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Nuclear News - 9/2/2010
PGS Nuclear News, September 2, 2010
Compiled By: Matthew Kapuscinski

A.  Iran
    1. No Response, Yet, from Vienna Group, PressTV (8/31/2010)
    2. Iran Ready to Cooperate with US in Nuclear Field, Atomic Chief Says, Earth Times (8/31/2010)
    3. Whoever Attacks Iran Will Regret It, PressTV (8/31/2010)
    4. Iran Needs Two Weeks to Load Nuclear Plant Fuel, Jay Deshmukh, AFP (8/31/2010)
    1. North Korean Pair Viewed as Key to Secret Arms Trade, Jay Solomon, The Wall Street Journal (8/31/2010)
    2. Japan Says Too Early to Resume Korea Nuclear Talks, Associated Press (8/31/2010)
    3. South Korea Offers North Aid, China Wants Nuclear Talks, Jeremy Laurence and Jack Kim, Reuters (8/31/2010)
C.  India
    1. Flawed Liability Law Threatens India-US Nuclear Deal, Economic Times (9/1/2010)
    2. USIBC Sore Over Nuclear Liability Bill Provision, S. Rajagopalan, Express News Service (9/1/2010)
    3. Engineering Giants Gear to Set Up Nuclear Projects, Rediff (8/31/2010)
D.  Nuclear Energy
    1. Turkey in $10 Billion Reactor Deal with South Korea, Dan Yurman, The Energy Collective (9/1/2010)
    2. Merkel's Cabinet Backs Nuclear Tax in $102 Billion Savings Plan, Brian Parkin and Nicholas Comfort, Bloomberg (9/1/2010)
E.  Links of Interest
    1. Cracks in India's Nuclear Law, Indrajit Basu, Asia Times (9/2/2010)
    2. What Do the Six Parties Want From North Korea Talks?, Reuters (9/1/2010)
    3. North Korea Forges Trade Documents to Dodge Sanction: Report, Kwang-Tae Kim, Associated Press (9/1/2010)
    4. Japan Set to Toughen Sanctions on Iran - Nikkei, Reuters (9/1/2010)
    5. West Did Not Oppose Pakistan Nuclear Programme Due to Afghan War: AQ Khan, Hindustan Times (9/1/2010)

A.  Iran

Iran Needs Two Weeks to Load Nuclear Plant Fuel
Jay Deshmukh
(for personal use only)

Iran will need two more weeks to complete the process of loading fuel into its Russian-built first nuclear power plant, atomic chief Ali Akbar Salehi said.

The process of loading 163 fuel rods, also supplied by Russia, into the nuclear power plant located in the southern port city of Bushehr began on August 21 and was to be completed by September 5.

Thereafter the rods were to be transferred to the reactor.

But state news agency IRNA reported late on Monday that Salehi, in an interview with Al-Alam television, said it will take another two weeks to shift the rods into the plant.

"From now on, it will take 10 to 15 days for the 163 fuel rods to be moved into the main building of the Bushehr nuclear power plant and then we have to transfer the fuel rods into the reactor," Salehi said.

Last week, he had said the transfer of fuel rods into the reactor would start at the end of the Iranian month of "Shahrivar (September 22), and at the end of (the month of) Mehr (October 22), we will close the lid of the reactor."

On Monday, Salehi blamed Bushehr's "severe hot weather" for the delay in moving the rods into the plant and said that this work was being done during the night.

Iranian officials had earlier said the Bushehr plant's commissioning is expected in October or November when the electricity it generates is connected to the national grid.

Russian officials said the start of the process of loading fuel into the plant marked the physical launch of the facility, which had been under construction ever since the 1970s under the rule of the late shah.

Despite being OPEC's second-largest crude oil exporter and having the world's second-largest gas reserves, Iran insists it needs nuclear power for a rapidly growing population and for when its fossil fuels eventually run out.

Salehi also appeared to address safety concerns raised by Kuwait after the fuel loading began in the plant. Kuwait is the nearest country to the power plant as it is also located in the northern Gulf.

"These concerns and worries are untrue. If any incident happens, it can be contained in the main building" of the plant, Salehi said.

Salehi also said that the Islamic republic has received a "positive" initial response from Russia to its proposal of making nuclear fuel jointly in both countries.

"So far the Russian response has been positive to the Iranian proposal," Salehi said of the plan which he revealed on August 26.

"But any comprehensive and complete response depends on future negotiations and further study. We hope that the positive signals from the Russians will lead to the signing of an agreement."

Iran is under four sets of UN Security Council sanctions for its refusal to halt uranium enrichment -- the process which can be used to make nuclear fuel but also the fissile core of an atom bomb in highly purified forms.

