The Pakistani Spectator

The United Arab Emirates’ plan to become the first Arab country to operate a nuclear power plant is a step closer to fruition with the announcement in December 2009 that it had selected a Korean consortium to build four nuclear-power reactors. Though other Gulf States have in recent years declared their intention to explore nuclear power, the majority of their plans appear to be on hold. Fears that their nuclear-energy aspirations might be a preliminary step towards acquiring a nuclear deterrent against Iran have so far proved unfounded. The UAE’s programme poses little risk of proliferation and could establish a positive example for other Middle Eastern states considering nuclear power.

GCC project moves slowly

There are currently no operational nuclear power plants in the entire Middle East/Gulf region. Iran’s Russian-built civil power reactor at Bushehr is scheduled to become operational this year, but this has already been postponed many times. During the 1970s, high oil prices encouraged several Gulf States to consider introducing nuclear power, with Kuwait going as far as inviting bids for a small reactor. However, the subsequent fall in oil prices, the disaster at Chernobyl and the vast costs associated with introducing nuclear power to countries with little or no relevant infrastructure dissuaded most countries from proceeding further.

But as oil prices soared once again during the middle years of the last decade, the majority of Middle Eastern countries announced plans to explore nuclear power. In late 2006, the Gulf Cooperation Council (GCC) announced that it would undertake a study for a collective nuclear-energy programme. It completed a preliminary feasibility study with the International Atomic Energy Agency (IAEA) in November 2007, and moved ahead with a more in-depth study.

Many GCC states believe that their existing sources of energy will be insufficient to meet rising demand. Although they are the world’s major producers of fossil fuels, their electricity demand is projected to increase by 10% every year to 2015, with desalination requirements growing by 8% annually. For instance, the UAE assessed that its natural-gas reserves would only be able to satisfy 50% of its electricity demands by 2020, and that renewable energy sources could meet but a small proportion of the shortfall. In addition, many states reasoned that using nuclear power to fulfil domestic demand would allow for more exports of lucrative fossil fuels. The preliminary IAEA study concluded that nuclear power would indeed be economically viable in Gulf countries, although only if oil prices exceeded $50 per barrel.

National initiatives

The slow pace of the GCC’s deliberations appeared to frustrate some of its members, which went ahead with their own plans, often involving bilateral agreements with external powers. Although these were supposedly not in conflict with the broader GCC project, in practice they sometimes appeared separate. Yet the momentum of many of these national initiatives seems to have stalled after initial enthusiasm. This has partly been due to the recognition of the vast economic and bureaucratic investment required to establish nuclear power in countries with no associated physical or legal infrastructure and little technical expertise. In addition, the fall in fossil-fuel prices (for example, from around $140 per barrel of oil in 2008 to current prices of around $75 per barrel), combined with the global financial crisis, and has weakened both the economic justification for alternative energy sources and the capital available for large investments.

As a result, the progress of some national ventures has been uneven. In 2009 Prime Minister of Bahrain Sheikh Khalifa bin Salman al-Khalifa ordered the formation of a national nuclear-energy committee. Bahrain signed memoranda of understanding with the United States and Russia in 2008, but neither of these resulted in a solid nuclear-cooperation agreement. In November 2009 the IAEA board approved a comprehensive safeguards agreement and Additional Protocol for Bahrain, which have yet to be signed and implemented. Saudi Arabia also signed a memorandum of understanding with the US in 2008 and has been offered assistance with nuclear energy by France and Russia. But in late 2009 Saudi officials denied press reports that the kingdom had decided to proceed with power reactors, making it clear that a nuclear programme could not proceed until major infrastructural problems had been overcome, and that such a decision was not anticipated in the short term.

Qatar has investigated developing nuclear power, and signed a memorandum of understanding with the French company EDF in January 2008 that referred to future discussion of nuclear-power cooperation. But by late 2008 it had assessed that economic and infrastructural factors precluded the imminent procurement of a reactor, especially as the small-scale reactors most suitable for its power grid were unavailable. Oman signed a memorandum of understanding on nuclear-energy cooperation with Russia in 2009 but has also decided against a national project, while not excluding future participation in a regional venture. Kuwait has approved legislation establishing a commission to explore nuclear energy, and signed a 20-year nuclear trade agreement with France in January 2010. Although this pact does not specify the building of a nuclear power plant at this stage, the head of the commission said that Kuwait ‘has the will, the resources and the need’ to build one. However, a national project would meet opposition in the Kuwaiti parliament, meaning that participation in a regional GCC joint project might be easier politically.

