How Russia Is Using Nuclear Power To Win Global Influence

Courtesy of The Financial Times, a report on how Russia is using nuclear power to win global influence:

Rooppur in Bangladesh’s far west may seem an unlikely place for a Little Russia. Yet in this enclave, shop signs are written in Russian, Bengali vegetable vendors haggle over “kartoshka” (potatoes) and “morkov” (carrots), and Russian expats can have their teeth examined at Russ Dental Care.

The explanation sits a few kilometres down the road where Rosatom, Russia’s state-owned nuclear giant, is building the first nuclear power plant in Bangladesh. At an estimated cost of about $12bn, it is one of the largest ever infrastructure projects in the nation of about 170mn people.

With the aim of bringing the country’s share of electricity generated by nuclear power from zero to 10 per cent in less than 10 years, Rosatom is doing “amazing work”, says Sama Bilbao y León, director-general of the World Nuclear Association (WNA).

Bangladesh’s government says the 2,400MW plant, expected to begin trials this year, will address power shortages and blackouts crippling Bangladesh’s otherwise fast-growing economy, including its garments export sector.

But, for Moscow, the project serves another purpose: to bind the two countries together for decades and expand the Kremlin’s influence in Bangladesh, as it has done with other nations that do not have their own nuclear capacity.

Throughout Vladimir Putin’s more than two-decade-long rule, gas and oil have been his most important geopolitical bargaining tools until the invasion of Ukraine changed the landscape. The EU’s shift away from Russian energy, coupled with the Nord Stream pipeline explosions, deprived the Kremlin of its most important export market and leverage.

Sanctions have so far not hampered the nuclear energy sector, which can create long-lasting political ties and disrupt western efforts to isolate Putin’s regime.

Before the full-scale invasion of Ukraine, Russia already accounted for about half of all international agreements on nuclear power plant construction, reactor and fuel supply, decommissioning or waste management. Its main competitors in the nuclear power sector — China, France, Japan, South Korea and the US — accounted for about 40 per cent combined.

Despite sanctions on its economy, Russia continues to be an unrivalled exporter of nuclear power plants. It is involved in more than a third of the new reactors being constructed around the world at the moment, including in China, India, Iran and Egypt. 

Wary about Russia’s dominant position in the global nuclear supply chain, western governments are trying to push back. Last month US President Joe Biden signed a bipartisan bill banning imports of Russian enriched uranium, which constitutes about 25 per cent of the US total supply. That followed a move last year by the US, UK, Japan, Canada and France to form the “Sapporo 5” nuclear alliance on the sidelines of the G7, which the then British energy secretary Grant Shapps said was aimed at “pushing Putin out of the nuclear fuel market entirely”.

The relationships that Russia forges through nuclear projects surpass even the lengthy contracts for pipeline gas supplies.

Nuclear plant construction takes about 10 years, with a reactor lifespan of 60 years for newer plants. Dismantling preparations, including removing radioactive parts, take another 10-20 years and require substantial funds, says Vladimir Slivyak, a co-chair of the Russian environmental group Ecodefense, who has studied the country’s nuclear energy sector for decades.

“This is a very long commitment for a country to have a Russian presence. It is not just the actual construction. It’s the whole ecosystem,” says Darya Dolzikova, a nuclear policy programme research fellow at the Royal United Services Institute, the London-based defence and security studies think-tank.

In Turkey, Russia is building the country’s first nuclear power plant, a 4,800MW facility in Akkuyu which is expected to begin producing electricity this year. Russia often uses a build-own-operate model, which involves an even higher degree of co-operation as Rosatom provides everything, including the plant’s staff, during the lifetime of the project.

“The Russian side treats the plants as if [they are] owned by Rosatom. The only role of the host country is to buy the electricity from the reactor,” says Kacper Szulecki, a research professor at the Norwegian Institute of International Affairs (Nupi) who has been studying Russian nuclear energy diplomacy. This is precisely where Bangladesh finds itself, set to be tied to Russia by the Rooppur project for decades.

“This is a never-ending relationship that they’re entering into,” says Ali Riaz, a political scientist and expert on Bangladesh at Illinois State University.

It was the invasion of Ukraine that forced Russia to rethink its approach to nuclear diplomacy.