Russia, despite being Iran's long-time nuclear ally, also voted for the latest round of UN sanctions against Tehran, a move which triggered an angry response against Moscow from top Iranian officials.

Salehi said Iran was testing second and third generations of centrifuges, the device which rotates at supersonic speed to enrich uranium.

"The testing phase could take one to three years ... The testing is on an experimental basis and not on an industrial production scale," Iran's atomic chief said.

Iran currently enriches uranium at its facility in the central city of Natanz in defiance of the UN and world powers. As of May 24, it had installed 8,528 centrifuges at Natanz, according to the latest UN atomic watchdog report.

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Iran Ready to Cooperate with US in Nuclear Field, Atomic Chief Says
Earth Times
(for personal use only)

Iran would be ready to engage in nuclear cooperation with its archfoe, the United States, Iran's atomic chief said Tuesday.

"If the Americans were ready to cooperate with Iran in establishing joint firms for building nuclear power plants, then we would be ready to negotiate," Ali-Akbar Salehi told the Khabar news network.

"We would also be ready to establish a consortium for nuclear fuel production," he added.

Iran plans to build more nuclear power plants and at least 10 new uranium-enrichment sites in the coming years and has said that even the US could participate in these projects.

The US and Israel are the main critics of Iran's nuclear projects and accuse the country, which is the target of UN Security Council sanctions, of pursuing a secret nuclear weapons programme.

Washington was the key force behind the latest Security Council sanctions resolution, passed in June, after Tehran kept rejecting international demands for suspending its uranium-enrichment programmes. Highly enriched uranium can be used to make nuclear weapons.

Foreign Minister Manouchehr Mottaki on Monday denied Iran had any intention of making atomic bombs. He reiterated that Tehran would continue pursuing its civilian nuclear projects regardless of UN sanctions and political ultimatums.

So far, Iran has one nuclear power plant, located in the southern port city of Bushehr, but the Russian-built facility is not yet fully operational.

Salehi said it would take two more weeks until its 163 fuel rods were injected.

The 1,000-megawatt light-water reactor would require at least six months to reach maximum power, he said.

Available at:,field-atomic-chief-says.html

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No Response, Yet, from Vienna Group
(for personal use only)

The Director of the Atomic Energy Organization of Iran (AEOI) says the country has not yet received any official response from the Vienna Group over Tehran's proposal on resumption of talks.

"We have not received an official response, yet, from the (Vienna) Group on resumption of negotiations, but we have expressed our readiness to continue dialog," AEOI chief Ali-Akbar Salehi told IRNA on Tuesday.

He said Tehran is prepared to restart the negotiations as soon as the group announces its readiness.

Salehi underlined the talks will be based on the Tehran Declaration and 'without any preconditions.'

Salehi had announced earlier that fuel for the Tehran nuclear research reactor will be produced within a year.

He had also underlined that Iran needed 20%-enriched uranium for civilian purposes, saying the country was forced to produce 20 percent-enriched uranium for medical and therapeutic purposes.

Iran has been pursuing a civilian nuclear program, and has acted in good faith over its nuclear activities.

Iran has demonstrated full cooperation with the International Atomic Energy Agency (IAEA), and stressed time and again that its atomic work is merely geared to peaceful ends.

Nevertheless, the West has accused Iran of developing a nuclear weapons program and put the country under pressure to forswear its entitlement to civilian nuclear knowhow.

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Whoever Attacks Iran Will Regret It
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The Iranian foreign minister says any country which attacks Iran will regret it, adding Iran is set to safeguard its inalienable rights.

"No one can ignore the rights of a nation," Manouchehr Mottaki said in an interview with German weekly magazine Der Spiegel, according to Fars News Agency.

"Iran is determined to defend its rights, and anybody who attacks Iran will be regretful," Mottaki said.

He underlined attacking Iran has been on Israel's mind for several years.

"The Zionist regime knows exactly what fate is awaiting it here. By attacking Iran, the Zionist regime will put its existence on the line."

On possible dialog with the Vienna Group (comprising the United States, Russia, France and the IAEA) in the near future, he underlined the talks will focus on nuclear fuel swap.

"Iran is ready to exchange its low-enriched uranium (LED) with 20% enriched fuel for the Tehran (nuclear) research reactor," said the top Iranian diplomat.

He underscored Brazil and Turkey may also take part in the negotiations.

Mottaki said Iran has never demanded anything beyond its rights, adding the best thing to do at the moment is to recognize Tehran's legitimate rights.

The top diplomat then touched upon Iranian President Mahmoud Ahmadinejad's readiness for one-on-one talks with his American counterpart.

"Mr. Ahmadinejad has announced his willingness for direct talks with US President Barack Obama in a public debate. This is different from official negotiations between Iran and the US mentioned by Leader of the Islamic Revolution [Ayatollah Seyyed Ali Khamenei]," the foreign minister highlighted.