Although it may appear stagnant, the GCC regional project is not yet dead, and may eventually provide the route through which several Gulf States obtain nuclear power, given the difficulties inherent in national programmes. In July 2009 the first stage of the GCC power grid was completed, linking Kuwait, Saudi Arabia, Bahrain and Qatar; by 2011 the UAE and Oman should be included. Although an expensive investment, a common electricity grid could make a joint nuclear project much more feasible, as this would help countries to distribute the large amounts of electricity generated by nuclear power plants, which small grids are unable to accommodate. A joint project could also allow for the sharing of other burdens, such as waste storage.

UAE leads the field

The UAE’s progress has been the most impressive of the national initiatives in the Gulf so far. It has established a law on the peaceful use of nuclear energy and a Federal Authority of Nuclear Regulation. The government of Abu Dhabi set up the Emirates Nuclear Energy Corporation (ENEC) with an initial fund of $100 million in order to implement its nuclear plans. The UAE has signed bilateral nuclear-cooperation agreements with the US, Korea and France, and memoranda of understanding with the UK and Japan. It has also signed an Additional Protocol to its safeguards agreement with the IAEA, strengthening its non-proliferation credentials.

Until December 2009, there were three competitors for the UAE reactor contract: a consortium of French companies; a US–Japanese consortium of General Electric–Hitachi; and the ultimately victorious bid led by the Korea Electric Power Corporation (KEPCO), of which the Korean government owns a 51% controlling stake. Members of the Korean consortium include Samsung, Hyundai and Doosan Heavy Industries, with Westinghouse, the US-based subsidiary of Japan’s Toshiba, also involved. The consortium will be paid $20.4 billion to construct, commission and provide the initial fuel loads for four 1,400 megawatt APR-1400 third-generation pressurised water reactors. Although these will be the first Korean power plants to be exported, several models should be in operation within Korea by the time the first reactor is completed in the UAE. It is highly likely that the Koreans will be awarded another $20bn contract to operate the reactors over the next 60 years. The UAE’s reported aim is to generate up to 25% of its power from nuclear energy by 2020, and ENEC has announced that additional reactors are likely to be purchased in the future. It is not yet clear whether these will also be from Korea, and ENEC has stressed that cooperation with other foreign suppliers is still possible in areas outside the prime contract (such as long-term fuel supply). The first reactor is due to begin providing electricity in 2017, with all four units scheduled for completion by 2020.

The Korean consortium won the deal largely because it offered a lower price – Seoul keenly wanted to develop an export market for its nuclear industry. The UAE obtained other favourable conditions, including a high percentage of the contract being offered at a fixed price, with the Koreans absorbing the cost of delays. ENEC said it had been impressed by KEPCO’s willingness to transfer nuclear knowledge and expertise. Up to 2,300 staff will be required to operate the plants by 2020, of whom at least 60% should eventually be Emiratis. In the meantime, however, the UAE nuclear programme will depend heavily on foreign expertise.

No nuclear deterrent

Because GCC states are alarmed by Iran’s nuclear programme – fearing that they will suffer the consequences of either an attack on Iran or an accommodation of Iran’s nuclear aspirations – there have been concerns that they would seek their own nuclear deterrents, and that their nuclear-energy aspirations were a preliminary step towards this goal. However, there is no sign of this at present. They have opted instead to bolster their deterrent capabilities through conventional military acquisitions, including the purchase of American missile-defence systems. While there was speculation that Saudi Arabia had made a deal in the early part of the last decade that could see Pakistani nuclear weapons stationed on Saudi soil, no solid evidence for this has emerged.

The nuclear plans of GCC states do not pose a proliferation risk. The most sensitive ‘dual-use’ technologies associated with nuclear power are uranium enrichment and plutonium reprocessing, because these techniques can also be used to produce material for a nuclear weapon. However, they are in no way essential for a nation seeking a civilian power programme, and no GCC state has so far shown any desire to develop them; instead, they have gone out of their way to forgo them. As part of its agreement with the US, the UAE agreed not to enrich uranium or reprocess nuclear fuel on its soil. This was also stated in its nuclear-energy law. Bahrain and Saudi Arabia similarly indicated their willingness to forgo such technologies in their memoranda of understanding with the US.

No successful nuclear-weapons programme has ever exploited commercial power reactors. Thus, while the UAE will develop an expanded scientific base and expertise in nuclear affairs, the nuclear activities of the GCC states cannot be seen as a direct strategic response to Iran’s nuclear programme.

The transparency of the UAE’s nuclear programme stands in direct contrast to that of Iran, whose pursuit of enrichment and reprocessing technologies defies economic logic. Iran could acquire enriched fuel abroad for a civil nuclear programme at far less expense than through its domestic enrichment facilities, with supply guaranteed by the IAEA. Yet it has defied diplomatic pressure and international sanctions over its pursuit of what it claims are purely peaceful technologies. As Iran cannot today produce fuel rods for either its Tehran research reactor or Bushehr power plant, its stockpile of low-enriched uranium has no current civilian use.

Source: IISS– February 2010