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DE RUEHAK #1315/01 1501444
ZNR UUUUU ZZH
R 301444Z MAY 07
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 2313
INFO RUCPDOC/USDOC WASHDC
RHEBAAA/DEPARTMENT OF ENERGY WASHDC
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHUNV/USMISSION UNVIE VIENNA 0154
UNCLAS SECTION 01 OF 02 ANKARA 001315
SIPDIS
USDOE FOR CHARLES WASHINGTON
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK
STATE ALSO FOR EB/CBA FRANK MERMOUD
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ENRG EINV BEXP TU
SUBJECT: TURKISH PRESIDENT VETOES NUCLEAR ENERGY LAW
REF: A) ANKARA 1177
B) ANKARA 1121
C) 06 ANKARA 6056
SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE ACCORDINGLY.
1. (SBU) SUMMARY: On May 8 the Turkish Parliament passed the long
pending Nuclear Energy Law, but on May 24 President Sezer vetoed the
legislation based on a few technical provisions concerning
privatization and government obligations. Even in the unlikely
event that the parliament overturns the veto and the draft law
survives potential legal challenges, Turkey still faces many
obstacles in implementing its decision to add nuclear power to its
energy mix, including clarifying the government role, getting the
public on board, establishing an appropriate regulatory authority,
and dealing appropriately with environmental issues and nuclear
waste. Having burned their fingers in earlier attempts to establish
nuclear power plants in Turkey, American companies have responded
cautiously. Cooperation on regulation or other technical aspects of
nuclear power technology are still impeded by the hold up with
respect to the bilateral Agreement on Cooperation on Peaceful Uses
of Nuclear Energy. End Summary.
2. (SBU) BACKGROUND: Although Turkey has rich uranium reserves and
a nuclear power plant has been on the agenda of the Government since
the early 1960s, Turkey does not have any nuclear power plants in
operation or under construction. Despite lengthy research, detailed
preparation efforts, and tender processes for previous government
attempts in 1960, 1968, 1974, and 1998 such projects, all failed for
different reasons, including "NIMBY", environmental concerns, and
tender irregularities. Having gone far down the road in previous
attempts, U.S. firms General Electric and Westinghouse are very
cautious. The government has determined that Sinop, a province on
the Black Sea coast, is the best location for a first nuclear power
plant in Turkey's current plan to build three reactors totaling 5000
MW.
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Parliament Passes Nuclear Law - But President Vetoes
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3. (U) On May 8, the Turkish Parliament adopted a Nuclear Energy
Law designed to attract private investments to Turkey's nascent
nuclear sector. The President took his full review period and
vetoed the legislation on May 23, citing technical constitutional
objections with three sections related to government obligations and
privatization methodology. The Parliament may send the law back to
the President with or without making amendments. In such a second
submission, the President would not have a right of veto, but could
refer the law to the Constitutional Court. However, it seems
unlikely that Parliament will act before it dissolves on June 3 in
the run-up to the July 22 elections, creating another unfortunate
delay.
4. (U) The draft law established the legal basis for the
construction and operation of nuclear power plants with an emphasis
on encouraging the private sector to take the lead. The GOT has
determined that developing a nuclear generation capability is
necessary to meet fast growing electricity demand, which is expected
to exceed supply within the next few years. The law would create
processes and procedures for licensing private companies to build
and operate plants after evaluation by the relevant ministries and
public entities, including the Ministry of Energy (MENR).
5. (SBU) The law would have authorized TAEK to determine criteria
for private companies to qualify as builder/operators of nuclear
facilities. Any company meeting those criteria would make a
proposal to the GOT, which, the draft law states, should focus on
financial considerations in approving proposals. The law would
provide that proposals can include requests for government purchase
guarantees. In a meeting with Ambassador (Ref B), Energy Minister
Guler described this as a simple transparent process that would
minimize opportunities for corruption that has hindered previous
energy initiatives in Turkey.
6. (U) The draft also provided that a decommissioning fund and a
national radiological waste fund be established to meet costs
associated with the construction, licensing and operation of the
temporary and permanent waste storage facilities, transport and
processing of waste, research and development studies related to
nuclear waste management, and eventual dismantling of the nuclear
power plant. President Sezer cited this provision as creating an
undue and unconstitutional burden on the Treasury.
7. (SBU) The law also would have empowered the Council of
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Ministers, MENR, TAEK and the energy regulator (EMRA) to regulate
and supervise the implementation and supervision of certain
provisions of the law. For example, the authority to determine the
principles and procedures for the selection of authorized companies
rests with the Council of Ministers, while the authority to prepare
and conduct the selection process of authorized companies is granted
to MENR. Initially, TAEK would be the regulatory authority in the
nuclear energy sector. EMRA, which is the regulatory authority in
the electricity, natural gas, petroleum, LNG and renewable energy
sectors, would not have any regulation or supervision authority with
regard to nuclear power plant operators. The law however foresees
creation of a new regulator analogous to the U.S. Nuclear Regulatory
Commission.
8. (SBU) COMMENT: While the President has often opposed AKP
government initiatives and opposed economic liberalization measures
on nationalistic grounds, some observers expected him to support the
nuclear legislation. The President vetoed the law based on
technical provisions, citing constitutional issues and government
obligations which may provide a basis for sending the law to the
constitutional court if the Parliament resubmits it to him. The
political calendar may cause it to be shelved for now, pending a
potential new Government. Whether or not the draft legislation
eventually becomes law, the Government still faces many obstacles in
advancing its nuclear power agenda, including clarifying the
Government role, getting the public fully on board, establishing an
appropriate regulatory authority, and dealing appropriately with
environmental issues and nuclear waste. Since the Government will
have to pick the "low-bidder" or the company requiring the lowest
Government purchase guarantee, the most qualified company may not
necessarily win. The Government has expressed commitment for the
private sector to develop nuclear plants, but the new law includes a
provision for the state taking it on in the event that the private
sector does not step up. Nuclear power is a great opportunity for
cooperation with the U.S. NRC on regulation, as well as with U.S.
companies, but lack of movement on the bilateral Cooperation in
Peaceful Uses of Nuclear Energy remains an impediment.
Wilson