February 09, 2010

Alvin Chew
Visiting Scholar

The United Arab Emirates recently signed a $20 billion deal with Korean Electric Power Corporation (KEPCO) to bring nuclear power into the region. Envisioning the plants to be operational by 2017, the nation has transformed what was traditionally a long and deliberate process into an industrial benchmark that future nuclear deals could be based upon. However, has the nation been too hasty with its decision?

The path to nuclear energy has often been plagued with several political roadblocks. In the case of the UAE, its swift decision to embark on nuclear energy comes about purely out of economic rationality. Faced with an annual increasing demand in its domestic electricity consumption, the nation has adopted the nuclear option as the best means of addressing the twin dilemmas of energy security and global climate change. The base load generation of power by nuclear energy is definitely the winning formula over intermittent renewable sources such as wind and solar power. In this regard, UAE has to be applauded in embarking on the nuclear track as a strategy for energy diversification.

A few critical elements surfaced upon a close scrutiny of its nuclear deal. In signing the 123 agreement, the UAE has made clear that the nation would not pursue an indigenous enrichment and reprocessing program. This commitment is certainly welcomed to limit the risk of proliferation. At the front end, the contractor will have to supply fuel that comes together with the nuclear reactors. The question remains as to what would happen to the inevitable spent fuel after the nuclear process. In forgoing the expensive reprocessing methodology, there is still no international solution for the permanent storage of the nuclear spent fuel. The UAE would be fully aware that the spent fuel rods could be temporarily stored on-site at their nuclear plants until emerging options for waste management have been examined and chosen. Therefore, the nation will have to make sure that all security concerns relating to the temporary storage of the spent fuel are addressed.

Waste management has been an obstacle for new entrants to the nuclear industry. From a technological standpoint, reprocessing of the spent fuel is an expensive technique that does not eliminate the problem of waste storage completely. The solution will eventually be a political rather than a technical one, as it will hinge upon the cooperation of nations in the international system. However, it will not be prudent to consider nuclear energy till the issue of waste has been resolved. With the UAE joining the ranks of nations with civilian nuclear technology, it can contribute towards establishing a feasible solution in waste management.

Another distinctive element of the UAE deal is the outsourcing of the plant operation to KEPCO. This move will speed up the delivery of nuclear power to the region, as it takes time to build up indigenous capability. On the negative side, some have criticized the UAE's dependence on foreign sources for the technological build-up. In fact, its entire nuclear process is wholly dependent on external parties, which could make its future electricity prices sensitive to global market forces. This fear may well abate as in the long run, the cost of electricity from nuclear energy is less sensitive to uranium prices because the main bulk of the cost has gone into the construction of the nuclear reactors. The UAE has also announced its plans to develop in-house capability to operate the nuclear plants as that is an avenue for job creation in the nation.

Analysts have also argued and questioned the UAE's intention to set up nuclear plants in the region, as after all, it is the third largest oil exporter in the world. It had been previously suggested that the advent of nuclear technology in the region can be seen as a counter-balance to Iran's nuclear program. What one can gather more concretely is that there could be an impending shortage of electricity supply if the UAE does not pursue the nuclear energy option. In weighing the non-conventional threats of future energy supply and the regional security threats of nuclear weaponization, it is evident that the former takes precedence in the new dimensions of international security that is predominated by the process of economic globalization. Thus, the nation's call to develop nuclear power is a move to address the energy shortage in the coming years, as further deliberation will impede its economic progress in the future. Therefore, compliance with international standards and regulations, along with the transparent mechanisms for non-proliferation, underlines its cooperative efforts to bring clean and reliable electricity to power its economy.

Furthermore, the development of nuclear energy within the region is not a destabilizing factor, but one that calls for greater cooperation among the GCC nations. There will be efforts to enhance security in the region to safeguard against proliferation as well as establish regional frameworks that ensure the safe handling of nuclear wastes. On the economic front, electricity can also be potentially traded via the common power grid in the Gulf region.

It is clear that nations now make their strategic decisions beyond the traditional security concerns of military dominance. There is enough evidence globally in the new millennium that highlights the catastrophes caused by natural disasters, poverty, pandemics as well as energy shortage. The UAE's astute decision to develop nuclear energy embodies the foresight of taking calculated risks in an era of rising energy demands.

Alvin Chew is currently a Visiting Scholar at the Gulf Research Center in Dubai and an Associate Fellow of the Center for Non-Traditional Security Studies at the S. Rajaratnam School of International Studies in Singapore.