Overview
The sustained instability in energy markets caused by the simultaneous conflicts between the US and Iran and Russia and Ukraine has unleashed increased interest in nuclear power, especially in energy-poor states most affected by the crisis. Suppliers of nuclear technology like Russia and the US have launched a concurrent push to develop new partnerships, as exemplified by the recent US-Saudi Arabia agreement. The long-term nature of nuclear cooperation, as well as the diplomatic connections involved in nuclear cooperation, give nuclear technology exports a decidedly geopolitical aspect.
Nuclear energy cooperation with states like Russia cements multidecadal cooperation on energy policy and creates potential sanctions and diplomatic risks for Moscow’s partners. Alternatively, cooperation with either the US or American partners has the potential to boost long-term diplomatic relations and to create new opportunities for investment and economic connections. Generally, nuclear energy can strengthen energy security by diversifying supply in an increasingly unsettled market. Moreover, as new nuclear technologies progress, such as small modular reactors (SMRs), opportunities for nuclear energy cooperation will widen to include more countries and businesses as potential partners.
New Partnerships and Growing Nuclear Interest
Global interest in nuclear energy is rising on the back of a series of geopolitical crises that have upset energy markets. The US-Iran war has created a sustained state of volatility and uncertainty for global oil and gas supplies. Moreover, it has now expanded from the Strait of Hormuz to also include the Bab-el-Mandeb Strait in the Red Sea. The ongoing Russia-Ukraine war, which has seen Kyiv target Russian energy production and export infrastructure, adds to the global supply crunch.
Against that background, several major developments have occurred in global nuclear energy cooperation: the announcement of the US-Saudi Arabia nuclear agreement (albeit potentially on the rocks over linkage to Israeli normalization), a new US-Japan-South Korea cooperation framework, and a number of Russian initiatives. The US agreement with Saudi Arabia would shut out other players, such as Russia and China, from Riyadh’s domestic nuclear industry. The deal would also be worth tens of billions of dollars for American companies. Likewise, the US-Japan-South Korea agreement foresees cooperation on the deployment of small modular reactors (SMRs), an emerging type of smaller and cheaper nuclear reactor, to third countries with a focus on the Indo-Pacific region. Meanwhile, Russia is actively searching for nuclear partnerships. Moscow has signed agreements this year with countries including Rwanda and Vietnam on nuclear cooperation – in Vietnam, Russia will build the country’s first nuclear plant – and recently announced it was exploring negotiations with Indonesia on the construction of floating nuclear plants.
In this context, building nuclear energy infrastructure presents an attractive method for insulating energy security from geopolitical shocks. Nuclear energy also dovetails with decarbonization and green initiatives, as well as with increasing electrification, which has emerged as a major trend in the wake of the US-Iran war. This is particularly true for energy-poor countries that do not have the fiscal capacity to absorb the shocks of overlapping geopolitical crises. Five ASEAN members are actively working towards nuclear power, and some African states have also expressed interest in pursuing nuclear energy.
The US, South Korea, China, France, and Russia, among others, can supply nuclear energy technology and can construct nuclear plants in third countries. Of these, Russia’s state nuclear energy company, Rosatom, is by far the most globally active, and Rosatom is engaging in a campaign to develop its international business. However, China also has goals to develop its international footprint in nuclear energy cooperation, as do the US and its partners.
The Geopolitics of Nuclear Cooperation
In geopolitical terms, nuclear partnerships create multi-decadal commitments and can lock in dependencies in areas like maintenance and operations, technological know-how and fuel procurement. Supplying nuclear technology also presents the exporting country as a technological leader and provides more influence in global nuclear policymaking. Likewise, it gives the exporting country a bargaining chip in its diplomatic relations with other countries, and it provides revenue and increased business to boost the domestic nuclear industry.
Russia’s leading role in global nuclear energy cooperation illustrates the linkages between nuclear energy and geopolitics, both in terms of its value to suppliers of nuclear technology and the geopolitical risks involved. Russia is involved in over 50 nuclear plants abroad, approximately double the US’ footprint. Russia also leads in terms of the number of countries it supplies with nuclear power plants. Although Moscow’s revenues from its nuclear energy business fall far short of its oil and gas revenues, nuclear technology is a growth area that combines profit and geopolitical opportunities. Moreover, nuclear cooperation with the Global South allows Moscow to grow commercial partnerships and shows it remains a major player.
