FREE

The Chinese-Romanian Nuclear Cooperation

This policy brief looks into the technological, financial and safety related aspects of the cooperation between Romania and China for completion of Units 3 and 4 at the Cernavodă NPP, and argues that there are more pluses than minuses hanging in the balance. The Romanian authorities want to revive the plans to build the two reactors by bringing China as a financier of last resort. But, is China up to the task of being also involved in the execution of the project and, if so, on what basis? The author of this brief considers that safety concerns regarding Chinese companies are unwarranted as Beijing has invested significantly more in safety in prestigious and high-profile projects, such as nuclear reactors, than in general industrial projects which have been invoked by China bashers as reasons for nipping the deal in the bud. Since support for the completion of these two reactors has ebbed and flowed, for financial reasons primarily, losing yet another investor can turn to be a final nail in the coffin of this project. However, Romania needs to tread carefully with its new partner.

In November 2013, the Romanian Department of Energy and the National Energy Administration of China signed a letter of intent for the construction of Units 3 and 4 of the Cernavodă Nuclear Power Plant (NPP).^[1] In April 2014, China General Nuclear Power Corporation (known as CGN) and Societatea Națională Nuclearelectrica (SNN) extended the validity of the letter until December 31, 2014. Previously, the Vice President of the Romanian Senate, Nicolae Moga, had declared that a deal would be sealed in May 2014. Yet, the negotiations quickly turned topsy-turvy: gaffes and dawdling undercut the painstaking efforts taken to move forward. Finally, the cooperation agreement between China Nuclear Power Engineering Co (CNPEC, a subsidiary of CGN) and Candu Energy for the construction of the two reactors was signed in July.^[2] However, in the interview given by Constantin Niță, Romania’s Economy Minister, to Bloomberg the same month, he expressed both Bucharest’s intention to have the Chinese build two reactors and open up the bid to additional investors which created confusion.^[3] Earlier, Romanian officials envisaged an arrangement which would give the Chinese a 51% stake in the project, and the Romanians 49%. Niță’s statement sent mixed signals to Beijing, making it unclear whether Romania will rely only on the Chinese for the construction of Units 3 and 4, or on several other companies. The visit paid by the Romanian Prime Minister Victor Ponta to Beijing at the beginning of September 2014 aimed at smoothing the negotiations out.

Romania’s much touted intention to partner up with China in the sphere of atomic energy stirred both domestic and foreign audiences, due to the sheer magnitude of the deal (the value of the investment would rise to € 6.5 billion). Analysts rushed to pontificate about Beijing’s plans to drive a wedge between Western and Eastern Europe through its nuclear diplomacy.^[4] Moreover, articles about China’s questionable safety standards in its own construction industry spread like brush fire on social media. Since the beginning of 2014, the Romanian government has sought to assuage some of these fears of nuclear doom and gloom by providing details about the status of negotiations, as well as about the role the Chinese would have in the construction of Units 3 and 4 at Cernavodă.^[5] The Romanian authorities have stressed the fact that it would not be Chinese construction workers doing the actual job, but Romanian workers, a point which refers not only to the need for employment in that particular region, but also to the commitment of the Romanian authorities to safety standards.

These developments raise a few key questions:

• First and foremost, why did the Romanian government revamp the plan to build Units 3 and 4, after the project had been previously deemed wasteful and subsequently mothballed? How would the Romanian economy benefit from such a project?
• Second, are the Chinese up to the task? Are they cutting corners on nuclear-related domestic or foreign projects? Do they have any prior experience in such large-scale projects that may be useful for their first incursion into Eastern Europe?
• Third, what alternatives does Romania have in terms of investors for Units 3 and 4?

This analysis starts from the following core assumption: that the nuclear market is a political market, combining state interference with private sector dynamism and competition. There are different approaches to contracts as far as design, engineering, and construction. With respect to the reactor model and design, the Romanian-Chinese deal will not involve any changes. Units 3 and 4 will be built according to the CANDU 6 reactor design (pressurized heavy water) owned by Candu Energy, just like Units 1 and 2. If at the very beginning (in the late 1970s and early 1980s), the Romanian authorities were interested in a turnkey project with Atomic Energy of Canada Limited (AECL), in time they shifted to a split-package approach, and again to a multi-contract approach. The latter implies the division of the project into a large number of separately supplied components and systems. Breaking the project into these subparts can maximise the choice of suppliers for each segment and thus allows the buyer to attract a more competitive offer. It can function as a catalyst for a greater contribution from local contractors, which gives a boost to the economy of the region where the NPP is located. However, with greater complexity comes a heavier responsibility for the coordinator of the project and it would be incumbent upon Candu Energy to find an effective way to cooperate with CGN and with the other suppliers. However, the fate of Units 3 and 4 ultimately depends on the Romanians, especially on the legal and financial framework Bucharest sets.

Current context

The Cernavodă NPP produces 1,310 MW (approximately 20% of Romania’s electricity supply), and by putting Units 3 and 4 into operation, the Romanian government hopes to double this capacity. However, soon after Unit 2 had become operational in 2007, the global economic crisis struck, with investors abandoning long-term capital-intensive projects like large NPPs. If in November 2008, five foreign utilities and industrial companies (GDF Suez, Iberdrola, RWE, ArcelorMittal, and Enel Italia) in cooperation with SNN formed a project company (EnergoNuclear) to complete Units 3 and 4, by January 2011 only two remained interested: ArcelorMittal (with a 6.2% stake) and Enel Italia (with a 9.15% stake).^[6] Both pulled out of EnergoNuclear in December 2013-January 2014, following the letter of intent signed between SNN and CGN.^[7]

The March 2011 Fukushima disaster made a bad situation worse, as the accident “damaged confidence in nuclear power” (Yukiya Amano, current Director General of the IAEA).^[8] With shares in the nuclear industry taking a nosedive (the uranium market suffered the most), 2011 and 2012 signalled the retreat of potential financiers for new nuclear power stations.^[9] By contrast, the Chinese eagerness to demonstrate their nuclear construction expertise in foreign markets represented a boon for the cash-strapped EnergoNuclear (a wholly owned subsidiary of SNN, in charge of Units 3 and 4).^[10] CGN would contribute €5.4 billion, bringing their expertise and equipment, but not the workforce. Job creation represented one of the points Romanian officials have insisted on: the completion of Units 3 and 4 would generate between 50,000 to 80,000 jobs for the Romanian economy.^[11] Such arrangements look good on paper, especially in an electoral year (Prime Minister Victor Ponta, who made the negotiations with China a hallmark of his mandate, is running for President this fall), but they usually involve numerous twists and turns in practice.

