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Relations with Vietnam lost the atom

Why Russia's Ninth Thuan-1 has left the agenda of bilateral relations

At the end of last year, the National Assembly of Vietnam voted to stop all construction of nuclear power plants (NPPs) in the country. The Russian NNT-1 was to become a new locomotive in the cooperation of the two countries, the first nuclear power plant of Rosatom in Southeast Asia and a symbol of a new stage in the development of Vietnamese energy. But it was different. As the history of the Russian NPP in Vietnam developed, the expert of the Center for Strategic Research Anton Tsvetov tells

Relations with Vietnam lost the atom
Energy hunger
The Vietnamese nuclear program began as early as 1958, when South Vietnam became one of the first countries that ordered the Triga Mark II reactor from the Atoms for Peace program. The research reactor earned in the city of Dalat in the 1963 year, but because of the start of the second Indochinese war, the Americans stopped it, and then completely removed it for security reasons.

The united under the rule of the communists of Vietnam, soon after the disagreement with China and the border war, was only one strategic ally among the members of the nuclear club - the USSR. Soviet scientists and engineers did not complicate their work and in 1980 assembled in Dalat a new research reactor on the American site, putting the Soviet IVN-9 reactor in the building of the American Triga and leaving part of the structural elements. The new facility was used to train Vietnamese physicists and engineers, as well as for the production of medical isotopes.

Around the same time - at the beginning of 1980-x - the Vietnamese for the first time thought about the prospects of nuclear energy and conducted two studies on this topic. It is known that in the third such study, already in the 1995 year, it was proposed to start generating electricity at nuclear power plants from the 2015 year, when Viet Nam’s electricity needs reached 100 billion kWh per year.

Then the Vietnamese economists could not assume that the real needs for electricity will be twice as high. Market reforms of the “renewal”, launched in 1986, and the opening of the country to foreign capital quickly yielded results - Vietnam got up on export-oriented growth rails familiar to Asian countries. From 2000 to 2008, the growth rate did not fall below 6,8%, and with them the increase in energy consumption, which was about 2000% per year in 15.

On this wave of growth, the addition of an atom to the energy consumption structure was a logical step, besides it can show the technological orientation of the Vietnamese economy, to signal to foreign investors that growth will be long and sustainable. In 2006, the Vietnamese government announced that in 2020, two 2 GW reactors in the south of Ninthuang Province should be launched, followed by two more in the neighboring province and another three by 2030. Under the optimistic scenario in 2020 in Vietnam, nuclear power plants could operate at eight sites in five provinces of the country. By the 2050 year, nuclear energy would have accounted for 20-30% of energy consumption.

It was a small matter - it was necessary to choose a partner for the first two reactors. Interest was shown by the American-Japanese Westinghouse, the French EdF, the Korean Kepco and the Chinese China Guangdong Nuclear Power Group (CGNPG). In 2007, rumors arose that the Vietnamese would opt for the Japanese Kyushu Electric Power Company, which will supply the Westinghouse reactors assembled by Mitsubishi. The cost of the project was then estimated at $ 4 billion.

However, the Russian Rosatom and its Atomstroyexport became the happy owner of the right to build the first NPP in Vietnam. Vietnamese officials referred to the fact that Russia offers the safest technologies, as well as a high level of political trust between the countries. There is no doubt that politics played an important role here. For Russian-Vietnamese relations, it was a good time - there was a narrative about restoring Russia's position in the world, and Vietnam could be successfully put on the window of such a “return”, recalling the rich history of allied relations when Soviet ships plied the Pacific famous bay of kamran. In 2009, Vietnam made a deal to buy six diesel-electric submarines of the 06361 project, and the construction of a nuclear power plant looked like a spectacular addition to this kind of strategic cooperation, only in the non-military area.

In October 2010, the intergovernmental agreement summed up the agreement. Russian companies were supposed to begin construction of the Ninthuang-2014 NPP with two VVER-1 reactors from the year 1200 and connect them to the electric grid in 2020. The amount of the transaction was estimated at $ 8 billion, 85% of which would be covered by a Russian loan. In the same 2010 year, a similar agreement was signed with the Japanese consortium at the Ninthuang-2 NPP with the commissioning dates at 2024-2025.

The Russian project was extremely important from the image point of view. "Ninthuang-1" would become not only the first nuclear power plant in Vietnam, but also the first work station in all of Southeast Asia, as well as the first nuclear power plant "Rosatom" in the region. In the export strategy of the company, the Vietnamese project occupied an important place - in the construction of the Tianwan NPP in China, the Russian supplier was limited to building a reactor and strapping, and in Vietnam, Russia received a full package of services for the construction and maintenance of the station. The head of Rosatom, Sergey Kiriyenko, then said that he intended to use the Vietnamese nuclear program as a platform, as a foothold for the development of peaceful uses of atomic energy and atomic technologies in the Asia-Pacific region.

