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General Market Commentary
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General Energy
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General Market Commentary
As Saudis Go Nuclear, U.S. Seeks an Edge Over Great-Power Rivals
At a meeting of the International Atomic Energy Agency in Vienna last September, word spread that Saudi Arabia had identified a handful of countries that could build two nuclear reactors in the kingdom. The U.S. wasn’t among them -- until Energy Secretary Rick Perry buttonholed the Saudi delegates and told them America wanted in.
Within weeks, a mostly U.S. consortium headed by Westinghouse Electric Co. had joined the race. Its executives have visited the kingdom. So has Perry, whose intervention was described by two people who attended the meeting. In the next few months, the Saudis are expected to narrow the field to two or three bidders.
A glance at the current list of contenders shows the geopolitical perils that accompany this business opportunity. American allies South Korea and France are on it -- and so are China and Russia, recently designated by the Pentagon as the main U.S. threats. Reactor-building could become another arena of superpower rivalry.
‘What Are We Creating?’
For the Saudis, seeking the technical expertise to move beyond oil and compete with arch-rival Iran, the U.S. is undoubtedly the main strategic partner. But unlike Washington, the kingdom also has cordial ties with the other two giants -- and reasons to keep them sweet. China is its best customer, and Russia is increasingly its partner in policing world oil output.
Both countries are improving ties with the kingdom and “sharpening their strategies,” according to Marc-Antoine Eyl-Mazzega, director of the energy center at the Institut Francais des Relations Internationales in Paris. The effect is to give the Saudis more options, he said: “Riyadh will try to levy that to reinforce its regional positions.”
Meanwhile President Donald Trump’s administration sees a chance to revive a moribund U.S. nuclear industry. Some analysts question whether that’s worth the risks that will come with the expansion of nuclear technology through the world’s most volatile region.
“You’ve got Israel with nuclear weapons,” says Victor Gilinsky, a former commissioner of the Nuclear Regulatory Commission. “Turkey isn’t far behind. Iran has a nuclear program. Now they’re going to unleash Saudi Arabia? What are we creating here?”
The expansion is happening anyway. The United Arab Emirates has its first reactor going online this year, with three more planned; Egypt has signed a construction deal with Russia, as have Jordan and Turkey; Saudi Arabia’s planned two are expected to grow to as many as 16.