Selling nukes to the Third world

Like deals between South Korea and Abu Dhabi, Russia and Iran or France and Pakistan, the US-India arrangement targets business opportunities of epic dimensions. On the basis of the 2008 bilateral agreement, U.S. companies—most importantly Toshiba-Westinghouse and GE-Hitachi—are planning to build nuclear power plants in India. A linked American-Indian trade group claims that this business may ultimately be worth US $130 billion by 2030. At the basis of the long-running 30-year standoff between the USA and India was the question of uranium enrichment. During the negotiation of the 2008 agreement, Washington initially resisted giving India long-term consent to reprocess spent fuel subject to the agreement, because a 1982 U.S. National Security Decision Memorandum had limited such consent to the European Union and Japan. Business and plain sense however won the day: any questions of nuclear proliferation are in fact relics of a very distant past: India tested its first atom bomb in 1974 !

Already marshalled into this private-public ‘Marshall Plan’ for selling US nuclear power and services to India are the US Ex-Im (export-import) Bank, leading Wall Street private banks, and major downstream infrastructure companies such as Bechtel, all primed and ready to go. Under special arrangements for nuclear financing, US state agencies, especially the Ex-Im Bank can in some cases finance up to 85% of the initial sale for projects with a 15-year lifetime after an initial open-ended time period during which construction and hand-over to Indian buyers took place. Unlike smaller and specialized aid agencies like US AID, the Ex-Im Bank is an ideal vehicle for closely working with the big creative players of private finance, who shy well away from the atom for many reasons.

The next round in financing the new Nuclear Renaissance promises to be a lot less easy. Lined up on today’s buy side are a lengthening list of low-income and mid-income new nuclear countries wanting the atom. They include: Nigeria, Ghana, Sudan, Algeria, Egypt, Jordan, Kazakhstan, Indonesia, the Philippines, Bangladesh and others. Even “entry level” nuclear projects tend to cost US $ 2 – 5 billion, take years to construct and will have to be operated for a minimum of 30 – 40 years to make a profit and pay back initial costs. To be sure, the now standardized “operating life extensions” of 10 years here or there, may help avoid the prohibitive costs of decommissioning.

In a likely return to the dawn of civil nuclear power, the UN’s nuclear agency the IAEA could be extended to cover nuclear financing. When the IAEA was announced by US president Eisenhower in a Dec 1953 speech to the UN general assembly, his original proposal included power plant financing, building and fuel supply. As we know, the IAEA in fact was only given the “watchdog” anti-proliferation role that it still has. The World Bank and its regional bank affiliates were also excluded from financing the atom – and although today’s World Bank talk about nuclear power is positive, the financing is not there.

Modelled on the Global Renewable Energy and Energy Efficiency Fund, a US $ 100 billion fund that was definitely not approved at the December 2009 Copenhagen climate summit, the IAEA is working towards a “sister fund” known as the Global Nuclear Energy Fund for sustainable energy. In particular, this fund would aim to marshal and mobilize at least as much financing capability as the green energy fund: US $ 100 billion, but present and current promises, only from Europe, are of US $ 100 million. The nuclear fund would focus “small and innovative” nuclear power projects in low income countries, according to the IAEA.

Funky Town Finance Meets The Nuclear Renaissance :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

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