Oil-Rich Arab State Pushes Nuclear Bid With U.S. Help - WSJ.com

 

ABU DHABI -- The mating of the words "nuclear" and "Persian Gulf" normally sets off alarm bells in Washington. Yet this oil-rich Arab state just across the gulf from Iran is on a crash course to develop nuclear power with U.S. backing.

Dozens of American engineers, lawyers and businessmen have converged on Abu Dhabi in recent months to help the United Arab Emirates get the Arab world's first nuclear-power program running by 2017. "I don't know anyone else who has rolled out a nuclear program of this magnitude this fast," says Jeffrey Benjamin, an American engineer who in October was named project manager for Emirates Nuclear Energy Corp., which oversees Abu Dhabi's nuclear program.

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Even as the U.S. remains determined to block Iran from developing nuclear weapons, President Barack Obama sees the U.A.E. program as a "model for the world," according to a senior White House official, and by mid-April could move to present a bilateral nuclear-cooperation treaty to Congress for approval. The ability to make electricity through nuclear power is a long way from the ability to build weapons -- and, proponents say, the agreement could make bomb-making harder.

The treaty, signed by former President George W. Bush during his last week in office, would allow American firms to engage in nuclear trade with the U.A.E. To build support, the U.A.E. is agreeing to buy approved nuclear fuel on the international market, rather than enriching uranium or reprocessing plutonium, both of which can be made into weapons-grade material. It will also open its facilities to random international inspections.

The U.A.E.'s push represents a test for nuclear-power advocates who want countries across the globe to go nuclear -- so long as they play by the rules. The U.S. and United Nations officials are championing the U.A.E. as a role model for other developing countries and as a counterexample to Iran. Tehran has repeatedly rebuffed international inspectors, while amassing large quantities of materials that can be used to build bombs. A spokesman at the Iranian mission to the U.N. says Iran's nuclear program is purely for civilian purposes, and says Tehran believes "peaceful nuclear programs" are the right of all signatures to the Nuclear Nonproliferation Treaty.

Some U.S. lawmakers have threatened to block the U.A.E. deal, saying the risks of letting that country split the atom are too large. They cite the U.A.E.'s history as a transit point for sensitive military technologies to Iran, Iraq and Libya. They also make the slippery-slope argument: If one Arab country has nuclear power, others may pile in, and perhaps down the road, seek nuclear weapons as well. Both Saudi Arabia and Egypt have recently announced their desire to develop nuclear-power programs with U.S. assistance.

Western and Asian companies are already salivating at the chance for lucrative contracts with the U.A.E., which has set the end of April as the rough deadline for bids. General Electric Co. and Westinghouse Electric Co. are among the U.S. firms interested in the initial $20 billion in reactor work, say officials familiar with the bidding process. GE and Westinghouse declined to comment.

Facing ambitious timelines set by officials bent on growth, Mr. Benjamin, the American engineer, and his colleagues rarely get far from the Emirates Nuclear Energy headquarters in downtown Abu Dhabi. Many live in an apartment building next to the office and exercise at the same gym. Mr. Benjamin lives three floors above his office.

Surge in Demand

The U.A.E. began exploring nuclear power three years ago as it faced a surge in electricity demand, say Emirati officials. The Persian Gulf country is a federation of seven states, among them Abu Dhabi, the capital, and Dubai. It has among the largest oil reserves in the world. But it's short of the natural gas that is used to fuel power and water-desalination plants, and imports most of its gas from neighboring Qatar.

Reuters

Qatari Emir Sheik Hamad bin Khalifa al Thani, right, receives United Arab Emirates President Sheik Khalifa bin Zayed al Nahyan at Doha international airport on Sunday. Leaders of the 22-member Arab League gathered in the Gulf Arab state of Qatar for a two-day summit meeting.

Abu Dhabi's ruler, Sheik Khalifa bin Zayed al Nahyan, commissioned a white paper that concluded the country's electricity demand would reach 40,000 megawatts by 2020 from around 16,000 megawatts currently. Nonnuclear options, such as coal-fired plants, solar energy or alternative fuels, were seen either as insufficient to meet demand, too expensive or harmful to the environment.

"Nuclear power was seen both as practical and clean," says Hussain al Nowais, an Abu Dhabi industrialist who took part in the study.

The U.A.E.'s foreign minister announced Abu Dhabi's intentions to pursue nuclear power last May. Officials here say they believe the global economic downturn is temporary and are sticking to ambitious growth plans that assume rising electricity demand.

Bush Initiative

The Bush administration quickly emerged as a powerful partner. Former Bush officials say they wanted to tout the U.A.E.'s nuclear approach to developing nations and to pressure Iran to follow suit. Some former officials say they believed nuclear power was inevitably going to spread farther into the Middle East. A deal with Abu Dhabi could also set a precedent by binding a key economic powerhouse to U.S. technologies and international standards.

"This is the kind of counterexample to Iran we need to actively support," says Jackie Wolcott, a former U.S. envoy who helped negotiate the pact Mr. Bush signed in January.

David Scott is one of the Americans helping to build the nuclear program in the U.A.E. Mr. Scott served as the National Security Council's director for the Arabian Peninsula and North Africa during President Bush's first term. In 2006, he became the director of economic affairs for Abu Dhabi's Executive Affairs Authority, which is run by the crown prince.

