. Stranga identifies the effects of Karlis Ulmanis’ regime as the perception in Latvia that a ‘strong man’ is needed to guide Latvia out of its current crisis. However, the necessity for Latvia to remain a democracy is made clear by the help it receives from the organizations mentioned above.

Although the help is clearly needed, Prof. Stranga feels that its consequences are often very painful. The IMF’s conditions for essentially saving Latvia’s economy include cutbacks in medical assistance and a reduction of teachers and schools, facets of public life deeply engrained in Latvia’s culture. In addition, Prof. Stranga examines the question of energy security. He looks particularly at Latvia’s absolute dependence on Russia exhibited by the fact that Gazprom’s first foreign office is in Latvia, and the fact that this has perhaps hindered Latvia’s progress.

At the same time, it seems clear that Prof. Stranga sees this crisis also as an opportunity. Firstly, he argues that now is probably the time to not be shy but to look for alternative energy sources such as nuclear energy, something Prof. Stranga further discussed when answering questions. Moreover, Prof. Stranga believes there are too many bureaucratic positions, and the crisis is an opportunity to cut these off and direct funding elsewhere. In addition, he feels the crisis is a chance to reconstruct exports. In particular, Prof. Stranga would like to see Latvia leaning more towards innovation rather than timber or agriculture. Finally, Prof. Stranga addresses Latvia’s issue of an internally divided society, particularly between Latvians and Russian speakers. He analyzes Latvian Russians’ diminishing impact as Russia’s economy falters but also expresses concern at the fact that Russian influence in Latvia seems to be heavily dependent on Russia’s economic state.

Prof. Stranga kindly takes the time to briefly answer a few questions and raises several issues in the process. Prof. Stranga cites Latvia's population reduction as perhaps the "greatest" problem it faces. However, he feels reassured by the help of the friendly states of Scandinavia and other organizations across the world. At the same time, Prof. Stranga explains such organizations are not having an entirely positive impact. In particular, he argues against the "inhuman" approach of solely focusing on cutting back capital of the IMF which he feels is an assault on Latvian life.

About the speaker

Aivars Stranga is professor and chair of the Department of History at the University of Latvia. He is the author of seven monographs and more than 150 scholarly and general publications on Latvian domestic and foreign policy andinternational relations between 1918 and 1940, and Latvian foreign policy from 1991 to 2000. Professor Stranga was a distinguished visiting professor at Stanford in 2003, teaching courses on Baltic History and the History of the Holocaust in the Baltics.

Jointly sponsored by the Forum on Contemporary Europe, Stanford Humanities Center, Department of History, Taube Center for Jewish Studies, and Center for Russian, East European and Eurasian Studies.

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Management Science and Engineering Professor Siegfried S. Hecker, an expert on nuclear weapons, recently returned from a visit to North Korea, where he frequently checks on the country's denuclearization process. Hecker has researched extensively in fields of plutonium science-he served as director of Los Alamos National Laboratory from 1986 through 1997, and remains an emeritus director to the Laboratory. Through a series of Track Two, non-governmental, non-official visits to North Korea, Hecker has worked closely with the previous and current administration's North Korean negotiations team. The Daily spoke with Hecker about his experiences in the country, and his insight into nuclear issues in North Korea and elsewhere.

The Stanford Daily (SD): This is your sixth visit to North Korea. You made one each year from 2004 to 2009. How is this trip different from the previous ones? Any change in North Korean society, diplomacy?

Siegfried Hecker (SH): We visited North Korea from Tuesday, Feb. 24 to Saturday, Feb. 28, and first of all it was quite a relief from Beijing in that the air was quite clear and that the weather was beautiful. In Beijing, it went day to day from being smoggy to being almost impossibly smoggy. So the first thing that we found when we got off at Pyongyang, was the relief of having reasonably clean air.

