PUTIN´S RADIOACTIVE CHOKEHOLD ON THE WORLD / THE ECONOMIST

Nuclear power for civilian use

Putin’s radioactive chokehold on the world

The Kremlin dominates the cross-border business of nuclear fuel and technology

An aerial view of the Akkuyu Nuclear Power Plant (NPP) construction site, in Mersin, Turkiye. / Photograph: Getty Images

DURING THE brief war between Israel and Iran, the world’s attention was focused on Iran’s nuclear programme. 

Yet out of the spotlight another geopolitical struggle is being waged—over the international trade in nuclear technology and enriched uranium. 

Though far less explosive than the situation in the Islamic Republic, the stakes involved are nonetheless high.

The civilian nuclear industry can be broadly divided into two main markets: the building of nuclear power stations; and the production and supply of enriched-uranium fuel. 

The first is dominated by countries with big domestic fleets of nuclear power plants, such as America, China, France and South Korea. 

They tend to build these themselves. 

Yet there is also a significant export market for reactors. 

The fuel market is even more lopsided, with just a few countries able to enrich uranium.

Whoever dominates these export markets gains not just geopolitical heft and economic and soft power, but also influence over the policing of nuclear proliferation and safety standards. 

One sign of the growing importance of this contest can be seen in four executive orders signed by President Donald Trump in May. 

These are aimed at re-establishing America “as the global leader in nuclear energy”, as well as securing America’s supplies of enriched uranium. 

Both are ambitious goals, given that American firms have long struggled to build reactors on time and on budget, and because America and Europe rely on imported enriched uranium, much of which comes from Vladimir Putin’s Russia.

Customers shopping for nuclear reactors can, in theory, get the technology from seven main countries: America, Canada, China, France, Japan, Russia and South Korea. 

But Russia is far in the lead when it comes to exporting them. 

Rosatom, its state-owned nuclear firm, has about 65% of the global export market for nuclear reactors in power stations, according to the World Nuclear Association.

Russia dominates not only the international market for new-build nuclear power stations, but also the market for enriched uranium, which is used to fuel them, controlling 44% of the world’s uranium-enrichment capacity, according to the most recent data (see chart 1). 

Last year the European Union imported a quarter of the enriched uranium it needed from Russia, much of which went to the five countries that have reactors designed in Russia: Bulgaria, the Czech Republic, Finland, Hungary and Slovakia. 

And in 2023 America bought roughly a quarter of its enriched uranium from Russia.

Russia’s sales of enriched uranium and reactors are dwarfed by its gas and oil exports, though nuclear fuel is not as easily substituted as oil. 

Using World Bank trade data The Economist reckons that in 2023 Russia earned about $2.7bn from exporting enriched uranium—mostly to America and the EU, and another $1.1bn from exporting reactors and components, such as the fuel-assemblies that hold the enriched uranium. 

Rosatom itself reported that its foreign operations generated revenue of more than $16bn in 2023, including more than $7bn from building new power plants, many of them funded by Russian state-backed loans. 

This figure has risen since Russia’s invasion of Ukraine, from almost $9bn in 2021.

Perhaps more important than money is the diplomatic leverage Russia gains through its customers’ reliance on it for fuel or nuclear technology. 

In May the European Commission pledged to release plans the following month to introduce taxes or levies on Russian enriched uranium, with the aim of gradually phasing out its use (alongside measures to halt imports of Russian gas by 2027). 

It soon relented, delaying the uranium plans. 

Behind the U-turn was lobbying from Slovakia and Hungary, which both have Russian-designed reactors and complained that it would lead to higher prices. 

Many believe that Hungary’s pro-Russian stance is cemented by contracts it awarded to Rosatom in 2014 (without going through tenders) to build two nuclear reactors.

Power play

Similarly a deal signed by Turkey in 2010 for Rosatom to build and operate four nuclear reactors in the country deepened its ties to Russia. 

It may also have contributed to Turkey’s decision to buy S-400 anti-aircraft missile batteries from Russia, according to Jane Nakano of the Centre for Strategic and International Studies, an American think-tank. 

The arms deal soured relations with NATO: America halted the sale of F-35 fighters to Turkey (though Mr Trump may soon relent) and kicked it out of a programme to help build them. 

The nuclear project, meanwhile, has been beset by delays and financing problems, partly because of financial sanctions on Russia; this week Rosatom said it was in talks to sell a 49% stake in the $25bn plant.

In Bangladesh, Rosatom is building two reactors that will add about 10% to the country’s generating capacity. 

This will put Bangladesh alongside the likes of Belarus, Hungary and Slovakia, which are assessed to have a “high” dependence on Russian-built or -operated nuclear power plants, according to Kacper Szulecki and Indra Overland, researchers from the Norwegian Institute of International Affairs, another think-tank.

