A nation swimming in fossil fuels and sunshine puts a priority on a nuclear energy

One of the last foreign policy acts of the Bush Administration was to sign a nuclear cooperation agreement with the United Arab Emirates (UAE), a nation state about the size of Maine with a population of about 5 million.  The Financial Times, London reported that it puts the UAE on the path to become the first Arab state to develop nuclear power.

Last January Condoleezza Rice, the outgoing secretary of state, and Sheikh Abdullah Bin Zayed Al-Nahyan, the UAE foreign minister, signed a bilateral agreement for peaceful nuclear co-operation.

“Under the terms of this agreement, the UAE will gain access to significant capabilities and experience in the peaceful use of nuclear energy,” Sheikh Abdullah said in a statement. “This will allow the UAE to develop its civilian nuclear program to the highest standards of safety, security and non-proliferation.”

Sec. Rice said the key to the deal is the UAE’s willingness to import, rather than produce, fuel that would be used in its proposed reactors. The UAE would also return all spent nuclear fuel rather than develop the technical capabilities to reprocess it.

Not everyone agrees with this assessment. “In the Middle East, a nuclear energy race could be as perilous as a nuclear arms race,” Rep. Ed Markey, (D-MA), told the FT.

”I hope that President Obama will seize the opportunity to put the brakes on the Bush administration’s policy of placing nuclear commerce above common sense.”

Does this deal make sense?

The first question that comes to mind is why? The country has abundant oil and natural gas reserves and the infrastructure to exploit them. If it wants renewable energy, there is always the sunshine that is as bright and continuous as one could expect in a desert region at 24N;54E.  The next question is whether introducing nuclear reactor technology to another Middle Eastern country is a completely hare-brained idea, the last gasp of an outgoing administration fixated on countering Iran's nuclear drive.

In fact the deal is not hare-brained and, unlike Iran, has no Frankenstein motives to build nuclear bombs behind it.  The drive for nuclear energy in the UAE is based on the fact electricity demand has soared due to energy-intensive water desalination and air-conditioning needed for much of the year.  Some smart ideas about how to get the nuclear deal done have come out of the UAE with some help from French and American nuclear firms. 

So far the UAE has signed deals for acquiring nuclear technology and cooperation with firms in both countries.  The key idea is that the UAE will import its nuclear fuel and retrograde the spent fuel back to the supplier forgoing both uranium enrichment capabilities and reprocessing that could provide weapons grade materials. This is the heart of the UAE's plan to satisfy critics who raise concerns about nonproliferation issues.  A parallel mechanism on transparency is an agreement for snap and regular inspections from the IAEA.

UAE needs nuclear powered growth

As it turns out, despite all that oil, natural gas, and sunshine, the UAE needs nuclear energy.  The country's rapid growth has created demand for water that is 100 times greater than its natural fresh water supply.  The UAE desalinates water using natural gas plants, but a look into the future shows this isn't a sustainable path. 

According to the CIA World Fact Book, natural gas production in 2006 in the UAE was estimated at 48.79 billion cubic feet and domestic consumption in the UAE was estimated at 88% of that amount or 43.11 billion cubic feet.  A mere 6.8 billion cubic feet is available for export or for domestic growth.  The country actually imported an additional 1.3 billion cubic feet of natural gas the same year.  At the current rate of production and growth, the country’s known reserves of natural gas will be gone in about 60 years.

Demand for electricity in the UAE is currently about 15 GWe, but is projected to nearly triple in just 12 years.  Natural gas is the fuel of choice for peak power and half of base load demand in the UAE.  Oil provides the rest.  No coal is burned in the UAE for electricity. 

The heart of the UAE’s base load energy plan is to swap out the natural gas plants for nuclear energy to power water desalinization and electricity for household and industrial use.  Two reactors are planned initially to be located on the Persian Gulf coast and a third on the Indian ocean side with all three operational by 2020.  This is an extremely ambitious plan and will require a lot of international help.

If the plan goes through the UAE is also going to need plenty of nuclear fuel.  According to a January 2009 report by World Nuclear News, three French companies are in the process of proposing to build two Areva 1,600 MW EPR reactors at Sharjah on the Persian Gulf coastline.  The money side of the deal involves a 25% equity stake by Areva, Suez, and Total. They would build the reactors and supply the nuclear fuel to run them. 

American firms on the project

The UAE is also getting help from American companies including Thorium Power (OTC:THPW) and CH2MHill.  A five-year deal with Thorium Power is helping the UAE develop its own version of a nuclear regulatory agency.  CH2MHill is helping develop the Emirates Nuclear Energy Corp which will select prime contractors and provide project management for construction once the planned reactors break ground.

Relying on advice from Thorium Power, the UAE's Federal Authority for Nuclear Regulation (FANR) has hired former top NRC official William Travers to head the agency (WSJ 12/12/08).  Travers is the former head of operations for the NRC.  His decision to go to work for the UAE prompted a comment from current NRC Chairman Dale Klein. He told industry trade newsletter "Inside NRC" on Feb 16 Travers had better not steal too many people from the agency.  Another former high-level NRC official, Farouk Eltawila, is now the chief scientist at FANR. 

