Ukraine tells Albright it will not sell turbines for nuclear project in Iran (03/15/98)

Ukraine tells Albright it will not sell turbines for nuclear project in Iran

by Roman Woronowycz
Kyiv Press Bureau

KYIV - A week after signing a long-term economic trade agreement with Russia, Ukraine continued to successfully play its multi-vectored foreign policy game by heeding U.S. demands that it not sell Russia turbines for a nuclear reactor project in Iran.

"Ukraine has decided to refrain from nuclear cooperation with Iran, including the supply of turbines to the Bushehr Project," said Foreign Minister Hennadii Udovenko on March 6.

Mr. Udovenko made the statement after he and U.S. Secretary of State Madeleine K. Albright had signed a series of agreements on nuclear and satellite technology cooperation. Ms. Albright was in Kyiv for a seven-hour visit on the first leg of a tour of European capitals.

Last year Kyiv had said it would sell Moscow a $45 million turbine needed for the completion of the Bushehr nuclear reactor project in Iran, which Russia has contracted to finish at a cost of $800 million.

Then Ukraine became entangled in a controversy between Russia, on which it depends for most of its nuclear fuel as well as gas and oil, and the U.S., whose Senate is currently considering whether Ukraine should receive the second half of a $225 million foreign aid package that was appropriated for this year.

The U.S. does not want Russia to finish the Bushehr nuclear reactor, which has been in development since the late 1970s, because it believes Iran will use the plant to develop nuclear weapons. Meanwhile, Russia has refused to cancel the deal, stating that it is not a dangerous project because Iran is a member of the International Atomic Energy Agency and subject to international inspections.

The U.S. had exerted increasingly more intense pressure on Ukraine not to sell the turbine, after the U.S. had failed to convince Russia to discontinue the project. Washington had offered Kyiv a series of financial and technological aid packages, and the prospect of access to U.S. nuclear fuel supplies as an incentive, but had also warned that if Ukraine did sell the turbines, the U.S. would not sign an accord on peaceful nuclear cooperation.

Russia had offered its own carrots for Ukraine to go through with the deal, most recently in the form of a memorandum of intent to supply a $200 million technology loan to help Ukraine complete two nuclear reactor complexes, one in the city of Rivne and the other in Khmelnytskyi. Ukraine has said it will not be able to shut down the Chornobyl nuclear facility by the year 2000, as it has promised, if these complexes are not completed.

Vasili Titushkin, press spokesman for the Russian Embassy in Kyiv, said Russian President Boris Yeltsin had discussed the problem with Ukraine's President Leonid Kuchma, during his state visit to Russia. "It is Ukraine's private matter," said Mr. Titushkin. "Russia understands that Ukraine was under intense pressure from the United States."

Ukraine's deal with the U.S. allows it to continue a multi-faceted foreign policy approach aimed at developing two strategic axes of cooperation, one with Moscow, the other with Washington, which Ukraine's government is more frequently calling its "multi-vector policy." At a press briefing several days after the Albright visit Volodymyr Horbulin, secretary of the National Security and Defense Council, said, "Ukraine can point to another success in its multi-vectored foreign policy."

That foreign policy success cannot be said to have extended to Iran, however, which blasted Ukraine for reneging on the turbine deal and buckling in to U.S. pressure.

As a result of the decision not to sell the turbine, the Kharkiv plant that was to build it, AOA Turboatom, is now out of $45 million in future business, which was the value of the contract with Russia. At a news conference in Kyiv after the signing ceremony with Secretary of State Albright, Foreign Affairs Minister Udovenko said a U.S.-Ukraine team of experts would visit AOA Turboatom to decide how to retool it to redirect its manufacturing capability towards other industrial sectors. President Kuchma said the manufacturing of turbines for hydroelectric generating plants may be one option.

President Kuchma said Ukraine's opportunity to join the missile technology control regime, which will allow Ukraine to take part in future U.S.-directed international space projects, including Sea Launch and Global Star, was the deciding factor in Ukraine's decision and will more than compensate for the loss of $45 million in business for this investment-starved country.

Bilateral agreements signed

The U.S. and Ukraine formally signed two agreements during the Albright visit. One is the satellite technology safeguards agreement, which paves the way for Ukraine to join the two large-scale satellite launch projects and for it to share satellite technology with the U.S.

Ukraine also received guarantees that the U.S. will support its request to join the Missile Technology Control Regime. The MTCR bans the exports of missiles or missile technology that can deliver payloads of 500 kilograms or more a distance of 300 kilometers.

"Ukraine's accession to the MTCR removes all limitations on Ukraine entering the space market," said President Kuchma.

Secretary Albright and Foreign Affairs Minister Udovenko also signed an agreement on the peaceful use of nuclear technologies, which will allow U.S. companies to bid on Ukrainian nuclear reactor projects. The Westinghouse Corp. has expressed an interest in making a bid on completing construction of the Rivne and Khmelnytskyi nuclear facilities, said to be worth about $1.2 billion. In addition, the agreement will allow the U.S. to sell Ukraine nuclear fuel. Today more than 90 percent of Ukraine's nuclear fuel supply comes from Russia.

The U.S. further agreed to give Ukraine a line of credit for small business loans and provide up to $6 million for science and technology research, some of which will go to AOA Turboatom.

Besides meeting with government officials while in Kyiv, Secretary of State Albright visited with students at the National University of Kyiv-Mohyla Academy and met with Ukrainian political party leaders. She also met with U.S. businessmen, where the subject of discussion was the problems they face doing business in Ukraine.