This dependence makes these countries vulnerable to supply disruptions, sabotage and other sorts of malign influence, they argue.

That worry seems plausible enough, at least in the short run. 

Russia has used energy as a weapon before, typically through cutting off natural-gas supplies. 

But its ability to use uranium as an energy weapon is more tightly constrained. 

Many of Rosatom’s European customers have signed contracts with alternative suppliers since 2022, or have built up fuel stockpiles to last several years. 

And wielding it would impose considerable costs on Russia, since doing so would spook other potential customers, which may explain why Russia has not halted uranium supplies to Europe. 

(Last year it restricted exports to America in response to American import curbs.)

Rosatom is successful partly because it offers an attractive all-in-one package, says George Borovas, a lawyer who advises governments on nuclear programmes. 

“They say ‘Hey, we’re going to give you everything’,” including fuel and training for local engineers. 

Strong state backing helps Rosatom take on the big financial and hard-to-insure risks of nuclear projects. 

Russia is reportedly lending around 90% of the estimated $12.6bn cost of building Bangladesh’s first set of nuclear reactors.

Projects like the one in Bangladesh also establish “a long-term relationship” that gives Russia a foothold in South Asia, says Ali Riaz, a political scientist from Illinois State University. 

It can take up to 80 years from starting construction to decommissioning a nuclear reactor, which can bind clients into agreements covering maintenance, spare parts, training and technical assistance for decades. 

Bangladeshi politicians would struggle to ditch the deal even if they wanted to, because they would be tied into loan agreements.

Western governments are taking a two-pronged approach to weaken Russia’s nuclear diplomacy. 

The first involves reducing their own reliance on enriched uranium, fuel assemblies and other services provided by Rosatom. 

The second is trying to compete more vigorously with Russia in selling reactors abroad. 

In 2023 America, Britain, Canada, France and Japan formed the “Sapporo Five” group to collaborate on at least $4.2bn-worth of investments in new enrichment.

Breaking the shackles

There are already some signs of progress. 

Last year Europe’s reliance on Russia’s enriched uranium fell sharply, to 24% of its needs, from 38% the year before. 

This share should fall further, though demand among Western countries (including America, Canada, Japan and South Korea) will probably outstrip friendly supply, even after new capacity has come online.

EU members with Russian reactors are also moving to reduce their reliance on Rosatom. 

Westinghouse, a firm based in America, has developed nuclear-fuel assemblies that fit Russian VVER reactors and has agreements to supply them to Bulgaria, the Czech Republic and Ukraine.

Western governments also hope to challenge Rosatom in the reactor export market. 

Yet toppling it will not be easy. 

In order to win foreign orders, Western companies first need to show they can build on time and stick to budgets at home, says Chris Gadomski of BloombergNEF, a research firm. EDF, France’s state-backed electricity firm, has faced long delays and cost overruns at its three recent nuclear projects in Britain, France and Finland. 

Only one nuclear plant has been built in America since 2017. 

It reportedly cost around $35bn, more than double the initial estimate, and was finished seven years behind schedule. 

One reason for such delays is that construction skills have atrophied. 

Strict regulations and onerous planning rules have also slowed the deployment of reactors in the West.

Banning the bomb

In the decades after the second world war, when America had a clear lead in civilian nuclear power, it set international standards and enhanced safety through, for instance, its push to set up the International Atomic Energy Agency, the UN’s monitor. 

In 1978 America required countries to sign the Nuclear Non-Proliferation Treaty (NPT) before gaining access to its technology. 

Russia, however, has a chequered record on non-proliferation: since 2022 it has “become markedly counterproductive, and outright obstructive”, argues Darya Dolzikova​ of the Royal United Services Institute, a think-tank in London.

There is, some might argue, a glimmer of good news in that a plausible rival to Russia is emerging. 

Unlike most Western nuclear firms, it has an experienced workforce, a solid pipeline of projects, a track record of building reactors in as little as six years, and it can offer clients state-backed financing. 

The bad news is that it is China, which also has wobbly credentials on non-proliferation. 

For decades it denounced the NPT as unfair. 

In the 1970s and 1980s it helped Pakistan with its nuclear-weapons programme, providing it with blueprints for a bomb. 

China has come a long way since then, acceding to the NPT in 1992 and eschewing sales to rogue states. 

But it remains selfish, recently weakening scrutiny of bomb-making by North Korea, a regime it sees as a useful buffer state.

Until now it is largely the West that has been concerned by Mr Putin’s vigorous nuclear diplomacy. 

But the prospect of an international nuclear market dominated by not one but two autocracies ought to trouble the entire world.