Frenzied Growth

On a recent morning, Mr. Scott was in a helicopter over Abu Dhabi, pointing out the frenzied growth of skyscrapers and apartment blocks that he hopes will soon be powered by nuclear energy. Mr. Scott, a graduate of Utah's Brigham Young University, has worked for the U.S. military, the State Department and Occidental Petroleum Corp. On weekends, he and his family ride wakeboards on Abu Dhabi's turquoise waters.

Also in the helicopter was Mohamed al Hammadi, the chief executive of the Emirati nuclear company. Mr. Hammadi was tracking the flight path using the global-positioning system on his cellphone. The 33-year-old, a graduate of the Florida Institute of Technology and a native of Abu Dhabi, said he hardly recognized the town he grew up in.

"Most of this was just desert," said Mr. Hammadi. The Louvre and Guggenheim museums are building branches on an island next to Abu Dhabi's downtown waterfront. A Formula One racetrack built on another nearby island will stage its first event later this year. Farther away from the city, one of the world's largest aluminum smelters is under construction.

Mr. Hammadi's job includes choosing sites for the reactors that are in secure locations and away from population centers, but still close to desalination plants and the power grid. He'll also decide which designs the U.A.E. adopts. Plants must withstand sandstorms and summer heat that can reach 120 degrees.

Following the Western model, the U.A.E. has established an independent regulator to monitor nuclear safety. The regulator's first director general is set to be William Travers, a 58-year-old Florida native. In the 1980s, he was dispatched by the U.S.'s Nuclear Regulatory Commission to help clean up America's worst nuclear accident at Three Mile Island in Pennsylvania.

Mr. Travers oversees a staff of 30 American, Emirati and European officials that's expected to grow to more than 100 by 2013. The regulatory office is seeking to put in place licensing requirements so the U.A.E. can begin importing components for its nuclear reactors. Mr. Travers says he plans to retain his independence, which is one reason his offices have been literally walled off from the nuclear-energy company, even though they share the same floor. "What they want from me is a safety call," Mr. Travers says from his spartan office.

Emirati officials say they've started developing homegrown talent to run and maintain the reactors. Khalifa University, Abu Dhabi's largest technical school, is teaming up with European and U.S. colleges to create nuclear science and engineering degrees. The government is offering to retrain engineers already working in the nation's petroleum sector.

'Serve My Country'

"I want to see myself in a stronger position so that I can serve my country," said 30-year-old Fahad al Rumaithi, who's preparing for a degree in nuclear engineering after working for the Abu Dhabi Marine Operating Co. in Malaysia and South Korea. He said he spends his spare time reading engineering books on thermodynamics.

Most critics of the program, including some U.S. lawmakers and nonproliferation experts, believe the U.A.E. is unlikely to turn to nuclear weapons. But they have reservations about the country's past role in the flow of sensitive military technologies. The rogue Pakistani scientist Abdul Qadeer Khan used the port of Dubai to transfer centrifuge technologies to countries like Libya, according to American and U.N. officials. Mr. Khan's network grew to include nuclear sales to North Korea and Iran, before American and international investigators shut him down in 2003.

Iran has allegedly obtained materials for its missile program from front companies based in Dubai. Iran and the U.A.E. are trading partners, exchanging more than $5.5 billion in goods in 2007, according to the European Union.

Some American lawmakers have said they want to block the U.S.-U.A.E. deal on the grounds that the U.A.E. hasn't done enough to combat the flow of funds and technology into Iran.

"If this is to be the model for future nuclear cooperation agreements, don't we want to get this right the first time?" asks Rep. Ileana Ros-Lehtinen of Florida, the Republican vice chairman of the House Foreign Affairs Committee. Ms. Ros-Lehtinen wants more assurances that the U.A.E. will support U.S. efforts to confront Iran and that it won't pursue nuclear weapons.

U.A.E. officials say in the past they have been lax in monitoring the flow of sensitive technologies through the ports. But they say they have stepped up enforcement of U.N. sanctions against Iran and tightened business-license regulations for Iranian nationals. They have also signed on to U.S.-led efforts to track air and sea shipments to Iran.

Iranian Crackdown

Over the past three years, U.A.E. officials say, they have shut down 40 Iranian companies operating in Dubai over either export-control violations or lack of proper licenses. In the past six months, Emirati authorities have also blocked more then 10 shipments of goods for potential military use heading to Iran through Dubai, largely from Asia. "We will not allow anyone to use our territory to harm anybody else," said Yacub al-Hosani, a Foreign Ministry official.

The U.A.E. points to Iran's stepped-up rhetoric over Persian Gulf islands that are in dispute between Abu Dhabi and Tehran as evidence that its harder stance isn't going unnoticed.

Emirati officials say their nuclear program won't be derailed by international pressure. The country has already signed a nuclear-cooperation agreement with France, and has tentative deals with Japan and Britain. Companies such as France's Areva SA and Korea Electric Power Co. are preparing to make bids for contracts that could ultimately top $40 billion.

Write to Jay Solomon at jay.solomon@wsj.com and Margaret Coker at margaret.coker@wsj.com

Oil-Rich Arab State Pushes Nuclear Bid With U.S. Help - WSJ.com