Rosatom's Nuclear Energy Assistance As Part of Russian Foreign Energy Policy

Producing power? Rosatom’s nuclear energy assistance as part of Russian foreign energy policy

Tjadina Herbert

Thesis submitted for the degree of Master of Arts in Russian and Eurasian Studies, Leiden University

Supervisor: Dr. Matthew Frear Date of submission: 30 June 2021 Wordcount: 21.498 (pages 1 – 58)

Abstract Rosatom, Russia’s state-owned nuclear corporation, has quickly emerged as the world’s largest provider of nuclear energy assistance. Their long lifespan and large imprint on a country’s electricity generation give nuclear power plants a strategic importance, while the provision of nuclear resources and technological expertise generates long-term dependencies between supplier and client states. As a result, the increased global presence of Rosatom has sparked concerns among observers who fear Russia could use its nuclear energy resources and relationships as leverage to achieve foreign policy goals. This thesis investigates in what ways Rosatom’s nuclear energy assistance could be used as foreign policy tool and whether Russia is actually using it as such. To do so, the thesis presents an analytical framework, based on theories of economic statecraft, that identifies a number of factors - economic power, state control, structural features of nuclear energy, and interstate relationships between client and supplier – as key determinants of the employment and efficacy of nuclear energy assistance as foreign policy tool. The thesis applies these factors to Russian foreign energy policy in the Central and Eastern European region by examining Rosatom’s nuclear energy cooperation with Belarus and Hungary. While Rosatom is certainly a demanding presence on the international nuclear energy market and can count on substantial support from the Russian state to maintain its dominant position, nuclear energy and its international marketplace possess certain qualities that prevent the application of nuclear energy assistance as coercive political pressure tool. Instead, Rosatom’s attractive business offers, and the state support that enable it, embody a form of persuasive statecraft, where Russia intends to solidify and reinforce existing relations with the client state. On this basis, concerns about Moscow weaponising its nuclear energy prowess are unfounded, although nuclear energy assistance is being used to bolster Russia’s international influence.

Acknowledgements I would like to thank my supervisor, Dr. Matthew Frear, whose expertise and support were invaluable in formulating the research design and completing the thesis. Your insightful feedback helped me to better arrange my thoughts and elevate my work. I would also like to express my gratitude to Dr. Morena Skalamera, for her inspired teaching and pleasant conversations which further encouraged my interest in the topic of energy geopolitics. Finally, I could not have completed this thesis without the support of my dear sister and friends, who functioned as excellent discussion partners and pleasant distractions from the thralls of thesis writing.

iii

Table of Contents Abstract ...... ii Acknowledgements ...... iii Table of Contents ...... iv List of Figures ...... v List of abbreviations ...... vi Introduction ...... 1 1. Literature review ...... 4 1.1. Theories on international energy politics ...... 4 1.2. Russia’s “energy weapon”? ...... 5 1.3. Historic trajectory of Russia’s nuclear energy sector ...... 7 1.4. Main takeaways ...... 10 2. Methodology ...... 11 2.1. Economic statecraft ...... 11 2.2. The political economy of nuclear energy ...... 12 2.3. Analytical framework ...... 15 2.4. Case studies ...... 17 2.4.1. Belarus ...... 17 2.4.2. Hungary ...... 18 3. Russia the nuclear giant ...... 19 3.1. Endowment of natural resources ...... 19 3.2 Rosatom’s presence on the international market ...... 21 3.3 Concluding remarks ...... 23 4. Under the state’s thumb or independent actor? ...... 25 4.1. The relationship ...... 25 4.1.1 The state and Rosatom ...... 25 4.1.2. Rosatom and the state ...... 26 4.2. The perks ...... 28 4.2.1. Financial support ...... 28 4.2.2. Diplomatic support ...... 29 4.3. Tensions between political and commercial interests ...... 30 4.4. Concluding remarks ...... 31 5. Nuclear energy assistance as stick or carrot ...... 32 5.1. Inelasticity of energy demand and nuclear energy oligopoly ...... 32 5.2. Nuclear energy as commodity ...... 33 5.3. Nuclear energy to forge partnerships ...... 35 5.4. Concluding remarks ...... 37

6. The interstate relationship between supplier and client ...... 38 6.1. Belarus ...... 38 6.1.1. Economic and political dependencies ...... 38 6.1.2. Impact of existing interconnections on nuclear energy cooperation ...... 40 6.2. Hungary ...... 41 6.2.1. Economic and political dependencies ...... 41 6.2.2. Impact of existing interconnections on nuclear energy cooperation ...... 43 6.3. Concluding remarks ...... 44 7. Conclusion ...... 46 Bibliography ...... 49 Appendices ...... 59 Appendix I – Rosatom’s uranium production ...... 59 Appendix II – Corporate structure of Rosatom’s civil nuclear complex ...... 61

List of Figures Figure 1: Nuclear Fuel Cycle...... 13 Figure 2: Nuclear energy in Central and Eastern Europe and Central Asia in 2021 ...... 17 Figure 3: Share of players on the uranium and nuclear fuel markets in 2019 ...... 21 Figure 4: Overview of divisions within the nuclear energy branch of Rosatom ...... 61

List of abbreviations ARMZ A Russian uranium mining company BOO (contract) Build, own, operate CEE Central and Eastern Europe EPC (contract) Engineering, procurement, construction EU European Union MWe Megawatt NPP Nuclear power plant NWF National Welfare Fund, Russia’s largest SWF SWF Sovereign Wealth Fund TVEL A Russian nuclear fuel cycle company US United States USSR Union of Soviet Socialist Republics VVER-reactor A type of nuclear reactor, originally developed in the Soviet Union, now in Russia

Introduction Challenges of climate change and insecure supply of energy have provoked a shift in the global energy system, away from fossil fuels and towards alternative forms of energy provision. From the 2000s onwards, nuclear energy has emerged as promising non- hydrocarbon alternative, due to its low greenhouse gas emissions, stable baseload of electricity generation and long lifespan with low operational costs (Fitzwater 2018). Currently, this “nuclear renaissance” continues, as multiple countries around the world are considering or in the process of building their own nuclear power plant (NPP). However, as the resources and capacities necessary to launch atomic programs are unevenly distributed across the globe, few countries are able to jumpstart their nuclear energy sectors without substantial international cooperation (Brutschin and Jewell 2018). The required nuclear energy assistance1, i.e. “the state-authorised transfer of technology, materials, or know-how intended to help the recipient country develop, successfully operate, or expand a civil nuclear program”, can be understood as either a commercial transaction or a means for states to increase their international influence (Fuhrmann 2012a, 2). Rosatom, Russia’s state-owned nuclear energy corporation, has established itself as the main supplier of nuclear energy assistance on the international market. Since its formation in 2007, the corporation has significantly enhanced its presence abroad by offering its services to countries without nuclear energy capacity. In its latest annual report, Rosatom confirms the construction of 36 nuclear power units in 12 countries and claims to be in various stages of negotiations in 50 countries worldwide (Rosatom 2019, 63). The increased global presence of Rosatom has sparked concerns among observers who fear Russia could use its nuclear energy assets and relationships as political tool (e.g. Armstrong 2015; Dobrev 2016; Mammadov and Karasik 2018). Following this argument, the long lifespan of nuclear reactors and uneven distribution of resources and technological expertise generate a long-term asymmetric dependency between Russia and the client state. Meanwhile, the significance of a stable energy supply for a country’s economic performance give the nuclear power plants a strategic quality that is hard to ignore. It is thus argued that nuclear energy assistance grants the supplier potential leverage over the client, which could be used to forward foreign policy goals (Macfarlane 2013, 67).

1 The thesis uses the terms “nuclear energy assistance” and “atomic assistance” interchangeably. 1

Wariness about the potential political implications of Rosatom’s activities abroad are situated within a larger debate about the nature of Russian foreign energy policy. The consolidation of state control over the energy sector and adoption of an increasingly assertive foreign policy stance in Moscow have raised concerns about Russia using its energy resources as political leverage (e.g. Baev 2008; Klare 2008). Numerous instances of supply interruptions and price hikes as well as subsidised gas and oil sales prove that Moscow has been willing to utilise energy to either punish or reward neighbouring states, depending on their political orientation (Orttung and Overland 2011; Newnham 2011). Against this background, the dependency of energy importing states on Russian energy has become increasingly understood as a security hazard. Existing literature on Russian foreign energy policy is primarily occupied with oil and natural gas (Balmaceda and Heinrich 2018, 472). While Russia’s economy is indeed heavily reliant on its hydrocarbon sector, the current preoccupation with hydrocarbons leaves other energy sources largely ignored. Meanwhile, nuclear energy assistance as a whole remains an underexplored topic and deserves more scholarly attention, especially since the prevalence of hydrocarbon energy is expected to decrease over the next decades (Fuhrmann 2012a; Brutschin and Jewell 2018). The motivation behind this thesis is thus twofold. By examining Rosatom’s atomic assistance, it aims to address a gap in the existing literature and intends to provide new insights on Russian foreign energy policy by focussing on a particular energy source that will likely become more widespread in the future. Therefore, the thesis asks the following question: what are the ways in which Rosatom’s nuclear energy assistance could be used as a foreign policy tool, and is Russia actually employing it as such? To answer this question, the thesis presents an analytical framework for examining the usage of nuclear energy as a political tool. Drawing from relevant theories of economic statecraft – to be understood as “the use of economic tools and relationships to achieve foreign policy objectives” (Mastanduno 2012, 204) – the analytical framework covers internal and external features that dictate how effective a state is in employing nuclear energy assistance towards political goals. Internal features relate to a country’s economic power and level of state control over the nuclear energy sector, whereas external features pertain to the structural qualities of nuclear energy and its international marketplace, and pre-existing asymmetries in the economic and political relationships between supplier and client state. To operationalise this analytical framework, the thesis applies these factors to Rosatom’s nuclear energy assistance in two case studies: Belarus and Hungary. First, it

2 examines Rosatom’s assets in term of nuclear energy resources to clarify Russia’s position on the international nuclear energy scene. Second, it explores the position Rosatom occupies in Russia’s political economy and considers how the relationship between the Russian state and commercial actor Rosatom affects its activities abroad. Third, it investigates the structural features of nuclear energy as a commodity and of the international nuclear energy market, that enable and disable it to function as political pressure tool. Finally, it considers the implications of existing asymmetric relationships between Russia and its client states on their nuclear energy cooperation, by exploring Belarus’ and Hungary’s economic and political dependencies on Russia. By doing so, the thesis present the factors that disable coercive economic statecraft of Russia’s nuclear sector as well as the conditions that allow its use towards persuasive statecraft. The thesis will be structured as followed. The first chapter situates the thesis in broader academic debates on energy politics and Russian foreign energy policy. This chapter also confirms the significance of nuclear energy for the Russian state by providing a trajectory of Russia’s nuclear energy sector. The second chapter presents the analytical framework and theoretical underpinnings that inform it. The third and fourth chapters cover the internal features of nuclear energy statecraft, examining Russia’s economic power and the level of state control over the nuclear energy sector. The fifth and sixth chapters consider the external features that affect nuclear energy statecraft, reflecting on Russia’s position on the international nuclear energy market and dominant position vis-à-vis its client states. The final chapter concludes that Rosatom’s nuclear energy assistance does not particularly lend itself as coercive pressure tool but can be used by Russia to solidify existing dependencies between supplier and client, before considering broader implications.

1. Literature review 1.1. Theories on international energy politics The theoretical foundation of thesis is based on the study of international energy politics, which is predominantly influenced by two main approaches: the realist competitive approach and the liberal cooperative approach. The realist approach considers energy to be a potential source of interstate competition. The strategic importance is premised on energy being “the basis for almost all aspects of human activity and, consequently, for the potential wealth and power of a state” (Harsem and Harald Claes 2013, 785). Since a stable and affordable supply of energy is essential for the functioning of industries, infrastructure and military forces, energy security is thought to be a vital interest for any state (Klare 2008; Herman 2018). Additionally, the scarcity and uneven distribution of energy resources across the globe require states to accept a certain level of external dependence, as they are reliant on foreign supplies to satisfy their energy needs or foreign buyers to earn energy revenues. As put forward by Wilson (2018, 155), it is this combination of strategic importance and external dependence that elevates the issue of energy in national security terms. As such, energy can be conceptualised as a strategic asset in either defensive or offensive terms. From a defensive view, security of supply is considered a national priority because energy-importing countries perceive their dependency on foreign energy sources to be a vulnerability (Herman 2018, 296). It should be acknowledged that security of demand is equally significant for energy-exporting states, given the importance of energy exports for their national budgets (O’Sullivan 2013, 31). Meanwhile, the offensive perspective argues that energy-exporting states recognise the vulnerabilities of their client states as opportunity to enhance their own state power and security (Herman 2018, 296). Such notions are reinforced by a belief that the international system is anarchic and hostile, which encourages states to engage in competition for access to and control over energy (Wilson 2018, 156). The geopolitical approach thus firmly connects energy with national security and consequently views energy politics as “a continuous struggle between exporters and importers for power and influence” (Jewell and Brutschin 2018, 251). Energy, in turn, is conceptualised as a tool – or indeed “weapon” – that can be used by states to project power internationally. Conversely, the liberal cooperative approach conceptualises energy as a factor of mutually beneficial collaboration between states. This account argues that most countries are reliant on energy trade and therefore are expected to actively seek out and commit to

4 international cooperation (Wilson 2018, 156). This is premised on the idea that the interests of actors in the energy sphere correlate: in basic terms, the desire of consumer states for supply security corresponds with the desire of produces for demand security (Goldthau and Witte 2010, 11). The liberal approach does not deny the importance of energy for states, but calls for the separation of energy as an economic commodity from political and security considerations. As put by Herman (2018, 297), “markets, not politics, are appropriate arenas for energy relations.” Liberal thinkers also reject realism’s preoccupation with state as primary actor, and instead acknowledge the important role non-state entities – such as markets, firms and international institutions – play in energy politics (Herman 2018; Goldthau and Witte 2010).

1.2. Russia’s “energy weapon”? Despite the growing prevalence of liberal thought in academic discussions on energy politics, Russia’s energy role in the Central and Eastern European (CEE)2 region continues to be considered primarily from a realist perspective (Balmaceda and Heinrich 2018, 481). In particular, much has been made about the significance of energy in Russia’s foreign policy and the existence of the so-called “energy weapon”, wherein Russia would use its energy resources to manipulate the political behaviour of other states (Goldthau 2008; Rutland 2008; Newnham 2011; Smith Stegen 2011). This inclination is based on Russia’s vast energy resources, the energy dependency of CEE states on Russian energy and the state’s strong grip on the energy sector. To start, Russia’s natural resource inheritance is legendary and a key factor in its national economy. The country has some of the largest reserves of oil, gas, coal, uranium and other minerals in the world and relies heavily on hydrocarbon revenues for its federal budget (Klare 2008, 89). In 2020, Russia was the second largest natural gas producer, third largest oil producer and fourth largest generator of nuclear energy worldwide. It is also one of the world’s largest exporters of hydrocarbon energy (Statista 2020a; 2020b; 2021). The export of energy resources has political significance, as it allows Russia to cement relations with neighbouring states on the basis of energy trade. The region became intertwined in the 1970s, when a vast network of pipelines connected Russia’s largest petroleum basin in Western Siberia with Europe’s energy markets (Klare 2008, 91). Driven by economic opportunities, the creation and expansion of the energy system between East and West was

2 This thesis utilises the term CEE to encompass the countries in Central and Eastern Europe, the Balkans and the Caucasus, which were formerly part of the Soviet Union or satellite states in the communist bloc. 5 largely unphased by the political hostilities of the Cold War and the collapse of the Soviet Union (USSR) (Högselius 2013). This historical legacy and existing infrastructure continue to be relevant for former Central and Eastern European satellites of the Soviet bloc, of whom several remain dependent on Russian energy to varying degrees (Balmaceda and Heinrich 2018; Eurostat 2020). High dependencies make these states vulnerable to Russian manipulation attempts. The final component relates to Russia’s state control over the energy sector. Since Vladimir Putin’s ascent to presidency in 2000, Moscow has made steps to tighten state connections to the country’s largest energy companies. Recognising the development of natural resources to be “a strategic factor” of Russia’s economic development, Putin called for the state to regulate the acquisition and extraction of natural resources (Klare 2008, 93). In the following years, all major energy companies either became directly or indirectly linked to the state or were pushed out (Newnham 2011; Sotiriou 2014, 61). The Russian state has also reinforced its control over pipelines by sanctioning a monopoly on pipeline infrastructure for state-owned companies (Domjan and Stone 2010, 41-42). Besides establishing control over the domestic sphere, Russia sought to expand its international energy influence by embarking upon a strategy to gain full control or partial ownership over energy infrastructure in neighbouring countries (Klare 2008, 112; Orttung and Overland 2011, 81). State involvement in the Russian energy sector extends to the personal level, with many high-ranked government officials and confidants of Putin serving as board members of energy companies (Domjan and Stone 2010, 40; Stern 2005, 172). As Stern (2005, 173) writes, after Alexei Miller, a close friend of Putin, assumed chairmanship of Gazprom in 2001, the company became “very much a part of the state with direct links to the president, and accepted its role as an instrument of government policy both domestically and internationally.” In Russia, energy and politics are thus interpersonally linked together. The combination of these factors has enabled Russia to utilise its energy assets to punish or reward neighbouring countries depending on their political orientation. Moscow has long employed subsidised energy prices to keep economies of friendly regimes afloat and bargain political loyalty, before moving away from this practice in the mid-2000s (Newnham 2011; Orttung and Overland 2011, 79). Meanwhile, price manipulations and supply disruptions were used to punish importing states if they opposed a Russian political or economic objective (Goldman 2008, 49; Collins 2017). As the current international nature of the oil market largely prohibits the usage of oil towards this purpose (Sotiriou 2014, 61-62), natural gas has

6 since emerged as more suitable pressure tool. Gazprom’s nationalised and vertical3 company structure, its near monopolistic position on the Russian gas market and control over pipeline infrastructure have enabled Moscow to use gas exports as political instrument (Balmaceda 2013, 73; Domjan and Stone 2010). Although there have been plenty of energy disputes between Russia and other CEE countries (Stern 2005, 78; Collins 2017), it was the 2006 and 2009 gas shutoffs to Ukraine, which heavily affected South-Eastern Europe, that directed international attention to the potential danger of Russia’s energy prowess (Domjan and Stone 2010, 44). Reflecting on these international worries, many scholars have since questioned the actual efficacy of Russia’s “energy weapon” (Orttung and Overland 2011; Smith Stegen 2011). While the role of energy in Russia’s foreign policy is well documented, the focus generally lies on natural gas and oil. Much less academic attention has been paid to Russia’s nuclear energy linkages. Minin and Vlček (2017) employ a liberal market approach to examine Rosatom’s external strategy and conclude the company’s interests are primarily economic in nature. Similarly, Schepers (2019) largely rejects concerns about the geopolitical implications of Russia’s nuclear energy assistance, arguing Rosatom to have little incentive to use nuclear energy for political purposes. Although the focus of these analyses on Rosatom’s motivations is important, they fail to include state control and bilateral dependencies beyond nuclear fuel as factors that can enable statecraft. This thesis aims to address these gaps, but before it can do so, it explains how nuclear energy came to be such an important asset for Moscow.