Mottaki further told the German weekly that sanctions imposed on Iran have immunized the country against the global economic crisis.

He also said the unilateral sanctions slapped by the European Union against Iran will definitely harm Europe more than it will hurt Iran.

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Japan Says Too Early to Resume Korea Nuclear Talks
Associated Press
(for personal use only)

Japan rejected North Korea's apparent interest in a quick resumption of six-party talks on Pyonyang's nuclear program, saying Tuesday that the time was not right for fresh discussions.

The talks involving the two Koreas, China, the United States, Russia and Japan have been stalled since North Korea walked away from them in December 2008. But Chinese state media reported Monday that North Korean leader Kim Jong Il told President Hu Jintao that he would like to see the talks restarted.

In a meeting Tuesday with China's nuclear envoy, Wu Dawei, Japanese Foreign Minister Katsuya Okada said conditions for talks were not right considering the increased tensions in the region over the deadly sinking of a South Korean warship in March that an international team of investigators has blamed on Pyongyang.

"As South Korea is dealing with the sinking of its warship, it is still too early to resume the six-party talks," Okada was quoted as telling Wu, according to a statement from the ministry.

Pyongyang has denied involvement in the attack.

Communist North Korea is believed to have enough weaponized plutonium to make at least a half-dozen atomic bombs and conducted a nuclear test last year, earning stricter U.N. sanctions.

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North Korean Pair Viewed as Key to Secret Arms Trade
Jay Solomon
The Wall Street Journal
(for personal use only)

A North Korean arms chief and Pyongyang's former ambassador to the United Nation's nuclear agency have emerged as key figures in an intensifying international effort to curb North Korea's weapons-trading activities.

The global dealings of the two men, Chun Byung-ho and Yun Ho-jin, whom North Korea analysts believe to be related through marriage, date back to the 1980s. They have played leading roles in North Korea's development and testing of atomic weapons, according to current and former U.S. officials, Asian intelligence analysts and U.N. nonproliferation staffers.

More troubling to officials, Messrs. Chun and Yun also oversee Pyongyang's vast arms-trading network, which appears to be spreading. They have shipped components for long-range missiles, nuclear reactors and conventional arms to countries including Iran, Syria and Myanmar.

On Monday, the Obama administration announced economic sanctions against various individuals and entities involved in Pyongyang's nuclear work and in alleged illicit trading activities. The Treasury Department named Mr. Yun and the North Korean body headed by Mr. Chun—the Second Economic Committee of Pyongyang's ruling Korean Workers' Party. The sanctions freeze any U.S. assets of those named and bar Americans from conducting business with them. Treasury also warned that foreign firms doing business with them risked sanctions.

The Second Economic Committee oversees a little-known foreign trade office with the Orwellian name of Office 99. The proceeds from the Office's arms sales go directly to North Korean dictator Kim Jong Il and Pyongyang's senior leadership, according to these officials and recent North Korean defectors.

"It is broadly believed that the Second Economic Committee...plays the largest and most prominent role in nuclear, other WMD and missile-related development programs, as well as arranging and conducting arms-related exports" for North Korea, says a report issued in May by the U.N. committee tasked with enforcing international sanctions on Pyongyang.

The U.S. and U.N. recently have intensified efforts to combat the Second Economic Committee and Office 99, alarmed by Pyongyang's two nuclear-weapons tests and its alleged role in sinking a South Korean naval vessel in March. Last year, the U.N. formally sanctioned Mr. Yun and his arms company, Namchongang Trading Co.

North Korean arms shipments moving through Thailand, the United Arab Emirates, South Africa and the South China Sea have been seized or turned back by the U.S. and its allies over the past few years. A Japanese court convicted a Tokyo-based trading company in November of procuring military technologies for Pyongyang with the intent of shipping them to Myanmar.

Yun Ho-Jin appeared in video footage of then-IAEA Director-General Hans Blix's 1992 visit to North Korean nuclear sites. Mr. Yun walks alongside Mr. Blix at the start of the video.

Still, Messrs. Chun and Yun's decades of experience in the weapons trade pose a challenge to an international community keen to disrupt Pyongyang's proliferation activities, say U.S. and Asian officials. "There is no reason to assume that Chun and Yun won't sell nuclear weapons," says David Asher, a former Bush administration official who has tracked Pyongyang's arms trade for a decade. "There needs to be an active effort to disrupt their WMD networks and drive them out of business now, before it's too late."

The two men have established a network of front companies in Asia, Europe and the Middle East and have partnered with Southeast Asian, Japanese and Taiwanese criminal syndicates to move cash and contraband, say U.S. officials. And Mr. Yun has used the political cover provided by Pyongyang's closest ally, China, to openly conduct business in cities such as Beijing and Shenyang, drawing official rebukes from Washington.