Public opinion weighs heavily on PM Ponta, especially given the protests against Roșia Montană and shale gas in 2013. A series of polls (conducted by Gallup Romania for SNN^[12] in July-August 2011, and environmental NGOs such as Ecopolis and Greenpeace in May-June 2011 and March 2012, respectively) suggest that a majority of the population (44% according to Gallup Romania and 62% according to Greenpeace^[13]) is against building new nuclear power stations, while only a minority of legislators believe investments in nuclear energy should be a priority (according to Ecopolis, only 10% of MPs consider nuclear a priority investment area vs. 76% who believe renewable energy should be a priority^[14]). In the absence of recent surveys on public attitude towards nuclear energy, estimating how hostile the population is to Units 3 and 4 is problematic. However, as the aforementioned studies indicate, an anti-nuclear campaign would have a large enough base to push the project in the doldrums.

In the long run, Units 3 and 4 can upset the electoral balance in several crucial constituencies for the Social Democratic Party (PSD). An increase in the share of nuclear power can displace local coal which still provides cca. 30% of Romania’s electricity. A scenario in which the population in coal-rich areas (Gorj, Vâlcea, Mehedinți, Prahova, Argeș, and Olt counties) would support further mine closures simply does not hold water,^[15] not taking into account the special relationship that PM Ponta himself has with the coal rich regions in Romania. The government will be compelled to pay heed to the position of the coal lobby and allay its concerns about how nuclear power will affect the energy mix, since Romania already has a significant excess of electricity capacities (21.5 GW total installed power generation capacity in July 2014^[16] with an average demand of 6 – 6.5 GW^[17] and a record peak electricity demand of 9 – 9.5 GW in winter 2012, for instance^[18]).

In January 2014, Romania and Turkey signed a Memorandum of Understanding for the High Voltage Direct Current (HVDC) Interconnection Link.^[19] Romania could provide up to 1,000 MW of electricity to Turkey, where demand growth for electricity reaches 8% per annum.^[20] In fact, Units 3 and 4 of the NPP are specifically related to the possibility of exporting power to Turkey. On the other hand, the government in Ankara has established its own nuclear power program.^[21] However, Russia’s conflict with Ukraine puts Turkey in a particularly uneasy position. Recep Tayyip Erdoğan, who was recently elected President, has to perform a delicate balancing act: maintaining Turkey’s key position in NATO without angering Putin. Ankara seeks to maintain good relations with Moscow, as Russia is Turkey’s second trading partner after Germany.^[22] According to Soner Cagaptay from the Washington Institute (a U.S.-based think-tank), although Erdoğan is known for taking a ‘business-first’ approach to inter-state relations, Crimea has revived “deep-rooted fears among many Turks about […] waking up the Russian bear“.^[23] It remains to be seen how Russian-Turkish relations, especially the plan to build the Akkuyu NPP, will evolve against the Ukraine crisis background. But even if the Turkish-Russian partnership comes through all this turmoil unscathed, Bucharest’s plans to export its electricity surplus to Turkey remain in place. The Akkuyu NPP would start production only in 2021, a few years after Units 3 and 4 at Cernavodă are scheduled to come on line. Therefore, the HVDC Interconnection Link represents an opportunity that Romania wouldn’t want to let slip.

Is China the right partner?

When the first Chinese nuclear power station (at Qinshan) came on line in 1991, few imagined that Beijing could make the transition from new entrant to mainstream market competitor so quickly. The fact that it was less than a decade ago that national energy plans drawn by the Chinese government treated nuclear as a niche generation technology makes this transformation ever more impressive.^[24] China energy policy has been long wedded to coal-fired power stations (which, in 2012, provided 66% of the total installed capacity). Trailing far behind on second place is hydro power, with 22%, while nuclear amounts to a paltry 2%.^[25]

Mammoth projects, like the Three Gorges Dam and the Xiaonanhai dam on the Yangzi River, stole the show for much of the 1990s and 2000s. Then, it was clear that the odds were stacked against nuclear, as several of the previous generation of Chinese leaders, such as Li Peng (Prime Minister from 1988 until 1998), and Hu Jintao (the former General Secretary of the Chinese Communist Party – CCP), were hydro engineers.^[26] Yet nuclear saw its luck change: coal poses an enormous logistical challenge, because most reserves are in the North or North-West (in particular Shanxi Province) while economic growth in China is driven by cities in the East and South-East.^[27] Transporting coal across the country takes up almost half of China’s rail capacity.^[28] Moreover, with protests emerging over the ghastly levels of pollution in China’s big cities and increasingly in the sparsely-populated West (coal-fired plants are at fault for hazardous pollution levels), the CCP leadership realized it cannot appear as doing nothing for Chinese citizens.^[29] China’s coffers already feel the pinch, as economic losses caused by air and water pollution amount to between 3.5 and 8% of GDP, according to the World Bank.^[30] Hydro plants are not the best option either, because the population perceives them as disruptive (given the practices of enforced relocation, and poor compensation adopted by the Chinese authorities).^[31] This combination of factors made the Chinese leadership turn to nuclear energy, which Beijing has promoted as “a clean, efficient, and reliable source of electricity generation”, not to mention geographically convenient (nuclear reactors can be built close to centres of demand, where wind and hydro may be unavailable).^[32]

China has 20 nuclear reactors in operation, with 28 under construction (of the 68 under construction globally), and 16 more having received preliminary approval to be built.^[33] Because of the tremendous energy it releases (1 kg of 235U produces the equivalent to 2,700 tonnes of coal) and its unparalleled destructive potential (in the form nuclear weapons), atomic energy still bestows great prestige upon its users. Aware of the global clout that comes with an advanced nuclear energy program, the Chinese leadership insists on upgrading its status from a “big nuclear power country” to a “strong nuclear power country”.^[34] Nuclear energy helps China consolidate its position as the world’s second largest economy and a responsible international player.