Long harnessed
Although by the end of 2010, the global financial crisis had already struck and the Vietnamese economy felt its negative impact (and the public sector crisis soon came), the NPP project had a great future. But less than six months after the signing of an intergovernmental agreement, in March 2011, an accident occurred at the Japanese Fukushima nuclear power plant - the strongest shock for the nuclear power industry of the last decades. In Rosatom itself, it was estimated that 62 power plants around the world were suspended for just the first year and the number of NPP projects decreased by 10%.

Public opinion, especially in Asian countries, in the first time after the incident with stress was related to nuclear power engineering. Vietnam was no exception, so the Russian side did much to convince partners that Russian technologies are safe. The Ninh Thuan-1 reactors were supposed to belong to generation III +, i.e., to have modern passive safety systems.

Despite some silence around the project over the past years, it remained at the center of attention of Russian-Vietnamese cooperation — the NPP invariably featured in joint statements. Future Vietnamese specialists studied at the Obninsk branch of MEPhI, they also trained in Volgodonsk, where the Rostov nuclear power plant and Atommash plant are located, altogether about four hundred people. The Vietnamese authorities were preparing the resettlement of people who lived in the territory allocated for nuclear power plants.

As a PR support for the project, Rosatom created the Atomic Energy Information Center in Hanoi, designed to “inform and educate the public” about its benefits. The company regularly held public events, participated in exhibitions and even landed a peaceful atom in Fanrang Alley. All this was intended to set up in the company and the atomic project a public opinion, agitated by the disaster in Japan. Moreover, Rosatom had an unpleasant experience in India, where the Popular Movement against Atomic Energy organized protests against the construction of the Kudankulam NPP.

The first clouds appeared on the horizon in 2014, when the first cubic meters of concrete had to be poured under the nuclear power plant. In January, the Vietnamese government stated that the construction was postponed for four years due to "continuing negotiations on financial and technical issues". Earlier it became known that the IAEA called for more thorough preparation of the project, and in 2015, the Vietnamese Atomic Energy Agency had already called 2019 the year as the start date of construction.

In November 2015, the committee on science, technology and the environment of the Vietnamese parliament (National Assembly) postponed the construction date to 2022 year, and its commissioning to 2028 year. At about the same time, an article by a member of the Central Committee of the ruling Communist Party of Vietnam, deputy head of the Central Propaganda Committee Vu Ngoc Hoang, published a detailed discussion of the shortcomings of the Vietnamese nuclear program, recalled Chernobyl, listed environmental risks and pointed out the high cost of the project.

If these signs were not enough, then at the beginning of 2016, an extremely unfortunate incident was added to them. The Taiwanese steel company Formosa Ha Tinh Steel in Central Vietnam threw toxic waste into the sea, which led to massive fish death. More than 200 thousand people were injured in at least four provinces - families of fishermen and salt miners, who were forbidden to use poisoned marine resources. The government refused to name the guilty for a long time, protests were held in large cities, which still continue, especially active Catholic villages that did not receive compensation. All this led to an unprecedented interest in the environmental topic in the Vietnamese information space - any news became more important, especially when it came to enterprises with foreign participation.

Already by the beginning of autumn 2016, there were rumors that the projects of nuclear power plants, both Russian and Japanese, could be frozen or canceled. And 10 November, the head of the Vietnamese energy state corporation said that in the renewed energy plan of the country until the year 2030 there are no nuclear energy projects and the budget for them is not laid. 22 November, the National Assembly of Vietnam voted in support of the government's proposal to halt the development of nuclear power projects in the country.

The main reason for the cancellation of NPP projects is the changed economic situation. In 2009, Viet Nam’s electricity demand growth was projected at 17 – 20% per year, and last year the forecast for 2016 – 2020 was already at 11%; for the period 2021 – 2030 - 7 – 8%. In addition, the cost of projects has almost doubled - from $ 9 billion to $ 18 billion, and according to some Vietnamese media - to $ 27 billion. Even more indicative is the increase in the cost of electricity from a nuclear power plant from 4 – 4,5 cents per kilowatt-hour up more than 8 cents per kilowatt-hour. Such an increase in costs seemed extremely unfortunate against the background of falling oil and coal prices, as well as the threat of exceeding the government debt ceiling 65% of GDP.

Vietnamese officials did everything possible to show that there was nothing personal in canceling the project and that they had no doubts about the quality of the Russian (and Japanese) proposal. A week before the National Assembly, the Deputy Prime Minister, Chin Dinh Dung, met with Russian and Japanese counterparts in turn and quietly, and immediately after the official cancellation of the “Ninthuang Nuclear Power Plant Projects”, the representative of the government and the head of the Chancellery Mai Tien Dung made a long reassuring statement where he expressed confidence in Russian and Japanese technologies and promised not to slow down the overall pace of cooperation.

