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US Signs Nuclear Deal with UAE

The new deal allows the United Arab Emirates to receive sensitive information and materials from the United States to help create the Arab world's first civilian nuclear power industry.

Rapid development in Dubai is straining the emirate's power supplies, 12 Dec 2009
Rapid development in Dubai is straining the emirate's power supplies, 12 Dec 2009

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The United States and the United Arab Emirates (UAE) have signed a landmark agreement on peaceful nuclear cooperation.

The new deal, which was finalized Thursday, allows the United Arab Emirates to receive sensitive information and materials from the United States to help create the Arab world's first civilian nuclear power industry.  Emirati officials say the country needs nuclear power to keep up with rising energy demands, but critics have expressed concern over the country's close proximity to Iran, which many international powers suspect of wanting to build a nuclear bomb.

At the al-Jabriah junkyard in Sharjah workers collect scrap metal and throw it into compressing machines for most of the day. And they say they're lucky to be doing it. For more than two months this summer, the sheikhdom, which is one of seven that makes up the United Arab Emirates, suffered from repeated power shortages.

It was the hottest time of the year in one of the hottest places on Earth and many members of the expat-dominated community were threatening to leave if the problem persisted.

Ojas Mehta, who owns al-Jabriah, says the situation was particularly bad for businesses owners.

"When the power went off we had these machines switched off totally. We do around 1,200 tons a month and because of the power shortages we could do only 200 to 250 tons, which is like we've lost around $300,000," says Mehta.

Analysts say the blackouts clearly show how rapid development has outpaced broader planning efforts throughout the country.  The Emirates has one of the highest population growth rates in the world, with an estimated 300,000 people, nearly all of them foreign workers, moving in this year alone.

The UAE Embassy in Washington expects further influxes to drive demand for electricity up to around 40,000 megawatts in a decade's time. That is a nine percent annual growth rate from levels two years ago.

The country is the world's third largest oil producer, but it mainly burns gas to generate electricity. It also exports gas, but according to the embassy's calculations it will need double the amount it currently has just to meet its own consumption in ten year's time, threatening to extend the power problem from the junkyards of Sharjah to the five-star hotels and glitzy palaces that litter Dubai and Abu Dhabi.

Local energy expert Khaled al-Awadhi says that is one of the reasons why the country needs nuclear power.

"There is a problem with fuel. We expect to have gas shortages to meet the growing demand in electricity," he said. "By making more oil available and more gas available [for local consumption] two things will happen: The industries will have less gas and oil and also the international market will have less gas and oil. So the ideal solution is to go to nuclear energy. It will meet up with the growth and it will also release oil and gas to the industries."
 
A new pact with the USA aims to help the UAE meet its nuclear needs.

Known as the 123 Agreement, it establishes a legal framework for the U.S. to transfer sensitive information and materials, like nuclear fuel, to the Emirates in return for a promise to abide by non-proliferation agreements.

The accord was first signed back in January by the departing Bush administration and was later approved by current president Barack Obama in May.

As part of the agreement, the UAE has outlawed uranium enrichment and reprocessing spent nuclear fuel for plutonium, which is used in nuclear bombs. Instead, it will import all the fuel needed for its future reactors. This is exactly the type of deal the international community has been trying to reach with Iran.

President of the US-UAE Business Council, Danny Sebright, says it's a revolutionary step forward.
 
"I would say that what the US-UAE agreement does and what the UAE's civilian energy program does quite frankly sets a new model, sets a new example for the way nuclear energy can be done in the world in such a manner that it's all about the energy and it has nothing to do with promoting or pursuing a weapons program," said Sebright.
 
But the U.S.-UAE agreement does have its critics.

Some members of U.S. Congress have expressed concern over the UAE's trading ties with neighboring Iran. They say Emirati authorities are not taking enough steps to ensure U.S. nuclear technology does not fall into the hands of Tehran, which many international powers suspect of planning to build nuclear weapons.

Supporters of the accord say it will actually serve as a counterweight to Iran's weapons pursuit, showing the nation it too could receive help for its nuclear program if it complied with global standards. But opponents say this is a naïve assumption.

There are also members of congress who believe the UAE's human rights record should prevent it from receiving any nuclear assistance.

Earlier this year a member of Abu Dhabi's royal family was allegedly caught on videotape beating a man with a nailed plank, setting him on fire and running him over with his car all because he apparently cheated him in a business deal.

Democratic Congressman James McGovern worries this behavior is acceptable in the UAE and he says he fears the country's image of moderation and tolerance could be nothing more than a façade. He says a more thorough investigation of the country should have been carried out before the nuclear agreement was approved.

"If I had a magic wand and could make everything the way I wanted it to be I probably would not be in support of this deal," said McGovern. "There are people in congress who believe that this deal is actually helpful to us in terms of prohibiting technology transfers to Iran. I understand that, but look, I chair the human rights commission here in Congress and human rights to me is the central issue and I am very, very concerned that there is a culture of impunity that still exists in the UAE. That some people appear to be above the law is of great concern to me and I think it should be of great concern to the United States."

The next step for the Emirates is deciding on who will build its four nuclear reactors - it's a decision that has been expected for some time now.

Several nations, including the United States, are bidding for the project, which the New York-based consultancy firm Eurasia Group estimates at being worth more than $40 billion.

Many industry sources say a consortium from France is in pole position to win the contract.

But Eurasia Group analyst David Bender says it is really anybody's guess.

"The decision-making process in the UAE for this is obviously very opaque and so it is difficult to say who has the edge right now. There have been people trying to speculate one way or another, were they waiting for the US to pass the agreement because they are giving it to a US company or because they are not giving it to a US company, but they wanted to show that they gave a US company a fair chance and I think you could really read it either direction." said Bender.
 
Bender says even the countries that are not chosen will still benefit from the UAE's new nuclear program. He also says it is just a glimpse of what to expect in the region.

"I think this is the beginning of a growing nuclear power industry in the Gulf," he said. "Saudi Arabia has suggested it will go ahead with a nuclear power program, although it is still in the very early stages, and I think we will also see countries like Qatar, Bahrain and Kuwait moving in that direction as well of investigating whether it makes sense to them, and by and large for most Gulf countries I think it does make sense."

The UAE expects to have its nuclear program up and running by 2017.
 

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