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As Saudis Go Nuclear, US Seeks An Edge Over

Great-Power Rivals
World (c) 2018, BloombergEthan Bronner, Jennifer A. Dlouhy, Bloomberg
Some analysts question whether that's worth the risks that will come with the expansion of
nuclear technology through the world's most volatile region.

Updated : February 20, 2018 12:51 IST


Reactor-building could become another arena of superpower rivalry (representational)





At a meeting of the International Atomic Energy Agency in Vienna last


September, word spread that Saudi Arabia had identified a handful of
countries that could build two nuclear reactors in the kingdom. The U.S.
wasn't among them -- until Energy Secretary Rick Perry buttonholed the Saudi
delegates and told them America wanted in.

Within weeks, a mostly U.S. consortium headed by Westinghouse Electric Co.


had joined the race. Its executives have visited the kingdom. So has Perry,
whose intervention was described by two people who attended the meeting. In
the next few months, the Saudis are expected to narrow the field to two or
three bidders.

A glance at the current list of contenders shows the geopolitical perils that
accompany this business opportunity. American allies South Korea and
France are on it -- and so are China and Russia, recently designated by the
Pentagon as the main U.S. threats. Reactor-building could become another
arena of superpower rivalry.

'What Are We Creating?'

For the Saudis, seeking the technical expertise to move beyond oil and
compete with arch-rival Iran, the U.S. is undoubtedly the main strategic
partner. But unlike Washington, the kingdom also has cordial ties with the
other two giants -- and reasons to keep them sweet. China is its best
customer, and Russia is increasingly its partner in policing world oil output.

Both countries are improving ties with the kingdom and "sharpening their
strategies," according to Marc-Antoine Eyl-Mazzega, director of the energy
center at the Institut Francais des Relations Internationales in Paris. The
effect is to give the Saudis more options, he said: "Riyadh will try to levy that
to reinforce its regional positions."

Meanwhile President Donald Trump's administration sees a chance to revive


a moribund U.S. nuclear industry. Some analysts question whether that's
worth the risks that will come with the expansion of nuclear technology
through the world's most volatile region.

"You've got Israel with nuclear weapons," says Victor Gilinsky, a former
commissioner of the Nuclear Regulatory Commission. "Turkey isn't far behind.
Iran has a nuclear program. Now they're going to unleash Saudi Arabia? What
are we creating here?"

The expansion is happening anyway. The United Arab Emirates has its first
reactor going online this year, with three more planned; Egypt has signed a
construction deal with Russia, as have Jordan and Turkey; Saudi Arabia's
planned two are expected to grow to as many as 16.

'Gold Standard'

Nuclear energy is a far cry from nuclear weapons but there is overlap. Spent
fuel, which can be reprocessed into plutonium for bombs, lasts for thousands
of years; enriched uranium needed for the process holds special allure to
terrorist groups. To prevent global proliferation, the U.S. has strict standards
for what technology can be sold abroad, and what the buyers can do with it.
They must sign a so-called "123 agreement," named after a section of the
U.S. Atomic Energy Act.

The one signed a decade ago by the U.A.E., whose Korean-built reactor will
use some U.S. parts, is stricter than any that went before and has become
known as the "gold standard." The Gulf nation promised there'd be no
enrichment or reprocessing of uranium in-country.

But Saudi Arabia has long rejected the gold standard. It has its own uranium
underground and wants to be self-sufficient in nuclear fuel preparation over
the long term. Moreover, the Saudis point out that their enemy, Iran, is
permitted under the 2015 international accord signed by the U.S. to enrich
uranium for peaceful purposes. "We want to have the same rights as other
countries," Saudi Foreign Minister Adel al-Jubeir told CNBC on Sunday.
'Couldn't Be Happier'

The U.S. is reluctantly preparing to offer the Saudis a deal that falls short of
the gold standard, though officials say it would still be stricter than the terms
any other potential builder would impose. Diplomats and intelligence officials
are due in Riyadh for negotiations soon. It'll be a balancing act: the U.S. will
be seeking the tightest restrictions it can get, while knowing that the Saudis
have other options.

The U.S. nuclear industry, in the dumps for years, is thrilled. "I could not be
happier with the support from this administration," said Daniel Lipman, vice
president of the Nuclear Energy Institute and a former Westinghouse
executive, who recently returned from heading a delegation to Saudi Arabia.
"There is a whole-of-government approach here. I haven't seen anything like
this before."

Westinghouse is in bankruptcy and in the process of being sold by its


Japanese owners to Canada's Brookfield Business Partners. The Saudi deal,
in which Westinghouse is playing the role of lead negotiator, could be a
lifesaver. Industry sources said the U.S.-backed group also includes Fluor
Corp., which will do the engineering, procurement and construction, and
Exelon Corp., which will sell its operating model and train locals to run the
plant. Exelon and Fluor declined to comment.

'Catastrophic'

Any agreement they reach must be approved by Congress, which will have 90
days to weigh in. The process may not go smoothly. Any dilution of the gold
standard would be "catastrophic," Senator Ed Markey, a Massachusetts
Democrat on the Foreign Relations Committee, said in an interview last week.

A wild card is Israel. Many members of Congress place special store by what
the Israelis say about regional security. It has steadfastly opposed the
introduction of nuclear energy into the Islamic world. But lately, Israel has
cultivated ties with the Saudis as part of a Washington-sponsored alliance
against Iran.

So far, the Israeli government has been notably silent. Experts say it has other
priorities (including a possible war to its north and corruption allegations
against its prime minister), but will likely get involved behind the scenes as a
U.S.-Saudi agreement shapes up.

"We have an interest that the United States and not China or Russia enter the
Saudi nuclear market," said Yoel Guzansky, formerly an Israeli official who
focused on non-proliferation, and now at the Institute for National Security
Studies in Tel Aviv. "If Washington is inside, it will be better placed to monitor
the program and to have leverage over the Saudis for a rainy day."

'Slow-Motion Proliferation'

"But of course you are opening up a slow-motion proliferation," he added.


"And Israel will have to deal with the consequences."

Still, a Saudi-American nuclear deal may tie in with efforts by Jared Kushner,
President Donald Trump's son-in-law, to negotiate an Israeli-Palestinian
peace deal. His plan reportedly relies on a large Saudi contribution, so
generous nuclear terms for Riyadh could help.

Kushner's a strong supporter of the Westinghouse bid, a U.S. official said.

Whoever wins the Saudi contract will be entrenched in the kingdom for the
long term -- one reason why nuclear power is so politically important.

"From the time you shake hands, you have very close to a century-long
relationship," Lipman said. "From design and construction to operation,
servicing, upgrading and then eventually decommissioning and waste
management, you are working together. That's why so much is at stake."

(This story has not been edited by NDTV staff and is auto-generated from a
syndicated feed.)

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