Yet, Beijing is also aware that with great power comes great responsibility. The Fukushima disaster rang alarm bells throughout the world and China’s quick response indicates that the CCP takes the danger of a nuclear accident very seriously. Less than a week after the catastrophe in Japan, the Chinese leadership imposed a moratorium on new construction permits for nuclear power stations and ordered a sweeping review of nuclear safety and laws and regulations for the field of nuclear energy.^[35] To increase transparency, the government solicited public input on the new nuclear safety plan it drafted in May 2012.^[36] The main objective of this new safety plan is to ensure that no ‘serious accident’ (Level 3 or higher on the International Nuclear and Radiological Event Scale – INES) occurs at any reactor.

International Nuclear and Radiological Event Scale

Source: International Atomic Energy Agency

So far, China has not reported any incidents classified higher than INES Level 2. The year 2011 marked the third leg of a significant change in China’s nuclear policy from ‘moderate development’ in the 1990s to ‘positive development’ in 2004, and finally to ‘steady development with safety’.^[37] This turn dealt a blow to the global nuclear industry, stoking up existing fears about a recalibration of the Chinese nuclear power program. Indeed, if before Fukushima, China was aiming for 86 GW of installed nuclear power capacity by 2020, that target was cut to 58 GW by 2020 following the 2011 accident in Japan.^[38]

However, the Chinese authorities were careful to underline that China was not renouncing nuclear power.^[39] During the moratorium, work on the 27 reactors under construction at the time continued according to plan, with one of these reactors, Ling Ao, actually being completed in August 2011.^[40] Moreover, the stress tests performed on operating and under construction reactors came out positive, giving them “a clean bill of health.”^[41] In October-November 2012, the Chinese nuclear regulator, the National Nuclear Safety Administration (NNSA), resumed issuing new construction permits. According to the World Nuclear Association, China has demonstrated an “unprecedented eagerness to achieve world’s best standards in nuclear safety”.^[42] Operational Safety Review Teams (OSART) from the International Atomic Energy Agency (IAEA) are routinely invited to carry out external safety reviews.^[43] As a matter of fact, each NPP in China undergoes one such review per year from an international or national organization.^[44] In December 2013, the NNSA agreed to a collaboration with its Japanese and South Korean counterparts on nuclear safety and information exchanges in nuclear emergencies.^[45]

In addition to the enhanced regulatory framework and intensified partnerships, the post-Fukushima review brought another silver lining for the Chinese nuclear power program and for the global nuclear industry: an opening for more advanced technologies to enter the Chinese market. In 2011, Zhou Xizhou (associate director of IHS Cambridge Energy Research Associates in Beijing) presciently stated that China would favour safer, third generation reactors.^[46] This turn found fertile ground in China’s existing partnerships with Areva (France) and Westinghouse (currently owned by Toshiba). The adoption of the AP1000 pressurized water reactor (PWR) from Westinghouse is China’s turn to safer reactors writ large. The AP1000 relies on a passive safety system, which means that during a station blackout or loss of all electrical power, the reactor is shut down automatically, with no need for human intervention for up to 72 hours. In this interval, the AP1000’s safety system harnesses natural forces like gravity, convection, and condensation to achieve safe shutdown of the reactor. ^[47]

AP1000 passive safety system

Source: Westinghouse

In the first few hours after a blackout, the AP1000 passive safety system relies on a natural circulation flow of coolant water, determined by the density differences between the cold reactor coolant in the passive heat exchanger and the hot fuel in the reactor core. When water evaporates, it is replenished from a source located in the adjacent cask washdown pit, which is gravity-fed to the spent fuel pool. In the next phase heat is transferred to the water inside the in-containment tank, which begins to boil and produces steam. This steam triggers the activation of the Passive Containment Cooling System, which relies on water stored in tanks located on the roof of the Shield Building. This water drains on the top and sides of the steel containment vessel, cooling it. Then natural convection airflow passing through the shield building cools the water that is recirculated outside the steel containment vessel thanks to evaporation and condensation. Meanwhile inside the steel containment vessel, a continuous cooling cycle forms thanks to the condensation of steam back into water, transferring heat from the reactor core.

After 72 hours, water makeup pumps, powered by ancillary diesel generators, are used to transfer water from the ancillary water storage tank to the passive containment cooling water storage tank to continue cooling the containment vessel. These pumps also transfer water to the spent fuel pool from the ancillary water storage to maintain the cooling of the spent fuel.^[48] The AP1000’s passive safety system would make a meltdown similar to the ones at Fukushima unlikely: the pumps that were meant to circulate coolant water and prevent the core of the boiling water reactors (BWR) at Fukushima Daiichi NPP from overheating relied on emergency generators, which failed to work because the low-lying rooms in which they were located had been flooded by the tsunami.^[49]

The battle for introducing Generation III+ reactors to China was waged in 2004 between the powerful CNNC, which was pushing for domestically-developed technology, and the State Nuclear Power Technology Corporation (SNPTC), a much smaller entity but with great contacts at the top, which insisted on importing foreign technology.^[50] The decision taken by the CCP Central Committee and the State Council (the Chinese Cabinet) to favour foreign technology was a victory for enhanced safety and alignment to international standards. The transfer of the AP1000 technology to China, for instance, established a close cooperation between the NNSA and the U.S. Nuclear Regulatory Commission (NRC), which will bolster experience and best practices exchanges.^[51] The 4-stage approach the Chinese leadership took towards expanding the nuclear power program gives both CNNC and SNPTC what they want. China’s nuclear technology transfer strategy involves the following phases: introduction, digestion, absorption, and re-innovation.^[52] So, if at the moment Beijing is relying on foreign nuclear companies for advanced reactor designs, ultimately the goal is to develop a Chinese brand which it could export worldwide. According to the SNPTC, “it is the dream of China’s energy and nuclear power industry to possess its own large-scaled advanced nuclear power technology with proprietary intellectual property rights”.^[53] Innovation and development grant Chinese nuclear companies exclusive proprietary rights over these new designs (the AP1000 will become the CAP1000 and later the CAP1400). The recent Sino-Pakistani deal spearheaded these new independently developed technologies on the global market. In November 2013, the Pakistani Prime Minister Nawaz Sharif signed a $9 billion agreement for two advanced Chinese APC1000 reactors to be built in the southern city port of Karachi.^[54] The state-owned China Exim Bank will provide Pakistan with a $6.5 billion loan, in a deal that would be repaid over the next 20 years.^[55] The Chinese will waive off $250,000 insurance premium on the loan and agreed to let the Pakistanis pay for their 18% share of the total cost in Rupees.^[56]