Even though it was in February and still quite cold, the greatest impression left is that Pyongyang and the people just looked more prosperous this time than I have seen them look in the past. There were more cars on the road; there were more tractors, especially when we got off into the countryside. The people were better dressed.

Particularly, one of the things I look for is color. Years ago, North Korea, like the Soviet Union, was all drab, gray and black. Now you see lots of colors; lots of down jackets, for example, on little children and women with bright colors from yellow to green to red. There was more construction in Pyongyang. We've seen many cranes working on the ground.

All the way around, while some people believed that North Korea and its economy is sinking, we've actually seen it rising and looking better than we've seen in the past. I would say this is the starkest observation of how it struck differently as the previous times.

[Diplomatically,] we've seen a change of attitude since October 2006, when they conducted a nuclear test. Even though, by technical standards, that nuclear test was of limited success, politically for them it was very successful. So the principal attitude change is one of greater confidence on their part. They now tell us, you must deal with us as a nuclear weapon state. We have demonstrated that we have nuclear weapons. We've tested a nuclear weapon, and so we expect to be treated as a state that has nuclear weapons. That confidence will most likely harden their negotiating position. Then, of course, they're also still trying to get a sense of what the new administration will do. They are entering the negotiations with a new administration from what they considered to be a position of strength.

SD: How is North Korea's disablement process of its nuclear facilities going?

SH: In July 2007, they stopped operations and began disabling the nuclear facilities. When I was there almost exactly one year ago, they showed me the nuclear facilities, allowed me to take photographs of the nuclear facilities to demonstrate that they are disabling those facilities that produce the bomb fuel-the plutonium. Disabling the facilities means making it more difficult to restart. They have finished most of the disablement actions, but still need to complete the unloading of the fuel from the nuclear reactor.

They made the decision last year to slow down the unloading because the other parties did not meet their obligations of providing heavy fuel oil or equivalent energy aid. At this point, Japan and South Korea have not finished their obligations, so the slow-down continues.

If the other parties complete their obligations, then I believe North Korea is prepared to complete the disablement. However, the next important step is to dismantle the facilities-that is, take them apart. The terms of that dismantlement have not yet been negotiated. Subsequently, they will need to give up their nuclear weapons. That seems a long way off now based on their comments.

SD: In one of your reports, you discussed the idea of a scientific fingerprint that could deter North Korea from exporting its plutonium. This is very interesting. Can the method have wider use?

SH: One of the concerns with North Korea would be the possibility of them selling or exporting plutonium or nuclear technologies. We know enough about the North Korean plutonium that we have what you call a scientific fingerprint. The makeup of plutonium is determined by the type of reactor and by how long it was in the reactor. We know that about the North Korean plutonium so we can identify North Korea's plutonium. This should be a deterrent for North Korea ever exporting its plutonium because we would know it came from North Korea.

We, of course, don't know whether or not North Korea would ever want to sell its plutonium, but just in case, the fingerprint represents a deterrent. This fingerprinting of plutonium is not as useful for plutonium from the rest of the world, because there are so many different types of reactors and we know less about their fuels and operating schedules.

SD: Do you think the example of North Korea contributes much to a solution of nuclear problems in other regions-for example, Iran?

SH: Right now, the second nuclear hot spot is Iran, and the difference between North Korea and Iran is that North Korea has declared its nuclear program now to be a weapon's program and has demonstrated that at least it can detonate a nuclear device, even though it wasn't fully successful. Iran, I believe, is developing an option for nuclear weapons but under the umbrella of doing it strictly for civilian purposes. They say, "We're not a nuclear weapon state and we have no intention of developing nuclear weapons," but they are continuing to put most of the capabilities in place should they decide to build weapons.

The dividing line between military and civilian is a very fine line, so North Korea and Iran are two very different problems. However, those countries certainly watch each other and look at the diplomatic responses during each other's negotiations.

SD: Are you advising anyone in the new administration?