North Korean diplomats at Pyongyang's U.N. mission in New York did not respond to requests for comment. Messrs. Chun and Yun couldn't be reached.

Current and former U.S. officials say North Korea's operations resemble in both scale and tactics those of Pakistan's Abdul Qadeer Khan—one of the most notorious arms dealers in recent years. U.S. officials fear that isolated North Korea, desperate for hard currency, could accelerate its arms exports in a bid to prop up Kim Jong Il's finances.

Mr. Chun, now 84 years old, and his Second Economic Committee emerged as major global arms exporters in the 1980s, as North Korea shipped as much as $3 billion worth of rockets, pistols and submarines to Tehran during the eight-year Iran-Iraq war, say recent defectors and North Korea analysts.

Pyongyang assisted some communist and socialist countries militarily during the 1960s and 1970s, and provided fighter pilots to aid Egypt and Syria in their wars against Israel. But North Korea found a largely captive market in Iran, which faced a U.S.-led weapons embargo as the West threw its support behind Iraqi strongman Saddam Hussein.

One senior North Korean defector who worked in Pyongyang's munitions industries says he was dispatched to Iran by the Second Economic Committee in 1987 with the task of constructing missile batteries on the Iranian island of Kish to help Tehran better control the movement of ships through the Straits of Hormuz.

His main interlocutor was Iran's elite military unit, the Islamic Revolutionary Guard Corps. The former hydro-mechanic says camaraderie developed between his 100-man team and the Guard, despite their different backgrounds.

Mr. Chun's control over the Second Economic Committee was tied to his close relationship with Pyongyang's ruling Kim family, say defectors and North Korea experts. The Russian-trained bureaucrat served as a member of North Korean founder Kim Il Sung's bodyguard unit. He rose up the ranks of the Korean Workers' Party with the political support of Kim Jong Il, eventually securing a position on Pyongyang's most powerful political body, the National Defense Commission.

North Korea's high-level defector, Hwang Jang-yop, has identified Mr. Chun as the broker of a key barter trade in the 1990s with Pakistan that significantly advanced Pyongyang's nuclear infrastructure. The agreement resulted in North Korea shipping parts for long-range missiles to Islamabad in exchange for A.Q. Khan sending centrifuge equipment used in producing nuclear fuel.

As Mr. Chun pushed forward North Korea's nuclear program from Pyongyang, Mr. Yun, believed to be the husband of Mr. Chun's second daughter, emerged as a key player in procuring technologies for the Second Economic Committee from Europe, according to U.S., U.N. and European officials.

Mr. Yun, 66, arrived in Vienna in 1985 as Pyongyang's ambassador to the International Atomic Energy Agency. The English and German speaker led negotiations with the U.N. agency aimed at forging a nuclear-inspection agreement with North Korea, and he helped oversee a 1992 tour of his nation's Yongbyon nuclear facility for Hans Blix, the IAEA's then-managing director.

"Yun was dedicated to turning things around. I truly believe that," says Willi Theis, who worked closely with Mr. Yun as the head of the IAEA's safeguards unit overseeing North Korea. Mr. Theis is now retired.

Still, concerns grew inside the IAEA about Mr. Yun's activities, as relations between Pyongyang and the international community deteriorated, according to IAEA officials.

In 1993, North Korea broke off talks with the IAEA over the agency's demands for an inspection of the country's nuclear operations, and the U.S. charged Pyongyang with secretly stockpiling plutonium for atomic weapons. The next year, the Clinton administration threatened to bomb the Yongbyon facility if North Korea didn't explain where the plutonium had gone. Mr. Yun grew embittered with the diplomatic process and mistrustful of the U.S. and its allies, according to IAEA staff and journalists who met with him.

Mr. Theis says he spent hours discussing the process with Mr. Yun and pressed the Agency to remain engaged with Pyongyang. The West German-born nuclear inspector says he grew suspicious of Mr. Yun's many trips to other European cities and his contacts with local companies. Mr. Yun even hinted to Mr. Theis that he might have no choice but to directly support North Korea's nuclear-weapons programs if relations with the IAEA collapsed.

"He came to the conclusion that dealing with the international community was totally disappointing," said Mr. Theis in a phone interview from Austria. "Mr. Yun had definitely learned how to establish contacts with all types of people [while in Vienna]—not just from the IAEA, but managers of companies."

Mr. Theis's concerns about Mr. Yun would be borne out in 2003, when a German businessman, Hans Werner Truppel, was arrested and eventually convicted by a Stuttgart court of selling 22 metric tons of aluminum tubes to Mr. Yun.