Klein also said that he expects that within 10 years the UAE will be staffing the FANR almost entirely with UAE nationals.  In the meantime, if you have a taste for travel, and expertise in nuclear energy regulation, the FANR is paying salaries as high as $40,000/month or half a million a year for top positions.  Airfare is included.

Yet another U.S. company, Goodharbor, headed by former US national security official Richard A. Clarke, is providing security and management consulting services to the nuclear energy project.

Nonproliferation issues

When then secretary of state, Condoleezza Rice signed a nuclear-energy accord with the UAE, she called the measure "a powerful and timely model for the world."  Proponents of the deal hope President Barack Obama will agree.

According to a Feb 5 report on the Bloomberg wire service, Jon Wolfsthal, a former U.S. government monitor at North Korean and Russian nuclear facilities who will be advising Vice President Joseph Biden Jr. on proliferation, said.

"The UAE is doing it absolutely the right way. We should not only support the U.A.E. deal, but it could be used as a model for other countries to pursue nuclear power in a way that does not raise fears of clandestine weapons programs.”

Andrew Grotto, a security analyst at the Center for American Progress in Washington, a public-policy group with close ties to the Obama administration, says that rejecting the deal would be a bad idea. 

He points out the UAE can buy nuclear technology from anyone it wants with or without US agreement.  Blocking a US agreement that includes safeguards against proliferation "would undermine our efforts to set a high bar for transparency," he said.

Republicans object to the deal

There are some serious objections to the agreement. Rep Ileana Ros-Lehtinen, (R-FL), Ranking Republican on the House Foreign Affairs Committee, has questioned security at the UAE's port in Dubai. She says the UAE was a cross roads for nuclear smuggling by rogue Pakistani scientist A.Q. Kahn though UAE officials are quick to respond that the country was unaware its ports were used for that purpose. 

However, Rep. Ros-Lehtinen is determined to block the deal if and when it is submitted to Congress.  In a press release Jan 16, she drew a line in the sand.

“Serious concerns remain regarding the UAE’s efforts to combat money laundering and terrorist financing, as well as the effectiveness of their export control system.  We should not enter into nuclear cooperation with any country before we are certain that it will not undermine US security interests.”  

Joseph Cirincione, president of the Ploughshares Fund, a nonproliferation foundation in San Francisco, appears to agree. He told Bloomberg’s reporter he worries that the UAE's nuclear plants can be "starter kits for nuclear weapons" and that some nations may have “ulterior motives” in seeking nuclear energy.

The UAE's ambassador to the IAEA in Vienna, Hamad al-Kaabi, said that in response his nation's decision to go ahead with nuclear energy has nothing to do with Iran.

If the UAE wanted weapons, it would not have become the first nation "to forgo enrichment and reprocessing," he said. Since 2007, the UAE has enhanced export controls through new laws, prosecutions, interdictions and the banning of companies involved in proliferation, said Kaabi, who trained in the US in nuclear engineering at Purdue University.

Obama administration decision unlikely soon

So far the Obama administration, which has its hands full with a global financial crisis, has not said anything pro-or-con about the deal.  The near-term foreign policy focus in the region has been an effort to open diplomatic dialog with Iran.  That process is off to a rocky start with Iran rejecting the US overture.

Key officials have not yet been appointed at the State Department nor at the Department of Energy.  However, one signal of who may have a hand in the decision comes with the news that Rep. Ellen Tauscher (D-CA), chairman of the House Armed Services strategic forces subcommittee, said she has accepted an offer to serve as Undersecretary of State for Arms Control and International Security.  This is a high level post and it requires Senate confirmation.

A moderate Democrat from California, Tauscher, 57, has served in Congress since 1997.  Her district, just east of San Francisco and Oakland, includes Lawrence Livermore National Laboratory (LLNL) which last year experienced wrenching layoffs of hundreds of senior nuclear scientists.

Tauscher is not optimistic about her chances at confirmation. She told wire services in the bay area the confirmation process "is fraught with uncertainty and can take weeks, if not months."

Tauscher was a high-profile critic of the Bush administration’s drive to open the doors of global nuclear commerce for India.  She voted against the ‘123 agreement' in the House last year.  It passed in the House 298-117 and in the Senate 86-13 and US nuclear firms are now pursuing deals with India. 

While the composition of Congress has changed since the November election, the overwhelming approval last Fall of US and India nuclear trade will be a significant factor in how the Obama administration addresses the UAE deal.  Unlike India, the UAE signed the Nuclear Nonproliferation Treaty (1996) and participates in a string of national and homeland security joint programs with the US.  These factors will work in its favor.

Even so a response from President Obama on the UAE deal may have to wait for a while.  Meanwhile, the door appears to be open to opportunity there for anyone interested in nuclear energy in the region. Shortly after the UAE signed its agreement with the US, it signed a similar, three-year agreement for nuclear cooperation with Japan.

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