1.3. Historic trajectory of Russia’s nuclear energy sector The significance of the nuclear energy sector for the Russian state becomes clear by reviewing its history. Initial attempts to jumpstart the industry had emerged right after the Second World War by scientists and engineers who used the success of the atomic weapons project to realise civilian applications of nuclear energy (Schmid 2015, 18). Nuclear energy gained solid foothold in the USSR with the development of the first NPP in Obninsk in 1954 (Marples 1999, 19). The sector flourished over the next few decades: 17 nuclear power sites with a total of 54 reactors were constructed between 1954 and 1986 (Kasperski 2015, 55). The seed for a Soviet nuclear power programme had been planted in the Khrushchev era. Nikita Khrushchev had promised the Soviet people that the communist utopia – a state of

3 The term “vertical” here refers to a situation where a company controls the entire supply chain from production to distribution. 7 equality, plenty and universal happiness – was within arm’s reach, and in order to keep that promise he needed a complete transformation of the economy on a basis of science and technology. Nuclear energetics, as symbol for progress and modernity, became a central component in imaginations of this communist future (Josephson 2005, 10). The success of the Soviet nuclear project became a source of prestige for the Communist Party not only at home, but also abroad. Khrushchev’s Thaw allowed for collaboration between Soviet nuclear scientists and foreign colleagues, where the high-tech nature of nuclear energy generated international recognition for Soviet science, and in turn Soviet leadership (Holloway 1994, 352-353). The development of the sector gathered steam in the Brezhnev period. The government of the 1960s and 1970s witnessed rising production costs and fluctuating output levels of traditional energy sources, combined with an annual growth in electricity needs. Against these developments, nuclear power was perceived as a solution for the Union’s impending energy shortage (Marples 1999, 19-21). Unlike gas or oil, nuclear energy could also provide large amounts of energy without the need for expensive connective infrastructure from Siberia to European Russia (Schmid 2015, 20-23). Nuclear energy was thus conceptualised as the ideal source of energy for the urban and industrialised European parts of the USSR (Spence 1983). While economic concerns thus seem to have been more successful for boosting the sector than earlier efforts to present nuclear energy as facilitator for technical and societal progress, nuclear energy did not lose its symbolic value. By the 1980s, it had been firmly established within Soviet iconography as brick in the road towards a bright communist future (Schmid 2015, 39). In 1981, the nuclear industry provided 6,5% of electric power produced in the USSR and projections were made to increase the nuclear share to 30% by 2000 (Spence 1983, 92; Marples 1999, 23). The 1986 disaster at Chernobyl incited comprehensive changes in the Soviet nuclear industry, including modification of reactors, improvement of training for operators and a complete restructuring of the industry’s management (Schmid 2015, 154). It also had immense effect on the image nuclear energy had enjoyed in the Soviet mythos, as it led citizens to realise that their revered and celebrated technology was, in fact, not inherently safe nor infallible (Josephson 2005, 244). As it later turned out, Chernobyl would become the catalyst for the Soviet Union as a whole. The mismanagement of the catastrophe and its aftermath, revealed by Mikhail Gorbachev’s policies of glasnost’ and perestroika, did serious damage and the system collapsed quietly yet inevitably under its own weight. The disintegration of the USSR in 1991 and subsequent economic disarray put further expansion

8 of the nuclear sector on hold (Kasperski 2015, 56). Although the nuclear power lobby remained present in Russia, its ambitions remained fruitless due to lack of funding (Marples 1999, 33). An impressive revival of the Russian economy in the 2000s helped resuscitate the nuclear industry. By 2006 the government planned to add 2000-3000 megawatt (MWe) of nuclear capacity per year to 2030 (World Nuclear Association 2021b). Russia’s economic revival was largely premised on its abundant natural resources. Putin recognised the export quality of energy assets, both hydrocarbon and nuclear, and saw them as a vital source of income (Kasperski 2015, 63). Thus, Russia’s natural resource wealth ought to be used “to advance the country’s national interests” (Goldman 2008, 97). Only by reclaiming control or ownership of the earlier privatised resource-based companies, Putin argued, Russia could hope to “exit from its deep crisis and restoration of its former might (Balzer 2006, 54). Accordingly, the nuclear industry, which had remained under control of the Ministry for Atomic Energy since 1992, underwent a comprehensive reorganisation. In 2004, it was transformed into the Federal Agency on Atomic Energy “Rosatom”, which became a state corporation in 2007 (Schepers 2019, 2). Currently, Rosatom manages over 300 companies involved in all stages of the nuclear production chain, from uranium mining and enrichment to NPP construction, power generation and nuclear waste management. Additionally, it encompasses a wide variety of functions, from the development of military and civil nuclear industries, management of Russia’s nuclear icebreaker fleet and national research institutions to the implementations of nuclear safety regulations (Rosatom 2019). As noted by Kasperski (2015, 59), the monolithic structure of Rosatom is “reminiscent of the Soviet approach.” With the creation of Rosatom, Moscow hoped to realise its ambitions to significantly expand the nuclear energy industry, which had first sprouted in the late 1990s. In 1998, the Russian government had published a plan that prescribed the construction of 16 new generators by 2010. While Moscow strongly supported the construction of new domestic nuclear projects and promotion of Russian technology abroad, results were fairly meagre. By 2010, only 3 of the originally planned 16 reactors were realised and connected to the grid. Irrespective of these lacklustre results, an even more ambitious program for an additional 30.000 MWe of nuclear capacity was announced in 2008, that called for the construction of more than thirty reactors, including floating stations, by 2020 (Kasperski 2015, 63). Between 2008 and 2020, Rosatom brought ten reactors on line, two of which are part of the floating station Akademik Lomonosov (IAEA NEA 2020, 83). The launch of this pilot project, which is currently based in the Arctic town of Pevek, has been appreciated as a particular success,

9 since it paves the way for the provision of electricity to remote settlements in the Russian High North (RIA Novosti 2020a). As of 2020, Russia has 38 operational reactors spread across 11 nuclear power sites, accounting for more than 19% of national electricity generation (IAEA 2020). An additional four reactors are currently under construction, with one expected to go on line in 2021 (OECD NEA 2020, 83; RIA Novosti 2020b). In addition, Rosatom has been keen to expand its international market share. The corporation takes pride in Russia’s track record of international nuclear business, which started with the construction of a reactor in the German Democratic Republic in 1966 (Schmid 2015, 268). Since its creation in 2007, Rosatom has built 7 NPPs in three foreign countries and has provided assistance in the construction of over 20 research reactors across the globe. Currently, the company has official arrangements to build 36 nuclear power units abroad, of which 25 are currently in the implementation stage (Rosatom 2019, 65-68). As noted by Kasperski (2015, 64), Russia’s ambitious plans to bolster the nuclear sector “indicate a strong belief in the idea of a ‘nuclear renaissance’ in which the industry will expand and expand rapidly.” The fact that these plans transcend national borders indicates how Russia intends to employ the potential resurgence of nuclear energy to bolster its international position. This corresponds with Putin’s insistence on using energy resources to advance national interests.

1.4. Main takeaways In summary, much academic attention has been paid to the role of hydrocarbon energy in Russia’s foreign policy. Flagging energy as an important component in Russia’s foreign policy toolbox, scholars have pointed to large energy resources, persistent energy dependence of CEE states on Russian energy and strong state control over the energy sector as main facilitators of energy statecraft attempts. Much of this literature has focused on natural gas and oil, leaving nuclear energy largely ignored. This is particularly puzzling given the historic and symbolic significance of the nuclear energy sector for the Russian state. Over the last twenty years, Moscow has endeavoured to significantly expand the nuclear energy industry, both within and outside of Russia’s geographic borders. This nuclear renaissance seems partly driven by a desire to boost the image of Russian leadership to domestic audiences as well as to bolster Russia’s position on the international level. Whether this also translates to Russia attempting to use its nuclear energy sector as political tool, as it has done with its hydrocarbon energy resources in the past, is the topic of this thesis. How it investigates this question will be discussed next.

2. Methodology To explore in what way Rosatom’s nuclear energy assistance could be used to advance political goals, this thesis operationalises an analytical framework that draws from relevant theories of economic statecraft adapted to the characteristics of nuclear energy. This chapter discusses economic statecraft and the political economy of nuclear energy before presenting the framework.

2.1. Economic statecraft The methodology of this thesis is premised on the notion of economic statecraft, to be understood as “the use of economic tools and relationships to achieve foreign policy objectives” (Mastanduno 2012, 204). Although examples of punitive instruments receive most attention, economic statecraft may be either coercive or persuasive in nature (Hill 2003, 138; Baldwin 1971). Positive economic instruments can be particularly effective in building alliances and enhancing client-patron relationships between states (Knorr 1975, 162-164). A canonical text on economic statecraft was provided by David Baldwin (1985, 371), who found that that economic instruments remained largely ignored by studies of foreign policy and insisted that they “should be analysed in much the same way as other techniques of statecraft”. This was in stark contrast with the conventional understanding of that time, which considered economic measures less compelling than their military counterparts since they were often unable to achieve “ambitious foreign policy goals” (Pape 1997, 90). Baldwin provides a rather straightforward understanding of the concept, which understands the “economic” in economic statecraft to refer purely to the nature of instruments employed, indicating that they can be measured in terms of money (Baldwin 1985, 32). Since Baldwin’s seminal text, there have been attempts to broaden this understanding of economic statecraft. One such attempt is by Blackwill and Harris (2016, 22), who recognise a lacuna of “conceptual thinking about economic and financial instruments as tools of statecraft” beyond Baldwin. To fill this gap, they propose several economic tools that are suited to (geo)political application, including the use of commodities such as nuclear energy. As discussed in the previous chapter, Russia’s energy statecraft is based on three factors that enable it to employ its energy resources for political purposes: possession of vast energy reserves; state control over the energy sector; and dependent bilateral energy ties. Before these can be translated to nuclear energy in the analytical framework, a better understanding is needed on how nuclear energy as a commodity behaves differently to hydrocarbons. The next section therefore examines the political economy of nuclear energy.

2.2. The political economy of nuclear energy A state’s usage of nuclear energy is determined by its motivations and capacities to develop nuclear energy programs. Motivations to pursue nuclear energy are plentiful: it offers a long- term and emission-free solution to growing electricity needs and signals a certain prestige and political power associated with the atomic sector (Macfarlane 2013, 55). Most significantly, nuclear energy can decrease energy dependencies since it alleviates some need for hydrocarbon imports and allows for enhanced domestic production of affordable electricity (Fuhrmann 2012b; Jewell 2011, 1044; Hultman 2011, 398). However, given the uneven distribution of nuclear resources and capacities around the world, few countries are able to jumpstart their own nuclear energy sector without substantial international assistance (Jewell 2011). It is this tension between motivations and capacities upon which the international political economy of nuclear energy is premised (Brutschin and Jewell 2018). Like hydrocarbon reserves, uranium deposits are scattered unevenly across the globe: more than half of the identified or estimated uranium reserves are located in just three countries (IAEA NEA 2020, 16). Countries with large uranium reserves are thus in a privileged position, as they possess a scarce and relatively rare resource. While the inequity between uranium producing and consuming countries is reminiscent of dependency patterns in hydrocarbons trade, it has to date not led to major supply disruptions. This is likely due to the oversupply of uranium on the international market and the high proportion of uranium exporters being stable Western democracies (Brutschin and Jewell 2018, 323). The market is expected to remain stable, since the resource base is substantial enough to cover even large nuclear expansion (IAEA NEA 2020, 108). Beyond uranium deposits, a particular set of technological and infrastructural capacities is required to construct and operate a nuclear power plant. As a consequence, the construction of an NPP can introduce new forms of dependencies to the buyer state (Brutschin and Jewell 2018). First is the dependence on uranium. Currently, most uranium trade is conducted through long-term contracts, although recent developments suggest a more spot trade based market going forward (ibid., 325). The second dependence is related to the nuclear fuel cycle. Since only a few countries (China, France, Russia, the United Kingdom and United States (US)) possess capacity to cover the full cycle, most countries are required to import one or more parts (ibid., 329). The third dependence pertains to the construction of nuclear power plants. Again, the capacities to manufacture reactors and construct and decommission power plants are concentrated in a handful countries (ibid., 332). These two dependencies used to be connected, since only the contractor of the NPP could provide the right type of fuel assembly

12 for that particular reactor. Historically, countries with Soviet, now Russian, VVER4-type reactors were fully dependent on Rosatom or its predecessor for fuel assemblies, until diversification of the fuel market in the late 2000s introduced competition between vendors (Kidd 2010). Lastly, nuclear dependence can involve a financial component. Although nuclear energy has relatively low operating costs compared to other energy sources, NPPs are very expensive to build (Fuhrmann 2012b, 33). The realisation of an NPP requires a significant investment to create the necessary regulatory, legislative and physical infrastructure to support the construction and operation of the plant (Jewell 2011, 1044).

Figure 1: Nuclear Fuel Cycle Source: Zhivov, Boytsov and Shumilin (2012, 23), Fitzwater (2018). On the other side of the equation, nuclear suppliers have multiple reasons to provide nuclear energy assistance. Nuclear energy is a commercial enterprise, where multiple providers may be in competition to offer their services to a potential client state (Lantis 2014). Countries with nationalised nuclear industries, like Russia, typically focus on nuclear energy as a commodity from which they can collect revenues (Macfarlane 2013, 64). Although such economic motivations are certainly important, atomic assistance cannot be fully understood without considering political and strategic factors. As highlighted by Fuhrmann (2009, 186), atomic assistance is “a potentially effective instrument of statecraft”, because it enhances the

VVER stands for Vodo-Vodyanoi Energetichesky Reaktor, meaning that water is used both as a coolant and as a moderator in the reactor (Zhivov, Boytsov and Shumilin 2012, 50). 13 client state’s energy production capacity and consequently economic capabilities and strengthens relations between supplier and client. Given the leverage it grants suppliers over a client state’s energy mix, nuclear energy assistance can thus be understood as “a means [for states] to enhance their international influence” (Fuhrman 2012a, 3). However, because the technology, materials and know-how used in nuclear assistance can be used for both civil and military applications of atomic power, states are expected to be careful in providing their services and willing to accept the risk of nuclear proliferation only if they can collect political and strategic benefits as compensation (ibid.). As proposed by Fuhrmann (2009; 2012a; 2013, 77), two strategic reasons drive supplier states to provide nuclear energy assistance: to create new or enhance existing alliances, and to strengthen allies in order to generate or sustain advantage over common adversaries. 5 First, nuclear assistance reinforces the relationship between supplier and client state, since clients rely on their foreign contractors to receive the benefits of nuclear energy based on the dependencies described earlier. Nuclear states may opt to provide atomic assistance to their allies in order to guarantee the durability of their bilateral ties. Supplier states are more likely to negotiate nuclear cooperation agreements with clients they have established ties with, which signals the significance of existing strategic relationships in generating and facilitating nuclear cooperation (Lantis 2014). Since the possibility of nuclear proliferation prevents the provision of nuclear technology at random, atomic assistance can be considered an unequivocal sign of intent to establish a strategic partnership between supplier and client state (Fuhrmann 2009, 188). Second, nuclear assistance enhances the economic performance and industrial capacities of the client state by improving its energy producing capacity. Suppliers may be motivated to provide nuclear energy assistance to counterbalance common adversaries. Civil nuclear cooperation can thus function to offset external pressures as it bolsters bilateral ties between supplier and client (ibid., 189). In summary, nuclear energy can be characterised by an uneven distribution of nuclear capacities, which create dependencies between supplier and client. Supplier states enter the nuclear market to capitalise on this uneven balance, not only economically by collecting revenues, but also politically by strengthening bilateral ties and strategically by enhancing their influence on the international level. While the political and strategic implications of nuclear energy assistance are recognised, scholars have noted the lack of systematic work that documents these dependencies and how they influence international politics (Fuhrmann

5 A third strategic reason offered by Fuhrmann is “to strengthen existing democracies and bilateral relationships with these countries (if the supplier is also a democracy)”. 14

2012b, 32-33; Brutschin and Jewell 2018, 333; Way 2018, 155-156). This thesis aims to address this gap in the literature. The next section will present the analytical framework of this thesis, building on the matter discussed above.