The North Korean and his company, Namchongang Trading, used offices in Beijing and Shenyang, China, to place orders for the equipment, which is critical to building centrifuges needed to enrich uranium, according to a German Customs Bureau report. U.S. officials briefed on the case were alarmed that Mr. Yun conducted some of his business through the offices of Shenyang Aircraft Industry Co., a Chinese state-owned firm.

In the ensuing months, the State Department aired its concerns about Mr. Yun's activities to China's government, according to former U.S. officials. But Beijing took no action.

China's ministries of foreign affairs and commerce didn't respond to requests for comment. Shenyang Aircraft says it had no recollection of any dealings with Mr. Yun.

Messrs. Chun and Yun have sought to accelerate North Korea's weapons sales and procurement in recent years and allegedly have played important roles in strengthening Pyongyang's military ties to countries such as Syria and Myanmar, say current and former U.S. officials.

North Korea analysts believe most of these transactions have been conducted through Office 99, which they describe as an international sales office and slush fund for Kim Jong Il.

"Anything that has to do with the imports and exports of weapons flows through Office 99," says Oh Kongdan, a North Korea expert at Virginia's Institute of Defense Analyses, a Pentagon-funded think tank. "It's a royal patronage system."

U.S. officials say that since the late 1990s they detected through intelligence channels intensifying military cooperation between North Korea and Syria, focused on everything from the development of chemical weapons to missiles.

In September 2007, Israeli jets bombed a facility in eastern Syria that U.S. officials say was a nearly operational replica of North Korea's Yongbyon nuclear reactor. As many as 10 North Koreans died in the Israeli attack, according to U.S. officials. Mr. Yun and Namchongang Trading are believed to have played a central role in brokering development of the facility.

"That particular company was all over the nuclear trade. There's no question about it," says John Bolton, who served as the Bush administration's top non-proliferation official. Both Syria and North Korea have denied cooperating on developing nuclear technologies.

Over the past two years, U.S. and U.N. officials have also voiced concerns about North Korea's deepening military ties with Myanmar, the Southeast Asian country formerly known as Burma.

North Korea engineers have helped Myanmar build a maze of fortified bunkers to house senior government officials and military installations, according to Burmese defectors and commercial satellite photos. Current and former U.S. officials say Washington has intervened to block the transfer of Scud missiles to Myanmar from Pyongyang.

In June, Japan's Ministry of Economy and Trade banned Tokyo-based Toko Boeki Trading Co. and device maker Riken Denshi from conducting international trade after three of their affiliated executives, one of them an ethnic Korean, were arrested trying to send machine tools on an export-control list to Myanmar using a dummy company in Malaysia. The equipment could be used to develop either ballistic missiles or centrifuges for a uranium-enrichment program, according to weapons experts. And the U.N. in its May report said it was examining "suspicious" ties between Mr. Yun's Namchongang Trading and Myanmar, possibly linked to these activities in Japan.

The Obama administration, in response, has announced a stepped-up campaign to block North Korea's ability to raise funds through the arms trade. In addition to the new sanctions, the Pentagon has said it will intensify the interdiction of ships and planes believed to be carrying North Korean arms.

Still, Mr. Theis and other North Korea experts believe that it is only through dialogue that the West will be able to curb the North's proliferation threat. Mr. Theis says he is recently lobbied the IAEA to allow him to return to Pyongyang to hold meetings with Mr. Yun. So far, he says, the IAEA hasn't agreed.

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South Korea Offers North Aid, China Wants Nuclear Talks
Jeremy Laurence and Jack Kim
(for personal use only)

China pressed regional powers on Tuesday to restart talks on ending North Korea's nuclear ambitions, and Seoul offered aid to its destitute neighbor despite a new round of U.S. sanctions against Pyongyang.

In a move that could ease tensions on the peninsula, South Korea made its first large-scale offer of humanitarian aid to the North since the sinking of one of its warships in March.

Seoul offered 10 billion won ($8.4 million) to North Korea after heavy rains in July and August in its northern and eastern provinces forced thousands from their homes and put farmland under water.

Seoul cut off most of its ties with Pyongyang after accusing the North of torpedoing the Cheonan corvette and demanded an apology.

North Korea says it did not carry out the attack, and has told its only major ally China it is committed to denuclearizing the peninsula and wants to resume the aid-for-disarmament talks.

Analysts say the North's willingness to return to talks could be a sign international sanctions are hurting the isolated state, whose battered economy is just 3 percent the size of the South.

China is lobbying neighbors to sign up for renewed talks, and on Tuesday Beijing's nuclear envoy met his Japanese counterpart in Tokyo to discuss a plan to get the six parties back to the negotiating table.

"Both of us agreed to work together to safeguard peace and stability of the Korean Peninsula, meanwhile, we also agreed to work together with the others to push forward the resumption of the six-party talks as soon as possible," Wu Dawei said.