Rosatom is currently building nuclear plants in countries including Bangladesh, Egypt, Turkey, Uzbekistan, and India, alongside the company’s push for new agreements. Russia can also offer financing for plants built abroad; Rosatom’s current projects in Turkey, Egypt, and Bangladesh all enjoy significant Russian financing. In Turkey, Russia will own and operate the nuclear facilities. Russia is also piloting the deployment of SMRs in its Uzbekistan project. If successful, this would boost Russia’s potential offering in the nuclear sphere by giving it a smaller, cheaper option for export to countries with lower demand and less infrastructural capacity.
Moscow’s leading nuclear role also makes its nuclear industry more difficult to sanction and more difficult to disengage from. In July, a French company announced a joint venture with the Rosatom subsidiary TVEL to license and produce nuclear fuel for Central and Eastern Europe. Across much of the region, nuclear plants use Russian-designed VVER reactors, and, up until recently, Rosatom had an almost complete monopoly on fuel for those reactors. Russia has also historically played an outsized role in the global supply of enriched uranium, which has given Moscow a critical role in global nuclear supply chains.
However, while Russia is currently the leader in global nuclear cooperation, that position is potentially precarious. Moscow’s tight fiscal position and the scale of the projects Rosatom is already undertaking mean there is potential for other market entrants to compete against Rosatom, especially given growing market demand for nuclear technology suppliers.
Although China is less of a global player in nuclear energy than Russia, Beijing also harbors significant ambitions for nuclear energy cooperation, specifically in the context of the Belt and Road Initiative. China’s first-ever overseas deployment of its Hualong One reactor went online in Pakistan in 2021, and China signed an agreement in February 2022 to build a nuclear plant in Argentina. Moreover, China leads the world in nuclear energy construction when domestic power plants are included. China is also set to build two large-scale nuclear power plants in Kazakhstan, with Rosatom building the first plant. While China is well behind Russia in the scale of its nuclear partnerships, Beijing plans to establish itself as a leading supplier of nuclear technology for the Global South and as a leading voice in nuclear expertise. However, China is not yet ready to begin a major export push, especially in the area of SMRs.
The US has a number of leading SMR developers and is clearly interested in developing its position as a global nuclear energy supplier. This approach aligns with the Trump administration’s policy of “American energy dominance” and of promoting the US’ role as a key partner in energy security policy. The US already has agreements to deploy SMRs in Europe, such as with Hungary and Romania, an area that could take on more importance as the US looks at alternative energy as an area of great power competition. The Trump administration has also specifically prioritized building up the US nuclear industry, which would benefit significantly from developing the US position as a nuclear technology supplier.
Risks and Opportunities
Competition to supply nuclear technology and growing global interest bring a number of both upside and downside risks for importing countries and international businesses. While Russia’s nuclear industry has largely escaped sanctions up until now, there is no guarantee it will remain unsanctioned permanently. Washington has also targeted countries for doing business with Russia in oil and natural gas. Partnering with Russia on nuclear, which inherently involves long-term and relatively close cooperation, could likewise introduce complications into countries’ relationships with Washington and with European capitals. In the future, this could also extend to cooperation between other countries and China, depending on how competition between Washington and Beijing develops.
On the upside, nuclear energy would strengthen countries’ energy systems against outside energy shocks and could contribute to a more reliable, cheaper power supply. The US appears well-situated to grow its influence in international nuclear development. Rosatom is already stretching its capacity, and countries may be hesitant to rely too heavily on Russia. China likely won’t be able to export SMRs in the near-term, so there is strong potential for the US and partners to take market share, especially partnering with countries on SMRs. New nuclear partnerships could offer a way for Washington and other capitals like Seoul or Paris to deepen energy cooperation across the Global South, promote decarbonization, and build out overall economic and diplomatic ties. A growing international market for nuclear energy could also create upsides for companies involved in domestic nuclear energy and nuclear research.