2.3. Analytical framework This analytical framework contends that the employment and efficacy of nuclear energy assistance as economic statecraft is dictated by a number of economic capabilities and attributes, some of which are located beyond the control of the state. By drawing on various scholars (Knorr 1975; Blanchard and Ripsman 2008; Blackwill and Harris 2016; Norris 2016), it identifies economic power, state control, structural features and interstate relationships as key determining factors for economic statecraft. The thesis applies these factors to Russian foreign energy policy by examining Rosatom’s nuclear energy assistance in the CEE region. In this context, it explores the factors that enable and disable nuclear energy statecraft. Given the centrality of influence in statecraft, the concept of economic power is a key medium for assessment. For Knorr (1975, 84-85), the basis of national economic power is found in the size of a state’s foreign economic transactions, which varies based on size of population, degree of economic development and degree of international economic specialisation. In the energy sector, economic power is premised on geographical and technological qualities combined with economic and political capacities. In other words, a state must possess significant natural resources that are economically and technologically extractable, and the state must have the required economic resources and political will to extract, refine and export these resources (Česnakas 2016, 13). To illustrate, Russia’s attempts to utilise hydrocarbon energy as political tool are premised on its large oil and natural gas reserves (Smith Stegen 2011; Newnham 2011; Orttung and Overland 2011). For nuclear energy to be used in the same way, it follows that Russia needs to possess significant uranium reserves and occupy a prevalent position on the global nuclear market. The second factor relates to state control over economic actors. Although government intent is vital in economic statecraft – indeed as Knorr (1975, 93) writes “there will be no economic power without the organised will to use economic strength” – this preoccupation with the state level is overly simplistic. In reality, economic activities are conducted by commercial actors, which means that economic statecraft rests on a precarious balance between governments and economic entities, whose interests are often diametrically opposed (Hill 2003, 148-149). State control, therefore, refers to the extent to which the state “can

15 control or direct the behaviour of economic actors that are conducting the international economic activity” (Norris 2016, 14). Indeed, as noted by Newnham (2011) and Smith Stegen (2011), the state’s control over the gas and oil sectors is an essential factor in its ambitions to harness their potential economic power for political purposes. Russia’s ability to apply its nuclear energy sector towards political goals thus hinges on its capability to direct Rosatom’s behaviour. The existence of close personal interconnections between the Russian state and largest energy corporations is significant here. Besides internal factors, there are also certain structural features that facilitate the usage of economic statecraft. Knorr (1975, 85) presents two important structural dimensions: the comparative inelasticities of supply and demand, meaning that economic power increases if a country exports things in urgent demand; and relative concentration and dispersal of trade geographically, meaning that economic power increases if a country has monopoly control over supply. In other words, the less a client state can go without its exports, the more persuasive a state’s economic statecraft attempts will be. A country’s role as key provider of energy commodities is particularly relevant in this regard, due to the strategic importance of a secure energy supply for importing countries (Blackwill and Harris 2016, 90). As argued by Smith Stegen (2011), Russia’s expansion of control over energy infrastructure is a key component in its efforts to utilise gas resources as political tool, since it enables it to manipulate the delivery of energy. Thus, for nuclear energy assistance to be compelling as statecraft tool, Rosatom needs to be able to generate circumstances in which its services are in urgent demand while being in full control of their delivery. Finally, the interstate relationship between supplier and client should not be overlooked. The efficacy of any economic instrument is relational, meaning that its functioning “depends on the interaction of actor and target” (Hill 2003, 336). Existing economic asymmetries with other states can boost the impact of economic statecraft, since the client state is already caught in a dependent relationship with the supplier (Blackwill and Harris 2016, 89). Accordingly, the success of economic statecraft is not related on its actual scope, but rather on the political costs or opportunities it generates within the target state (Blanchard and Ripsman 2008). This is particularly relevant in regard to Russia’s dominant economic position in the CEE region, based on the comparative size of the Russian economy, existing dependencies of CEE countries on Russian energy and market, and historical legacies (Macfarlane 2018, 288-289). Therefore, the economic statecraft potential of Russia’s nuclear energy assistance is premised on existing economic and political dependencies of the client state, which incentivise it to opt for nuclear cooperation with Rosatom specifically.

2.4. Case studies While the first two factors consider the supplier side of nuclear energy statecraft, investigation of the latter two requires the inclusion of the client. These factors will be discussed using two case studies from the CEE region. Belarus and Hungary are chosen because they both have bilateral nuclear cooperation agreements with Rosatom, with NPP construction currently ongoing or soon to commence. The two offer separate experiences: Belarus being a former member of the Soviet Union with no previous experience in nuclear energy, and Hungary being a former satellite state within the communist bloc and current EU member with an established nuclear energy sector.

Figure 2: Nuclear energy in Central and Eastern Europe and Central Asia in 2021. Source: World Nuclear Association, various country profiles.

2.4.1. Belarus Minsk made the steps to jumpstart its nuclear energy sector in the 1980s, but these projects were discontinued in 1987 after Belarusian lands suffered serious radioactive contamination from the Chernobyl disaster. Despite obvious concerns from the affected population, Minsk went back to flirting with the idea of nuclear energy as early as the mid-1990s, guided by energy security considerations. Belarus is heavily dependent on Russian energy resources and a series of supply disruptions in 2004 and 2007 made it acutely aware of the vulnerability of its energy mix. Consequently, Minsk conceptualised nuclear energy as primary solution to achieve energy security (Novikau 2019). The political decision to greenlight the construction of the first Belarusian NPP was made in 2008 (ibid., 7). Minsk to put the project out to tender and received bids from multiple nuclear vendors, but ultimately decided to contract Rosatom for a turnkey construction of an nuclear power plant in the town Astravets (WNN 2009; World Nuclear Association 2021d).

An intergovernmental agreement was signed in 2011, outlining the commissioning of two Russian-built VVER-1200 reactors with shared capacity of 2.400 MWe. As part of the deal, Russia provided a loan of $10 billion to Belarus with intention to cover 90% of the project’s estimated costs (NEI 2021). The two reactor units were planned to be completed in 2018 and 2020, respectively, but the project was delayed several times due to construction mishaps. Unit 1 was connected to the grid in November 2020 and became commercially operational in June 2021, whereas unit 2 is expected to go on line sometime next year (WNN 2021c). When completed, the Astravets NPP is expected to provide about a quarter of Belarus’ total electricity demand (NS Energy 2021a).

2.4.2. Hungary Hungary’s nuclear energy industry dates back to 1966, when Budapest signed an interstate treaty with the Soviet Union to build the first Hungarian NPP near the town of Paks. Construction started in 1974 and four reactors with a combined capacity of 1.760 MWe went online between 1982 and 1987 (World Nuclear Association 2021a). Currently, Paks NPP produces over half of domestic power generation and provides for one-third of total electricity consumption. As Paks is to be decommissioned between 2032 and 2037, its replacement with two new nuclear units is considered necessary to provide for Hungary’s growing energy consumption without resorting to increasing gas imports (Gosling 2020). When completed, Paks II will consist of two VVER-1200 reactors with total capacity of 2.400 MWe (NS Energy 2021b). Plans for a new NPP became reality with parliamentary approval in 2009. Following European Union (EU) legislation for energy projects, Budapest made plans for a competitive market tender in 2012, which attracted multiple interested parties. However, the tender was unexpectedly retracted in January 2014 and Rosatom was selected as the contractor for Paks II (World Nuclear Association 2021a). An intergovernmental agreement was signed one month later, which included a €10 billion Russian loan to cover 80% of expected project costs (NS Energy 2021b). The murky circumstances of the deal sparked controversy in the EU about the political implications of the project and Hungary’s lack of adherence to European energy market rules. After some pushback from Brussels, including an infringement procedure against Budapest for non-compliance with EU public procurement rules, the Paks II project was ultimately allowed go forward with minor altercations (Herszenhorn, Stefanini and Hirst 2016). It is expected that construction will start at the end of 2021 and that the plant will become operational in 2025 and 2026 (World Nuclear Association 2021a).

3. Russia the nuclear giant The first component of Russia’s ability to employ nuclear energy statecraft relates to its economic power. This chapter explores Russia’s endowment of natural uranium resources and the size of Rosatom’s presence on the international nuclear energy market to confirm that these assets are significant enough to give Russia a position of power as nuclear energy exporter.

3.1. Endowment of natural resources Russia’s uranium mining industry is built on the remnants of its Soviet predecessor, which was launched as part of the nuclear weapons programme in 1945. In absence of domestic uranium mines, the USSR turned to the already explored deposits in Eastern Europe (Khlopkov and Chekina 2014, 18-19). Shortage of domestic production remained a significant constraint on the development of the Soviet nuclear energy industry, until new uranium mines in Kazakhstan, Uzbekistan and Russia were launched in the 1960s and 1970s (Bukharin 1996, 61). By the mid-1980s, the Soviet uranium mining industry had emerged as the largest in the world, reaching peak production at 16.000-16.500 tonnes in 1985-1986 (Khlopkov and Chekina 2014, 20). Since most of the production was concentrated in Central Asia and Ukraine, the collapse of the Soviet Union had a severe impact on Russia’s nuclear energy sector. After 1991, only one mining centre, accounting for less than 20% of Soviet uranium mining assets, was located within Russian borders (ibid.). Currently, Russian uranium production is conducted by Rosatom subsidiaries ARMZ6 Uranium Holding and Uranium One.7 ARMZ was founded in 1992 and has been responsible for uranium production in domestic mining facilities since 2008, when all Russian uranium mines were brought under its wing. In 2013, ARMZ acquired full ownership of Canadian- based Uranium One, a developer of several mining assets in Kazakhstan (Dolchinkov 2019, 109). As part of a restructuring of Rosatom assets in the same year, ARMZ came to control all domestic uranium mining assets while Uranium one was made responsible for Russia’s foreign assets (Khlopkov and Chekina 2014, 28). Together, these two companies produced over 7.300 tonnes of uranium in 2018, which corresponds to 14% of global production and makes Rosatom the second largest producer of uranium in the world (ARMZ 2018, 33). ARMZ currently operates three uranium mine complexes, located in the regions of Zabaykalsky Krai and Kurganskaya Oblast, with a total production of 2.911 tonnes per annum

6 AtomRedMetZoloto, a contraction of the Russian words for “atoms, rare metals, gold”. 7 For a full overview of Rosatom’s uranium production assets, see appendix I. 19

(ARMZ 2019). The company aims to develop several new uranium mine projects in the Yakutia and Trans-Baikal regions, for which purpose the Russian government allocated an exploration budget of 14 billion roubles (Dolchinkov 2019, 110). In particular, the Elkon project is high on the agenda, because it promises significant reserves that could make it Russia’s largest uranium mining complex (ARMZ 2019, 21). Development of new mines is difficult, however, given the remote location, harsh climate and difficult terrain of uranium fields (Khlopkov and Chekina 2014, 26). Expected high extraction costs mean ARMZ needs to cut costs or wait for the price for uranium on the global market is more generous before development of new projects is feasible (Dolchinkov 2019, 111). Uranium One has shares in several mining compounds in Kazakhstan, the United States and Tanzania, and has conducted tentative exploration activities in Namibia. Given the current low demand for uranium on the global market, the corporation has shifted its focus from developing new projects to “ensuring that all mines in Kazakhstan remain at optimal production capacity” (Uranium One 2021a, 56). In total, uranium production attributable to Uranium One amounted to 4.274 tonnes in 2020 (ibid., 74). In contrast to the hefty price tag of extraction in Russian uranium mines, Rosatom’s foreign production assets involve some of the lowest production costs in the world (Khlopkov and Chekina 2014, 29). Besides mine output, Russia can use secondary sources to meet its uranium demand. These consist of existing stockpiles of natural and enriched uranium, from civilian or nuclear origin, as well as reprocessed nuclear fuel from spent reactor fuel and re-enriched uranium from depleted nuclear tails (IAEA NEA 2020, 96). According to estimates, the USSR possessed an uranium stockpile of 200.000 tonnes before its disintegration in 1991. Russia sold much of these reserves during the 1990s to keep its nuclear industry operational and had almost an eight of its original amount left by 2010 (Khlopkov and Chekina 2014, 31-32). Currently, Russia only uses its national reserve for domestic production and has halted sales to foreign buyers. It was estimated that the national reserve would deplete by 2020, used only for emergency situation (Zhivov, Boytsov and Shumilin 2012, 268). Given the confidential nature of nuclear stockpiles, few countries are willing to disclose detailed information on the size of their secondary nuclear sources (IAEA NEA 2020, 97). This makes it difficult to verify such estimates. Combined, Rosatom’s annual uranium production thus lies around 7.200 tonnes plus possible secondary sources. Russia is estimated to use about 5.500 tonnes of uranium per year (World Nuclear Association 2021c). With the current expansion of nuclear power’s share in the national energy balance and Rosatom’s ambitions plans of building new NPPs abroad,

Russia’s demand for natural uranium is projected to increase. To guarantee sufficient resources for the nuclear energy sector, the Russian Energy Strategy up to 2035 calls for exploration and development of uranium deposits both within Russia and abroad (Russian Government 2020, 45).

3.2 Rosatom’s presence on the international market Besides the natural uranium market, the nuclear energy sector offers business opportunities such as various components of the nuclear fuel cycle well as NPP construction and maintenance. In most of these, the export potential of Rosatom is massive and expected to grow.