China’s ability to propel itself on the global nuclear market depends on the success of the AP1000 venture. All eyes are currently on four reactors Westinghouse is building, two at Sanmen in Zhejiang Province, and another two at Haiyang in Shandong. Given how keen the Chinese government is on saving money and making profits, some naysayers expect that the Chinese will cut corners, and sweep any problems under the rug just to be able to meet the tight deadlines set by the top economic planners and the political leadership.^[57] Moreover, the widespread corruption that mires China, which runs the gamut from bribery to statistical falsification, nepotism, and patronage, together with the conviction of Kang Rixin (a senior Party apparatchik) on charges related to rigged bids in the construction of nuclear power plants do not help allay fears about mismanagement and poor quality.^[58] When news about defects at the main pumps for the AP1000 broke, it seems as if the pessimists were right.^[59]

The fault for the defects in the main pumps (which circulate reactor coolant through the core, loop piping and steam generators) lay with one of the sub-contractors (Wollaston Alloys) working for the pump manufacturer (the Pennsylvania-based Curtiss-Wright).^[60] SNPTC faced a tough choice: either ignore safety considerations and put the reactor in operation, or admit to the existence of problems and delay putting it on line, thus incurring the risk of losing face at home and abroad (the Chinese political leadership has a very low tolerance to missing deadlines). SNPTC chose safety over expediency and reputation: it decided to delay the completion of the reactors in question until it could be sure that the pumps function flawlessly. The Chinese leadership is fully aware of how much harm a nuclear accident could inflict not only on its energy policy, but more widely on its economic growth. As the fate of the CCP is intrinsically linked to the government’s ability to deliver prosperity and better standards of living, the Chinese leadership must preserve its atomic energy program intact. As the head of CNNC, Su Qin, pointed out a few years ago, “For China, developing nuclear power is not a choice, but a necessity.”^[61]

Another indication that China is on par with other countries as far as safety standards are concerned is CNNC’s and CGN’s participation in a consortium (led by France’s EDF) tasked with building the UK’s first new nuclear power station in a generation (the Hinkley Point C plant in Somerset).^[62] This project stands out for two reasons: the cooperation with the French, and the entry on the European market through Britain. First, the Chinese have a long history of working together with the French in the field of nuclear energy (31 years).^[63] Many of China’s current and future nuclear power stations are the products of its fruitful collaboration with Framatome (which is now Areva) and EDF: the reactors at Daya Bay, Ling Ao, Taishan, Ningde, Fuqing, Yangjiang, Fangjiashan, or Shidaowan. At many of these reactors, the French came with the reactor design and the Chinese with the construction workers. To date, there have been no accidents (above INES 2 level) at any of China’s NPPs caused by managerial, technical, or human error. The partnership with the French is conducive to learning best practices, as France’s experience in the field of nuclear power spans 1,519 reactor-years (one reactor year means one reactor operating for one year). As far as the deal with the UK is concerned (which UK Chancellor of the Exchequer George Osborne hailed as a “new dawn”), CNNC’s and CGN’s 40% stake in the project would be the beginning of Chinese investment in the UK nuclear industry, as, according to the UK government, Chinese companies will be able to take a stake – including potential future majority stakes – in the development of nuclear power plants in the UK.^[64] Osborne also stressed the conditionality of these Chinese investment on an unwavering compliance with “rigorous regulatory standards for safety and security”.^[65]

There are, however, circumstances in which accidents may happen. Nuclear energy, like other forms of energy, is never risk-free. Earthquakes occasionally occur in China, but fortunately there are no nuclear power stations in the most quake-stricken area (Sichuan).^[66]

China: NPPs location relative to fault lines

Moreover, nuclear power plants located on the coast are exposed to tsunami or storm surge hazards that can occur because of China’s proximity to the ‘Pacific Ring of Fire.’^[67] Luckily, the deadly tsunamis of 2004 and 2011 have spared China, and so far there have been no incidents at any of China’s NPPs caused by natural hazards.

If not China, who else?

On September 2, 2014, Prime Minister Victor Ponta presciently pointed out that from a financial and technological point of view, China is the only investor capable of building Units 3 and 4.^[68] CGN was indeed the only company to submit a bid for the construction of the two power reactors by the September 18, 2014 deadline.^[69] Yet PM Ponta failed to offer any details on why choosing China is a foregone conclusion. Consequently, this brief will now outline the other options the Romanian government could have, drawing parallel not only with other Eastern European countries but also with more distant countries seeking to develop their nuclear energy industries.

CGN is a relatively new company compared to Areva, Toshiba, Westinghouse, and GE Hitachi, the four colossi which have shaped the spread of the atom since the dawn of the nuclear age. However, recent developments signalled that this situation will not endure. The shadow cast by Fukushima has fallen unevenly across the globe. Advanced industrial countries such as Germany, Canada, and Japan decided against building any new NPPs. Meanwhile, other countries carried out as normal. As an article from “Nuclear Engineering International” underlines, “all the hot spots for nuclear construction – Russia, the Arabian peninsula, the Indian subcontinent – lie in the Eastern hemisphere”.^[70] The companies involved in this expansion of the nuclear sector pose a serious challenge to the dominant position of the more traditional suppliers. Romania failed to attract a bid from the “big four” which is why it turned its attention to emerging suppliers (such as China and South Korea). Each of them presents its distinct set of advantages and shortcomings.