A South Korean diplomatic source said at the weekend that China had proposed a three-stage process to Seoul to restart the talks. He said North Korea and the U.S. should first conduct bilateral talks that could open the way to the broader, six-party negotiations, the source said.

China's regional lobbying, and its courting of secretive Kim Jong-il, highlight the pressures that North Korea -- isolated, poor and with a brace of primitive nuclear bombs -- has brought to bear on the region that is home to the world's second and third biggest economies and a big U.S. military presence.


President Barack Obama broadened financial sanctions on North Korea on Monday and froze the U.S. assets of four North Korean citizens and eight firms in part to punish the North for the sinking of the Cheonan.

U.S. officials hope the measures, which target North Korean entities that trade in conventional arms and luxury products and that counterfeit U.S. currency, will also sharpen pressure on the North to abandon its nuclear programmes.

A foreign ministry spokesman in Seoul welcomed the toughened U.S. sanctions. "It can be assessed that the U.S. sanctions regime on North Korea has been completed overall," he said.

The new U.S. sanctions steps aim to target the leadership of the isolated, authoritarian nation, which is preparing for a key party conference that analysts say could nail down succession plans, involving Kim's youngest son, Kim Jong-un.

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C.  India

Flawed Liability Law Threatens India-US Nuclear Deal
Economic Times
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Suggesting that the Indian parliament had passed a flawed civil nuclear liability law, a US South Asia expert has warned that it could cast a pall over the historic India- US civil nuclear deal.

An internationally compliant civil nuclear liability regime that would facilitate US investment in India's nuclear industry would have been the last step in completing the nuclear deal, noted Lisa Curtis, Senior Research Fellow for South Asia at The Heritage Foundation, a Washington think tank.

US policymakers and industrial leaders were taken off guard over the passage of the legislation "despite retaining language inconsistent with international standards for engaging in nuclear commerce," she wrote in a commentary.

The law includes language that makes suppliers of equipment, raw materials, and services liable - beyond the recourse already available through the courts - for 80 years after the construction of a plant in the unlikely event of a nuclear accident.

Noting that Indian business groups have denounced the legislation, Curtis said: "This latest obstacle in the US-India nuclear deal is unfortunate, as it follows the successful completion of a US-India nuclear reprocessing agreement earlier this year, which granted India the right to reprocess spent nuclear fuel."

"This liability law also follows a dust-up between the US and India over flawed US legislation passed in the US Congress a few weeks ago that directly targets Indian companies that bring highly skilled workers into the US," she noted.

But "there is still an opportunity to find solutions to these issues before President (Barack) Obama visits India in November, but both sides will have to step up their engagement and find common ground on issues of mutual interest," Curtis said.

"Domestic politics can impact foreign policy in any genuine democracy," she said. But "Washington and New Delhi need to move past the recent irritants in the relationship caused by domestic politics in both countries so that this important bilateral partnership will continue to advance."

There is no official US reaction to the legislation yet, but US India Business Council, representing 300 top US companies doing business with India, has also asked India to adopt a nuclear liability regime compliant with the International Atomic Energy Agency's Convention on Supplementary Compensation (CSC).

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USIBC Sore Over Nuclear Liability Bill Provision
S. Rajagopalan
Express News Service
(for personal use only)

The US-India Business Council (USIBC), the apex body of business firms from the two countries, has voiced disappointment over India’s civil nuclear liability legislation, cautioning that the measure could preclude the participation of the private sector, both Indian and foreign.

In its immediate comments on the Bill’s passage, USIBC bemoans the absence in the legislation of a nuclear liability regime consistent with the International Atomic Energy Agency’s Convention on Supplementary Compensation (CSC).

According to it, a CSC-compliant liability regime will “safeguard the Indian public interest by delivering swift, certain and adequate compensation in the unlikely event of an accident”. Such a regime would also attract to India the most responsible international suppliers, and facilitate integration of Indian industry into the global commercial nuclear supply chain.

The trade body that is affiliated to the US Chamber of Commerce went on to say that “the absence of an effective, CSC-compliant liability regime could preclude involvement by the private sector — both Indian and foreign — and stymie India’s multi-year effort to develop civil nuclear power”.

Stating that it is still reviewing the implications of the legislation passed by both Houses, USIBC said it would “seek clarification from the Government of India on whether and how Indian and foreign suppliers can move forward with NPCIL to vitalize India’s nuclear power sector”.

“We have taken a position from the outset that is consistent with the position stated publicly by India’s nuclear operator, the Nuclear Power Corporation of India, and supported by major Indian business associations and commercial nuclear suppliers -- that absolute and exclusive liability must be channeled to operators of nuclear power plants, and that a sole remedy must be established for compensation of claims,” USIBC said in a statement.

