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Cablegate: Turkey's Nuclear Power Quest As Beauty Contest

VZCZCXRO5195
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHAK #6056/01 2930510
ZNR UUUUU ZZH
R 200510Z OCT 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 9533
INFO RUCPDOC/USDOC WASHDC
RHEBAAA/DEPARTMENT OF ENERGY WASHDC
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHUNV/USMISSION UNVIE VIENNA 0113

UNCLAS SECTION 01 OF 02 ANKARA 006056

SIPDIS

USDOE FOR CHARLES WASHINGTON
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK
STATE ALSO FOR EB/CBA FRANK MERMOUD

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ENRG EINV BEXP TU
SUBJECT: TURKEY'S NUCLEAR POWER QUEST AS BEAUTY CONTEST

REF: A) ANKARA 2143
B) 05 ANKARA 7390

Sensitive But Unclassified. Please handle accordingly.

1. (SBU) SUMMARY: Energy Ministry U/S Sami Demirbilek explained
that due to legal and financial limitations, Turkey will rely on the
private sector to realize its decision to add nuclear power to its
energy mix. He told us that the government's role is limited to
providing an electricity purchase guarantee, establishing clarity
for the appropriate legal and regulatory environment, and
encouraging companies to make the most attractive applications for
licenses, terming the process a "beauty contest". Progress on
ratification of the "Cooperation on Peaceful Uses of Nuclear Power"
("123") agreement would help American companies participate in this
potential opportunity. The USG should consider offering assistance
with its NRC (Nuclear Regulatory Commission) regulatory model and
including Turkey in the Global Nuclear Energy Partnership (GNEP),
building on discussions between Energy Minister Guler and Secretary
Bodman in the U.S. last spring. Demirbilek looks forward to a
possible meeting with the U.S. NRC at an IAEA meeting in Vienna in
November. End Summary.

--------------------------------------------- ---
Turkey's Passive Nuclear Quest as Beauty Contest
--------------------------------------------- ---

2. (SBU) In a September 28 meeting, Demirbilek cited the
limitations of alternative sources (hydro, indigenous lignite,
expensive natural gas imports) as a compelling reason for Turkey to
add nuclear power to its energy mix. He emphasized that nuclear
power would meet projected electricity supply shortfalls, promote
grid reliability, increase diversification of supply, and reduce
reliance on imported energy sources. Underscoring that the 2001
electricity law identified the private sector as the sole source of
new energy investment, Demirbilek said the GOT was not going to
build nuclear plants. Rather, the government's role is to 1)
establish legal clarity and remove uncertainties for interested
companies, 2) provide a purchase guarantee for electricity off-take,
and 3) establish an appropriate regulatory regime.

3. (SBU) Demirbilek admitted that there was still lively debate
within the GOT on the exact process and conditions for holding and
awarding the "beauty contest" through which companies would apply
for permits, but it would involve some combination of minimum
electricity price and minimum purchase guarantee from the GOT. The
U/S said a draft Nuclear Energy Law - aiming to establish clear
legal and operating environment - was under consideration by the
Cabinet of Ministers, but there was still some disagreement at the
Prime Ministry and the State Planning Organization about the extent
of state support that would be made available. Press accounts have
reported a series of planning meetings of domestic and foreign
companies convened by the Energy Ministry to hone next steps.
Demirbilek said that the winner(s) of a potential "beauty contest"
would be awarded a license and a purchase guarantee. He expected
that domestic companies would partner with international ones to
bring appropriate expertise and financing capability.

--------------------------------------------- --
Need for Assistance on Regulator - NRC as Model
--------------------------------------------- --

4. (SBU) Demirbilek elaborated on Turkey's need for help in
developing a regulatory approach, noting that the existing Turkish
Atomic Energy Agency (TAEK) and the energy regulator (EMRA) were not
equipped to play this critical role. Citing the U.S. NRC as a
natural model, he said he hoped to meet with the U.S. NRC at an IAEA
meeting in Vienna in November. Reminding us of discussions on
cooperation for nuclear power with Secretary Bodman on Minister
Guler's visit to Washington last spring, he noted that lack of
ratification by the U.S. of the "Cooperation on Peaceful Uses of
Nuclear Energy" was an impediment to U.S. companies' participation
in projects. MFA told us that the GOT was also looking to Finland
as a potential regulatory model for nuclear power.

5. (SBU) COMMENT: The U.S. is a natural model and partner for
commercial and regulatory aspects of Turkey's quest to add nuclear
power to its energy mix. Including Turkey in the Global Nuclear
Energy Program (GNEP) - targeting developing countries seeking to
embark on new programs, offering our NRC as proven regulatory model,
and seeking to advance the stalled "Peaceful Uses" ("123") agreement
would facilitate U.S. contribution to this opportunity and help
dissuade Turkey for aiming at lowest cost alternative providers. It
is not clear how timely or successful Turkey's "beauty contest" will
be in attracting the responsible international community to

ANKARA 00006056 002 OF 002


supporting Turkey's peaceful nuclear power quest.

Wilson

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