UAE Nuclear Agreement: A Model for Southeast Asia?

By Alvin Chew

The recent nuclear deal between the United Arab Emirates (UAE) and Korea Electric Power Corporation (KEPCO) signified several new dimensions in the nuclear energy industry. Firstly, its intention to forgo indigenous enrichment and reprocessing is an innovative policy that will be welcomed by the global community. Secondly, the UAE has engaged in a partnership with KEPCO to build and operate the plants upon completion. This innovation in policies can save considerable time and cost which helps to overcome the worrisome process of acquiring civilian nuclear energy that is often peppered by political and social hindrances.

In addition to establishing the first nuclear power plant in the Gulf region, the record-breaking deal is also a significant milestone for the Korean nuclear industry, with Jordan now possibly considering South Korea’s favourable bid for its nuclear project. In fact, we may be seeing a new era of nuclear power emerging, not in the form of nuclear weapons, but in the competition for a slice of the civilian nuclear market.

The Korean-led consortium had outbid its rivals by almost 40% in upfront construction cost. In considering the worth of the deal, that is a hefty savings for the oil-rich nation which has been plagued by the financial crisis. Yet again, as nuclear energy entails strategic foresight, UAE’s decision to award the deal to the Koreans is not purely the lure of economic savings. It opens up an avenue for new entrants to challenge the incumbents such as France, United States and Japan who had dominated the market all this while. In the perspective of international relations, it can be seen as a balancing act that aims to bring more competitors to the market to bring down the cost of nuclear energy.

Innovative Change

Previously, nations had developed indigenous expertise to prepare for the operation of nuclear power reactors. Coupled with roadblocks in the licensing processes that attributed to construction delays, the cost of bringing in nuclear power resulted in excessive inflation in the past. The UAE arrangement is a joint-venture partnership that engages the Koreans to operate the facility, thereby giving the vendor a stake to bring down the construction cost and have the facility to be operational in the shortest time possible with the supply of experienced staff. It therefore opens up a whole new standard for the industry to adopt in future nuclear arrangements.

Striving towards Non-Proliferation

The UAE decides to outsource the construction and operation services of its nuclear programme. By staying away from both the front and back ends of the nuclear process, it underlines the transparent pursuit of nuclear power as an option for energy diversification. This serves as a model towards the handling and control of enriched radioactive materials. Disposal of nuclear spent fuel has clouded the adoption of civilian nuclear energy for possible new entrants, and the UAE’s forthcoming action is a step towards the progress of emerging fuel arrangements in the future.

A model for Southeast Asia

UAE is the third largest supplier of oil in the world and currently uses gas to generate electricity. However, it is facing an expected annual 10% increase in energy demand. With the cleaner nuclear option, UAE hopes to have its electricity running at a quarter of the cost in 2020. Its swift and decisive approach to its nuclear programme will provide the nation with a head-start in the management of advanced fuel options. It also draws in foreign direct investment and boosts its political stature in the region. In the long run, its strategic decision will begin to pay off when the UAE starts exporting electricity to member states of the Gulf Cooperation Council (GCC) via the common power grid.

The UAE’s rise to economic prominence in the Gulf region has been phenomenal, modeling some of its infrastructure development after modern ASEAN nations such as Singapore. Its nuclear initiative which began just three years ago could have been accelerated by counter-balancing the nuclear threats posed by Iran and Israel in the nearby region. As we have witnessed to this date, UAE sees a more discerning justification in addressing non-traditional threats of energy security and global warming issues by adopting a programme that deters nuclear proliferation.

On the other hand, Southeast Asia had deliberated on their nuclear ambitions that were fermented decades ago, but has yet to concretise the development of civilian nuclear power in the region. While it can be argued that the economic, social and political climates differ between the ASEAN region and the GCC, it is certain that the astute judgment in pursuing the nuclear option could not have been possible without a paradigm shift to overcome the mental block that has dogmatised the industry. This is perhaps something that we can learn from the UAE experience.

Alvin Chew is a Visiting Scholar at the Gulf Research Centre in Dubai and an Associate Fellow of the Non-Traditional Security Studies Centre at the S Rajaratnam School of International Studies (RSIS), Nanyang Technological University.