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Engineering Giants Gear to Set Up Nuclear Projects
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With passage of the nuclear liability Bill, the heavy engineering supply chain, led by Bharat Heavy Electricals Ltd (BHEL), Larsen & Toubro (L&T) and Bharat Forge Ltd (BFL), is gearing to take up the challenge ahead.

India plans 25,000 Mw of nuclear capacity addition by 2020 and this will be partly done through indigenous technology-driven reactors for a capacity addition of about 7,000 Mw and the balance through technology transfers from countries such as Russia, France and the US.

Despite concerns on supplier liability, domestic companies in both the private and government sector have over the past few years adopted the joint venture route.

L&T, India's largest private engineering company, is looking at revenue of about $1.5-2 billion every year (Rs 6,000-9,000 crore) from this business in another three years, K V Kotwal, whole-time director and senior executive vice president, heavy engineering, told Business Standard.

The 64-year-old L&T, which already has complete solutions for turbine island and balance-of-plant work related to nuclear reactors, will invest in building capabilities, A M Naik, chairman and managing director, told shareholders last week.

L&T has tie-ups with four major advanced reactor makers -- GE Hitachi of the US, Atomstroyexport of Russia, Toshiba Westinghouse of the US and Atomic Energy of Canada.

It also has an agreement with Rolls-Royce for light water reactors, nuclear instrumentation and controls, engineered products and systems, reactor components, engineering services, in-service reactor support and waste management.

Big plans

India plans to add 8x700 Mwe pressurised heavy water reactors, 3x500 fast breeder reactors, 1x300 Mwe advanced heavy water (thorium) and 10x1,000 Mwe light water reactors by 2032.

BHEL, which is associated with 80 per cent of the heavy equipment for India's indigenous nuclear power programme and has done turbines and generators of 540 MWe rating for the Tarapur station of the Nuclear Power Corporation (NPCIL), is now building the conventional turbine generator island for two 700 mw units each at Kakrapar and Rawatbhata.

L&T and Hindustan Construction Company (HCC) are doing the engineering, procurement and construction contracts for the two plants. The first unit at Kakrapar will start operations in December 2014, followed by the first unit at Rawatbhata in June 2015, said the BHEL executive.

The project is being done through a joint venture with NPCIL. The JV will rope in a foreign partner as an equity holder in the proposed company, to move to higher ratings of 1,000 and 1,600 MWe.

Another NPCIL joint venture has L&T as its partner for manufacture of finished forgings for nuclear reactors, pressurisers and steam generators, and also heavy forgings for critical equipment in the hydrocarbon sector and for thermal power plants.

BFL, the world's second-largest forging company, is also in the process of making a big foray into nuclear forgings capacity. In January 2009, it had signed a memorandum of understanding with Areva to set up a joint venture in casting and forging nuclear components for both the export and domestic market.

BHEL has a 10-year technology transfer agreement with Sheffield Forgemasters for large power plant components.

HCC has a joint venture with AMEC, the UK-based engineering and project management firm to undertake consulting services and nuclear power plant construction.

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D.  Nuclear Energy

Merkel's Cabinet Backs Nuclear Tax in $102 Billion Savings Plan
Brian Parkin and Nicholas Comfort
(for personal use only)

Chancellor Angela Merkel’s Cabinet backed a tax on nuclear power-plant operators, shunning utilities and German industry as the government holds to budget cuts it says are needed to protect the euro.

Ministers meeting in Berlin today approved the nuclear levy alongside a four-year program of spending cuts and revenue- raising measures worth about 80 billion euros ($102 billion), Finance Minister Wolfgang Schaeuble said. The draft legislation will now go to parliament for consideration.

Merkel is sticking to the savings plan even after the economy, Europe’s biggest, expanded at the fastest pace in 20 years in the second quarter. The cuts are necessary to comply with European Union budget-deficit rules that backstop the euro and ensure “solid” economic growth, Schaeuble told reporters.

“We’re fulfilling our responsibility as part of the European Union and the globalized world economy,” Schaeuble said. Germany, in urging other euro-region countries to do likewise, is “not being arrogant,” he said. “If you’re on the right path, then you can’t let up. You have to persevere.”

The savings program, elements of which were outlined in June, includes an air passenger tax of as much as 45 euros with immediate effect; welfare and defense cuts; a financial- transaction tax on banks of 2 billion euros per year from 2012; and a delay in the rebuilding of Berlin’s royal palace.

Ackermann Rebuffed

Merkel rebuffed pleas to drop the nuclear levy made in an open letter last month signed by the chief executive officers of E.ON AG and RWE AG, Germany’s biggest utilities, plus Deutsche Bank AG’s Josef Ackermann and BASF SE’s Juergen Hambrecht. In it, they said a policy of “helping the budget with new energy taxes blocks necessary investment in the future.”