Figure 3: Share of players on the uranium and nuclear fuel markets in 2019. Source: Rosatom (2019). Russia is one of the leading countries in the processing of natural uranium into nuclear fuel. The conversion, enrichment and fuel fabrication processes are all part of Rosatom’s fuel division.8 In 2014, Rosatom possessed an annual conversion capacity about 25.000 tonnes of uranium, of which only about 35-55% was in use. Rosatom’s fuel company TVEL decided to consolidate its conversion facilities into one main production centre in Seversk to save costs. Annual production of this new facility is conversion of 18.000 tonnes of natural uranium and 2000 tonnes of regenerated fuel (Khlopkov and Chekina 2014, 35-36; RIA Novosti 2013). Rosatom is the world’s largest producer of enriched uranium, accounting for 38% of the global demand (Rosatom 2019, 42). The corporation has been working to expand its enrichment capacity. In 2011, Head of Rosatom Sergey Kiriyenko announced to allocate between 45 and 65 billion roubles to modernise an existing enrichment plant and double its capacity (WNN 2011). Russia’s current enrichment capacity allows Rosatom to position itself as one of the leading suppliers of nuclear fuel products on the international market. In 2019,

8 For an overview of the different divisions within Rosatom’s civil nuclear complex, see appendix II. 21 the corporation supplied nuclear fuel products for both Russian- and Western-design reactors to 42 customers across 16 countries and earned $2 billion in sales (Rosatom 2019, 71). Russia takes third place in the global nuclear fuel market, providing about 16% of global supply (ibid., 42). According to TVEL, “every sixth commercial NPP is running on TVEL fuel” (TVEL 2018, 12). Rosatom’s successes in developing fuel assemblies for Western-type reactors signal that this number may increase in the future (IISS 2018, 6). Additionally, Rosatom is developing new types of nuclear fuel using spent fuel (WNN 2021a; NEI 2020). These are an important step in “closing the nuclear fuel cycle” and alleviating the need for nuclear waste storage (World Nuclear Organisation 2021b). Further modernisation of Russia’s nuclear fuel cycle technologies and the development of new fuel types made from regenerated fuels are flagged as essential to keep Russia’s competitive position on the global nuclear market (Russian Government 2020, 45-46). A small player on the back-end market, Rosatom signals waste management as a potential new market opportunities (Rosatom 2019, 51). Currently, Rosatom is the only corporation that offers to take spent fuel back from international clients. In such arrangements, spent fuel is transported to Russia, where it is reprocessed it and derivative plutonium is collected, after which the remaining radioactive waste is returned to the country of origin. For nuclear newcomers that lack the required infrastructure for the transportation and reprocessing of spent fuel, such arrangements are an added incentive to opt for nuclear energy provided by Rosatom (Macfarlane 2013, 66; Schepers 2019, 3). Essentially, Rosatom’s monolithic structure grants it capabilities to cover the entire nuclear fuel cycle. This enables Rosatom to cater to ‘nuclear newcomers’, which might be hesitant to venture into nuclear energy due to its many technological challenges, as well as established nuclear countries, which lack specific services or products in their domestic sector (IISS 2018). This applies to both Belarus and Hungary, as Rosatom will provide and dispose of the fuel for the Astravets NPP and Paks II NPP (Belta 2021; Panin 2014). As noted by Schepers (2019, 3), Rosatom’s ability to offer “an all-inclusive package” of nuclear technology has put it ahead of its competition and allowed it to tap into markets other nuclear suppliers are hesitant to enter. As the market for nuclear fuel services is becoming oversaturated, Rosatom’s export revenues are transitioning from enrichment and fuel fabrication to NPP construction (IISS 2018, 6). With one third of global projects ordered worldwide in its portfolio, Rosatom is the world leader in construction of nuclear power plants abroad (Pehuet Lucet 2015, 41). The corporation claims official commitments to build 36 NPPs across various countries,

22 suggesting it is likely to keep its market leader status (Rosatom 2019, 68). It should be noted that these commitments also include signed “memoranda of understanding” of “framework agreements”, which do not promise any tangible developments in the short-term (De Clercq, Burmistrova and Stubbs 2016). Still, the dominance of Rosatom in international technological nuclear cooperation is indisputable. As noted by Galluci and Shellenberger (2017), Rosatom accounts for 60 percent of global reactor sales and technical assistance. The corporation’s portfolio includes more nuclear technology agreements than the four next largest suppliers combined and its only real competitor – Westinghouse – has been hampered by legal regulatory restrictions and a looming bankruptcy (Jewell et al. 2019, 849-850). Part of Rosatom’s appeal lies in that its NPP construction services come fast, cheap and, unlike its Western alternatives, without any non-proliferation conditions (Blackwill and Harris 2016, 85). Another attractive quality of Rosatom is range of services it provides. Rosatom typically offers comprehensive cooperation deals that include financing and training as part of the NPP construction process (Jewell et al. 2019, 849). With its flexible business model, in which client states can opt between EPC (engineering, procurement, construction) or BOO (build, own, operate) contracts, Rosatom can cater to all types of clients. An EPC contract constitutes a turnkey construction, where the supplier constructs a NPP and then “turns over the key” to the client to assume daily management. With a BOO contract, Rosatom maintains (partial) ownership of the plant and sells generated electricity to the client (World Nuclear Association 2021b). This flexible approach establishes Rosatom as viable partner for both unexperienced and experienced nuclear countries. Both Belarus and Hungary have signed EPC contracts, meaning they will take over management of the plant once construction is completed.

3.3 Concluding remarks To summarise, Rosatom is a significant player in the nuclear energy industry. The corporation owns several uranium mines in Russia with relatively high production costs and is planning on expanding domestic production if the global market allows it. It also owns foreign mining assets, including several operational mines in Kazakhstan which have some of the lowest production costs in the world, and plans on developing projects in Africa. Together, this gives Rosatom ample resources to sustain its nuclear energy sector and expand its presence internationally. On the global nuclear energy market, Rosatom is one of the leading companies in uranium enrichment and nuclear fuel fabrication, and aims to boost its waste management

23 capacities. Rosatom has emerged as world champion in reactor fabrication and NPP construction, positioned well ahead of other competitors. Due to its monolithic structure, Rosatom can provide any or all parts of the nuclear fuel cycle and offer several approaches to NPP construction, which allows it to cater its project proposal to the buyer state. This gives Rosatom a competitive advantage over other nuclear vendors.

4. Under the state’s thumb or independent actor? The second component of Russia’s nuclear energy statecraft model relates to state control. As suggested by Norris (2016, 26), states must be able to “control or direct the economic behaviour of commercial actors” in order to engage in statecraft. This chapter therefore investigates the relationship between the Russian government and state-corporation Rosatom, before describing the positive and negative implications of this relationship.

4.1. The relationship This section investigates the relationship between the government and Rosatom by linking them to statist and patrimonialist trends in Russia’s political-economic development. As noted by Norris (2016, 29), the ability of the state to act as a unified actor is imperative in its efforts to control the behaviour of economic actors. This section thus discusses the relationship between Rosatom and the state, and the unity within that relationship.

4.1.1 The state and Rosatom Statism, referring to the belief that the government ought to control major aspects of the national economy through state-owned enterprises or regulation of the market, has been a set feature of political economy of Post-Soviet Russia since the 2000s (Hanson 2007). Although the nuclear energy sector had remained under federal oversight and was therefore exempted from the privatisation that had reconstructed Russia’s hydrocarbon industry in the 1990s, it underwent several significant changes that consolidated state control. While a high proportion of state-involvement in nuclear energy sectors is not uncommon given the sensitive nature of nuclear energy (Brutschin and Jewell 2018), these changes fit within larger patterns of “recentralisation of political power in the Kremlin” and consolidation of state control over Russia’s largest enterprises (Kasperski 2015, 61; Sprenger 2010). First was the centralisation of the Russian nuclear energy sector. With its creation in 2007, Rosatom restructured several dozens of unitary enterprises into joint-stock companies with a majority government share (Sprenger 2010, 22; Schepers 2019, 2). The establishment of Rosatom coincided with the creation of five other state corporations in the same year, each founded by a separate law that grants the Russian president or government the right to appoint directors and board members (Sprenger 2010, 4, 21). With the creation of these corporations and provision of full state support, the Russian government hoped to improve economic efficiency and innovation in certain “strategic” sectors (Urnova 2009). According to Putin, these “national champions” would enable Russia to be more competitive in the global economy (Balzer 2006, 51). In short, with Rosatom as centralised, state-controlled entity, the

Putin administration intended to facilitate its pursuit of national interests like economic growth and international influence. A second contributor is a major reform of subsoil legislation in 2007. The legislative framework for exploitation of subsoil natural resources, including uranium, had been provided by a 1992 federal law, which granted federal and local governments shared ownership of the licencing system that gives companies permission to develop deposits. The new law enabled the federal government to seize control. The decision to take over subsoil management and centralise licensing authorities fits within Moscow’s efforts to consolidate its position over regional governments (Adachi 2009, 1396-1397). The resulting power vertical means the federal government can oversee the development of the uranium mining sector without the possibility of resistance from local governments. A third change relates to the restriction of foreign participation in Russia’s nuclear energy industry, as stipulated by the 2008 law “On strategic sectors”. The law aims to limit foreign investment in companies with a so-called strategic impact on Russian national security, requiring foreign investors to seek explicit permission from the state to acquire a controlling stake in a company. Accordingly, foreign private entities cannot obtain 50% or more of voting rights in Rosatom or any of its subsidiaries. For foreign governments or foreign government-controlled entities, the threshold lies at 25% of voting rights (Sprenger 2010, 10, 12). Adoption of this law was accompanied by amendments to the Subsoil Law, which now maintains that any subsoil plot containing “deposits and occurrences of uranium” is considered to be “of federal significance”. Foreign companies now require government approval to acquire more than 10% of voting shares in a Russian company that is developing a uranium field, while foreign state-owned companies can only hold 5% of shares (Adachi 2009, 1410-1411). Given these laws, it is hardly surprising that Russia’s uranium production is 100% government owned (IAEA NEA 2020, 348). In summary, the Russian federal government has sought to consolidate its control over the nuclear energy industry by taking away power from local governments and minimising access of non-Russian and non-state controlled companies. As a result, the key to development of nuclear energy industry in securely the hands of the federal government with minimal possibility of intrastate division.

4.1.2. Rosatom and the state Patrimonialism, denoting “a distinct structural mode of political-economic organisation based on clientelism and patronage”, is often considered an ubiquitous feature of the Russian

26 economy (Becker and Vasileva 2017, 83). Although a legacy from Soviet times, where the economic system favoured particularistic relationships between economic actors based on acquaintance and trust, patrimonialism outlived the collapse of the USSR (Robinson 2013). By reigning in the power of regional leaders and big business actors, the Putin regime has transformed Russia’s political landscape from multiple competing factions to a single, nationwide political machine controlled by Putin and his allies (Hale 2010). In this so-called “vlast vertical”, the state exerts control through a complex network of relations between patrons and clients (ibid., 34, 36). The consolidation of political power by the Putin administration therefore reinforced the notion that proximity to power translates to access to economic resources (Becker and Vasileva 2017, 88). In return, the state asks loyalty and compliance with its vision (Sakwa 2013, 74). If the political leadership fears that independent economic actors might pose a challenge to its authority, it is driven to create an environment where its patrons oversee every important industry (Hanson 2007, 37). In Russia of the 2000s, this resulted in the emergence of Rosatom as a way for the state to maintain control over the nuclear industry by putting its representatives in charge the leading company. Per the corporation’s founding law, the general director of Rosatom is appointed by the Russian president and is invited to attend meetings of the federal executive government (Russian Government 2007, 21). Between 2005 and 2016, this position was filled by Sergey Kirienko. Originally a more liberal figure in Russian politics, Kirienko has since moved up the ranks and has been an established member of Putin’s inner circle. Currently, he functions as first deputy Chief of Staff of the Presidential Executive Office, the most powerful decision- making body in the country (WNN 2016c; Stognei 2020). Kirienko’s successor, Alexey Likhachov, previously held the position of deputy minister of economic development and trade. Since Likhachov is considered Kirienko’s protégé and Kirienko has maintained his position of chairman of the Supervisory Board, it is assumed he continues to influence Rosatom’s activities (Nikol’skii, Mukhametshina and Churakova 2016). The supervisory board of Rosatom is comprised of the Russian president and eight representatives of the presidential administration (Russian Government 2007, 19). The appointment of representatives to the supervisory board is highly informal and opaque (Sprenger 2010, 18). At the moment, the board includes high ranking officials from Ministries of Energy and Economic Development, the Military-Industrial Commission and Federal Security Service (Rosatom 2021). The seniority of these board members combined with the personal involvement of Putin suggest that the Russian government prefers to have direct influence over Rosatom’s operations. The appointment of senior officials of the Putin

27 administration to the boards of state corporations grants the government direct supervision over Russia’s strategic sectors and ensures that decisions are made in accordance with its interests (Sakwa 2013, 87).

4.2. The perks Part of economic statecraft, as explained by Blackwill and Harris (2016, 87), lies in “a state’s willingness and ability” to apply domestic capital and resources to political use. The Russian government is certainly able and willing to support the nuclear energy sector, which benefits Rosatom’s business in multiple ways. As state-corporation, it has access to financial support provided by state investment banks and sovereign wealth funds and enjoys diplomatic support during its overseas activities.

4.2.1. Financial support As the construction of an NPP involves high construction costs, part of Rosatom’s appeal lies in its ability to provide generous financing to nuclear newcomers. Rosatom offers several forms of project financing, including credit provided by Russian government funds or state investment banks. One way Rosatom is attempting to finance its projects is by seeking funding from Russia’s Sovereign Wealth Funds (SWFs), investment funds owned and controlled by the state used for economic stabilising or accumulative purposes (Elyakova, Tikhonov and Elyakov 2015). In this business model, the SWF functions as a financial guarantee for the deal between the Russian state-owned corporation and its foreign clients (Martínek 2017). The relationship between Rosatom and SWFs commenced in 2014, when the Russian Ministry of Finance announced its decision to use the National Welfare Fund (NWF) to support Rosatom projects and allocated up to 290 billion roubles to finance Rosatom’s international projects (TASS 2014a; TASS 2014b). As suggested by Martínek (2017, 148), Rosatom has limited options to secure investment from international institutions, which makes its current business model “fully dependent on the availability and continuous support from Russian SWFs.” In other instances, Rosatom offers state loans or large equity participation with the Russian government guarantee as a way to share the financial risks with its client (Pehuet Lucet 2015, 35). Rosatom and Vnesheconombank, Russia’s state development bank, signed an agreement in 2016, detailing their cooperation plans to support Rosatom’s international projects. According to its CEO Sergey Gorkov, Vnesheconombank is “ready to make every effort” to support Rosatom as a “strategic partner” (WNN 2016b). The bank has since been involved in various Rosatom projects, including its provision of a $10 billion loan to Belarus

28 and a €10 billion loan to Hungary (Nechepurenko and Higgins 2020; Herszenhorn, Stefanini and Hirst 2016). Whether supported via state fund or state bank, Rosatom’s business model is incredibly appealing countries without the required financial resources or external funding to jumpstart their nuclear energy sector. It can also act as an incentive to choose Rosatom over its competitors. Both Belarus and Hungary were allegedly swayed by such loans to assign the project to Rosatom instead of putting them out to tender (WNN 2009; Nechepurenko and Higgins 2020). As suggested by Pehuet Lucet (2015), Rosatom’s approach to financing new nuclear power projects is part of a paradigm shift on the global nuclear market towards a more intertwined and competitive environment. Herein, it has created a competitive edge over other nuclear vendors.

4.2.2. Diplomatic support Rosatom can count on diplomatic support from the Russian government, which is keen to “strengthen Russia’s position in the global economic system by providing diplomatic support to national economic operators abroad” (Ministry of Foreign Affairs 2013). As part of an agreement signed between the state-corporation and the Russian Ministry of Foreign Affairs in 2011, Rosatom could send its representatives to Russian diplomatic missions to promote international business. The two parties enhanced their collaboration efforts with a new agreement in 2015, which outlined their intend to coordinate activities to facilitate strategic nuclear energy projects abroad and bolster Russia’s position on the international nuclear energy market. Minister of Foreign Affairs Sergei Lavrov stated that this agreement signalled “a new framework” for further cooperation in which Russian embassies “provide Rosatom with the political and diplomatic support it requires to promote advanced Russian technology overseas” (WNN 2015a). Diplomatic support also comes in form of overseas visits by senior government officials or welcoming foreign delegations to Russia, either to publicly announce intend for bilateral nuclear cooperation or to attend official ceremonies celebrating a completed stage of the NPP construction process (Schepers 2019, 4-5). To illustrate, head of Rosatom Aleksey Likhachev has visited the construction site of Paks NPP expansion and has attended the inauguration of Belarus’ first nuclear power reactor by president Alyaksandr Lukashenka (Rusatom 2019; WNN 2020c). Diplomatic support is exemplary of how bilateral nuclear cooperation can be used as a signifier of political relations between Russia and the client country (Fuhrmann 2009, 188). This becomes particularly clear in our case studies, where nuclear cooperation deals are

29 generally discussed and announced on the highest political level. In working meetings with Belarusian president Lukashenka, Putin has explicitly mentioned Russia’s involvement and financial support for the Astravets NPP project, while also referencing Lukashenka’s personal attachment to the project (President of Russia 2020; President of Russia 2021). In Russo- Hungarian relations, the possibility for nuclear energy cooperation has been a talking point since Viktor Orbán’s return to power in 2010 (Than 2015). Plans for the expansion of the Paks NPP were announced by the two political leaders during a joint press release in 2014 (President of Russia 2014). In these instances, the involvement of highest political leaders emphasises the significance of the nuclear deal for the bilateral ties between these countries.

4.3. Tensions between political and commercial interests Although there exists some overlap between Rosatom executives and Russia’s political elite, it would be overly simplistic to assume that Rosatom and the Russian state share the same interests. Irrespective of its close links to the government, Rosatom ultimately remains a commercial actor, whose primary goal is to create value and increase profitability (Minin & Vlček 2017). Therefore, tensions may arise between the Russian state and the more business- oriented corporation (IISS 2018, 3). The possibility for tensions are enhanced by international nature of the global nuclear energy market, where Rosatom faces some competition. As a result, it seems Rosatom is eager to stay out of politics, having “a strong [commercial] incentive to avoid any perception that its nuclear energy relationships are being leveraged to seek foreign and security policy goals” (Minin & Vlček 2017, 42). Following Russia’s annexation of Crimea in 2014, Rosatom advocated keeping nuclear energy out of politics and attempted to convince international audiences of its reliability as an apolitical actor (Chestney 2014). To further drive home its apolitical status, the corporation has been attempting to lessen its dependency on federal budget by substituting them with Rosatom’s own funds. In 2019, Likhachev announced plans to double foreign revenues to $15 billion in the upcoming five years, which would alleviate the usage of federal budget funds (NEI 2019). Such financial autonomy would enable Rosatom to function independently from the state and thus be less obliged to abandon its commercial pursuits in favour of political interests. The Russian state has also attempted to depoliticise the nuclear energy sector, by signalling the desirability of limited state involvement in the nuclear energy sector in official government discourse (Tarasova 2018, 132). Moscow has commercial reasons to advocate the apolitical nature of nuclear energy assistance. The successes of Rosatom’s atomic assistance

30 promote the image of Russia as high-tech provider and engage a wide range of Russian industries, which boosts the Russian economy as a whole (WNN 2016a). Additionally, Rosatom’s foreign orders constitute a non-hydrocarbon based component to Russia’s overall export portfolio and generate a source of tax income irrespective of oil prices, thus serving as cash cow for Russia’s national economy (Minin and Vlček 2017, 39-40). Despite its best efforts, Rosatom occasionally gets caught in the crossfire of political tensions. The 2014 annexation of Crimea compelled Ukraine to lessen its dependence on Russian energy and contract Westinghouse to substitute some of Rosatom nuclear fuel assemblies (Jirušek et al. 2015, 273-274). The political fallout of Crimea is likely also the cause for the cancellation of Rosatom projects in Bulgaria and the Czech Republic (ibid., 348). More recently, a diplomatic row between Russia and the Czech Republic culminated in Prague deciding not to invite Rosatom to take part in the tender for extension of its Dukovany NPP (Reuters 2021). Regardless of whether Rosatom can function as an separate actor to the government, their affiliation as state and state-owned corporation, combined with international concerns about Russia’s potential usage of energy towards political purposes, make it unlikely for Rosatom to be treated as such.

