ANALYSIS: Nuclear power disputes; Ukraine, Russia and the Bushehr question (03/29/98)

ANALYSIS: Nuclear power disputes;
Ukraine, Russia and the Bushehr question

by David R. Marples

Following the visit of U.S. Secretary of State Madeleine Albright to Kyiv on March 6, the Ukrainian government canceled its agreement to provide Iran with turbines for its nuclear power station at Bushehr. Russia has agreed to provide reactors and other equipment for this project despite similar pressure from the United States not to aid Iran with technology that might be diverted to its nuclear weapons program.

The nuclear power industries in Russia and Ukraine have both experienced difficult times since the fall of the Soviet Union. Ukraine in particular has suffered energy shortfalls and has become dependent on Russia for imports of energy. In 1995, Ukraine agreed with the G-7 countries on a timetable that anticipated the closure by the year 2000 of the Chornobyl nuclear power station considered unsafe by the International Atomic Energy Agency (IAFA) since 1994.

This timetable was contingent on several events: that the West, and particularly the European Bank for Reconstruction and Development (EBRD) would provide funds for two new reactors at the Rivne and Khmelnytskyi stations in northwestern Ukraine, which together would compensate for the disassembly of the two operating reactors at Chornobyl; and that the West would provide financial aid for the construction of a new roof over the damaged fourth reactor.

On February 20, however, the EBRD decided not to fund eight of the 13 projects put forward by Ukraine. Russia promptly, offered to help Ukraine complete these projects in early March through a $200 million technical loan - an action that illustrated Ukraine's unusual situation between East and West and what might be termed a struggle for influence between the two sides for the allegiance of Ukraine.

At the same time, Ukraine has found itself a participant in an international dispute that also is related to the nuclear industries in both Ukraine and Russia. That dispute is over the construction of the Bushehr nuclear power station in Iran, a PWR station with reactors that are of 1,073-megawatt capacity. Russia has been offered the principal contract, that of constructing the third and fourth reactors for the plant; while in 1997 Ukraine agreed to sell to the Russians a $45 million turbine (and potentially a second) for use at the Iranian station. Specifically, the Turbatom factory in Kharkiv agreed to be the subcontractor to Zarubezhatomstroy in Russia.

Subsequently, the question of the Iranian nuclear power station has been at the forefront of U.S.-Russian discussions. The American side has made it plain that it will not tolerate any Russian involvement in the exporting of military technology to Iran, and it has expressed its opposition to the nuclear power project. The Russians, in turn, have responded that the former has not taken place and that a nuclear power plant does not constitute a threat since Iran is a member of the IAEA and, therefore, its plant is thus subject to international inspections.

In mid-February the dispute became more acute when the Russian Minister of Atomic Energy Viktor Mikhailov stated that Russia would assume responsibility for the building of the entire Bushehr project (initially many of the auxiliary structures were to have been built by Iran). Two weeks later, after a meeting of the Iranian-Russian intergovernmental commission on economic cooperation, Russia confirmed the agreement to build the third and fourth reactors.

Russian resistance to U.S. pressure spilled over into the Cabinet of President Boris Yeltsin when on March 2 Mr. Mikhailov resigned his position, ostensibly to concentrate on his research, and was replaced by Yevgenii Adamov, a well known nuclear researcher. [President Yeltsin fired his entire Cabinet on March 23 and thus the position of atomic energy minister was again vacant at press time.] The event was significant. There had been no previous signs that Mr. Mikhailov was about to leave. Moreover, he is well-known as one of the most hawkish figures in the Yeltsin administration. Mr. Mikhailov won a Lenin Prize in 1967 and a State Prize in 1982 and had led the Ministry of Atomic Energy (Minatom) since March 1992. His position seemed safe when he became a member of the Security Council of the Russian Federation in July 1995.

Mr. Mikhailov has been an outspoken supporter of the exporting of Russia's uranium and nuclear technology. Though on paper he has supported the sale of highly enriched weapons-grade uranium to the United States, in practice he has frequently hindered such transactions. Whereas the Ministry of Defense has generally cooperated with the United States in monitoring nuclear weapons and non-proliferation projects, Minatom has acted the part of a post-Cold War warrior, despite its sensitive role as the ministry responsible for the storage of weapons and fissile material. Mr. Mikhailov's removal might be interpreted as a sign that Russia was caving into U.S. pressure on the issue of the Iranian nuclear power station, in addition to non-proliferation issues generally. Both the U.S. and Israel have expressed fierce opposition to the Bushehr project.

Yet, if Russia was wavering, a rapid volte-face occurred. On March 10, Russian Prime Minister Viktor Chernomyrdin announced that the 64-year-old Mr. Mikhailov had a new post as first vice-minister of Atomic Energy and chairman of the Scientific Council, also attached to Minatom. Thus, his spell of unemployment lasted eight days, and Mr. Chernomyrdin stressed that the employees of Minatom could only benefit from Mr. Mikhailov's experience.