SH: We work very closely with the U.S. government on this, although our visits are strictly track two visits, which means non-governmental, non-official visits. I don't go as an official, but rather as a Stanford University employee. In the past, we worked very closely with the previous North Korean negotiations team led by Ambassador Christopher Hill. We have now begun to work with the new team that is just being put in place.

SD: During your visits, you met with North Korean officials in education, public health, and explored possibilities of cooperation in these areas. How do you envision these future exchanges?

SH: We met with officials from the ministry of education and one of the economic universities to discuss potential cooperation in educational and technology exchange. In the past, we have also met with officials from the health ministry. So, in addition to working the nuclear issues, we're very interested in trying to engage the North Korean community in a broader set of activities than simply nuclear, and technology is one of those. They're very interested in material science, biotechnology, information technology, and so we explored the possibility of exchange visits and particularly having some Stanford professors go to North Korea and lecture on those topics.

SD: What classes do you currently teach at Stanford? How do you like being a professor at Stanford?

SH: I have a terrific time-that's one of the reasons why I'm at Stanford. The two classes that I teach are both Management Science and Engineering classes. They both focus on the intersection of technology and policy. One is a very large class, MSE 193/293, that Professor William Perry, former Secretary of Defense, and I teach together. We cover everything from history of technology and warfare to modern times and what the current challenges are in the security arena. Both Prof. Perry and I try to teach that in the spirit of our own experiences in these areas. It's a very, very large class-over 200 students.

Then I teach a course by myself in spring that's exactly the opposite. It's a sophomore seminar, MSE93Q, and I have approximately 16 students. The title is "Nuclear Weapons, Nuclear Energy, Nuclear Terrorism," and in essence, it's everything nuclear. So I cover in that 10 weeks the whole nuclear problem. I try to get students to understand the basics of nuclear technology and how that interfaces with the policy issue of nuclear weapons, energy, proliferation and terrorism. We cover topics such as: If you develop nuclear energy, why do you have to be concerned about nuclear terrorism and nuclear proliferation? What is the connection between nuclear energy and nuclear weapons? That's what we cover in 10 weeks' time, and I've enjoyed the interaction with students immensely.

SD: What do you aim to teach students in the classroom and outside?

SH: Particularly, I want students to understand the intersections of technology and policy. The nuclear field is a very good one to do that because you must understand the basics of nuclear technology to make good policy. And we also now have 60 years of very rich history of the interplay of those two in so many different countries and so many different ways. For example, in both of my classes the students have to write policy papers that show they have at least a basic understanding of the technology, even though they may be social science, political science, international relations majors, but I want them to understand the difference between plutonium and uranium, between fission and fusion, between weapons and energy. That's what I like to be able to contribute to the University.

What I like about the students is how truly interested and dedicated they are and how experienced so many of them are in the international arena. In addition, what's also fascinating is that we have students from all over the world. Whether it is a physics major from Palestine, or somebody who grew up in Iran, Pakistan, India or in China, Vietnam, Africa, they bring a totally different outlook on the world to the table, which then of course helps the rest of the students to understand that this world is much more than just about the United States of America, and Stanford is a great place to do it.

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Abstract: The expected increasing world energy demand makes it necessary for us to seriously and urgently study the questions of global warming due to greenhouse gas effect emissions and the depletion of fossil resources. This clearly means producing more energy, while emitting a minimum amount of CO2, and keeping the costs under control and acceptable for the user.

A growing number of prospective studies thus envision that nuclear energy, because it is carbon-free, will play an important and essential role in the world energy mix of the 21st century.

However, the increased use of nuclear power to generate electricity brings with it, threats to regional and global security - specifically, increased risks of nuclear weapon proliferation and nuclear terrorism: nuclear power reactors inevitably produce plutonium as a by-product, plutonium that could be used by countries or terrorist groups to fabricate nuclear weapons. Several states still have not signed the NPT, while others have not clarified their real intentions.