4.4. Concluding remarks In summary, the Russian government seems able to exert considerable control over Rosatom. Against a background of power consolidation by the federal government and enhancement of state control over the energy sector, the creation of state corporation Rosatom was a true product of its time. The intimate links between Rosatom’s executive board and the Russian government reveal the desire of the government to be in control of this sector. Close proximity to power grants Rosatom significant benefits in terms of financial and diplomatic support, which give it a competitive advantage on the international market. Still, Rosatom’s apolitical rhetoric and strive for financial independence signal some desire to distance itself from the Russian state and its perceived assertive foreign energy policy.

5. Nuclear energy assistance as stick or carrot Whereas the previous two chapters considered factors related to Russia’s ability to utilise nuclear energy for statecraft purposes, this chapter explorers the commodity of nuclear energy itself. As argued by Knorr (1975) and Blackwill and Harris (2016), energy possesses certain structural features - such as uneven concentration of resources, inelasticity of demand and its importance for the functioning of national economies - that make it applicable as instrument of economic statecraft. This chapter considers which structural features nuclear energy possesses, that enable and disable it to function as political pressure tool.

5.1. Inelasticity of energy demand and nuclear energy oligopoly Following theory on economic statecraft, the ability to utilise an economic commodity as a political pressure tool is amplified if the commodity is in urgent demand and difficult to substitute, and if the supply is concentrated in a few countries (Knorr 1975, 85). Nuclear energy assistance largely fits this description. For one, atomic assistance is in urgent demand for client states, since energy is a basic necessity for any nation. A secure supply of energy is key for a country’s economic development, which grants energy security a certain strategic importance for importing countries (Luft and Corin 2009). Energy security considerations tend to be a driving factor behind the decision to jumpstart a nuclear energy project, since a single atomic reactor promises a relatively large and stable supply of electricity (Fitzwater 2018, 52). To illustrate, when operational, the Astravets NPP will provide for about a quarter of Belarusian electricity needs and Paks II will do the same for a third of Hungary’s electricity needs (NS Energy 2021a; NS Energy 2021b). As a consequence, the imprint of a nuclear energy project on a country’s energy mix makes an operational disruption of an NPP a dangerous scenario. This risk is intensified by a client state’s dependence on the nuclear supplier state. Since client states do not possess all required capacities to operationalise their nuclear power program, the functioning of their NPP becomes dependent on deliveries of nuclear fuel and the technical expertise of the supplier. These lie beyond the control of the client state, which make it susceptible to supply disruptions (Stuhlberg 2013, 104). This susceptibility is exacerbated by the concentration of nuclear energy resources and capacities in certain countries, which give suppliers a relative position of control. The uranium market is highly concentrated, with ten countries accounting for more than 98% of global production in 2018. Of those, the six largest producers – Kazakhstan, Canada, Australia, Namibia, Uzbekistan and Russia – account for 88% of world uranium production (IAEA NEA 2020, 94). Moreover,

32 only a handful companies possess the technical expertise and capacity to construct NPPs and provide all stages of the fuel cycle (Brutschin and Jewell 2018, 332). The oligopolistic nature of the nuclear energy market implies that Rosatom has a relative powerful position vis-à-vis its clients, as they have limited options to replace their dependency on. However, there are some developments that point to the supply side of the nuclear energy market becoming less concentrated. The proliferation of technology and knowledge required for nuclear weapons has expanded the group of states that possess the technology and knowledge required for nuclear energy projects (Way 2013, 157). Novel atomic powers, such as China and India, are developing nuclear energy export strategies, which suggests that the body of nuclear vendors will likely grow (Brutschin and Jewell 2018, 332). That being said, Rosatom remains a leader in the international business and currently does not face heavy competition. Most of its established competitors, such as Westinghouse, France’s AREVA and South-Korea’s EPCO, are struggling with budget deficits, construction delays and negative public perception on nuclear energy, while the export potential of new suppliers like China's National Nuclear Corporation is still minor. Until they catch up, Rosatom remains practically unrivalled on the nuclear market (Galucci and Shellenberg 2017; Jewell et al. 2019).

5.2. Nuclear energy as commodity While Russia may occupy a dominant position on the nuclear energy market, this position does not automatically translate into means to utilise its nuclear energy ties for statecraft. The commodity of nuclear energy has certain qualities that largely prevent it from being used to apply political pressure. Unlike natural gas, which is delivered through pipelines that can be used to shut off supply instantaneously, nuclear energy does not require specific transit infrastructure or an uninterrupted supply of uranium (Minin and Vlček 2017, 42). Instead, nuclear power plants operate on uranium fuel assemblies, which can be transported in various ways. When in 2014, Ukraine prohibited the transit of Russian nuclear fuel products via railway across its territory, Rosatom avoided interruption of supplies by arranging transportation to its European customers by air (NEI 2014). Furthermore, an NPP replaces a third of its fuel assembly every 18 to 24 months, which means it can continue to operate for multiple months without new fuel deliveries (Schepers 2019, 9). This means that, if Russia were to cease its nuclear fuel supply, the client state has multiple months to find a different nuclear vendor or alternative ways to

33 meet its energy demand. It is precisely this longevity of fuel usage of nuclear energy that makes potential supply disruptions a much less convincing threat for the client state. The resilience of supply is reinforced by the international nature of the nuclear fuel market, where Rosatom faces competition from other nuclear vendors able to replace it as provider of fuel assemblies (Minin and Vlček 2017, 42). Fuel fabrication used to be a part of the fuel cycle which could not be substituted, meaning that a client state could only buy fuel assemblies from the company that manufactured its reactor. However, the ongoing diversification of the nuclear fuel market means client states are no longer bound to their original contractor but can find other vendors that cater to their specific reactor type (Kidd 2010; Schepers 2019, 9). Attempts by Western nuclear vendors to develop fuel rods for Russian-design reactors came to fruition in 2002, when Westinghouse delivered its first fuel assembly for the Czech Temelín NPP (Jirušek et al. 2015, 119). Multiple Eastern-European countries, who operate NPPs with Soviet-design reactors and used to be fully dependent on Russian nuclear fuel, have since diversified their fuel supply. The most famous example is perhaps Ukraine, which used to be TVEL’s largest customer accounting for 55% of its exports, but has embarked upon diversification of its nuclear fuel supply since 2008 (Jirušek et al. 2015, 273-274; WNN 2020b). Other countries such as the Czech Republic and Bulgaria have followed suit, signing on Westinghouse to licence and develop new fuel types for their reactors (WNN 2021a). While Russia thus continues to occupy a prominent position on the nuclear fuel market, diversification of supply means that countries with Russian-design reactors do not solely depend on Rosatom for technology expertise and nuclear fuel supply. If the fear of becoming subject to political manipulation looms, they can make steps to diversify their dependence away from Rosatom and towards one of its competitors. Against these developments, it is noteworthy that both Belarus and Hungary decided to rely fully on Russian nuclear fuel for their new NPPs. Minsk has signed a contract with TVEL to provide nuclear fuel for its NPP’s whole operating lifetime (TVEL 2017). Budapest had intended to grant Rosatom similar exclusive rights to supply fuel for Paks II, but conceded to contract TVEL for an initial ten years after the EU nuclear watchdog Euratom refused to approve such plans (Byrne 2015). Given the international and relatively diversified nature of the nuclear energy market, it has not been a lack of alternatives that made Minsk and Budapest buy into comprehensive projects with Rosatom. Instead, such decisions point to different considerations to accept a cooperation deal with Rosatom, namely that nuclear energy assistance can be used to strengthen bilateral relations between supplier and client.

5.3. Nuclear energy to forge partnerships A reoccurring theme in the discussion of Russian foreign energy policy is its alleged coercive undertones, but, as discussed in chapter two, economic statecraft does not have to be coercive to be effective. Positive economic instruments can be effective in persuading recipient countries to enhance alliances with their patron. Applied to nuclear energy, this argument proposes that countries use civilian nuclear assistance as an instrument of statecraft to forge or strengthen partnerships with recipient states and facilitate bilateral cooperation (Fuhrmann 2013). Nuclear energy assistance here is presented as a win-win deal, that offers benefits to all involved parties. For the supplier state, the provision of atomic assistance can help reinforce existing alliances and strengthen allies by improving their electricity generation capacities (Fuhrmann 2013, 77). Assessment of Rosatom’s nuclear energy cooperation corroborates the idea that Russia uses its nuclear energy prowess to forward such goals. As discussed in the previous chapter, Rosatom and the Russian state have allocated significant financial and diplomatic resources to close nuclear cooperation deals with Minsk and Budapest. The provision of large credit lines and involvement of high-ranked politicians to generate attention for the nuclear deals suggest that the Russian government is eager to facilitate Rosatom’s international outreach with these countries in particular. In official discourse, Moscow has also been keen to present nuclear cooperation deals as flagship projects that signify the cordial relations between Russia and its client states. Putin has recognised the Astravets deal as the largest Russo-Belarusian project of the moment and has flagged the Paks II deal as a matter of “great importance” in the relations between Hungary and Russia (Interfaks 2018; President of Russia 2017). This is echoed by Rosatom, which maintains that the key benefit of nuclear energy assistance is that it generates “long-term economic ties” between supplier and client (WNN 2016a). Besides the strengthening effect of nuclear cooperation for bilateral ties, Russia is acutely aware of the effect of nuclear energy assistance on energy capabilities of the client state. Rosatom’s nuclear energy cooperation is thus presented as benevolent act to improve the energy security of the client state, especially since atomic energy functions as substitute for additional imports of Russian gas (President of Russia 2014; Interfaks 2018). It might seem counterintuitive for Moscow to promote nuclear energy deals that reduce prospects for future gas sales, were it not the longevity of nuclear power projects give nuclear energy cooperation a much longer life span than gas deals. The operating cycle of a NPP generally constitutes 60 years, but depending on whether the project encompasses construction,

35 operation and decommissioning of the power plant, a nuclear contract can connect supplier and client state together for almost a century (Schepers 2019, 8). Rosatom’s projects in Belarus and Hungary thus signify Russia’s intentions of further cementing bilateral relations with these countries throughout that period. For recipient country, the benefits of receiving nuclear energy assistance are pertain to a variety of material and immaterial factors. Nuclear energy can function as a signifier for a technological modernity and scientific competence, demonstrating a state’s power and greatness to domestic and international audiences. Images of prestige are also connected to economic prosperity, in that the nuclear energy sector is expected to bolster a state’s economic performance (Fuhrmann 2009, 186; Macfarlane 2013, 66-67). Energy security considerations are often prevalent, given the low operating costs, lack of need for hydrocarbon resources and stable supply of electricity a NPP promises (Fuhrmann 2012b). For instance, the launch of Astravets NPP was hailed as “a historic event” for Belarus by president Lukashenka, who celebrated the power plant for providing cheap electricity, lessening the need for gas imports and generating new opportunities for the national economy. According Lukashenka, the power plant also demonstrates the superiority of Belarus over its neighbours, whose NPPs are not as advanced as Astravets (Belta 2020). Minsk has promoted the project as a way to alleviate its dependence on Russian gas, claiming it furthers Belarusian energy security and national independence (Nechepurenko and Higgins 2020). Similarly, officials in Budapest have maintained the importance of the Paks II project for Hungary’s energy security, since it alleviates the need for more gas imports (Hungarian Ministry of Foreign Affairs 2014b; WNN 2020a). Orbán has also emphasised the national interest of the project, describing it as crucial for “keeping the Hungarian economy competitive” (Hungarian Ministry of Foreign Affairs 2014a). For both Belarus and Hungary, these goals seem worthwhile enough to tolerate Rosatom’s control over a critical part of their energy infrastructure and, consequently, Russia’s leverage over them. In light of the international nature of the nuclear energy market, it is extra significant that Belarus and Hungarian governments have opted to install Rosatom as single contractor to realise their nuclear ambitions. In this sense, nuclear energy functions as “an insurance policy of sorts” (Blackwill and Harris 2016, 87), in that Minsk and Budapest receive the benefits of Russia’s atomic assistance in return for their political alignment with Moscow.

5.4. Concluding remarks Although Rosatom occupies a significant presence on the international nuclear market, it is not completely without competition. Concurrently, diversification of the nuclear fuel market means Rosatom is no longer the sole supplier for client countries with Soviet/Russian VVER- type reactors. Altogether, this indicates that nuclear energy as a commodity does not particularly lend itself to apply pressure to a client state unable to free itself, but rather functions well as way to enforce existing partnerships between countries. The fact that Belarusian and Hungarian political leadership have explicitly chosen Rosatom to be their contractor suggests that client countries make the conscious decision to connect themselves to the nuclear supplier, in exchange for a long-term provision of energy against a bargain price.

6. The interstate relationship between supplier and client Whereas the previous chapters have considered Russia’s nuclear energy statecraft from supplier side and structural qualities, this chapter investigates the final part of the equation: the client state. The existence of economic asymmetries, where the client is more dependent on its economic relations with the supplier than vice versa, is particularly relevant here, as it grants the supplier certain leverage over the client (Blanchard and Ripsman 2008; Blackwill and Harris 2016). This chapter thus describes what economic and political dependencies exist in Russo-Belarusian and Russo-Hungarian relations and explains how these have compelled Minsk and Budapest to accept Rosatom’s nuclear energy assistance.

6.1. Belarus 6.1.1. Economic and political dependencies One of the defining aspect of the Belarusian economy is its dependence on Russia. Much of Belarus’ current dependencies on the Russian economy are a legacy of Tsarist Russian and Soviet rule, when the links between Belarusian industries and Russian centre were created and solidified (Novikau 2019, 6). Upon gaining its political independence in 1991, Belarus was confronted with the daunting task of reforming its highly centralised economy, which would require serious privatisation and liberalisation efforts to solve pervasive structural problems. Instead, positive economic relations with Russia are used to keep the Belarusian economy afloat without the need for economic reforms and their potentially destabilising side effects (Zlotnikov 2009). The persistence of this economic dependency on Russia is largely a result of the political alignment between Minsk and Moscow after 1991. Belarus has long occupied a special position in Russia’s foreign policy given its geographical location, which makes it a key factor in Russia’s security interests and one of its main energy transit routes to Europe (Konończuk 2008). To ensure the allegiance of its “little brother”, Moscow has provided Minsk with considerable economic incentives, such as subsidised energy resources, access to the Russian market and financial support (Newnham 2019). For one, Russia is Belarus’ main supplier of natural gas, oil and nuclear fuel, accounting for 80% of its energy needs (Karmanau 2020). While the Belarusian energy strategy demonstrates awareness about the undesirability of this heavy dependence on Russia, Minsk has difficulties diversifying its energy sources (Novikau 2019). This is because Russia has been selling natural gas and oil to Belarus for prices significantly below the market level. Subsidised energy imports are vital for Minsk. As estimated by Newnham (2019, 9-10),

Belarus saved almost $100 billion in gas and oil subsidies between 2001 and 2016. More importantly, this practice allows for importing Russian crude oil at a low price point, refining it and then reexporting it at global market prices, which enables Belarus to generate significant profits. To illustrate, export duties on petroleum products alone accounted for about 10% of the Belarusian budget in the mid-2000s (Balmaceda 2013, 177). Second, Russia has remained Belarus’ largest trading partner since 1991. Many of the country’s industries hail from Soviet times and continue to be primarily oriented towards the Russian customer (Zlotnikov 2009, 66). As a result, Russia accounted for 42% of Belarusian exports and 57% of its imports in 2019 (OEC 2019a). This dependence is exacerbated by bilateral and regional economic integration initiatives, such as a Russo-Belarusian Customs Union and the Eurasian Economic Union, an attempt by Moscow to establish a common market in the post-Soviet region (Zlotnikov 2009, 67; Saivetz 2012). The asymmetry of trade relations indicates that Moscow can easily use its imprint on the Belarusian economy to influence Minsk. In the past, Russia has done so using both negative and positive trade incentives (Newnham 2019, 11-13). Third, Russia provides key financial support to Belarus. The Belarusian government periodically appeals to Russia’s money vaults to keep its struggling economy afloat. Moscow has on various occasions agreed to supply Minsk with billions of dollars of financial support (Newnham 2019, 14). According to 2019 estimates, the Belarusian debt to Russia totals $8.1 billion, with another $1 billion loan to be provided by the end of 2020 (Mingazov 2021). In short, the Belarusian economy remains heavily reliant on Russian support, whether in form of subsidised energy resources, trade benefits or direct financial injections. The size should not be underestimated: between 2005 and 2015, Russia allocated an estimated $106 billion of economic support to its neighbour, responsible for between 11% and 27% of Belarusian GDP (Tkachev and Feinberg 2017). These benefits are vital for the survival of the Lukashenka regime, since they help save the economy from bankruptcy and raise living standards for Belarusians, bolstering the regime’s popularity among its population. They also provide additional income for the presidential administration, as they can be used to line the pockets of Lukashenka’s circle and ensure the loyalty of its supporters (Balmaceda 2013, 180). In basic terms, economic linkages with Russia thus have enabled Lukashenka to stay in power (Newnham 2019). This fits within larger patterns of Moscow attempting to bolster the Lukashenka regime as a way to safeguard their alliance and insulate it from external political pressures (Ambrosio 2006; Konończuk 2008). By protecting the Belarusian authoritarian leader, Moscow hopes to ensure stability in a strategically important neighbour.