Russia appeared both unsuitable for and uninterested in Units 3 and 4 of the Cernavodă NPP. Rosatom would be unfit for the job because it has no experience in building CANDU reactors. Its indifference towards the Cernavodă project stems a history of strained relations in the field of nuclear energy since the Cold War era. Romania has not figured in Moscow’s plans as an attractive market for nuclear technology. In 1970 the USSR agreed to sell Bucharest a nuclear power plant but instead of delivering it, Moscow used the NCA it signed with Romania as a counter-proliferation mechanism. Unlike other countries in Europe, Romania has a relatively small basis for developing a close cooperation with Rosatom. The only facility built with Soviet assistance was the Măgurele VVR-S nuclear research reactor, which was recently decommissioned. History left its mark more heavily on other countries in Eastern Europe, such as Bulgaria, Hungary, the Czech Republic, Slovakia, Finland, and the Ukraine, which had relied for decades on the VVER reactor designed by the USSR. More recently, some of these countries, such as Hungary for instance, chose Russian companies to build additional NPPs, also for financial reasons. Moscow agreed to provide Hungary a 30-year loan, covering 80% of the costs involved in the construction of two additional reactors at the Paks NPP.^[71] Russia’s promise predates the imposition of sanctions by Western countries prompted by the Ukraine crisis, as well as the capital flight that ensued.^[72] Faced with unforeseen economic pains at home, Russia may have to reconsider its investments abroad. All in all, for political, technical, and economic reasons, avoiding a nuclear deal with Moscow appears to have been a good call.

An even better example of how Romania dodged a bullet involves South Korea. BKB, a South Korean consortium, manifested its interest in the Cernavodă project in 2011, soon after the Chinese had held their first talks with the Romanian government.^[73] Partnering up with South Korea sounded promising. South Korea, as Asia’s fourth largest economy, would have had the financial resources to fund such a project. It seemed to gain ground in other emerging markets, such as United Arab Emirates, winning a $20 billion tender in 2010.^[74] Also, the South Korean nuclear industrial complex had accumulated significant experience in operating CANDU reactors thanks to its decades-long cooperation with AECL (and its successor – SNC-Lavalin). Yet, in 2013 the South Korean nuclear industry suffered a major blow after 100 people, including a top former state utility official, were indicted on corruption charges.^[75] The top leadership of Korea Electric Power Corp (KEPCO) received bribes to issue fake safety certificates for parts used in nuclear reactors.^[76] The discovery of what some South Korean officials have called a “nuclear mafia style behaviour” resulted in the shutdown of several nuclear reactors, which had to undergo safety inspections and maintenance. BKB’s quiet withdrawal from the Cernavodă tender, caused by this upheaval in the South Korean nuclear industry, may be one of the best things Romania never had.

In conclusion, fighting corruption goes well beyond selecting a more scrupulous supplier. After all, it takes two to tango. If the Romanian authorities continue to see corruption as an acceptable way for making an extra buck, then irrespective of the company chosen to build Units 3 and 4 at Cernavodă, norms and regulations will not be worth the paper they are written on. Maximizing profits without cutting corners becomes the key issue in this respect. Other countries, such as Pakistan, have secured advantageous terms in their dealings with Beijing. The Romanian authorities should aim for similar bonuses. Despite their reputation as tough negotiators, the Chinese, if offered the right incentives, can make concessions.

It definitely helps that China has accumulated considerable experience through its cooperation with other nuclear suppliers (such as France), who are just as keen (if not even more so) as Romania to maintain safety and security. Having the Chinese involved adds another layer of complexity in managing this project, but it will be ultimately up to the Romanians to weigh every decision carefully, keep things in check, and do their homework in this partnership.

FOOTNOTES:

