Source: World Politics Review

Global Insider: South Korea's Civil Nuclear IndustSouth Korea's burgeoning civil nuclear industry is gaining increasing international attention, due to a recent $20 billion construction deal with the UAE (which included an additional $20 billion operation and service contract), and potential multi-billion deals with both Turkey and India. In an e-mail interview, Mark Hibbs, senior associate of the Carnegie Endowment for International Peace's Nuclear Policy program, discusses South Korea's rise to prominence in the global civil nuclear energy industry.

WPR: What is South Korea's current status in the global civil nuclear industry?

Mark Hibbs: South Korea has steadily built up its nuclear power sector over the last three decades, primarily in partnership with the United States. It now has 20 reactors in operation -- more than Germany -- and possibly plans to add 20 more over the next two or three decades. South Korea wants to reduce its imports of energy fuels and reduce its carbon footprint.

Over the last 20 years, U.S. vendor companies have transferred to Korean firms the know-how to build reactors, improve designs, manufacture fuel, make key nuclear components, and manage projects. South Korea is now entering the world nuclear power plant market as a competitor to firms in the United States, France, Russia, and Japan.

WPR: What explains its recent success in winning contracts in the UAE, and perhaps in Turkey?

Hibbs: In bidding against firms from France, Japan, and the United States, the South Korean firms offered a more competitive price and more aggressive construction schedule. It is also likely that the South Korean government offered the UAE other bilateral deals which sweetened the deal. France's state-owned nuclear industry claimed that the Korean reactor design in the bidding was less safe than the design offered by the French. This was denied by both Korean and UAE firms involved, but this interaction demonstrated that, in some future markets, established vendor companies like Areva will be less competitive than the Koreans.

For its part, the UAE was willing to take the risk of partnering with a new vendor group with no experience in exporting reactors, because of the highly successful record the Koreans have demonstrated in building reactors on schedule and operating them safely. But the Korean firms have promised much to the UAE, and it remains to be seen whether they will be able to deliver without any major delays or cost overruns.

WPR: How might this affect South Korea's foreign policy posture, in terms of new relationships and regional priorities?

Hibbs: The success of the Korean firms in UAE will likely lead Korean industry and the government to press hard to duplicate that performance in other markets for nuclear power reactors. The contract awarded in the UAE has also inflated South Korea's expectations for renegotiating terms of a bilateral nuclear cooperation agreement with the United States. Their current agreement will expire in 2014 and Korea wants the United States to permit Korean researchers to develop fast reactors and do research and development on pyroprocessing of its spent fuel.

In the long run, the United States knows that time is on Korea's side, and will have to permit the Korean government to move forward with its nuclear program with less interference from Washington. The Korean government and industry are already planning on launching a future export drive in the nuclear power area, and Seoul will be unwilling to make new diplomatic commitments with partners that would inhibit the country's right to exploit nuclear energy peacefully.