Two weeks ago, three companies – two American, one Japanese – linked to the nuclear energy industry announced their intention to compete for contracts to build and operate nuclear power plants in Saudi Arabia and other Gulf states. This is despite the fact that the Gulf does not yet have the infrastructure, or the physical and human capabilities, to enter the nuclear club. Yet it is clear that there is a genuine movement in some Gulf States towards obtaining nuclear technology. The reasons put forward for this relate to diversifying sources of energy, which is true from an economic angle, particularly since the domestic rates of consumption for crude oil and gas have reached record figures over the past ten years.
However, the nuclear issue in the Gulf – as highlighted by numerous observers including Anthony Cordesman of the Center for Strategic and International Studies – cannot be discussed without taking into consideration the potential threat from the Iranian nuclear project. This raises important questions, perhaps the most important being; how serious are these plans? Are they driven by political or economic necessities?
Discussion of nuclear technology amongst politicians in our region, and even amongst European and American politicians, seems attractive as it reflects extremely complex and important affairs. But the truth is that words are easier than actions, and investing in nuclear energy is not an easy matter for the leading states in the region as their current usage of radioactive materials is limited to medical care. This does not mean that states in the region should lower their aspirations towards developing their own nuclear industry, but that there is a need to recognize the difficulties, and the technical and political complications, that are inherent in the nuclear energy industry today, as highlighted by Mark Hibbs, analyst at the Carnegie Endowment for International Peace.
Experts in alternative energy stress that the world is at a stage where crude oil and gas are no longer able to cope with global energy demands, and the steady rise in the price of oil is accompanied by an even higher rise in the cost of its production and export. This is slowing down the industry’s growth because the quick profits made by some exporting countries are barely enough to cover their own financial deficits, as is the case with Iran, for example.
There is, therefore, a desire for diversification of energy sources in order to avoid the risk of relying upon one source. Here one may think that it is possible to utilize alternative energy sources, such as nuclear power, solar power, bio-fuels, or wind power, however, according to Robert Bryce (Power Hungry: The Myths of “Green” Energy and the Real Fuels of the Future, 2010), these energy sources are economically unviable, and on their own do not provide a practical alternative to fossil fuels.
Advocates of environmental conservation emphasize the importance of natural alternatives, but it is scientifically proven that nuclear fuel produces energy that is millions of times more effective than the energy produced by environmental sources such as wind energy. The problem with nuclear energy is that taking into account the real costs of nuclear production, nuclear fuel is more expensive in comparison to fossil fuels. Nuclear energy also takes a long time to produce, with the construction of nuclear infrastructure requiring no less than two decades. Nuclear waste is also much more dangerous than gas emissions, and finally, and perhaps most importantly of all, nuclear energy is more dangerous in terms of security, because this opens the door for the development of lethal nuclear weapons.
What about the Gulf’s nuclear options?
Currently, Saudi Arabia and the UAE have begun to establish institutions concerned with nuclear energy for domestic consumption. The UAE signed a 20 million dollar contract with South Korean companies to build 4 nuclear reactors, however these will not be completed until 2020, when it is estimated that domestic electricity consumption in the country may be three times as much as it is today. In Saudi Arabia, the domestic rate of consumption of crude oil has reached a quarter of the country’s daily production, and this, for example, only accounts for 11 percent of electricity.
The Saudi government subsidizes the prices of fuel, electricity and water, which have prompted domestic energy consumption to reach record levels to the point that this is beginning to affect the balance of Saudi Arabia’s oil wealth. Today Saudi Arabia’s spare capacity is nearly 4.4 million barrels of oil a day; however this huge number is decreasing at the same time that domestic consumption rates are increasing. According to warnings from Aramco’s CEO, Khalid al-Falih, by 2028 Saudi Arabia will need to utilize 3 million barrels per day of its spare capacity for domestic use.
With reference to this, King Abdullah announced during his meeting with Saudi students in Washington last month, that he had ordered a halt to oil exploration in order to preserve the remaining oil resources for future generations. Last April, Saudi Arabia also announced the establishment of the King Abdullah City for Nuclear and Renewable Energy, which is expected to be responsible for the policy of diversifying energy sources and finding solutions to problems in Saudi Arabia’s electricity energy industry and water desalinization. Perhaps Saudi Arabia and the Emirates do have the financial capacity to award contracts for nuclear energy projects today, but what about the enrichment of nuclear fuel?
Nuclear energy experts confirm that creating a nuclear power plant to produce electricity is one thing, whilst processing the nuclear fuel cycle is something else entirely. In other words, it is necessary to possess large quantities of uranium, as well as the technological ability to enrich this, in order for it to be financially viable to invest in nuclear energy. Otherwise, the state becomes reliant upon imported energy in the form of industrial quantities of enriched nuclear fuel.
There are currently significant obstacles to nuclear enrichment. In 2005, the International Atomic Energy Agency passed an amendment to the 1974 ‘Small Quantities Protocol’, which stated that inspections were not required for states that possessed ‘small quantities’ of nuclear fuel for medical or research purposes. However, the new amendment requires inspection, and as a result of this a number of countries refused to sign. In addition to this, the US Atomic Energy Act prohibits Washington providing any state that does not sign the Section 123 Agreement with nuclear technology assistance. The UAE signed the 123 Agreement with the US in order to benefit from US support; however it conditioned that it would have the right to review this deal in the event of the US signing a more favorable nuclear agreement with any of its neighboring states. Furthermore, the G8 agreed in December last year not to provide any enrichment technology to any Middle Eastern state for security reasons.
In short, Gulf States will face technical and political difficulties before they can realize the economic feasibility in investing in the nuclear energy sector, and they should be careful in negotiating their entitlements with regards to nuclear technology. Iran has wasted seven years of international institutions’ time in endless negotiations; all the while it was working to increase its rate of uranium enrichment. This doesn’t mean that Iran should serve as an example, but the right to peaceful nuclear energy is one that should be negotiated, and endorsed for political and material gains, rather than something that is recognized as being free and voluntary; because nothing is free in the world of politics.