In return for its support, Russia expects loyalty. On a bilateral level, Belarus has been a steadfast ally on security and defence issues (Ambrosio 2006, 421; Konończuk 2008, 45- 47). Minsk has also been known to support Moscow’s position on controversial foreign policy issues, most notably on Crimea and Syria (Newnham 2019, 18-19). Moreover, Belarus has been a consistent presence in regional organisations created by Russia attempting to restore some form of integration among the former Soviet states (Saivetz 2012). Although a reliable ally in many instances, Minsk is not a merely a Muscovite puppet. Being aware of its strategic position for Russia, Belarus often drives a hard bargain in exchange for its allegiance (Newnham 2019, 23). For Lukashenka, any threat to Belarusian sovereignty – and in extension, his own position – is non-negotiable. Therefore, throughout his presidency, he has consistently attempted to maximise Belarusian political independence while simultaneously accruing as much Russian subsidies as possible (Gromadski 2009). This strategy is most obvious in the energy sector, which is tightly controlled by the Lukashenka regime. Here, Minsk has long attempted to leverage its political alliance with Moscow against economic incentives such as gas price reductions and credit lines (Balmaceda 2013). A similar pattern can be noticed in the field of nuclear energy cooperation.

6.1.2. Impact of existing interconnections on nuclear energy cooperation As illustrated above, Russo-Belarusian relations are largely asymmetric in nature, given Russia’s large imprint on the Belarusian economy and the dependence of the Lukashenka regime on Russian state support. These interconnections are vital to appreciate the nuclear cooperation agreement between Minsk and Rosatom, because they shed light on the circumstances in which it was created. Belarusian nuclear energy ambitions materialised in the late 2000s, primarily driven by energy security considerations (Novikau 2019). When Belarus first announced its intention to construct an NPP, four different vendors expressed their interest in the project. Ultimately, the other bidders were excluded – purportedly on basis of technological incompatibilities and lack of progress in intergovernmental agreement negotiations – and Rosatom was awarded the project after a visit of CEO Kiriyenko to Minsk in early 2009. Rosatom was reportedly the only bidder prepared to provide funding, an important aspect for Belarus who would not have been able to finance the project without external support (Jirušek et al. 2015, 78). While financial constraints certainly played a role in the decision to contract Rosatom, the international position of Belarus, including tensed relations with the West and relatively

40 positive ties with Russia, suggest political considerations were equally important (WNN 2009; Khodasevich 2009). In light of the existing economic and political dependencies described above, the rationale for Minsk to contract Rosatom is clear. The construction of the Astravets NPP by Rosatom further consolidates Belarus’ linkages with its main economic partner and energy provider, while alleviating the need for actual diversification of its energy supply (Nechepurenko and Higgins 2020; Novikau 2019). Given its history of using economic incentives to safeguard its neighbour’s allegiance, Moscow is conscious of the efficacy of providing financial support to Minsk. The provision of a $10 billion loan to realise the Belarusian NPP thus fits within previously established patterns of Moscow utilising financial means to buy influence in Belarus (Tkachev and Feinberg 2017; Nechepurenko and Higgins 2020). In short, by closing a nuclear deal with Rosatom, Minsk has secured the financial incentives required to realise its nuclear ambitions, and in return it accepts another long-term dependency on Russia.

6.2. Hungary 6.2.1. Economic and political dependencies At first glance, economic relations with Russia are rather insignificant for Hungary, since it has relatively little exposure to Russian trade and investment (Ámon and Deák 2015). Russia’s current share in the Hungarian economy is small, accounting for 1.75% of exports and 3.5% of imports in 2019 (OEC 2019b). Economic dependencies are thus relatively limited, with one glaring exception: Hungary’s triple energy dependence - oil, gas and nuclear - on Russia. Hungary depends on Russia for about half of its total energy demand. The majority of Hungarian oil imports and practically all gas and nuclear energy needs hail from Russia (Ámon and Deák 2015, 86; Gosling 2020; Feledy 2015, 71). Like many other Central European countries, Hungary’s energy dependence on Russia can be traced back to its history as satellite state to the Soviet Union. However, unlike many of its neighbours that have actively sought to diversify their energy supply, Hungary seems keen to strengthen energy ties with Russia (Racz 2014, 71). The vulnerability of its dependence has been exemplified previously by the 2006 and 2009 Russo-Ukrainian energy disputes, when gas shutoffs drove up domestic energy prices and threatened to leave Hungarian household without heating during winter. While Hungary has made some efforts to insulate itself from potential future supply disruptions by increasing gas storage capacity and installing interconnections with

41 neighbouring states, it has done little to diversify its actual energy supply (Deák 2006; Isaacs and Molnar 2017, 133). Instead, Budapest has sought to reinforce relations with Moscow as a way to guarantee a reliable supply from its main energy provider. Close ties with Russia are particularly important for Hungary, given the imprint of Russian energy resources on its economy (Sadecki 2014, 39). As nuclear energy and natural gas together account for three-quarter of Hungary’s total electricity generation, the provision of Russian nuclear fuel and gas is indispensable (WNN 2021b). Additionally, gas is the primary source of heating for many Hungarian households, making low energy prices a key concern for the population. Hungarian household gas and electricity prices are kept artificially low and currently remain the lowest of all EU states (Gosling 2020). Accordingly, it has been opined that energy in Hungary “must be first of all cheap, and only subsequently secure” (Deák 2006, 45). This is particularly true for Hungarian Prime Minister Viktor Orbán, whose electoral campaign and political popularity essentially revolve around the promise of affordable energy (Ámon and Deák 2015, 90). Orbán’s solution to this challenge is to solidify state control over the energy sector and involve himself personally in dealings with Russia. Since 2010, the Hungarian government started to implement price regulations and market interventions in order to push foreign entities out of the energy sector (LaBelle 2020, 79-80). The concurrent nationalisation of formerly privatised or foreign-owned companies further consolidated state control over the energy sector and allowed for price-setting (Isaacs and Molnar 2016, 117-118). This approach signals that, according to Budapest, only the state can guarantee affordable energy for its citizens as it has the most optimal position to negotiate deals with its energy suppliers. The resulting understanding is that energy security can only be achieved in a state-controlled and nationalised energy sector (ibid.). Additionally, the Hungarian government has attempted to reduce the distance between itself and its main energy provider. Under Orbán, state-owned energy company MVM was tasked with negotiating deals with Gazprom and Rosatom and has since signed multiple agreements with its Russian counterparts (Sadecki 2014, 39). High state representatives, most notably Orbán himself, also make frequent appearances in negotiations (Ámon and Deák 2015, 86). This energy rapprochement with Russia fits within a broader reorientation of Hungarian foreign policy. In 2010, Hungary embarked upon its “Eastern Opening” strategy, which sought to redirect its Western-oriented foreign policy to emerging economic powers in the East. Over time, Russia became the primal focus of this strategy (Sadecki 2014, 37-38). Although Budapest presented “Eastern Opening” as economically driven, it coincided with

42 significant political changes and constitutional reforms that signal a reconfiguration of Hungary’s political orientation (Racz 2014, 68). Being described as “a successful illiberal model” by the Hungarian Prime Minister, the Kremlin certainly seems to function as political example for Orban’s Hungary (ibid., 69). Orbán had won his election with populist promises of national sovereignty and economic nationalism, and has since endeavoured to centralise Hungary’s political system and position the state as principal overseer of the economy (Buzogány 2017; Isaacs and Molnar 2017). As result of these efforts, a centralised and authoritarian political system emerged in Hungary, which has often been likened to Putinite Russia. Budapest has also presented a shared advocacy for conservative values and political illiberalism as basis for its rapprochement with Moscow, emphasising the ideological closeness of their regimes in rather vague terms (Buzogány 2017, 1319). In reality, the political rapprochement between Russia and Hungary is superficial. Despite talk of enhancing bilateral cooperation, the two do not share large numbers of international agreements or other formalised cooperation initiatives and their ideational proximity seems to generate little beyond symbolic tokens of friendship (Feledy 2015, 73-74). Instead, Hungarian foreign policy seems decidedly pragmatic and Russo-Hungarian cooperation remains limited to areas of mutual interest, specifically energy (Tarrósy and Vörös 2020). Nuclear energy cooperation is a clear example of this.

6.2.2. Impact of existing interconnections on nuclear energy cooperation As described above, Russia has no major stakes in the Hungarian economy apart from energy, where the large imprint of Russian energy resources combined with the personal interconnectivity between political leaderships make Hungary particularly susceptive to Russian influence. This is exemplified in the nuclear energy cooperation between these two countries. Hungary’s ambitions to expand its Paks NPP emerged in the late 2000s as a way to anticipate for the country’s prospected growing energy consumption (Gosling 2020). Budapest initially had plans to put out a competitive market tender for the project, which generated interest from multiple nuclear vendors. Instead, cancellation of the tender and signing of a Russo-Hungarian deal for expansion of Paks were announced shortly after a private meeting between Orbán and Putin in January 2014 (Than 2015; LaBelle 2020, 85). Hungary’s official explanation maintains that Rosatom was hired because of its commercial and technical qualifications. However, the fact that this decision was made in the highest

43 echelons of the Hungarian government makes it suggestive of Orban’s desires to build closer energy relations with Russia (Than 2015; Herszenhorn, Stefanini and Hirst 2016). In light of Hungary’s energy dependence on Russia and attempts by Budapest to align itself politically with Moscow, the Paks II deal makes sense. The expansion of Paks NPP enables Budapest to further consolidate the relationship with its main energy provider, whereas the personal involvement of political leaders is suggestive of Orbán’s preference to be personally responsible for securing favourable energy deals. Meanwhile, the inclusion of a €10 billion intergovernmental loan is significant considering the basis of Orbán’s political popularity, since it provides Budapest the opportunity to embark on an expensive energy project without the need for raising national energy prices. The inclusion of high-level political involvement and financial support for the deal signals that Moscow is well aware of the significance of such factors for Budapest, and in turn enabled Rosatom to successfully close the deal. Additionally, the deal reflects Hungary’s adoption of a more statist approach to energy policy, which is increasingly at odds with the European standpoint that energy security can best be achieved in a liberalised and privatised energy sector (Isaacs and Molnar 2017). By enhancing their nuclear energy cooperation, Moscow can thus strengthen statist tendencies in Budapest and support its rejection of closer energy ties with Europe.

6.3. Concluding remarks In conclusion, investigation into the interstate relations between supplier and client states gives ample insight in why Belarus and Hungary have been compelled to close nuclear energy deals with Rosatom. The existence of economic dependencies and their connection to the position of power of the incumbent political regimes incentivise Minsk and Budapest to solidify relations with Moscow. In the case of Belarus, extensive economic and political dependencies on Russia persuaded the Belarusian government to contract Rosatom, in exchange for additional financial incentives. Atomic assistance here functions as yet another tie binding these countries together. Conversely, aspirations of closer relations with Russia seem to have been driving Hungary to hire Rosatom as nuclear contractor. By contracting Rosatom, Budapest hopes to solidify the relationship with its main energy provider for decades to come. In both cases, Moscow has used existing dependencies as facilitator for atomic assistance to further consolidate their bilateral relations and prevent these countries from seeking closer energy ties with Western competitors. Nuclear deals thus serve to enhance Russia’s privileged position in Belarusian and Hungarian political economies.

Additionally, it is noteworthy that statist tendencies in energy policy and realist energy security thinking are reoccurring phenomena in Minsk and Budapest. Both prefer a system of centralised state control and personal involvement of political leaders to inform decision- making processes on energy policy, including nuclear energy. As a result, both consider close ties with Moscow to be the most effective way to guarantee stable and affordable energy supply. Rosatom can then easily play into these circumstances and persuade them to accept its nuclear energy assistance.

7. Conclusion In the span of a decade, Rosatom has established itself as the world’s largest provider of nuclear energy assistance. The expansion of Rosatom’s foreign portfolio has led observers to suggest that Russia is “moving to create a global nuclear power empire” in order to expand its geopolitical influence (Armstrong 2015). Sceptical of such claims, this thesis aimed to identify the ways in which Rosatom and its nuclear energy assistance could be used as a foreign policy tool and whether Russia is actually employing it as such. Drawing inspiration from a large body of academic work on the role of energy in Russian foreign policy, the thesis has redirected the usual preoccupation on hydrocarbon energy to the much less explored nuclear energy sector. By operationalising an analytical framework based on theories of economic statecraft, it has explored several factors – economic power, state control, structural features of nuclear energy, and interstate relationships between client and supplier – as key determinants of the employment and efficacy of atomic assistance as foreign policy tool. In doing so, it discovered that Russia’s nuclear energy assistance can function as persuasive, rather than coercive, tool to reinforce bilateral relations with client states. This finding echoes Fuhrmann (2009), who proposed that the desire to enhance existing alliances is one of key drivers of supplier states to provide atomic assistance. Concerns regarding Russia’s alleged “nuclear energy weapon”, where Russia would use its nuclear energy prowess to coerce the political behaviour of other states, are premised on the international presence of Russian nuclear giant Rosatom and heavy state involvement in Russia’s energy sector. Indeed, Rosatom is currently the leading corporation on the international nuclear market where few other vendors can challenge its primacy. The Russian nuclear complex has been a darling of the state since Soviet times and can continuously count on support from its government, which has allocated significant resources to boost Rosatom’s performance and maintains personal connections via its supervisory board. These factors, combined with the strategic importance a nuclear power plant naturally occupies in a client state’s energy mix, suggest that Moscow could be able and willing to use Rosatom’s advantageous position to leverage its nuclear energy influence against client states. However, nuclear energy and its international marketplace possess certain qualities that prevent the application of atomic assistance as coercive pressure tool. In particular, the longevity of fuel usage of NPPs and the diversification of the nuclear fuel market largely disable the threat of supply manipulations for the client state. Instead, nuclear energy assistance must be understood as an example of persuasive statecraft, where the supplier intends to solidify existing relations with the client state. Here, its monolithic structure, 46 flexible business model and substantial government support enable Rosatom to make compelling offers to potential buyers and cater its services to their specific needs. Rosatom is also unique in its provision of services such as taking back spent fuel and provision of large credit lines to finance NPP construction, which make it an extra appealing vendor to states without the technical capabilities and financial means to realise their atomic ambitions. Rosatom’s projects in Belarus and Hungary thus seems less about the potential coercive qualities of energy, but rather about how persuasive nuclear energy assistance and financial support can be in solidifying already existing political relationships. The existence of asymmetric bilateral relations with the client state seems to be a prerequisite for the success of Rosatom closing nuclear deals in the CEE region. This confirms the importance of pre-existing relationships for nuclear energy assistance, as argued by Lantis (2014). There are few countries within the CEE region that have recently signed nuclear cooperation agreements with Rosatom. It is telling that these countries – Belarus and Hungary – are subject to significant economic and political dependencies on Russia. Whether a Russian-build and Russian-fuelled NPP functions as yet another string that ties supplier and client together, as seems to be the case in Minsk, or as an invitation for further enhancement of relations, which reflects the situation in Budapest, Moscow is keen to utilise atomic assistance as part of its foreign policy toolbox. The personal involvement of president Putin in closing deals gives further credence to the significance of nuclear energy for Russia’s foreign policy agenda. It should be noted that there is no evidence to suggest that Russia has actively pressured such countries to hire Rosatom as nuclear energy contractor, for example by threatening to suspend existing privileges to Minsk or Budapest. Instead, the offering of substantial credit lines has worked to entice the Belarusian and Hungarian governments to embark upon nuclear cooperation with Rosatom. It is important to note that the interference of the Russian state in the nuclear energy sector and efforts to utilise the corporation’s international presence towards foreign policy goals can be at odds with Rosatom, which has no interest in politicising the international nuclear energy industry. This reveals the “uneasy public-private relationship at the heart of economic statecraft”, as noted by Hill (2003, 148-19). As commercial actor, Rosatom is most concerned with keeping its position on a marketplace that is expected to grow more competitive. To gain a reputation of being used as political instrument would have detrimental effect on its business, giving Rosatom a clear incentive to stay out of politics. Of course, it is one thing to recognise nuclear energy assistance as a form of persuasive economic statecraft, but an entirely different thing to grasp its actual impact. This

47 is where the main limitations of this thesis lie. For one, the effects of persuasive statecraft are typically less detectable than those of coercive methods, since they are “rarely sudden or dramatic” and tend to be “cumulative, building up over decades or even centuries” (Baldwin 1985, 134). Second, the two examined cases are still in early stages of development, with their NPPs either under construction or in the pre-construction phase. It is therefore too early to ascertain whether established nuclear energy ties will be used by Russia to achieve foreign policy goals beyond strengthening bilateral dependencies. A promising direction of future research would therefore be to explore the dynamics of nuclear cooperation over a longer period of time. Additionally, given the emphasis of this thesis on existing political and economic dependencies between client and nuclear supplier, another interesting area of future research would be Rosatom’s atomic assistance to countries beyond the CEE region, where such dependencies are less pronounced. In any case, with the ongoing changes in the global energy system towards alternative energy sources, the “nuclear renaissance” is expected to persevere and nuclear vendors will likely become permanent actors in conversations about energy. Whether Rosatom will maintain its position as undisputed leader on the nuclear energy market or other nuclear vendors will re-establish themselves as viable competitors, the topic of Russia’s nuclear energy assistance and what kind of implications it might introduce in the long-term will thus likely grow in relevance.