Even though this aspect should by no means be neglected, the issue of nuclear energy expansion should be examined globally, accounting for the context, the current needs, as well as all kinds of concerns.

The context is the one described above, characterized by growing energy demand and climate change: nuclear energy is unanimously recognized as a solution well adapted to such a context. Its overall assets are numerous, it is a clean and competitive source of energy, which has very good safety records, with more improvements to come, it contributes to security of energy supply. All these assets should not be swept away for reasons solely linked to proliferation concerns. As a matter of fact, intensive works are being carried out, to improve even more nuclear energy's track record, by ensuring its sustainability: waste minimisation, increased safety, competitiveness, economy of uranium resources, resistance to nuclear proliferation, and application to fields wider than shear electricity production.

Jacques Bouchard is Special Adviser to the Chairman of the French Atomic Energy Commission (CEA). In 2006, he was appointed Chairman of the Generation IV International Forum (GIF) for 3 years.

Born in 1939, Jacques Bouchard holds an engineering degree from the "Ecole Centrale de Paris", and specialized in reactor physics.

Mr. Bouchard joined the CEA in 1964 and became Head of the Experimental Physics unit in 1973, then head of the Nuclear Engineering Department in 1975. In that capacity, the work he conducted was mainly in support of pressurized water reactor technology, and he also led studies in physics for fuel cycle applications.

In 1982, he became head of the Fast Neutron Reactor Department in Cadarache. In 1990, he was appointed head of the CEA's Nuclear Reactor Division, then, from 1994 to 2000, he became the Director of CEA's military application division.

From 2000 to 2004, he was in charge of the entire nuclear energy sector in CEA.

Since 2005, he is Special Adviser to the Chairman of the CEA.

Jacques Bouchard was also the President of the French Nuclear Energy Society from 2001 to 2003 and professor at the reknown "Ecole des Mines de Paris". He has serve on the board of directors of several companies working in the nuclear field, and he is member of many advisory committees to national and international nuclear organizations.

If you would like to be added to the email announcement list, please visit https://mailman.stanford.edu/mailman/listinfo/stsseminar 

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Executive Summary

Carbon capture and storage (CCS) is a promising technology that might allow for significant reductions in CO2 emissions. But at present CCS is very expensive and its performance is highly uncertain at the scale of commercial power plants. Such challenges to deployment, though, are not new to students of technological change. Several successful technologies, including energy technologies, have faced similar challenges as CCS faces now. In this paper we draw lessons for the CCS industry from the history of other energy technologies that, as with CCS today, were risky and expensive early in their commercial development. Specifically, we analyze the development of the US nuclear-power industry, the US SO2-scrubber industry, and the global LNG industry.

We focus on three major questions in the development of these analogous industries. First, we consider the creation of the initial market to prove the technology: how and by whom was the initial niche market for these industries created? Second, we look at how risk-reduction strategies for path-breaking projects allowed the technology to evolve into a form so that it could capture a wider market and diffuse broadly into service. Third, we explore the "learning curves" that describe the cost reduction as these technologies started to capture significant market share.

Our findings suggest that directly applying to CCS the conventional wisdom that is prevalent regarding the deployment and diffusion of technologies can be very misleading. The conventional wisdom may be summarized as: "Technologies are best deployed if left in the hands of private players"; "Don't pick technology winners" or "Technology forcing is wrong"; and "Technology costs reduce as its cumulative installed capacity increases". We find that none of these readily applies when thinking about deployment of CCS.

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Carbon capture and storage (CCS) is a promising technology that might allow for significant reductions in CO2 emissions. But at present CCS is very expensive and its performance is highly uncertain at the scale of commercial power plants. Such challenges to deployment, though, are not new to students of technological change. Several successful technologies, including energy technologies, have faced similar challenges as CCS faces now. In this paper we draw lessons for the CCS industry from the history of other energy technologies that, as with CCS today, were risky and expensive early in their commercial development. Specifically, we analyze the development of the US nuclear-power industry, the US SO2-scrubber industry, and the global LNG industry.