1. Biroul de presa al Guvernului României, Ședințe de Guvern, Informație de presă privind actele normative incluse pe agenda ședinței Guvernului României din 20 noiembrie 2013, ora 12.00, available at: http://gov.ro/ro/stiri/informatie-de-presa-privind-actele-normative-incluse-pe-agenda-sedintei-guvernului-romaniei-din-20-noiembrie-ora-12-00 ↑
2. Candu Energy is a subsidiary of SNC-Lavalin, whose predecessor – Atomic Energy of Canada Limited – AECL, supplied the heavy water reactors to Romania in the late 1970s. On the CNPEC – Candu Energy agreement, see: “China signs Candu deals with Romania and Argentina,” World Nuclear News, July 25, 2014, available at: http://www.world-nuclear-news.org/NN-China-signs-Candu-deals-with-Romania-and-Argentina-2507145.html ↑
3. Andra Timu, “Romania Seeks Deal with Chinese Company for New Reactors,” Bloomberg, July 4, 2014, available at: http://www.bloomberg.com/news/2014-07-04/romania-seeks-deal-with-chinese-company-for-new-reactors.html ↑
4. Mirel Bran, “La Chine a l’offensive en Europe centrale,” Le Monde, January 3, 2014, available at: http://www.lemonde.fr/idees/article/2014/01/03/la-chine-a-l-offensive-en-europe-centrale_4342407_3232.html ↑
5. “Nicolae Moga (PSD): Contractul româno-chinez privind construirea unităților 3 si 4 de la CNE Cernavoda se va parafa în luna mai,” Agerpress, January 17, 2014, available at: http://www.agerpres.ro/politica/2014/01/17/nicolae-moga-psd-contractul-romano-chinez-privind-construirea-unitatilor-3-si-4-de-la-cne-cernavoda-se-va-parafa-in-luna-mai-17-46-08 ↑
6. Government of Romania, Department for Infrastructure Projects and Foreign Investment, Funding, Designing and Executing Reactors 3 and 4 from Cernavoda Nuclear Power Plant, p.3. ↑
7. “Enel: Structura de proprietate a consorțiului reactoarelor 3 și 4 a devenit incompatibilă cu evaluarile noastre,” Agerpres, December 23, 2013, available at: http://www.agerpres.ro/economie/2013/12/23/enel-structura-de-proprietate-a-consortiului-reactoarelor-3-si-4-a-devenit-incompatibila-cu-evaluarile-noastre-12-36-15 ↑
8. Quoted in “IAEA sees slow nuclear growth post Japan”, United Press International, September 23, 2011, available at: http://www.upi.com/Business_News/Energy-Resources/2011/09/23/IAEA-sees-slow-nuclear-growth-post-Japan/UPI-87041316777856/ ↑
9. Matt Atkins, “Fukushima: What Follows for the Nuclear Industry?,” Financier Worldwide, June 2011, available at: http://www.financierworldwide.com/article.php?id=8166&page=1. ↑
10. Phil Chaffee, Romania: SNN’s Way Forward with CGN at Cernavoda, Energy Intelligence, Nuclear Intelligence Weekly, January 31, 2014. ↑
11. “Nicolae Moga (PSD): Contractul româno-chinez privind construirea unităților 3 si 4 de la CNE Cernavoda se va parafa în luna mai,” Agerpress, January 17, 2014, available at: http://www.agerpres.ro/politica/2014/01/17/nicolae-moga-psd-contractul-romano-chinez-privind-construirea-unitatilor-3-si-4-de-la-cne-cernavoda-se-va-parafa-in-luna-mai-17-46-08 ↑
12. Societatea Națională Nuclearelectrica, Sondaj de opinie publică cu privire la energia nucleară în România, 2011, available at: http://www.sien.ro/pappers/sien-2011-public-opinion-in-romania-after-the-accident-at-fukushima-201.pdf ↑
13. “Un an de la dezastrul nuclear din Japonia,” Greenpeace, Martie 5, 2012, available at: http://www.greenpeace.org/romania/ro/campanii/energia-nucleara/accidente-nucleare/Fukushima/un-an-de-la-dezastrul-nuclear-din-japonia-comemorare/ ↑
14. Ecopolis, Sondaj Parlamentar“Politica României în domeniile organisme modificate genetic (OMG) și energie nucleara: http://www.ecopolis.org.ro/media/files/Raport%20cercetare%20Ecopolis%20(OMG,%20energie%20nucelara)%20.pdf ↑
15. European Association for Coal and Lignite, Country Profile,: http://www.euracoal.be/pages/layout1sp.php?idpage=77 ↑
16. http://www.transelectrica.ro/web/tel/productie, see position No. 12 in the table “Capacitatea totală de producere instalată şi disponibilă în SEN pe fiecare unitate dispecerizabilă, diferenţiată pe surse primare de energie” (last updated on July 1, 2014). ↑
17. http://www.transelectrica.ro/web/tel/consum (see position No. 1 in the table “Consumul realizat al SEN”, data for 2014. ↑
18. http://www.romanialibera.ro/economie/finante-banci/avem-dovada–lipsa-restructurarii-din-energie-ne-creste-factura-254295 ↑
19. http://energie.gov.ro/comunicate-de-presa/27012014 ↑
20. World Nuclear Association, Nuclear Power in Turkey: http://www.world-nuclear.org/info/Country-Profiles/Countries-T-Z/Turkey/. ↑
21. Russia has displayed a keen interest in building 4,800 MW of nuclear capacity in Turkey, offering to finance and build four VVER-1200 reactors at Akkuyu (at a cost of €14.4 billion). See: Akkuyu NGS AS, Akkuyu Nuclear Plant safe, March 20, 2014, available at: http://www.akkunpp.com/akkuyu-nuclear-plant-safe/update ↑
22. Turkish Ministry of Foreign Affairs, Turkey’s Commercial and Economic Relations with the Russian Federation, Turkey-Russian Federation Bilateral Trade Figures, available at: http://www.mfa.gov.tr/turkey_s-commercial-and-economic-relations-with-russian-federation.en.mfa ↑
23. Quoted in Glenn Kates, “Turkey Torn Over ‘Brothers’ in Crimea, Good Ties with Russia,” Radio Free Europe Radio Liberty, March 9, 2014: : http://www.rferl.org/content/turkey-crimea-russia-demonstration-ukraine/25290858.html ↑
24. Steve Kidd, “Nuclear in China – now back on track?,” Nuclear Engineering International, April 15, 2013, available at: http://www.neimagazine.com/opinion/opinionnuclear-in-china—now-back-on-track ↑
25. U.S. Energy Information Administration, Analysis Briefs, China, February 4, 2014, available at: http://www.eia.gov/countries/analysisbriefs/China/china.pdf ↑
26. “Li Peng’s Biography,” Xinhuanet, January 15, 2002, available at: http://news.xinhuanet.com/ziliao/2002-01/15/content_238495.htm; Richard Daniel Ewing, “Hu Jintao: The Making of a Chinese General Secretary,” The China Quarterly, Vol. 173: 20. ↑
