Russia has been notoriously brazen in using state-owned companies as
instruments of national power. President Vladimir Putin’s natural-gas
wars with Belarus and Ukraine made headlines and sometimes left
substantial parts of Europe in the cold. But Moscow’s exploits in other
energy-related areas have been less noticed.
Recent revelations about the concerted Russian effort to buy up
uranium resources across the globe may change that. For Moscow’s
state-owned nuclear-energy company, Rosatom, has made successful inroads
into markets around the world.
It
is Rosatom — not France’s Areva or the United States’ Westinghouse —
that has 29 nuclear reactors in various stages of planning and
construction in more than a dozen countries, the largest number of
nuclear reactors being built internationally. In contrast, Areva, though largely owned by the French state, has not sold one reactor since 2007.
Much of Rosatom’s success can be ascribed to the strong support
provided by the Russian government. Moscow recognized roughly 10 to 15
years ago that Rosatom’s work enables Russia to add another
energy-related means of extending its long-term political influence
throughout the world. Unlike oil or gas projects, Russia’s nuclear
developments need not be in neighboring countries or even in its region —
a fact that broadens the Kremlin’s investment options.
Globe-trotting deals
The countries that Russia and its state-owned nuclear company have signed agreements with in the past year are diverse indeed.
The
most recent deal is with Jordan, a land-locked, energy-poor Middle
Eastern nation, which just agreed to have Rosatom complete two nuclear
reactors by 2022.
Less than a month before the Jordanian agreement, Putin finalized a
deal with Hungary for Rosatom to build and install two reactors to the
already existing
Soviet-built plant at Paks in south-central Hungary. The deal has come under intense scrutiny from the European Union over the source of the nuclear fuel, but looks set to go ahead.
Only days before the Hungary deal,
Putin used his visit to Egypt to conclude a preliminary agreement with Egyptian President Abdel Fattah el-Sisi. Moscow is set to build Egypt’s first nuclear power plant, in the northern city of Alexandria.
In November, Russia signed a contract with Iran to build two more reactors at the Bushehr site,
where Russia has already built one reactor that is now operational. The
deal left open the possibility of Rosatom building an additional four
reactors at a site yet to be determined.
India has long had a
relationship with Rosatom, as New Delhi has worked desperately over the
past years to increase its electricity production capacity. A
Russian-built reactor came online at the Kudankulam Nuclear Power Plant
in 2013, a project conceived under the Soviet regime.
Another reactor is to begin operation at Kudankulam
later this year. Two more nuclear reactors are planned for construction
at the same site. When Putin visited India in December 2014, the two
governments confirmed that their cooperation in the nuclear sector would
continue, with at least
10 more reactors planned in the coming years.
In northern Finland, Rosatom has started preliminary work
on a site where a new nuclear plant is scheduled to come online in
2024. Turkey’s first nuclear plant, also built by Rosatom, is set to
break ground this spring.
Rosatom is also looking toward Latin America. While Putin was touring South America in July 2014, the Russian leader and
Argentine
President Cristina Kirchner signed nuclear energy cooperation
agreements and in April 2015 agreed to have Rosatom build a reactor at
the Atucha-3 plant outside Buenos Aires. In February 2015, Rosatom
concluded an agreement with Brazil’s National Nuclear Energy Commission
to provide supplies of Molybdenium-99, an element used in many
nonmilitary nuclear applications.
Crucial Moscow support
So why, tender after tender, are Russia and Rosatom having more success than Western nuclear firms? There are four key reasons:
Favorable financing. Though Russia may be hurting for cash
because of international sanctions, Moscow is still willing to undertake
projects that promise long-term gains. The returns are expected to be
more than financial. The Putin regime sees these projects as part of its
national strategy. It is willing to heavily subsidize Rosatom and also
provide loans to countries too poor to afford its products. These
subsidies mean that Rosatom can sell nuclear reactors at a far lower
price than its competitors.
Rosatom’s Build, Own and Operate scheme.
Many developing countries are keen to develop nuclear power as a source
of comparatively cheap energy but are unable to raise the funds to
build reactors. In addition, they have neither the desire nor the
expertise to operate the reactors once they are built. The build, own
and operate deals remove these obstacles and put the responsibility on
the Russians. But they also hold the countries hostage to Russian
desires and demands. Under these controversial deals, Russia and Rosatom
provide nuclear fuel, processing when it has been depleted, education
for workers and technicians, maintenance and installation of any needed
upgrades. Turkey’s new plant at Akkuyu is the first set to be built
under these conditions.
Rosatom’s relative freedom from governmental oversight. In
comparison to the world’s other large companies engaged in nuclear
construction, Areva of France, Westinghouse of the United States and
TEPCO of Japan, Rosatom is not dissuaded from building in certain
countries. In contrast, U.S. companies are prevented from building
reactors in all but the 46 countries with which the United States has
already concluded so-called 123 Agreements on the sharing of nuclear
expertise. Countries such as Vietnam and Bangladesh, where Rosatom is
building reactors, are not on that list, effectively keeping U.S.
companies from even competing for those deals.
Deal sweeteners. In certain circumstances, a nuclear deal with
Russia is only part of a larger package. Vietnam’s collaboration with
Russia, for example, has also allowed it to purchase submarines and
other military equipment from Moscow.
West versus Rosatom
For all these reasons, competing against Russia and Rosatom has
become increasingly difficult for Western corporations, which are
steadily falling behind.
France’s Areva, for example, is in serious financial straits and must
address recent revelations of technological problems with one of its
reactor designs. Westinghouse is hamstrung by Americans’ reluctance to
build new reactors. Foreign buyers often want to see how the reactor
models they decide to build are running in a company’s base, and
Westinghouse has nothing to show them. Japanese companies have been
adversely affected by the 2011 meltdowns at the Fukushima power plant.
Meanwhile, Rosatom, backed by the full power of the Putin government,
is expanding its international reach and, in doing so, widening the
scope of Russian power. As it has begun to do in other arenas — media
and finance, for example — Europe and the United States must identify
and counter Russian influence in the energy sphere.
Sooner or later, Washington’s and Brussels’ instinct to ignore these
challenges will not only seriously undermine Western businesses, it will
also cede to Russia the international influence it so ardently seeks to
purchase.