We focus on three major questions in the development of these analogous industries. First, we consider the creation of the initial market to prove the technology: how and by whom was the initial niche market for these industries created? Second, we look at how risk-reduction strategies for path-breaking projects allowed the technology to evolve into a form so that it could capture a wider market and diffuse broadly into service. Third, we explore the "learning curves" that describe the cost reduction as these technologies started to capture significant market share.

Our findings suggest that directly applying to CCS the conventional wisdom that is prevalent regarding the deployment and diffusion of technologies can be very misleading. The conventional wisdom may be summarized as: "Technologies are best deployed if left in the hands of private players"; "Don't pick technology winners" or "Technology forcing is wrong"; and "Technology costs reduce as its cumulative installed capacity increases". We find that none of these readily applies when thinking about deployment of CCS.

Through analyzing the development the analogous industries, we arrive at three principal observations:  

  • First, government played a decisive role in the development of all of these analogous technologies. Much of the early government role was to provide direct backing for R&D work and demonstration projects that validated the technological concepts. For example, the US government directly supported for over two decades most of the basic science and engineering research in both SO2 scrubbers and nuclear power. Most of the demonstration projects were significantly underwritten by government as well; the Japanese government was the principal backer of LNG technology through its promises to buy most of the world's LNG output over many years. Direct government support created the niche opportunities for these technologies.
  • Second, diffusion of these technologies beyond the early demonstration and niche projects hinged on the credibility of incentives for industry to invest in commercial-scale projects. In each of the historical cases, government made a shift in its support strategy as the technology diffused more widely. In the early phase (when commercial uncertainties were so high that businesses found it extremely risky to participate in more than small, isolated projects) success in achieving technology diffusion required a direct role for government. But as uncertainties about the technology's performance reduced and operational experience accumulated, direct financial support became less important, and indirect instruments to lower commercial risk rose in prominence. Those instruments included tax breaks, portfolio/performance standards, purchase guarantees, and low-interest-rate loans linked to specific commercial-scale investments. It is conceivable that such incentives could have been supplied by non-governmental institutions, such as large firms or industry associations, but the three analogs point strongly to a governmental role-perhaps because only government action was viewed as credible. (In the United States, many of the key decisions to support new technologies were crafted at the state level, such as through rate base decisions to allow utilities to purchase nuclear plants.)
  • Third, the conventional wisdom that experience with technologies inevitably reduces costs does not necessarily hold. Risky and capital-intensive technologies may be particularly vulnerable to diffusion without accompanying reductions in cost. In fact, we find the opposite of the conventional wisdom to be true for nuclear power in the US (1960-1980) and global LNG (1960-1995). Costs increased as cumulative installed capacity increased. A very rapid expansion of nuclear power plants in the US around 1970 led to spiraling costs, as the industry had no chance to pass lessons from one generation of investment to the next-a fact evident, for example, in the failure to standardize design and regulation that would allow firms to exploit economies of scale. For natural gas liquefaction plants, costs stayed high for decades due to a market structure marked by little competition among technology suppliers and the presence of a single dominant customer (Japanese firms organized by the Japanese government) willing to pay a premium for safety and security of supply. The same attributes that allowed LNG to expand rapidly-namely, promises of assured demand made credible by the singular backing of the Japanese state-were also a special liability as the technology struggled to compete in other markets. The experience with SO2 scrubbers was more encouraging-costs declined fairly promptly once industrial-scale investment was under way. But that happened only after sufficient clarity on technological performance and capability of FGD systems had been established. What followed was a strict performance standard-in the form of a government mandate, imposed by environmental regulators-that effectively picked FGD as a technology winner. The guaranteed market for FGD led to serious investment, innovations, and learning-by-doing cost reductions. We do not argue that this technology-forcing approach was economically efficient but merely underscore that rates of diffusion of FGD technology akin to what is imagined for CCS technology today were possible only under this technology-forcing regulatory regime.