Bibliography Adachi, Yuko. 2009. “Subsoil Law Reform in Russia under the Putin Administration.” Europe-Asia Studies 61, no. 8: 1393-1414. Ambrosio, Thomas. 2006. “The Political Success of Russia-Belarus Relations: Insulating Minsk from a Color Revolution.” Demokratizatsiya 14, no. 3: 407-34. Ámon, Ada and András Deák. 2015. “Russia and Hungary in economic terms – love, business, both or neither?” In Diverging Voices, Converging Policies: The Visegrad States’ Reactions to the Russia-Ukraine Conflict, edited by Jacek Kucharczyk and Grigorij Mesežnikov, 83-101. Warsaw: Heinrich-Böll-Stiftung. Armstrong, Ian. 2015. “Russia is creating a global nuclear power empire.” Global Risk Insight, 29 October. ARMZ. 2018. The Power of Generations: Annual Report JSC ATOMREDMETZOLOTO. - 2019. Otchetnye Materialy Gornorudnogo Diviziona za 2019 god. Atomenergomas. N.d. “About AEM.” Accessed on 10 April 2021. AtomTekhEnergo. 2019. Godovoi Otchet za 2018. 28 June. Baev, Pavel. 2008. Russian Energy Policy and Military Power: Putin's Quest for Greatness. London: Routledge. Baldwin, David. 1971. “The Power of Positive Sanctions.” World Politics 24, no. 1: 19-38. - 1985. Economic Statecraft. Princeton, NJ: Princeton University Press. Balmaceda, Margarita. 2013. Politics of Energy Dependency: Ukraine, Belarus, and Lithuania between Domestic Oligarchs and Russian Pressure. Toronto: University of Toronto Press. Balmaceda, Margarita and Andreas Heinrich. 2018. “The Energy Politics of Russia and Eurasia.” In The Oxford Handbook of Energy Politics, edited by Kathleen J. Hancock and Juliann Emmons Allison, 465-506. Oxford: Oxford University Press. Balzer, Harley. 2006. “Vladimir Putin’s Academic Writings and Russian Resource Policy. Problems of Post-Communism 53, no. 1: 48-54. Becker, Uwe and Alexandra Vasileva. 2017. “Russia’s political economy re-conceptualized: A changing hybrid of liberalism, statism and patrimonialism.” Journal of Eurasian Studies 8: 83-96. Belta. 2020. “Lukashenko na BelAÈS: segodnya istoricheskii moment – Belarus’ stanovitsya yadernoi derzhavoi.” 7 November. - 2021. “Gosatomnadzor passkazal o planakh po obrashcheniyu s otkhodami i otrabotavshim toplivom BelAÈS.” 14 April. 49

Blackwill, Robert D., and Jennifer M. Harris. 2016. War by Other Means : Geoeconomics and Statecraft. Cambridge, Massachusetts: Harvard University Press. Blanchard, Jean‐Marc F., and Norrin M. Ripsman. 2008. “A Political Theory of Economic Statecraft.” Foreign Policy Analysis 4, no. 4: 371-98. Brutschin, Elina and Jessica Jewell. 2018. “International political economy of nuclear energy.” In Handbook of the International Political Economy of Energy and Natural Resources, edited by Andreas Goldthau, Michael F. Keating, Caroline Kuzemko, 322- 341. Northampton, MA : Edward Elgar Publishing. Bukharin, Oleg. 1996. “Analysis of the Size and Quality of Uranium Inventories in Russia.” Science & Global Security 6: 59-77. Buzogány, Aron. 2017. “Illiberal Democracy in Hungary: Authoritarian Diffusion or Domestic Causation?” Democratization 24, no. 7: 1307-325. Byrne, Andrew. 2015. “EU approves Hungary’s revised reactor plans.” The Financial Times, 21 April. Česnakas, Giedrius. 2016. “Energy Resources as the Tools of Foreign Policy: The Case of Russia.” Lithuanian Foreign Policy Review, no. 35: 9-40. Chestney, Nina. 2014. “Nuclear energy should be kept out of politics: Russia's Rosatom.” Reuters, 11 September. Collins, Gabriel. 2017. “Russia’s Use of the “Energy Weapon” in Europe.” Issue Brief, 18 July 2017. Rice University’s Baker Institute for Public Policy. Deák, András. 2006. “Diversification in Hungarian Manner: The Gyurcsány Government’s Energy Policy.” International Issues & Slovak Foreign Policy Affairs 15, no. 3-4, 44- 55. De Clercq, Geert, Svetlana Burmistrova and Jack Stubbs. 2016. “Rosatom’s global nuclear ambition cramped by Kremlin politics.” Reuters, 26 June. Dobrev, Boyan. 2016. “Rosatom & Russia’s nuclear diplomacy.” Geopolitical Monitor, 17 May. Domjan, Paul and Matt Stone. 2010. “A Comparative Study of Resource Nationalism in Russia and Kazakhstan 2004–2008.” Europe-Asia Studies 62, no. 1: 35-62 Elyakova, Isabella Damdinovna, Nikolai Nikolaievich Tikhonov and Aleksandr Lvovich Elyakov. 2015. “Sovereign Wealth Funds of States: Experience, Results and Prospects.” Indian Journal of Science and Technology 8, no. 10: 1-8. Eurostat. 2020. EU Imports of Energy Products—Recent Developments. Most recent update published in October 2020.

Fedely, Botond. 2015. “Hungarian Foreign Policy and Crisis in Ukraine.” In Diverging Voices, Converging Policies: The Visegrad States’ Reactions to the Russia-Ukraine Conflict, edited by Jacek Kucharczyk and Grigorij Mesežnikov, 69-82. Warsaw: Heinrich-Böll-Stiftung. Fitzwater, Savannah. 2018. “Nuclear Power: A Technical Overview.” In The Oxford Handbook of Energy Politics, edited by Kathleen J. Hancock and Juliann Emmons Allison, 43-67. Oxford: Oxford University Press. Fuhrmann, Matthew. 2009. “Taking a Walk on the Supply Side: The Determinants of Civilian Nuclear Cooperation.” Journal of Conflict Resolution 53, no. 2:181–208. - 2012a. Atomic Assistance : How “Atoms for Peace” Programs Cause Nuclear Insecurity. Ithaca: Cornell University Press. - 2012b. “Splitting Atoms: Why Do Countries Build Nuclear Power Plants?” International Interactions 38, no. 1: 29-57. - 2013. “Nuclear Suppliers and the Renaissance in Nuclear Power”, in The Nuclear Renaissance and International Security, edited by Adam Stuhlberg and Matthew Fuhrmann, 73-96. Stanford, CA: Stanford University Press. Galucci, Nick and Michael Shellenberg. 2017. “Will the West Let Russia Dominate the Nuclear Market?” Foreign Affairs, 3 August. Goldman, Marshall I. 2008. Petrostate: Putin, Power and the New Russia. Oxford: Oxford University Press. Goldthau, Andreas. 2008. “Resurgent Russia? Rethinking Energy Inc.” Policy Review, no. 147: 53-63. Goldthau, Andreas and Jan Martin Witte. 2010. “The Role of Rules and Institutions in Global Energy: An Introduction.” In Global Energy Governance: The New Rules of the Game, edited by Andreas Goldthau and Jan Martin Witte, 1-21. Washington, DC: Brookings Institution Press. Gosling, Tim. 2020. “Hungary’s energy dalliance with Russia.” Politico, 17 April. Gromadzki, Grzegorz. 2009. “Belarusian foreign policy – change or continuity?” In Back From the Cold? The EU and Belarus in 2009, edited by Sabine Fisher, 93-104. Chaillot Paper nr.119. Hale, Henry. 2010. “Eurasian Polities as Hybrid Regimes: The Case of Putin's Russia.” Journal of Eurasian Studies 1, no. 1: 33-41. Hanson, Philip. 2007. “The Turn to Statism in Russian Economic Policy.” The International Spectator 42, no. 1: 29-42.

Harsem, Øistein and Dag Harald Claes. 2013. “The Interdependence of European–Russian Energy Relations.” Energy Policy 59: 784-91. Herman, Lior. 2018. “Energy as an Instrument in Global Politics.” In The Oxford Handbook of Energy Politics, edited by Kathleen J. Hancock and Juliann Emmons Allison, 293- 319. Oxford: Oxford University Press. Herszenhorn, David M., Sara Stefanini and Nicholas Hirst. 2016. “Shrugging off concerns, Europe waves through Hungary’s controversial nuke deal .” Politico, 14 December. Hill, Christopher J. 2003. The Changing Politics of Foreign Policy. Basingstoke: Palgrave Macmillan. Högselius, Per. 2013. Red Gas: Russia and the Origins of European Energy Dependence. New York: Palgrave Macmillan. Holloway, David. 1994. Stalin and the Bomb: The Soviet Union and Atomic Energy, 1939- 1956. New Haven, CT: Yale University Press. Hultman, Nathan E. 2011. “The Political Economy of Nuclear Energy.” Wiley Interdisciplinary Reviews: Climate Change 2, no. 3: 397-411. Hungarian Ministry of Foreign Affairs. 2014a. “Paks power plant crucial for competitive economy.” 17 January. - 2014b. “Minister Martonyi on the nuclear energy developments.” 29 January 2014. IAEA (International Atomic Energy Agency). 2020. “Country Profile: The Russian Federation.” Most recent update published in 2020. IAEA NEA. 2020. Uranium 2020: Resources, Production and Demand. A joint report by the Nuclear Energy Agency and the International Atomic Energy Agency. IISS. 2018. “The Geopolitics of Nuclear Energy: New Dynamics of Supply and Demand.” Moscow Workshop Report, 2 November. Interfaks. 2018. “Putin zayavil v Belorusii, chto RF stroit BelAÈS v ushcherb sebe.” 12 October. Isaacs, Rico and Adam Molnar. 2017. “Island in the neoliberal stream: energy security and soft re-nationalisation in Hungary.” Journal of Contemporary European Studies 25, no. 1: 107-126. Jirušek, Martin, Tomáš Vlček, Hedvika Koďousková, Roger W. Robinson, Anna Leshchenko, Filip Černoch, Lukáš Lehotský and Veronika Zapletalová. 2015. Energy Security in Central and Eastern Europe and the Operations of Russian State-Owned Energy Enterprises. Brno: Masaryk University.

Jewell, Jessica. 2011. “Ready for nuclear energy?: An assessment of capacities and motivations for launching new national nuclear power programs.” Energy Policy 39: 1041-1055. Jewell, Jessica and Elina Brutschin. 2018. “The Politics of Energy Security.” In The Oxford Handbook of Energy Politics, edited by Kathleen J. Hancock and Juliann Emmons Allison, 249-274. Oxford: Oxford University Press. Jewell, Jessica, Marta Vetier and Daniel Garcia-Cabrera. 2019. “The international technological nuclear cooperation landscape: A new dataset and network analysis.” Energy Policy 128: 838-852. Josephson, Paul R. 2005. Red atom: Russia's nuclear power program from Stalin to today. Pittsburgh: University of Pittsburgh Press. Karmanau, Yuras. 2020. “Russia halts oil supplies to Belarus in push for closer ties.” AP, 3 January. Kasperski, Tatiana. 2015. “Nuclear dreams and realities in contemporary Russia and Ukraine.” History and Technology 31, no. 1: 55-8. Khlopkov, Anton and Valeriya Chekina. 2014. “Governing Uranium in Russia.” DIIS Report 2014:19, Danish Institute for International Studies. Khodasevich, Antoniya. 2009. “Rosatom sdast belorusam AÈS pod klyuch.” Nezavisimaya Gazeta, 23 January. Kidd, Steve. 2010. “Fuel fabrication – outside of the fuel cycle?” Nuclear Engineering International, 14 January. Klare, Michael T. 2008. Rising Powers, Shrinking Planet: The New Geopolitics of Energy. New York, NY: Metropolitan Books. Knorr, Klaus. 1975. The Power of Nations: The Political Economy of International Relations. New York: Basic Books. Konończuk, Wojciech. 2008. “Difficult ‘ally’: Belarus in Russia’s foreign policy.” Warsaw: Centre for Eastern Studies. LaBelle, Michael. 2020. Energy Cultures: Technology, Justice, and Geopolitics in Eastern Europe. Cheltenham: Edward Elgar Publishing. Lantis, Jeffrey S. 2014. “Economic Competition and Nuclear Cooperation: the “Nuclear Renaissance” revisited.” The Nonproliferation Review 21, no. 1: 21-41. Luft, Gal and Anne Korin. 2009. “Energy Security: In the Eyes of the Beholder.” In Energy Security Challenges for the 21st Century, edited by Gal Luft and Anne Korin, 1-17. Santa Barbara, CA: Praeger Security.

Macfarlane, Allison. 2013. “Where, How, and Why Will Nuclear Happen?”, in The Nuclear Renaissance and International Security, edited by Adam Stulberg and Matthew Fuhrmann, 50-72. Stanford, CA: Stanford University Press. Macfarlane, Neil. 2018. “Contested Regional Leadership: Russia and Eurasia”, in Regional Powers and Contested Leadership, edited by Hannes Ebert and Daniel Flemes, 275- 299. Cham, Switzerland: Palgrave Macmillan. Marples, David R. 1999. “Nuclear Power in the Former USSR: Historical and Contemporary Perspectives.” In Nuclear Energy and Security in the Former Soviet Union, edited by David Marples and Marilyn Young, 19-44. Boulder, Colorado: Westview Press. Martínek, Stanislav. 2017. “Sovereign wealth funds: Driving growth of the nuclear power sector.” Energy Strategy Reviews 18: 141-149. Mastanduno, Michael. 2012. “Economic statecraft.” In Foreign Policy : Theories, Actors, Cases, edited by Steve Smith, Amelia Hadfield-Amkhan, and Tim Dunne, 204-222. Oxford: Oxford University Press. Mammadov, Rauf and Theodore Karasik. 2018. “Rosatom as a Tactic in Russia’s Foreign Policy.” International Policy Digest, 19 July. Mingazov, Sergei. 2021. “Vsemirnyi bank naschital $22,9 mlrd dolga razvivayushchikhsya stran Rossii.” Forbes, 31 March. Minin, Nikita and Tomáš Vlček. 2017. “Determinants and Considerations of Rosatom's External Strategy.” Energy Strategy Reviews 17: 37-44. Ministry of Foreign Affairs. 2013. Kontseptsiya vneshnei politiki Rosiiskoi Federatsii. Adopted on 18 February 2013. Nechepurenko, Ivan and Andrew Higgins. 2020. “Coming to a Country Near You: A Russian Nuclear Power Plant.” New York Times, 21 March. NEI (Nuclear Engineering International). 2014. “Ukraine transport ban will not impact Russian nuclear fuel deliveries.” 5 March. - 2019. “Rosatom reports record revenue and orders.” 13 May. - 2020. “Rosatom to fabricate REMIX fuel at Siberian Chemical Combine.” 26 August. - 2021. “Russia amends terms for Belarus NPP loan agreement.” 29 March. Newnham, Randall. 2011. “Oil, carrots, and sticks: Russia’s energy resources as a foreign policy tool.” Journal of Eurasian Studies 2, no. 2: 134-143. - 2019. “Russia and Belarus: Economic Linkage in a Patron-Client Relationship.” Journal of Belarusian Studies 9: 3-26.

