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Cablegate: Turkey Nuclear Quest and U.S. Technology

This record is a partial extract of the original cable. The full text of the original cable is not available.

080829Z Sep 05

UNCLAS SECTION 01 OF 02 ANKARA 005220

SIPDIS

STATE FOR EUR/SE, EB/IFD, EB/CBA, EB/ESP, AND NP/RA
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK
DOE FOR CHARLES WASHINGTON

SENSITIVE

EB/CBA FOR MERMOUD AND WALTERS

E.O. 12958: N/A
TAGS: ENRG EINV BEXP TU
SUBJECT: TURKEY NUCLEAR QUEST AND U.S. TECHNOLOGY

REF: A) 04 ANKARA 6948

B) ANKARA 3789

Sensitive But Unclassified. Please Handle Accordingly.

1. (SBU) SUMMARY: While Turkish officials prefer U.S.
technology to implement its decision to develop a civilian
nuclear power capability, Westinghouse and GE reps, both
with previous bad experiences in Turkey, are skeptical about
Turkey's will, capacity, and commitment to a transparent,
non-political process. Post seeks to assure that U.S.
technology gets a fair shot at the potential opportunity.
End Summary.

Announce it and they will come
------------------------------

2. (SBU) Turkey has announced its intention to diversify
its energy mix by building three nuclear power plants (5000
MW) targeted for operation in 2011-2016 (Ref A). Press
accounts have described high level discussions with France
and Russia on nuclear technology. Meanwhile, GOT officials
tell us they have a preference for U.S. technology,
specifically Westinghouse's pressurized water reactors.
Energy Officer made contacts with key providers of U.S.
technology, GE and Westinghouse, to discuss their potential
interest in the opportunity. Turkey pulled back from
earlier attempts to develop civilian nuclear power for
financial reasons.

The Reticent Contenders
-----------------------

3. (SBU) Ankara-based Westinghouse rep Sukran Kose told
EnergyOff on August 26 that Westinghouse would be ready to
move forward on Turkey's projects, including helping to
facilitate EXIM financing. She said that the 1997-2000
tender for the oft-delayed 1,300 MW plant at Akkuyu, on the
southern Mediterranean, had been postponed (rather than
cancelled) because of the economic crisis and corruption in
the energy sector (Westinghouse was the leading contender).
There was vigorous opposition from anti-nuclear and
environmental groups. Kose said that the GOT aimed to build
a second plant at Sinop on the Black Sea and the third site
was yet to be determined. (Note: Post understands that
Westinghouse has been busy working on projects in China and
the owner of Westinghouse nuclear, BNFL, aims to sell this
nuclear unit, so Westinghouse's appetite for new projects is
unclear. Moreover, Westinghouse is still working on
licensing of its newest AP1000 model. It is not clear to
post if Ms. Kose still represents Westinghouse. An industry
consultant gave us the following contact for Westinghouse
nuclear project development overseas: Dan Lipman at 412 374
6920. End Note.)

4. (SBU) General Electric, like Westinghouse, had an
experience with an unsuccessful nuclear plant bid - in the
1980's. In an August 31 conference call with EnergyOff,
Jaime Segura (GE Nuclear, Madrid) and Olcayto Yigit (GE
Energy, Istanbul) expressed skepticism about Turkey's
capacity and will to realize nuclear power projects.
Emphasizing the cost of preparing a nuclear bid, they cited
three criteria for evaluating investment:

a) What are prospects for funding and what is the history of
power generation? In their view, the experience in Turkey
was bad: too much uncertainty in the rules of the game and
dangling of BOO/BOT type investment models which were not
acceptable.

b) Adequate nuclear liability protection needed. They said
Turkey fell short of EU standards.

c) Interest in the GE Boiling Water Reactor type. They said
that Turkey was neutral at best on this point.

The GE reps said that without some sort of agreement or
assurance that Turkey would favor U.S. technology, it might
be difficult for them to proceed. They said that they had
been approached by two partners (one from the defense sector
and one energy) looking for potential collaboration, but
they had not pursued it at this time. GE is focused on
potential opportunities in the U.S. market.

4. (SBU) Comment: Both companies appear to not have
approached the GOT to discuss the proposed nuclear projects.
There are big obstacles for Turkey's quest: The biggest is
how Turkey would generate the formidable financing need.
GOT officials recognize that it represents a "long road".
(It is not clear that GOT has established a comprehensive
plan on timing, technology type, and location.) GOT
officials interpret the failure of the U.S. to ratify the
"Peaceful Uses of Nuclear Energy Agreement" as a serious
impediment to adopting U.S. technology (Ref B). Finally, in
light of Turkey's EU bid, there may be political pressure to
advantage French or European technology. PM Erdogan first
announced the most recent nuclear initiative while visiting
France in July 2004 in what was seen as an attempt to curry
French support for Turkey's EU bid. The GE reps said that
GE's European Simplified Boiling Water Reactor (ESBWR) bid
for the new Finland plant lost to French Framatone's EPR
(European Pressurized Water) for political reasons. End
Comment.

McEldowney

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