27. McKinsey Global Institute, “Urban World: Mapping the economic power of cities,” 2011, available at: http://www.mckinsey.com/insights/urbanization/urban_world; Kevin Jianjun Tu, Sabine Johnson-Reiser, “Understanding China’s Rising Coal Imports,” Carnegie Endowment for International Peace, Policy Outlook, February 16, 2012, available at: http://carnegieendowment.org/files/china_coal.pdf ↑
28. World Nuclear Association, “Nuclear Power in China,” February 20, 2014, available at: http://www.world-nuclear.org/info/Country-Profiles/Countries-A-F/China–Nuclear-Power/ ↑
29. Lucy Hornby, “China Pollution: Trouble in the Air,” Financial Times, February 26, 2014, available at: http://www.ft.com/intl/cms/s/0/c8d06578-98d8-11e3-8503-00144feab7de.html#axzz2wcmpSxVg; “China Outsourcing Smog to West Region Stirs Protest,” Bloomberg, March 6, 2014, available at: http://www.bloomberg.com/news/2014-03-06/china-outsourcing-smog-to-west-region-stirs-protest.html ↑
30. The World Bank, “Cost of Pollution in China. Economic Estimates of Physical Damages,” 2007, p. ix, available at: http://siteresources.worldbank.org/INTEAPREGTOPENVIRONMENT/Resources/China_Cost_of_Pollution.pdf ↑
31. Jim Yardley, “Chinese Dam Projects Criticized for their Human Costs,” New York Times, November 19, 2007, available at: http://www.nytimes.com/2007/11/19/world/asia/19dam.html?pagewanted=all&_r=1& ↑
32. U.S. Energy Information Administration, Analysis Briefs, China, February 4, 2014, available at: http://www.eia.gov/countries/analysisbriefs/China/china.pdf ↑
33. World Nuclear Association, “Nuclear Power in China,” February 20, 2014, available at: http://www.world-nuclear.org/info/Country-Profiles/Countries-A-F/China–Nuclear-Power/ ↑
34. State Nuclear Power Technology Corporation, Design & EPC of AP/CAP Nuclear Power Plant, available at: http://www.snptc.com.cn/en/index.php?optionid=939 ↑
35. Leslie Hook, Review strikes blow but creates opening to advanced technologies, Financial Times, November 18, 2011, available at: http://www.ftchinese.com/story/001041789/en/?print=y ↑
36. Ministry of Environmental Protection of the People’s Republic of China, “The Report on the nationwide inspection of safety at civilian nuclear facilities and the Twelfth Five Year Plan and the 2020 vision for Nuclear Safety and Radioactive Pollution Prevention open for recommendations from the community,” May 31, 2012, available at: http://www.mep.gov.cn/zjyj/201206/t20120615_231737.htm ↑
37. World Nuclear Association, “Nuclear Power in China,” February 20, 2014, available at: http://www.world-nuclear.org/info/Country-Profiles/Countries-A-F/China–Nuclear-Power/ ↑
38. “China on course for 58GW of nuclear capacity by 2020,” Energy Economist, October 1, 2013. ↑
39. Rob Taylor, “China’s overall nuclear power goals will stay unchanged: Xie,” China Daily USA, March 31, 2011, available at: http://usa.chinadaily.com.cn/business/2011-03/31/content_12258427.htm; Leslie Hook, “China to restart nuclear programme,” Financial Times, October 24, 2012, available at: http://www.ft.com/intl/cms/s/0/60b89e38-1de1-11e2-901e-00144feabdc0.html#axzz2wcmpSxVg ↑
40. “Second Ling Ao II unit enters service,” World Nuclear News, August 8, 2011, available at: http://www.world-nuclear-news.org/IT-Second_Ling_Ao_II_unit_enters_service-0808115.html; “China: The next few years are crucial for nuclear industry growth,” Nuclear Engineering International, July 31, 2013, available at: http://www.neimagazine.com/features/featurechina-the-next-few-years-are-crucial-for-nuclear-industry-growth/ ↑
41. Steve Kidd, “Nuclear in China – now back on track?,” Nuclear Engineering International, April 15, 2013, available at: http://www.neimagazine.com/opinion/opinionnuclear-in-china—now-back-on-track ↑
42. World Nuclear Association, “Nuclear Power in China,” February 20, 2014, available at: http://www.world-nuclear.org/info/Country-Profiles/Countries-A-F/China–Nuclear-Power/ ↑
43. IAEA Nuclear Safety Action Plan Dashboard, Mission Calendar, available at: http://www-ns.iaea.org/actionplan/missions.asp?mt=OSART&my=All&cn=All+countries&ms=Completed&func=search ↑
44. World Nuclear Association, “Nuclear Power in China,” February 20, 2014, available at: http://www.world-nuclear.org/info/Country-Profiles/Countries-A-F/China–Nuclear-Power/ ↑
45. Mari Iwata, “Japan, South Korea and China Agree on Nuclear Safety Network,” Wall Street Journal, December 4, 2013, available at: http://online.wsj.com/news/articles/SB10001424052702303497804579237423810359150 ↑
46. Leslie Hook, “Review strikes blow but creates opening to advanced technologies,” Financial Times, November 18, 2011, available at: http://www.ftchinese.com/story/001041789/en/?print=y ↑
47. Westinghouse, “AP1000: Passive Safety Systems and Timeline for Station Blackout,” available at: http://westinghousenuclear.com/Portals/0/New%20Plants/AP1000/AP1000%20Station%20Blackout.pdf?timestamp=1404842353431 ↑
48. David Biello, “Designs for Newest U.S. Nuclear Plants Aim to Balance Safety and Costs,” Scientific American, March 23, 2011, available at: http://www.scientificamerican.com/article/new-nuclear-designs-balance-safety-and-cost/; Westinghouse, “AP1000: Passive Safety Systems and Timeline for Station Blackout,” available at: http://westinghousenuclear.com/Portals/0/New%20Plants/AP1000/AP1000%20Station%20Blackout.pdf?timestamp=1404842353431 ↑
49. “Explainer: What Caused the Incident at Fukushima-Daiichi,” Forbes, March 15, 2011, available at: http://www.forbes.com/sites/christopherhelman/2011/03/15/explainer-what-caused-the-incident-at-fukushima-daiichi/ ↑
50. World Nuclear Association, “Nuclear Power in China,” February 20, 2014, available at: http://www.world-nuclear.org/info/Country-Profiles/Countries-A-F/China–Nuclear-Power/. ↑
51. John Tappert, “U.S. Nuclear Regulatory Commission – China Cooperation on New Nuclear Construction,” Brookings Institution, September 17, 2000, available at: http://www.brookings.edu/~/media/events/2010/9/17%20china%20clean%20energy/powerpoint_tappert.pdf ↑