Shortly after the war started, Rosatom lost one of its contracts in Europe: the 1,200MW Hanhikivi power plant in Finland, which was due to start construction in 2023.

Forced to forge new alliances, Putin — who is on a visit to North Korea and Vietnam this week — has increasingly positioned his government as a partner to the “global south”, a term that encompasses decolonised countries in Africa, Asia and Latin America. 

Mirroring Soviet-style rhetoric, Putin often points out that many of these nations have not condemned his invasion and in fact resent the “colonial approach” of the US, EU and their “imperial” allies.

“The model of globalisation, which was largely formed by western states?.?.?. is in a state of deep crisis,” Putin stated at a foreign policy conference in Moscow last year. “A new, fairer, and more democratic system is emerging.”

Rosatom has been a key part of Moscow’s efforts to court the global south. Over the past two years, its director-general, Alexey Likhachev, has visited these countries almost as many times as he did in the entire period from his appointment in 2016 to 2022.

The company has signed nearly two dozen memorandums of understanding with African and Latin American countries, including Zimbabwe, Mali, Burkina Faso and Brazil. In Ghana, Russia has begun preparing a bid to build the country’s first nuclear power plant, alongside vendors from the US, China, India, South Korea and France.

This year, Russia and Uzbekistan signed an agreement to build a small modular reactor with a capacity of 330MW. The project is a first for Rosatom and Russia in introducing the next generation of nuclear technologies outside the country.

Proponents claim that SMRs offer greater safety and efficiency compared with existing technologies, with prominent private investors such as Bill Gates and OpenAI chief executive Sam Altman supporting start-ups developing SMRs. But unlike Russia and China, the US is yet to develop, build and deploy one.

In addition to building reactors and supplying operating units, Rosatom also uses soft diplomacy to wield influence.

In 2023, it began discussions with Nicaragua, Uzbekistan and Tajikistan about establishing medical centres, according to Rosatom’s annual report. In Bolivia, Russia completed a nuclear research centre in 2023 and, a few months later, secured a lucrative contract for lithium extraction.

“Perhaps in North America and Europe, we are choosing not to work together with Russia in critical industries. But in many other countries in the world they do not care. They will find the best partner,” says Bilbao y León from the WNA.

Even in Europe, Russia is not completely shut out. The Hungarian Paks 2,400MW plant, awarded to Rosatom without competition in 2014, has not been affected by the Ukraine invasion. It is expected to be handed over in the early 2030s, with a trained workforce and the first shipment of enriched uranium delivered. 

Hungary is one of the countries with the highest dependence on Rosatom, says Nupi’s Szulecki, whose assessment is based on services purchased, financing arrangements and the share of total electricity from Rosatom-built plants. Nuclear energy from an existing plant, which was built using Soviet designs, currently accounts for 40 per cent of Hungary’s electricity.

Prime Minister Viktor Orbán who is often criticised by other EU countries for his pro-Moscow stance, has repeatedly stated that Budapest will not agree to any sanctions against Russian nuclear energy.

“This is a prime example of how Russian nuclear diplomacy operates and why it is dangerous,” says Ecodefence’s Slivyak.

Bangladesh, which sits between India and Myanmar on the Bay of Bengal, is the target of intense geopolitical competition between powers such as India, China and the US. The three countries have each used deals and investment offers to build links with Prime Minister Sheikh Hasina.

But the Rooppur project has given Moscow an invaluable foothold. While China and the US have nuclear power building capacity, the Chinese state National Nuclear Corporation is largely occupied leading the country’s aggressive internal nuclear expansion, and the US-based Westinghouse Electric Company cannot match the conditions offered by Rosatom.

State-owned Rosatom is able to offer up to 90 per cent financing for nuclear projects, with repayments spread over decades at minimal interest rates. More attractive financing helped Rosatom win the deal, recalls Mohammad Tamim, a former Bangladesh energy adviser.

Such favourable terms are “crucial for poorer countries with low credit ratings, who cannot secure such financing elsewhere”, says Ecodefense’s Slivyak.

For Rooppur, Russia’s Vnesheconombank — a state-owned body used as a special-purpose vehicle to support priority projects from Moscow — granted a US dollar-denominated loan of $11.38bn, which covers almost the entire cost of the project. The loan has a grace period of 10 years and the interest rate is variable but cannot exceed 4 per cent a year.

