26 June 2022

Sunday, 23:44


Moscow isn’t interested in miniscule intrigues of Armenia amidst large projects in the neighbouring states



A year ago, the US Department of Energy released a report stating that Washington has lost its leadership position in the nuclear power projects, behind Russia and China. At the same time, the US characterized the situation as a geopolitical challenge and proposed a strategy that provided for American companies to access the markets dominated by the state-run Russian and Chinese corporations. Over the past year, the situation has not changed dramatically. Moreover, Russia has taken serious steps to strengthen its position. This suggests that geopolitical competition for the export of peaceful nuclear energy will only intensify. Thus, Russia's proposal to build another nuclear power plant in Armenia voiced by the Armenian Prime Minister Nikol Pashinyan is both surprising and alarming at the same time.


Peaceful nuclear power as a tool of geopolitical rivalry

Over the past years, Russia, China, the US, France and a number of other states have been actively competing for one of the most promising and influential global markets – the nuclear power market. This is quite normal, since nuclear energy is a dynamically developing branch of the global energy sector. It is known that the cost of electricity generated by nuclear power plants makes it possible to enter into serious competition with other types of power plants. Today, about 17% of the global electric power production belongs to nuclear power plants. At the same time, the industry ranks third after coal and hydropower.

According to the World Nuclear Association, as of September 2020, there are 441 operating nuclear power plants with a total throughput capacity of 391.7GW of energy. 53 reactors with a total capacity of 59.2GW are under construction, of which 12 are in China, 7 in India and only 4 in Russia.

However, only the Russian state corporation Rosatom has a colossal portfolio of orders ($130b) for the construction of power plants around the world. This makes Russia the world leader in the peaceful nuclear race.

If we take a look at the map of construction operations for nuclear facilities, we can notice that a lion’s share of construction orders are given to Russian engineers, albeit working under the fiercest competition regime. As of today, it is planned to complete the construction of 106 nuclear reactors (113.8GW) around the world. Most of the works are carried out by Russians, including in countries with no nuclear plants in the past (Egypt and Uzbekistan). At the same time, Rosatom equally cares about the operational maintenance of these plants, supplying them with fuel and carrying out repair works, etc.

But competitors are vigilant. Especially in China. By 2026, China plans to become the largest nuclear power industry in the world, generating almost 100GW - three times more than the country does now. At the same time, China is  boosting its nuclear exports.

Beijing has already secured deals with Argentina, Romania and Pakistan. In addition, two Chinese state-owned companies are close to signing agreements on significant investments for the construction of the British nuclear power plant Hinckley Point C. Meanwhile, the British regulator is reviewing the issue with the construction of the Hualong One reactor, which the Chinese corporation CGN proposed to build at the Bradwell nuclear power plant.

South Korea is also active in this area. Currently, the state-run companies KEPCO and KHNP, as well as the South Korean industrial giant Doosan Heavy Industries & Construction, play the leading roles in South Korean nuclear exports. South Korean companies are also trying to access the same promising markets that China, Russia and other countries are targeting today.

According to BP forecasts, nuclear power generation is expected to grow by 2050. A clear advantage of NPPs is the absence of aerosol and greenhouse gas emissions.


Akkuyu and Bushehr as flagship plants in the Middle East

The successful implementation of projects for the construction of the two largest nuclear power plants in the region – Akkuyu in Turkey and Bushehr in Iran – has earned a large number of accolades for Rosatom. Both can also be called a successful case of promoting Russian technologies to foreign markets. This is not only a matter of political prestige, but also an important factor for the diversification of foreign economic relations and the development of Russia's export potential. The total cost of construction projects for the second stage of the Bushehr nuclear power plant, as well as Akkuyu, is estimated at more than $32 billion (Bushehr-2 - over $10 billion, Akkuyu - over $22 billion). But it's not just the numbers.

