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Debt for Nonproliferation

Debt for nonproliferation legislation has been enacted in the U.S. (see Legislative Updates below) as a mechanism for funding nuclear, chemical and biological weapons proliferation prevention activities in Russia. Debt for nonproliferation relies on “debt swap,” a form of debt restructuring, to exchange monetary debt, discounted to some percentage of the total, in return for specific actions by the Russian government in support of nonproliferation efforts. Debt conversions can be based on the exchange of official bilateral debt between creditor and debtor nations, or on the conversion of private debt between international lending institutions and creditor nations. In either case, funds exchanged into domestic currency are typically deposited into a fund governance and management structure with some kind of bilateral oversight. 

With appropriate governing and management structures in place, debt conversions for nonproliferation are potentially powerful tools that can leverage current nonproliferation programs and expenditures to reduce further the security threat from Russia’s weapons infrastructure.