But even cheap loans have to be repaid, and this could become a problem for the reactor buyers — and another lever of pressure for Russia.

Economists are concerned that paying off debt for the Rooppur plant, part of a growing bill for infrastructure projects funded in foreign currency, will add to the already acute strain on Bangladesh’s foreign reserves. “It’s possible to pay back if it runs on full scale and revenue is generated,” says Tamim, the former adviser. “But it’s not going to generate any foreign currency. This project is for local electricity consumption.”

Although the loan repayment period is yet to arrive, under the terms of the agreement between the countries, Bangladesh must pay 10 per cent of Rosatom’s construction work in dollars as advance payments. But its efforts to repay have been complicated by restrictions on dollar payments stemming from US sanctions, according to officials and analysts.

Sourcing financing for nuclear projects is one of the biggest challenges for western companies. Many of the western development banks with the firepower for nuclear megaprojects, such as the World Bank or Asian Development Bank, specifically exclude nuclear financing due to opposition from key shareholders including Germany. “Safety of nuclear facilities and non-proliferation are not in the World Bank areas of expertise,” it said in a statement.

There are moves in the US to pressure the bank’s shareholders to rethink their position over concerns that Russia and China will dominate the global industry, but it has been more than 60 years since the bank last approved nuclear energy project financing. 

For Rosatom, foreign projects — including the construction of nuclear power plants, the export of enriched uranium and other initiatives — account for about half of its total revenue, according to annual reports.

In 2023, Rosatom earned $16.2bn from these projects, up from $11.8bn in 2022. This revenue has more than doubled in the past decade. Operation costs and contributions to the state, however, eat up most of Rosatom’s earnings, bringing the group’s net profit to $2mn-$3mn a year.

By 2030, Rosatom’s total revenue is expected to reach over $56bn, more than double the current level, according to the company’s development strategy. This growth is to be driven primarily by foreign projects, the document states. Rosatom believes it can capture a significant slice of the African market, considering it a “point of growth” for nuclear technology, Rosatom’s Likhachev told Russia’s parliament in April.

Beyond becoming entrenched in the Kremlin’s sphere of influence, Bangladeshi civil society fears the deal with Rosatom has created opportunities for graft.

“The whole power sector is shrouded in secrecy,” says Iftekharuzzaman, the executive director of Transparency International Bangladesh. “At the end of the day, what will the people of Bangladesh actually be paying for? If it was open and healthy competition, that would be a different kind of story.”

Calculated on the basis of the plant’s estimated construction costs, the price for Rooppur is 9.36 cents per kilowatt-hour, compared with 5.34 cents for the same amount of energy from a neighbouring Indian project, according to Rashed al-Mahmud Titumir, an economist at Dhaka University. 

Critics say Bangladesh would have been better off spending the money on domestically generated solar and wind, whose costs have fallen sharply in recent years, rather than creating a dependency on Russia for expensive and potentially dangerous nuclear energy. “For me, it’s a disaster,” says Anu Muhammad, an economist and civil society activist.

It is not only local activists who are worried about Rosatom’s advance in the region. Western concerns about its push into the global south have also grown. Kathryn Huff, former assistant secretary for nuclear energy at the US Department of Energy, says it is critical for the US and its allies to rebuild a stable nuclear supply chain and re-establish leadership in the global nuclear sector. But it could take a decade for this to happen, she adds.

“There is no choice. If we don’t [re-establish leadership], we won’t control the conversation around safeguard security, non-proliferation, safety and the standards that would propagate across the world,” Huff says.

Rafael Mariano Grossi, the director-general at the International Atomic Energy Agency, takes a softer stance as the organisation “does not politicise nuclear energy production”. “My mission is to make sure that nuclear energy is done in a safe, secure and non-proliferation way,” he adds.

But while the debate continues in the west, Rosatom is already discussing the construction of a second plant in the country. Mohammad Hossain, a director at Bangladesh’s power ministry, suggests the relationship will only continue. Russia, he says, is an “indispensable partner”.



This entry was posted on Sunday, June 23rd, 2024 at 10:05 pm and is filed under Bangladesh.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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