52. State Nuclear Power Technology Corporation, Design & EPC of AP/CAP Nuclear Power Plant, available at: http://www.snptc.com.cn/en/index.php?optionid=939 ↑
53. Idem. ↑
54. Thecla Fabian, “New-build now. Part 2: Asia” Nuclear Engineering International, July 9, 2014, available at: http://www.neimagazine.com/features/featurenew-build-now-part-2-asia-4313945/ ↑
55. Farhan Bokhari and James Crabtree, “China strengthens Pakistan ties with $6.5bn loan for nuclear power,” Financial Times, January 1, 2014, available at: http://www.ft.com/cms/s/0/4407fcee-72e9-11e3-b05b-00144feabdc0.html#axzz3Dopx3Jfh ↑
56. Rabia Akhtar, “Pakistan’s Nuclear Energy Vision, 2050,” South Asian Voices, March 6, 2014, available at: http://southasianvoices.org/pakistans-nuclear-energy-vision-2050/ ↑
57. He Zuoxiu, “Chinese nuclear disaster ‘highly probable’ by 2030,” Ecologist, October 25, 2013, available at: http://www.theecologist.org/News/news_analysis/2133281/chinese_nuclear_disaster_highly_probable_by_2030.html ↑
58. Evan Osnos, “China’s Nuclear Binge,” The New Yorker, March 14, 2011, available at: http://www.newyorker.com/online/blogs/evanosnos/2011/03/chinas-nuclear-binge.html; Jeremy Carl, “Fukushima and the Future of Nuclear Power in China and India,” in George P. Shultz, Sidney D. Drell (eds.), The Nuclear Enterprise. High-Consequence Accidents: How to Enhance Safety and Minimize Risks in Nuclear Weapons and Reactors (Stanford: Hoover Institution Press, 2012), p. 237; Rob Broomby, “Security fears over ‘Orwellian’ Chinese nuclear deal,” BBC News, November 30, 2013, available at: http://www.bbc.com/news/uk-politics-25156551 ↑
59. Erig Ng, “China nuclear plant delay raises safety concern,” South China Morning Post, October 7, 2013, available at: http://www.scmp.com/business/china-business/article/1325973/china-nuclear-plant-delay-raises-safety-concern ↑
60. “AP1000 pumps China-bound again,” World Nuclear News, August 15, 2013, available at: http://www.world-nuclear-news.org/NN-AP1000_pumps_China-bound_again-1508137.html ↑
61. Leslie Hook, Review strikes blow but creates opening to advanced technologies, Financial Times, November 18, 2011, available at: http://www.ftchinese.com/story/001041789/en/?print=y. ↑
62. UK nuclear power plant gets go-ahead,” BBC News, October 21, 2013, available at: http://www.bbc.com/news/business-24604218 ↑
63. “France and China increase nuclear cooperation,” Nuclear Engineering International, December 10, 2013, available at: http://www.neimagazine.com/news/newsfrance-and-china-increase-nuclear-cooperation-4143610/ ↑
64. Rob Broomby, “Security fears over ‘Orwellian’ Chinese nuclear deal,” BBC News, November 30, 2013, available at: http://www.bbc.com/news/uk-politics-25156551; “China could take majority stake in future UK nuclear plants,” Nuclear Engineering International, October 17, 2013, available at: http://www.neimagazine.com/news/newschina-could-take-majority-stake-in-future-uk-nuclear-plants/ ↑
65. “China could take majority stake in future UK nuclear plants,” Nuclear Engineering International, October 17, 2013, available at: http://www.neimagazine.com/news/newschina-could-take-majority-stake-in-future-uk-nuclear-plants/ ↑
66. James T. Areddy, Brian Spegele, “China, Also on Fault Lines, Faces New Atomic Scrutiny,” Wall Street Journal, March 16, 2011, available at: http://online.wsj.com/news/articles/SB10001424052748703566504576202512705277514 ↑
67. Michael Bittner, “Nuclear Power Facilities in Seismic and Storm Surge Zones,” EHS Journal, March 29, 2011, available at: http://ehsjournal.org/http:/ehsjournal.org/michael-bittner/nuclear-power-facilities-in-seismic-and-storm-surge-zones/2011/ ↑
68. “Ponta: Only the Chinese Can Build the Cernavoda NPP,” The Money Channel, September 2, 2014, available at: http://themoneychannel.realitatea.net/ponta-doar-chinezii-pot-construi-la-cernavoda/ ↑
69. “China Nuclear Power Corporation, the only country to submit a bid for Cernavoda 3 and 4,” Agerpres, September 9, 2014, available at: http://www.agerpres.ro/economie/2014/09/09/china-nuclear-power-corporation-singura-companie-care-a-depus-oferta-pentru-reactoarele-3-si-4-de-la-cernavoda-18-20-09 ↑
70. Thecla Fabian, “New-build now. Part 2: Asia” Nuclear Engineering International, July 9, 2014, available at: http://www.neimagazine.com/features/featurenew-build-now-part-2-asia-4313945/ ↑
71. “Russia agrees loan for Hungary’s Paks nuclear plant expansion,” Nuclear Engineering International, January 15, 2014, available at: http://www.neimagazine.com/news/newsrussia-agrees-loan-for-hungarys-paks-nuclear-plant-expansion-4160225/ ↑
72. Paul Roderick Gregory, “Western Sanctions and Rising Debts Are Already Strangling the Russian Economy,” Forbes, August 28, 2014, available at: http://www.forbes.com/sites/paulroderickgregory/2014/08/28/western-sanctions-and-rising-debts-are-already-strangling-the-russian-economy/; Carol Matlack, “As Investors Flee, Russia Inc. Is Feeling the Pain,” Bloomberg Businessweek, March 17, 2014, available at: http://www.businessweek.com/articles/2014-03-17/as-investors-flee-russia-inc-dot-is-feeling-the-pain. ↑
73. Andra Timu, “South Korea’s BKB May Invest in Romania’s Nuclear Reactors,” Bloomberg, September 2, 2011, available at: http://www.bloomberg.com/news/2011-09-02/south-korea-s-bkb-may-invest-in-romania-s-nuclear-reactors.html ↑
74. “KEPCO wins UAE civil nuclear bid,” Nuclear Engineering International, January 4, 2010, available at: http://www.neimagazine.com/news/newskepco-wins-uae-civil-nuclear-bid/ ↑
75. Choe Sang-Hun, “Scandal in South Korea Over Nuclear Revelations,” New York Times, August 3, 2013, available at: http://www.nytimes.com/2013/08/04/world/asia/scandal-in-south-korea-over-nuclear-revelations.html?pagewanted=all&_r=0 ↑
76. Ju-Min Park, “South Korea Charges 100 with corruption over nuclear scandal,” Reuters, October 10, 2013, available at: http://www.reuters.com/article/2013/10/10/us-korea-nuclear-idUSBRE99905O20131010 ↑