But one thing is the real level of security, and the other is mass perception. Although it is in Vietnam that Russia has the highest rating of support according to the Pew Global Attitudes version, negligence in environmental issues can cost the government dearly, as this is one of the topics that concern all sectors of Vietnamese society, uniting nationalists, greens, Catholics and the urban average classroom

One more suspicion can be added to economic risks and environmental activism. Nguyen Phu Trong, an active anti-corruption campaign led by the CPV Secretary General, uses, among other things, as a tool to "cleanse" the party of so-called interest groups, does not facilitate the implementation of major projects. As in neighboring China, such campaigns give rise to some bureaucratic torpor, when it is dangerous for a political career to take on big plans.

Now what?
The external calm around the cancellation of the NPP project, of course, does not hide the Russian offense from the lost forces and means. In Russia, hundreds of Vietnamese students have been trained in nuclear specialties, 150 engineers practiced at the Rostov NPP. Of course, they will remain in demand by specialists and will be able to work on other energy facilities of the country, in the field of nuclear medicine and other fields of application of the peaceful atom (the very first reactor in Dalat is still working), but the feeling of lost profits will remain.

No matter what they say, the loss of the Vietnamese nuclear project has damaged Russian-Vietnamese relations. The trade and economic component has always been their weak point and contrasted sharply with lush political rhetoric and practically mandatory annual meetings of heads of state. Only this year there should be at least two such meetings - the visit of Vietnam's President Chiang Dai Kuang to Moscow in June and the visit of Vladimir Putin to the APEC summit in Vietnam. Partially, taking into account plans for the supply of equipment and services for nuclear power plants, the parties declare their intention to reach the turnover of $ 10 billion by 2020 year from year to year, although in 2016 it amounted to $ 3,8 billion, having fallen by 1,5% compared to the previous year.

The Rosatom project could become a new flagship of bilateral cooperation - a new, high-tech industry, and, moreover, a breakthrough for Vietnam and all of Southeast Asia. Ninh Thuan-1 could replace, as the most significant project, the Vietsovpetro joint venture operating from 1980's, producing oil on the Vietnamese shelf. Now the parties will have to look for new large projects, although it will be difficult to achieve the same scale and quality, not to mention such opportunities for access to technology.

All this is not very good news for the "Rosatom" itself and its regional strategy. In 2014, the representative office of the company was registered in Singapore, and in the summer of 2016 the company positively assessed the prospects of Southeast Asia as a market for nuclear goods and services. Director of International Business Department of the company Nikolay Drozdov then говорил, That Indonesia and Malaysia could become next for the NPP, although even then the representative of Rosatom stressed the role of public opinion in the success of such projects.

In addition to Vietnam, Russia has agreements on cooperation in the field of the peaceful atom with six more countries in the region: Malaysia, Indonesia, Thailand, Cambodia, Laos and Myanmar. However, none of them is not talking about the construction of nuclear power plants. Apparently, now the bet is placed on Indonesia, where Rosatom has developed an experimental reactor with a capacity of 10 MW, but where there is also no clarity in terms of public perception. The government will have to convince the population that it is safe to build nuclear power plants in the archipelago, where earthquakes, typhoons, forest fires and even terrorist attacks are not uncommon.

In other words, for the Russian NPP export strategy, Vietnam was an important link. Despite the image of Rosatom as a successful global high-tech player and astronomical portfolio value (more than $ 100 billion), nuclear power plants themselves are built today only in three countries - India, China and Belarus (although large-scale preparatory work is also going on in Bangladesh and Finland). In a broader sense, the actual construction of a nuclear power plant in Southeast Asia could be a major contribution to the Russian presence strategy in the region, which today, in essence, boils down to projects in the field of oil and gas and arms exports. And the volume of trade and investment cooperation does not occupy more than 2% of the total volume for both Russia and ASEAN countries.

The story of the cancellation of the Russian NPP project in Vietnam is not about how Russia lost something or failed to successfully implement the foreign economic project in Asia. On the contrary, the Russian proposal was qualitative, technological and relevant, but the rate did not play because of an unfortunate coincidence. The absence of other Russian projects of a similar level in South-East Asia makes this loss noticeable.

For the Russian presence in Asia, in the long term, it is important to create a critical mass of business ties at the level of medium-sized businesses, but it is for large state corporations that it is usually possible, with political support, to pave the way for complex and undeveloped Asian markets. Unfortunately, in Vietnam, Rosatom failed to become such a pioneer.