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U.K. offers an opportunity to heal U.S.-Korea nuclear rift

  • Date 2020.08.03
  • Hit 6,526


 

 

For about the last 18 months the U.S. and South Korea have been engaged in a highly unproductive freeze on their civil nuclear cooperation. But the recent threat by China to pull out of a nuclear deal in the U.K. because Prime Minister, Boris Johnson, is reconsidering Huawei’s 5G communications network, presents an opportunity to heal the split and create a powerful partnership that can counterbalance Russia’s and China’s nuclear export ambitions.

This fight between close allies has its origins in the competition over the reactor tender put forward by Saudi Arabia. Both nations, along with France, Russia, and China, are in the running. The essence of the battle is over the U.S. content in the ROK reactor, the APR-1400+, which is based on a Westinghouse design. Korean executives contend this design is now completely indigenized with their technical content. Westinghouse and the U.S. government disagree. What began as a technical dispute has now hardened into a political standoff.

The truth is that the Saudi’s are not going to move forward with their reactor tender until after the November U.S. election and even then, with oil prices in a COVID-fueled decline, they may decide to delay any decision much further. So, the root of the conflict has become a competition over a currently nonexistent business opportunity.

The reality is that the U.S. and Korea need one another as partners in the new civil nuclear landscape. While they are fighting, Russia has locked up new reactor deals in Egypt, Turkey, Hungary, and Belarus. And China is angling to assert its dominance in the future nuclear market.

The U.K.-China nuclear deal is an important opportunity for China General Nuclear (CGN) to build and operate its indigenous reactor, the Hualong One, in an OECD nation with a strong, independent nuclear regulatory authority.  Success would strengthen China’s ability to compete for large reactor sales in other nations. Both Russia and China could then effectively box out South Korea and the U.S. by wielding the state-financing weapon that underwrites their attractive nuclear package deals.

The U.S. has been warning the U.K. for several years about the political and security dangers of a long-term lock-up with China on nuclear power and other sensitive technologies. Recently, U.S. officials ratcheted their concern about China having control over more than a quarter of Britain’s electric supply, a message that has resonated with some U.K. officials.

In a remarkable statement this week, U.S. Secretary of State, Michael Pompeo, pledged that the U.S. is prepared to assist Britain in building nuclear power plants in response to China’s “coercive bullying tactics.” That was followed by a declaration from the U.S. International Development Finance Corporation (DFC) that it plans to allow financing for nuclear projects, a reversal of a ban applied by its predecessor organization, the Overseas Private Investment Corporation (OPIC). DFC explained its shift by citing the importance of zero emission energy, U.S. nonproliferation standards, and the need to offer “an alternative to the financing of authoritarian regimes.”

But can the U.S. build these reactors alone? As the new report of the U.S. Nuclear Fuels Working Group (NFWG) has stated, “America has lost its competitive global position as the world leader in nuclear energy.” Proposals for nuclear reactor co-financing are being surfaced.

The U.S. has been successful in helping push China out of a nuclear deal with Romania, and signed a nuclear cooperation Memorandum of Understanding (MOU) with that nation last Fall. Discussions on the potential construction of new U.S. reactors have been incrementally progressing, as they have been with another MOU partner, Poland. But this is occurring against the background of the struggle to complete construction of two reactors at Plant Vogtle in the state of Georgia, the first new builds in the U.S. in decades.

It is not clear that the U.S. has the muscle memory, workforce depth, and hot supply chains that would allow it to build several new reactors, likely the Westinghouse AP-1000, at home and abroad simultaneously without a strategic partnership. The most suitable partner is South Korea which has capabilities that complement U.S. strengths in the nuclear power field.

The Koreans are successfully constructing, on budget and roughly on schedule, four reactors in the United Arab Emirates (UAE). The process has not been flawless and there have been delays in certifying the first reactor for operation. But Korean industry has proven that it can successfully perform reactor construction, which has been a challenge for U.S. firms, and its supply chains are operating. The problem for Korea is that since the UAE deal a decade ago, it has not inked another major export agreement. Some of its major companies are suffering financially as a result.

The U.S. government has made the decision to reenter the international nuclear market and it is taking steps to strengthen its positioning. But decades of weak sales have impacted its readiness. The Korean government has made clear that it has a decreasing interest in domestic nuclear energy but supports its export. The strengths of each nation complement one another.

It makes little sense to sustain a conflict over a winner-take-all strategy for a shrinking number of large reactors sales.  What makes more sense is to put the U.S.-Korea tension over the delayed Saudi bid on the back burner and look at the U.K. as a new opportunity for strategic partnership. That would address a number of the economic, clean energy, and geopolitical challenges that both nations face as well as giving a boost to global security.

Ken Luongo, Partnership for Global Security 


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