The point is that Rosatom's export contracts are of great importance for the development of the Russian economy. In addition to significant export earnings and a positive balance of payments of external transactions, the localization of production plays a significant role, which rarely exceeds 35-40%. Therefore, almost 75% of the work is carried out in Russia, at Russian enterprises. In addition to the construction of power units, they are provided with Russian fuel enriched with uranium, services, supplies of isotopes, etc.

For Russia, the export of nuclear technologies is a real driver for the development of foreign economic relations with foreign countries and is an indicator of Moscow's strategic interests in a particular region.

Meanwhile, the Western states increasingly oppose the Kremlin’s policy. Thus, at the end of April, the European Parliament called on the EU states to abandon contracts with Rosatom for the construction of nuclear power plants in the EU, calling them “contradictory”. In December 2020, for the first time since 2014, the United States imposed direct sanctions against Russian nuclear scientists to restrict the use of Russian nuclear technologies by a significant number of stakeholders. However, the same stakeholders do not seem bothered much.

In terms of developing Russian-Turkish and Russian-Iranian relations, there are enough reasons to view them as a strategic partnership, both in the economic and political spheres. That is why it is important for Russia that the communications linking Iran and Turkey with Russia work in a reliable and stable mode, meeting the growing needs of dynamically developing interstate relations.

In fact, the most optimal routes connecting Russia with Iran and Turkey pass through the territory of Azerbaijan. In a small section of the Zangezur corridor, these communication lines also cross the Armenian territory. According to a trilateral statement signed on November 10 between Armenia, Azerbaijan and Russia, it was decided to unblock these important transport arteries for the benefit of the signatory states, as well as Turkey and Iran. And now comes the most interesting part of the whole story...


What do the proposals for a second nuclear power plant in Armenia mean?

It is well known that Armenia was and is reluctant to unblock the Zangezur corridor. Although Yerevan has committed itself to restoring the transport route connecting the western regions of Azerbaijan with the Nakhchivan Autonomous Republic, it delays the implementation of these works as much as possible.

At the same time, during his visit to Moscow on April 7, Armenian Prime Minister Nikol Pashinyan at the very beginning of negotiations with Russian President Vladimir Putin suggested the construction of a new nuclear power plant in the republic. Why Armenia needs a new nuclear plant is a separate question. But how the construction components will be delivered to Armenia is, obviously, an interesting question if Yerevan gets a positive decision on its proposal, which is unlikely.

It seems that Yerevan's proposal is based not on the real needs of the Armenian economy but on a trivial intention to secure the role of Russia's leading economic partner in the region, even if achieves this goal through new financial borrowings. A nuclear power plant is a very expensive business. And Armenia has no extra funds. To be more precise, it has no funds at all.

The Armenian GDP is about $12 billion, while the external debt is rapidly approaching $9 billion. How can we talk about new expensive projects in such conditions? For comparison: Iran's GDP is over $400 billion, Turkey's - about $700 billion. Components for the nuclear plants in Iran and Turkey are delivered via the Caspian and Black Seas, respectively. We yet to know how the similar components will be delivered to Armenia, which is hindering the implementation of the construction of the Zangezur corridor. Also, who will provide a loan for the construction of a new Armenian nuclear power plant with an extremely low investment justification?

Therefore, Pashinyan's proposal is like a shot with a blank cartridge. A lot of noise but little sense.

Currently, there is one operating nuclear power plant in Armenia, which was built in 1969-1977 near the city of Metsamor. The plant consists of two power units with VVER-440 reactors. Moreover, this is a rather troublesome facility that requires constant costs to maintain activities.

According to environmentalists, the plant poses a permanent environmental hazard for the entire region. Turkey and Azerbaijan have repeatedly advocated its closure. Now, by raising the issue of constructing yet another nuclear power plant, Armenia makes it clear that it is not going to listen to its neighbours and is ready to go against their interests.

Thus, Moscow is not interested in the miniscule intrigues of Armenia amidst large projects in the neighbouring states. But it is time for Yerevan to think about more realistic and profitable projects, in particular the perspective of the Zangezur corridor, rather than dreaming of expensive and unrealisable dreams.