The coalition will implement the nuclear tax “as budget consolidation means accessing additional revenue sources,” a copy of the draft bill posted on the Finance Ministry website said. The utilities may seek to pass on some of the cost of the tax to companies and consumers, the draft said.

Dusseldorf-based E.ON fell 0.2 percent to 22.17 euros as of 12:32 p.m. local time in Frankfurt trading, while Germany’s benchmark DAX Index rose 1.1 percent. Shares in smaller competitor RWE of Essen were down 0.1 percent at 51.65 euros. Both companies have fallen about 25 percent this year, making them two of the worst-performing DAX members. Of the 30 DAX companies, only HeidelbergCement AG has performed worse.

‘Cold Shower’

Announcement of the levy hit the utilities “like a cold shower,” Theo Kitz, an analyst with Merck Finck in Munich, who has “sell” recommendations on E.ON and RWE, said yesterday in an interview.

“They reacted pretty aggressively, with media campaigns and the lobbying that is usual in this industry,” he said. Even so, “it’s pretty clear the tax is coming. It’ll be a weight on them, especially on their cashflow. The utilities will probably invest less in coal- and gas-fired power plants as it looks like the government will commit them to funding renewable energy projects.”

Merkel’s government, near historic lows in opinion polls, faces public opposition to plans to extend the running life of nuclear-power plants as part of an energy policy to be announced by the end of September. Merkel said Aug. 30 that an extension of 10-15 years was “sensible.”

“The nuclear tax is pretty frustrating for the utilities, but the nuclear issue as a whole is by no means a done deal,” said Steffen Manske, an analyst at National Bank AG in Essen, who recommends investors “buy” shares in E.ON and RWE. “E.ON and RWE have already grown outside of Germany, where this tax won’t have any influence. It’s a very international business.”

The government aims for the tax on air travel to yield 1 billion euros per year, the draft bill shows. Flights will be subject to a levy of 8 euros per passenger for destinations in Europe; 25 euros to countries including Egypt and Israel; and 45 euros for all other destinations.

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Turkey in $10 Billion Reactor Deal with South Korea
Dan Yurman
The Energy Collective
(for personal use only)

Turkey may have another major nuclear reactor deal in the works. According to English language press reports from Ankara, South Korea is positioned to sign contracts by November to build a $10 billion project.

At that price, the site at Sinop on the Black Sea coast in northern Turkey could become home to at least two 1,400 MW KEPCO reactors. The sign-off could take place at the G-20 summit scheduled for Seoul Nov 11.

According to the press reports, officials from KEPCO were in Ankara this week to meet with Turkey’s energy minister Taner Yildiz and other nuclear energy officials.

Turkey already has one deal in place, signed in May 2010, for new nuclear reactors on its Mediterranean coast to be build by Russia’s state-owned nuclear export agency. That deal took a long time to close due to differences over the price of electricity to be delivered from the reactors.

In Turkey some experts were skeptical the deal will move as fast as reported by the media. Haluk Direskeneli, an Ankara based energy analyst, (right) told this blog via email that the negotiations could drag into mid-summer 2011 when new elections take place. He feels the government will be in a strong position to ink a deal at that time.

He also said that the difference between the Russian deal and the South Korean one is that Russia is deeply involved in Turkey’s energy infrastructure and supply chain. It provides natural gas and oil to Turkey. On the other hand, he says, South Korea has only minor trading relationships with Turkey and isn’t involved in Middle East politics. Read more at a blog published by Haluk Direskeneli on this issue.

KEPCO’s growing market share in the Middle East

The KEPCO reactor is new to the global market. However, KEPCO has wind in its sails having inked a $20 billion deal with the United Arab Emirates in December 2009 to build four of them in that Persian Gulf country. The deal followed sign-off of a 1-2-3 agreement with the U.S. in principle will allow U.S. firms to supply reactor components and nuclear fuel to the UAE.

However, so far far contracts let by KEPCO have gone to other South Korean firms including Doosan Heavy Industries. The first contract awarded this past July is worth $4 billion. Using its own technology, Doosan Heavy Industries will design, manufacture, and supply the Nuclear Steam Supply System and turbine assemblies for the project.

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E.  Links of Interest

Cracks in India's Nuclear Law
Indrajit Basu
Asia Times
(for personal use only)

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Japan Set to Toughen Sanctions on Iran - Nikkei
(for personal use only)

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North Korea Forges Trade Documents to Dodge Sanction: Report
Kwang-Tae Kim
Associated Press
(for personal use only)

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West Did Not Oppose Pakistan Nuclear Programme Due to Afghan War: AQ Khan
Hindustan Times
(for personal use only)

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What Do the Six Parties Want From North Korea Talks?
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