The change of heart appears to be linked to events in Ukraine. Though U.S. pressure on Russia was unavailing, Ukraine proved to be an easier target because of its anxiety to receive the second half of a foreign aid package worth $225 million. On March 6, U.S. Secretary of State Madeleine Albright traveled to Kyiv and held talks with President Leonid Kuchma and Foreign Affairs Minister Udovenko, after which Ukraine announced that it had decided not to fulfill its part of the agreement for the Bushehr station.

This decision has caused considerable turmoil in Ukraine, not least at Turbatom, whose managers have maintained that President Kuchma gave in to U.S. pressure and that Ukraine's Russian partners had been "stabbed in the back." Immediately prior to the parliamentary elections in Ukraine, President Kuchma has deprived a major Kharkiv enterprise of contracts worth far more than the basic $45 million, since Russia had promised several other subcontracts that would result from the deal.

In return for a humiliating retreat, Ukraine has not emerged empty-handed. Minister Udovenko and Secretary Albright announced the signing of a 30-year agreement on nuclear cooperation, via which U.S. companies will assist the completion of the new reactors at the Rivne and Khmelnytskyi nuclear plants. The U.S. evidently has also offered Ukraine access to its satellite technology.

Both Iran and Russia have responded to Ukraine's move. Iran has declared Ukraine an unreliable partner that has been unable to withstand U.S. pressure. Russia has acted more gently toward Ukraine, with which it has recently entered a much closer economic and political partnership, but it has restored Mr. Mikhailov to a position of eminence, and announced that its specialized factory in St. Petersburg can take over the job of constructing turbines for Bushehr. Mr. Mikhailov's reinstatement can be interpreted as a sign that Russia is refusing to bow to U.S. pressure after what occurred in Ukraine.

Perspectives

These events are complex because they are so closely intertwined with international politics, but several conclusions may be drawn from them.

Ukraine's energy plight remains desperate without aid in the closure of Chornobyl and the generation of new atomic electricity from the two new reactors. Its position vis-à-vis the West is one of frustration over what is perceived as insufficient aid (the EBRD case) and the need to maintain its close relationship with the United States. That President Kuchma should take the risk of losing a profitable deal for a major Kharkiv firm on the eve of an election only illustrates the significance of the U.S. link to Ukraine. It also demonstrates the problems of being caught between two major powers that have not yet determined the exact nature of their relationship. Once it became clear that Russia was not going to be moved by U.S. requests, the attention of Washington was immediately switched to Ukraine, and the results were immediate.
Russia remains resistant to U.S. pressure, but a clear distinction should be drawn between the positions of the Defense Ministry and Minatom, both of which have jurisdiction over nuclear weapons. Changes in the latter would be seen as a welcome sign from the Western perspective and there has been no greater symbol of Russian intransigence - and the desire for Russia to play the role of a superpower - than Mr. Mikhailov. His departure and subsequent return demonstrate the divisions within the Russian nuclear industry and its evident influence within the Russian government. Indeed Mr. Mikhailov seems to have the personal backing of Prime Minister Chernomyrdin. On March 16, Russia reaffirmed its commitment to the Bushehr project.
Ukrainian-Russian relations have experienced a number of undulations, but Russia's approach toward its neighbor is more cautious than it was a few years ago. The signing in 1997 of the Treaty on Friendship and Cooperation, and the signing at the February 26-28 summit in Moscow between Presidents Yeltsin and Mr. Kuchma of a 10-year agreement on economic cooperation, particularly in fuel, metallurgy and missile industries, all suggest that, ultimately, Ukraine and Russia will become close partners again. The Iranian problem indicates, however, that Ukraine will find it increasingly difficult to tread the delicate and often precarious path between the former and present superpowers.
The Russian Ministry of Atomic Energy continues to seek partners for nuclear energy cooperation as its market has contracted with the break-up of the Soviet Union. The domestic industry is fairly dormant, with new reactors scheduled in the future only for its fast-breeder plant at Beloyarsk. Ambitious plans to commence a new period of internal development have been stalled by lack of funds and lack of outside commitment to such projects. Many of Russia's existing stations are due to be decommissioned over the next few years, as they came into service in the 1970s and are approaching the natural 30-year life span. Others - Smolensk, Sosnovy Bor (St. Petersburg) and Kursk - are of the discredited and dangerous RBMK (graphite-moderated) design similar to the Chornobyl plant. Thus far these stations have avoided the international concern directed at Chornobyl, but Ukraine has frequently expressed its view that they are markedly less safe today than the operating and much modified reactors at Chornobyl.
The Ukrainian domestic nuclear energy industry is approaching the end of the expansion begun in the early 1980s. Once the new reactors are brought on line at the Khmelnytskyi and Rivne plants, only the fourth reactor at the Mykolaiv plant in South Ukraine will remain outstanding. No new stations are being built, and the industry is plagued by wage backlogs, loss of skilled personnel (often to Russia) and worker discontent. In this depressed situation, Turbatom has little prospect of major projects from within the country, and the cancellation of the Bushehr contract is perceived as a major blow. It appears that in the future, the Ukrainian nuclear program will likely be brought to completion with Western technology and know-how - a solution that may provide some relief to the international community but will offer little solace to the Ukrainian work force.

Dr. David R. Marples is professor of history and director of the Stasiuk Program on Contemporary Ukraine at the University of Alberta.