US embassy cable - 05ANKARA5220

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