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. ii 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 iv 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