September 26, 2007

Yemen nuke deal may not hold

As Yemen signs a reactor deal with a US company, doubts remain whether autonomous nuclear generation is feasible in this impoverished country racked with security problems.


Image: ISNC ommentary by Dominic Moran in Tel Aviv for ISN Security Watch (26/09/07)


Yemen signed a five-reactor deal with a US nuclear company this week, but significant doubts remain concerning the future prospects for the nascent Yemeni atomic program.

The pact with Houston-based Powered Corporation envisages the establishment of a 1,000MW reactor by 2012, with four others to follow within a decade, bolstering Yemen's total generation capacity by 5,000MW, according to Energy and Electricity Minister Mustafa Bahran.

A US$3 million feasibility study jointly funded by Powered Corporation and the government would be quickly followed by the initiation of work on the first reactor in early 2009, Bahran told Agence France Press. He added that all atomic activities would be conducted with full oversight from the UN's International Atomic Energy Agency (IAEA).

The agreement appears to fit into a previously announced atomic generation strategy involving the establishment of privately owned, for-profit reactors on Yemeni soil, with the state buying electricity from the generating company for an indeterminate period before purchasing the facilities.

Yemen has suffered from an electricity shortfall since the mid-1990s, with daily blackouts in major cities and current generation capacity standing at only 800-900MW, AFP reports.

President Ali Abdullah Saleh announced his intention to foster the development of peaceful nuclear generation during his presidential re-election campaign last October. The announcement was met with incredulity by most informed analysts, given Yemen's economic situation and lack of the significant research and knowledge base required for autonomous atomic development.

Bahran, who also heads the National Committee for Atomic Energy and advises the president on technological and scientific issues, is known for his rather optimistic assessments of Yemen's generation potential and is the main driving force behind the impoverished nation's nuclear bid.

In a statement carried by Middle East Online, the minister said: "The overall cost of the project is estimated at $15 billion," stressing that the new energy source would be "economically competitive, that is, cheaper than the electricity we produce today."
Critics of nuclear generation debunk such claims, arguing that the costs of nuclear generation are invariably understated and underwritten by the state.

Bahran acknowledged that the government would not be paying for the reactors, saying "Powered Corporation will oversee efforts to secure the financing of the project."

Perusal of Powered Corporation's website gives no indications as to the company's ability to raise the required US$15 billion, or of significant experience in Modular Helium Reactor (MHR) generation, which the company says it is moving into.

The company's site also provides no details as to the potential or existing partnerships required to fund and conduct the massive undertaking of establishing reactors in Yemen.

It is clear that given the risks of tardy or non-existent government payments, the company will not be able to generate sufficient revenue for the fabrication of the reactors from the private sector and will likely be relying on the US government to bear the bulk of start-up funding and provide ongoing payment guarantees.

The US has given muted support to Yemen's desire for a nuclear generation capacity in the face of stiff competition from Russia, China, France and other states seeking to increase their economic penetration and strategic influence in the region through potentially lucrative nuclear deals.

The Yemeni program will not be self-supporting in the near future and would require the wholesale transplant of nuclear technologies and personnel from the contracting companies and US atomic agencies.

Washington will also be given pause by the country's seemingly intractable security problems.

Yemen suffers from ongoing violent tribal and sectarian conflict. Saleh is also accused by some analysts of deals involving the establishment al-Qaida-linked militant camps in return for pledges not to attack government targets and security forces. Al-Qaida specifically targets energy facilities across the region.

Deepening economic woes have also sparked burgeoning popular protest movements, which have seen a number of violent, isolated clashes between demonstrators and police and calls for southern secession.

The IAEA has provided US$1.5 million to train Yemeni nuclear staff in nuclear safety and has offered equipment for a radiology facility planned for a hospital in Aden. However, the US and IAEA would likely prefer to focus future assistance on preventing the smuggling of nuclear materials rather than reactor maintenance and safety.

The current wave of Arab and Israeli nuclear announcements is intimately related to developments in the Iranian nuclear program. Arab states will come together in November in the Egyptian Red Sea resort of Sharm el-Sheikh to discuss nuclear cooperation as the US struggles to win support for the strengthening of sanctions in the UN Security Council in the wake of the IAEA-Iranian deal.

Ultimately, the George W Bush administration and its successor will need to decide whether the risks of nuclear proliferation in allied states are outweighed by the strategic and economic benefits to the US. Despite Monday's agreement, in Yemen the scales appear to be tipping against.


Dr Dominic Moran, based in Tel Aviv, is ISN Security Watch's senior correspondent in the Middle East and the Director of Operations of ISA Consulting.

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