The ethical cost of CANDU exports has also been high, as CANDU
sales have repeatedly involved bribery, and have contributed to
Canada's abandonment of an effective human rights policy.
Economics
In a February 1996 publication by the Campaign for Nuclear
Phaseout entitled "Nuclear Sunset: The Economic Costs of the
Canadian Nuclear Industry", it was demonstrated that Atomic
Energy of Canada Ltd. (AECL) 1 received federal taxpayer
subsidies totalling $13 billion up to the end of March 1995.
Reactor sales cannot hope to recoup that massive subsidy. Indeed,
the proceeds from reactor sales may not even keep pace with
ongoing annual federal subsidies -- AECL will receive a subsidy
of $174 million for 1996-97 (up from $172 million in 1995-96).
The amount of the annual subsidy is supposed to drop to $132
million in 1997-98, and to $100 million in 1998-99 -- presumably
it will then remain at that level.
Since Canadian utilities are clearly not interested in building
more reactors, AECL maintains that prospects for reactor exports
justify ongoing subsidies from Canadian taxpayers. However,
nuclear prospects are not numerous. The number of nuclear power
reactors under construction around the world is at its lowest
level in 25 years. