South Korea’s Role in Promoting the Nuclear Renaissance

South Korea’s surprising success last December against more experienced competitors in winning a bid to produce nuclear reactors in the U.A.E. has had a powerful ripple effect, boosting Korean hopes to become a serious player in the nuclear plant export market with the goal of capturing twenty percent of the global nuclear energy market by 2030. According to a recent Congressional Research Service report by Mark Holt, South Korea’s KEPCO-led consortium successfully underbid Areva and Hitachi by about thirty percent by offering a price of U.S.$20 billion (4200 megawatts of electricity generating capacity at $3571 per kilowatt). In so doing, South Korea is attempting to position itself as a reliable and low-cost supplier to other Middle Eastern countries who may follow the U.A.E. in pursuing the development of the nuclear energy option. For South Koreans, winning the U.A.E. bid was like hearing the starter’s gun at the beginning of a track competition.

One effect of South Korea’s winning bid has been to reignite a debate in Seoul over South Korea’s need for “nuclear sovereignty,” following comments by Minister of Knowledge Economy Choi Kyung-hwan. These comments follow a similar domestic debate that took place in the aftermath of North Korea’s May 2009 nuclear test. The rationale for having such a capability in order to compete in the international nuclear energy export market looks different from the rationale of trying to match North Korean nuclear weapons development capabilities. At present, South Korea is the only nuclear energy supplier among six countries that cannot independently provide enrichment or reprocessing services to address issues related to nuclear waste.

These issues are likely to come to a head as part of the renegotiation of the U.S.-ROK bilateral nuclear cooperation agreement, which expires in 2014. On the one hand, the restrictions imposed under the 1974 agreement do not fit with the level and dimensions of the U.S.-ROK nuclear relationship that are required in the twenty-first century; on the other hand, the United States continues to have a special responsibility to uphold nuclear non-proliferation norms, especially by dissuading South Korea from the pursuit of additional reprocessing capabilities. The Nuclear Non-Proliferation Treaty (NPT) legitimizes the right to peaceful development of nuclear energy versus the attempt to prevent development of nuclear weapons, but the line between the two is not as bright as many might like, especially given that mastery of enrichment and reprocessing technologies under the NPT can be the first steps toward developing nuclear weapons, as in the cases of North Korea and Iran.

The U.S. decision to allow India to have such capacities a few years ago strengthens South Korea’s argument that it should be allowed to reprocess, but U.S. reluctance to grant similar consent to South Korea will not be easily accepted in Seoul. Instead, South Korea advocates a qualifications-based approach through which countries with responsible track records and well-developed nuclear energy markets would be able to have access to enrichment and reprocessing technologies. Such technologies might also help to address the growing problem of nuclear waste storage, which is especially acute in South Korea given its heavy reliance on nuclear energy and small geographic size.

South Korea’s opportunities to provide technology, plants, and services in the nuclear energy sector depend on the successful conclusion of a new bilateral cooperation agreement with the United States, but U.S. denial of an agreement that fits with South Korea’s emerging role would clearly mean a severe economic and political fall-out for the U.S.-ROK relationship.  Allowing South Korea to develop reprocessing or enrichment capabilities could have negative effects on negotiations with North Korea and is contrary to the 1992 Joint Inter-Korean Denuclearization Agreement through which both sides pledged to forego uranium enrichment (although the North Koreans have clearly violated that pledge). It will take some creative thinking to avoid a train wreck in U.S.-ROK negotiations over this issue. In a recent report from the Center for U.S.-Korea Policy, Fred McGoldrick proposed several creative ideas, including the possibility of placing a regional enrichment facility in South Korea under international management.

Meanwhile, South Korean “nuclear sovereignty” arguments should not overshadow the fact that South Korea’s excellent safety record to date and attention to safeguards are primary factors that bolster their competitiveness in providing nuclear plants. For the sake of maintaining its own international competitiveness in this newly emerging sector, “nuclear responsibility,” not “nuclear sovereignty,” must be the centerpiece of South Korea’s focus going forward.