Nikol’skii, Aleksey, Elena Mukhametshina and Ol’ga Churakova. 2016. “‘Rosatom’ vozglavil Aleksei Likhachev iz Minèkonomrazvitiya.” Vedomosti, 5 October. Norris, William J. 2016. Chinese Economic Statecraft: Commercial Actors, Grand Strategy and State Control. Ithaca: Cornell University Press. Novikau, Aleksandr. “Conceptualizing and achieving energy security: The case of Belarus.” Energy Strategy Reviews 26: 1-11. NS Energy. 2021a. “Belarusian Nuclear Power Plant.” [Accessed on 14 May 2021]. - 2021b. “Paks II Nuclear Power Plant.” [Accessed on 14 May 2021]. OEC. 2019a. “Belarus.” [accessed on 25 May 2021]. - 2019b. “Hungary” [accessed on 28 May 2021]. Orttung, Robert W., and Indra Overland. 2011. “A Limited Toolbox: Explaining the Constraints on Russia’s Foreign Energy Policy.” Journal of Eurasian Studies 2, no. 1: 74-85. O’Sullivan, Meghan. 2013. “The Entanglement of Energy, Grand Strategy, and International Security,” in The Handbook of Global Energy Policy, edited by Andreas Goldthau, 30- 43. Chichester: John Wiley & Sons. Panin, Alexander. 2014. “Hungary Gets $14Bln Loan for Nuclear Plant.” The Moscow Times, 14 January. Pape, Robert A. 1997. “Why Economic Sanctions Do Not Work.” International Security 22, no. 2: 90-136. Pehuet Lucet, Fabienne. 2015. “Financing Nuclear Power Plant Projects: A New Paradigm?” Notes de l'Ifri, Institut Français des Relations Internationales. President of Russia. 2014. “Zayavleniya dlya pressy po itogam rosssiisko-vengerskikh peregovorov.” 14 January. - 2017. “Sovmestnaya press-konferentsiya s Prem’er-ministrom Vengrii Viktorom Orbanom.” 2 February. - 2020. “Vstrecha s Prezidentom Belorussii Aleksandrom Lukashenko.” 14 September. - 2021. “Vstrecha s Prezidentom Belorussii Aleksandrom Lukashenko.” 22 February. Racz, Andras. 2014. “The Visegrad Cooperation: Central Europe Divided over Russia.” Europe En Formation 374, no. 4: 61-76. Reuters. 2021. “Czechs exclude Rosatom from nuclear tender after dispute with Russia.” 19 April. RIA Novosti. 2013. “Konversiya na SKhK: novyi zavod bez novykh èkologicheskikh riskov.” 16 May. 55

- 2020a. “Pervuyu v mire rossiiskuyu plavuchuyu AÈS vveli v promyshlennuyu èkspluatatsiyu.” 22 May. - 2020b. “Na Leningradskoi AÈS-2 zapustili novyi ènergoblok.” 23 October. Robinson, Neil. 2013. “The Contexts of Russia’s Political Economy: Soviet Legacies and Post-Soviet Policies.” In The Political Economy of Russia, edited by Neil Robinson, 15- 50. Lanham, Md.: Rowman & Littlefield Publishers. Rosatom. 2019. Performance of State Atomic Energy Corporation Rosatom in 2019. Annual report. - 2021. “Nablyudatel’nyi Sovet.” Last updated on 14 April. Rusatom. 2019. “Glava Rosatoma A. Likhachev i Yanosh Shuli posetili ploshchadku sooruzheniya AÈS ‘Paksh-2’”. 5 November 2019. Russian Government. 2007. O Gosudarstvennoi Korporatsii po Atomnoi Ènergii “ROSATOM”. Adopted on 13 and 23 December 2007. - 2020. Ènergeticheskaya Strategiya Rossiiskoi Federatsii na period do 2035. Adopted on 9 June 2020. Rutland, Peter. 2008. “Russia as an Energy Superpower.” New Political Economy 13, no. 2: 203-10. Sadecki, Andrzej. 2014. In a state of necessity: how has Orban changed Hungary. Warsaw: Centre for Eastern Studies. Saivetz, Carol R. 2012. “The Ties That Bind? Russia’s Evolving Relations with Its Neighbors.” Communist and Post-communist Studies 45, no. 3-4: 401-12. Sakwa, Richard. 2013. “Systemic Stalemate: Reiderstvo and the Dual State.” In The Political Economy of Russia, edited by Neil Robinson, 69-96. Lanham, Md.: Rowman & Littlefield Publishers. Schepers, Névine. 2019. “Russia’s Nuclear Energy Exports: Status, Prospects and Implications.” Non-Proliferation and Disarmament Paper no. 61. Schmid, Sonja D. 2015. Producing Power : The Pre-Chernobyl History of the Soviet Nuclear Industry. Cambridge, MA.: MIT Press. Smith Stegen, Karen. 2011. “Deconstructing the “energy weapon”: Russia's threat to Europe as case study.” Energy Policy 39, no. 10: 6505-6513. Spence, Martin. 1983. “Soviet Power: Nuclear Energy in the USSR.” Capital & Class 7, no. 3: 87-96. Sprenger, Carsten. 2010. “State Ownership in the Russian Economy: Its Magnitude, Structure and Governance Problems.” ICEF Working Paper.

Sotiriou, Stylianos A. 2014. Russian Energy Strategy in the European Union, the Former Soviet Union Region, and China. Lanham, Maryland: Lexington Books. Statista. 2020a. “Russian natural gas industry - statistics & facts”. 17 July. - 2020b. “Russian oil industry – statistics & facts”. 9 November. - 2021. “Operable nuclear reactors worldwide as of April 2020, by country”. 27 January. Stern, Jonathan P. 2005. The Future of Russian Gas and Gazprom. Oxford: Oxford University Press. Stognei, Anastasia. 2020. “Sensei and philosopher – meet Sergei Kiriyenko, the latest EU sanctions target.” The Bell, 19 October. Stuhlberg, Adam. 2013. “Internationalization of the Fuel Cycle and the Nuclear Energy Renaissance”, in The Nuclear Renaissance and International Security, edited by Adam Stuhlberg and Matthew Fuhrmann, 97-123. Stanford, CA: Stanford University Press. Tarasova, Ekaterina. 2018. “(Non-)Alternative energy transitions: Examining neoliberal rationality in official nuclear energy discourses of Russia and Poland.” Energy Research & Social Science 41: 128-135. Tarrósy, István and Zoltán Vörös. 2020. “Hungary’s Pragmatic Foreign Policy in a Post‑American World.” Politics in Central Europe 16, no. 15: 113-134. TASS. 2014a. “Minfin gotov podderzhat’ proekty “Rosatoma” za schet FNB.” 18 January. - 2014b. “MÈR: do 60% sredstv FNB mogut byt’ vlozheny v infrastrukturnye proekty.” 10 June. Than, Krisztina. 2015. “Special Report: Inside Hungary's $10.8 billion nuclear deal with Russia.” Reuters, 30 March. Tkachev, Ivan and Anton Feinberg. 2017. “Skrytyi schet na $100 mlrd: kak Rossiya soderzhit belorusskuyu èkonomiku.” RBC news, 2 April. TVEL. 2017. “TVEL Fuel Company of Rosatom and Belarussian NPP sign nuclear fuel supply contract.” Press release, 28 December. - 2018. Godovoi Otchet 2018: Novye biznesy i produkty toplivnoi kompanii Rosatoma «TVEL». Uranium One. 2021a. Ezhekvartal’nyi Otchet za IV kvartal 2020 g. 17 February. - 2021b. Operating and Financial Review 2020. 12 March. Urnova, Anastasia. 2009. “Russian State Corporations: A Stabilizing Economic Force or a Drag on Growth?” Kennan Institute Meeting Report, 30 March.

Way, Christopher. 2013. “The Politics of the Nuclear Renaissance”, in The Nuclear Renaissance and International Security, edited by Adam Stulberg and Matthew Fuhrmann, 154-174. Stanford, CA: Stanford University Press. Wilson, Jeffrey D. 2018. “Energy Interdependence.” In The Oxford Handbook of Energy Politics, edited by Kathleen J. Hancock and Juliann Emmons Allison, 151-171. Oxford: Oxford University Press. WNN (World Nuclear News). 2009. “Belarus and Russia plan for cooperation.” 22 January. - 2011. “Capacity hike planned at Russian enrichment plant.” 7 June. - 2015a. “Rosatom strengthens cooperation with Russian foreign ministry.” 3 June. - 2015b. “Russia renames overseas subsidiary.” 31 December. - 2016a. “Rosatom explains benefits of state backing to plant projects.” 11 February. - 2016b. “Russia's Rosatom signs $10 billion worth of deals at AtomExpo.” 1 June. - 2016c. “Kirienko leaves Rosatom to join Presidential Administration.” 6 October. - 2020a. “Hungarian minister highlights importance of nuclear energy.” 2 April. - 2020b. “Westinghouse signs VVER-440 fuel agreement with Ukraine.” 30 September. - 2020c. “Belarusian President celebrates start-up of new reactor.” 9 November. - 2021a. “Westinghouse signs VVER fuel licensing contract.” 5 February. - 2021b. “Hungary and Poland plan nuclear to replace coal.” 5 March. - 2021c. “Ostrovets unit 1 enters commercial operation.” 10 June. World Nuclear Association. 2021a. “Nuclear Power in Hungary.” Last updated in January 2021. - 2021b. “Nuclear Power in Russia.” Country profile. Last updated in May 2021. - 2021c. “Russia’s Nuclear Fuel Cycle.” Country profile. Last updated in May 2021. - 2021d. “Nuclear Power in Belarus.” Last updated in June 2021. Zhivov, V.L., A.V. Boytsov and M.V. Shumilin. 2012. Uran: geologiya, dobycha, èkonomika. Moscow: RIS VIMS. Zlotnikov, Leonid. 2009. “The Belarusian ‘Economic Miracle’: Illusions and Reality.” In Back From the Cold? The EU and Belarus in 2009, edited by Sabine Fisher, 65-78. Chaillot Paper nr.119.

Appendices Appendix I – Rosatom’s uranium production Rosatom’s uranium production is divided between subsidiaries ARMZ Uranium Holding and Uranium One, which have a combined annual uranium production of around 7.300 tonnes. ARMZ oversees the three operational mining complexes within Russian borders: the Priargunsky, Dalur and Khiagda mines. The Priargunsky Mine delivered its first tonne of uranium ore in 1970, making it the oldest still operational uranium mining facility in the world (Khlopkov and Chekina 2014, 21; Dolchinkov 2019, 111). The crown jewel of Russia’s uranium mines, Priargunsky accounts for almost half of national production. Expansion of Priargunsky mine six began in 2018, which can increase production capacity by 2.300 tonnes if completed (IAEA NEA 2020, 68). Dalur offers a modest contribution to domestic production. The mine became operational in the 1980s but was closed due to lack of financing. In 1997, the facility was reactivated. Average annual production lies between 500-700 tonnes, although the mine is expected to reach production of 1000 tonnes at some point (Khlopkov and Chekina 2014, 24). Since extraction costs are relatively low, ARMZ is working to expand uranium extraction in Dalur, conducting geological explorations on Dobrovolnoye field (ARMZ 2019, 24; Dolchinkov 2019, 110). With its launch in 1999, Khiagda is the most recent addition to Russia’s domestic production. Located in the permafrost zone of Buryatia, the frozen terrain, harsh climate and lack of infrastructure make extraction a difficult and costly procedure (Khlopkov and Chekina 2014, 24). In 2008, ARMZ envisaged production in Khiagda to increase to 1800 tonnes per year by 2019, but adjusted these plans later to 1000 tonnes per annum. This target was reached in 2019 (Dolchinkov 2019, 110; ARMZ 2019, 24). Being responsible for all Rosatom’s foreign assets, Uranium One has interest in several foreign mining compounds in Kazakhstan, the United States and Tanzania. The company’s shares in Kazakh mines are: - A 70% share in the Southern Mining and Chemical Company LLP (limited liability partnership), which operates the Akdala and South Inkai Uranium Mines; - A 50% share in Karatau LLP, which operates the Karatau Uranium Mine; - A 50% share in JSC (joint-stock company) Akbastau, which operates the Akbastau Uranium Mine; - A 49,98% share in JSC Zarechnoye, which operates the Zarezhnoye Uranium Mine;

- And a 30% share in Kyzylkum LLP, which operates the Kharasan Uranium Mine (Uranium One 2021b, 4). Additionally, Uranium One has full ownership of the Willow Creek Mine in Wyoming, US, which ceased production in 2018 (ibid., 12). It also conducted early-stage exploration in Namibia and owns a 13,9% share in the Tanzanian Mkuju River Project, whose development is currently under suspension due to the state of the global uranium market (IAEA NEA 2020, 341; Uranium One 2021b, 14). In total, uranium production in Uranium One’s mining assets amounted to 4.274 tonnes in 2020 (Uranium One 2021a, 74).

Appendix II – Corporate structure of Rosatom’s civil nuclear complex Rosatom was created in 2007 to oversee the whole of Russia’s nuclear complex, including scientific research, electricity generation, the nuclear weapons complex and Russia’s nuclear icebreaker fleet. The corporation currently manages over 300 enterprises, the majority of which belong to the civil nuclear complex. This side of the industry encompasses all stages of the nuclear production chain, from uranium mining and enrichment to NPP construction, power generation and nuclear waste management (Rosatom 2019, 10). The civilian assets of Russia’s nuclear industry fall under the curfew of Rosatom subsidiary Atomenergoprom (World Nuclear Association 2021b).

Figure 4: Overview of divisions within the nuclear energy branch of Rosatom, including their main tasks and selected companies. Sources: Khlopkov and Chekina (2014), Rosatom (2019), World Nuclear Association (2021b).

The mining division is responsible for production of natural uranium and exploration of new uranium field. AZMR and Uranium One are the main entities within this division (Rosatom 2019, 12, 76). A detailed overview of the mining division’s assets are listed in Appendix I. The fuel division is responsible for conversion and enrichment of natural uranium, as well as nuclear fuel fabrication. Key players within this division are TVEL and TENEX (Rosatom 2019, 12, 79). TVEL is primarily responsible for the enrichment of uranium and production of nuclear fuel for both domestic and foreign NPPs, while TENEX is the main exporter of nuclear fuel cycle products and services on the international market (Khlopkov and Chekina 2014, 35). Russia possesses the largest conversion capacity on the globe. TVEL aims to consolidate its conversion capacity in one facility in Seversk, with a total capacity of 20.000 tonnes of uranium per year. After conversion, the uranium is transformed in either low

61 enriched uranium, used for civilian purposes, or high enriched uranium, used for military purposes. TVEL produces the majority of its low enriched uranium in two plants in Novouralsk and Zelenogorsk. The enriched uranium is then converted into fuel pellets, which are inserted into rods and grouped together to form fuel assemblies. Fuel fabrication by TVEL occurs in two plants in Elektrostal in Moskovskaya Oblast and Novosibirsk, with a combined capacity of 2.800 tonnes of finished fuel per year (World Nuclear Association 2021b). The mechanical engineering division is represented by holding company Atomenergomash, which supplies essential equipment for construction and functioning of nuclear power plants and related facilities (Rosatom 2019, 12, 82). According to company data, 14% of the NPPs currently in operation around the globe use equipment manufactured by Atomenergomash (Atomenergomash n.d.). The engineering division covers the design and construction of NPPs (Rosatom 2019, 12, 84). The division is spearheaded by Atomstroyexport (ASE), which was established as holding company of the engineering division after consolidation of all Russian nuclear engineering companies by the end of 2015 (World Nuclear Association 2021b). The commissioning of domestic and foreign projects is done by AtomTekhEnergo, which has been involved in the commissioning of several international nuclear reactor projects including those in Belarus and Hungary (AtomTekhEnergo 2019, 13). In light of its growing international presence over the years, Rosatom created subsidiary Rosatom Overseas for the promotion of Rosatom’s NPP construction projects to potential foreign clients. Its main task is to bolster Rosatom’s overseas portfolio to ensure Russia maintains its dominant position on the international nuclear market (WNN 2015b). The power engineering division is concerned with the power generation at NPPs and related services. The division falls under the curfew of Rosenergatom, which operates all Russian NPPs and is thus responsible for 19% of the country’s total electricity generation (Rosatom 2019, 12, 86; IAEA 2020). In 2015, the company was split in two branches: Rosenergatom and Rusatom Energy International. The latter specialises in the management of Rosatom’s international projects, specifically relating to the construction and operation of NPPs. This company also functions as the Russian shareholder in foreign projects (WNN 2015b). The End-of-life division is responsible for the back end of the nuclear fuel cycle, including the management of spent nuclear fuel and radioactive waste, as well as the decommissioning of power plants (Rosatom 2019, 12). This division is overseen by the Federal Centre for Nuclear and Radiation Safety, while activities are carried out by the

National Operator for Radioactive Waste Management. The national operator is the only organisation in Russia that is authorised to arrange final storage of radioactive waste (World Nuclear Association 2021b).