As CCS commercialization proceeds, policymakers must remain mindful that cost reduction is not automatic-it can be derailed especially by non-competitive markets, unanticipated shifts in regulation, and unexpected technological challenges. At the same time, there may be some inevitable tradeoffs, at least for a period, between providing credible mechanisms to reduce commercial risk, such as promises of assured demand for early technology providers, and stimulating market competition that can lead to lower costs. History suggests that government-backed assurances are essential to creating the market for capital-intensive technologies; yet those very assurances can also create the context that makes it difficult for investors to feel the pressure of competition that, over successive generations of technology, leads to learning and lower costs.

We are also mindful that our history here-drawn on the experience of three technologies that have been successful in obtaining a substantial market share-is a biased one. By looking at successes we are perhaps overly prone to derive lessons for success when, in fact, most visions for substantial technological change actually fail to get traction.

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Program on Energy and Sustainable Development, Working Paper #81
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Varun Rai
David G. Victor
Mark C. Thurber
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Gabrielle Hecht is Associate Professor of History at the University of Michigan.  Her first book, The Radiance of France:  Nuclear Power and National Identity after World War II (MIT 1998), won awards from the American Historical Association and the Society for the History of Technology.  The French translation appeared with La Découverte in 2004, and MIT will publish a new English-language edition in 2009.  Her current project, entitled Uranium from Africa and the Power of Nuclear Things, draws on archival and field work conducted in Africa, Europe, and North America.  Focusing especially on Gabon, Madagascar, South Africa, Namibia, and Niger, this project examines uranium mining in these places and the flow of uranium from these places. It argues that the view from Africa transforms our understanding of the "nuclear" as a political, technological, and occupational category, as well as our perspective on the transnational power of nuclear things. 

Alexander Montgomery, a visiting assistant professor in 2008-09, was a postdoctoral fellow at CISAC in 2005-2006 and is an assistant professor of political science at Reed College. He has published articles on dismantling proliferation networks and on the effects of social networks of international organizations on interstate conflict. His research interests include political organizations, social networks, weapons of mass disruption and destruction, social studies of technology, and interstate social relations. His current book project is on post-Cold War U.S. counterproliferation policy, evaluating the efficacy of policies towards North Korea, Iran, and proliferation networks.

He has been a joint International Security Program/Managing the Atom Project Research Fellow at the Belfer Center for Science and International Affairs in the Kennedy School of Government at Harvard University. He has also worked as a research associate in high energy physics on the BaBar experiment at Lawrence Berkeley National Laboratory and as a graduate research assistant at the Center for International Security Affairs at Los Alamos National Laboratory. He has a BA in physics from the University of Chicago, an MA in energy and resources from the University of California, Berkeley, and an MA in sociology and a PhD in political science from Stanford University.

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Gabrielle Hecht Associate Professor of History and Director of Graduate Studies, Program in Science, Technology, and Society, University of Michigan Speaker
Alexander Montgomery Visiting Assistant Professor, CISAC; Assistant Professor of Political Science, Reed College Commentator
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Effective strategies for managing the dangers of global climate change are proving very difficult to design and implement. They require governments to undertake a portfolio of efforts that are politically challenging because they require large expenditures today for uncertain benefits that accrue far into the future. That portfolio includes tasks such as putting a price on carbon, fixing the tendency for firms to under-invest in the public good of new technologies and knowledge that will be needed for achieving cost-effective and deep cuts in emissions; and preparing for a changing climate through investments in adaptation and climate engineering. Many of those efforts require international coordination that has proven especially difficult to mobilize and sustain because international institutions are usually weak and thus unable to force collective action...."

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The Harvard Project on International Climate Agreements
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David G. Victor
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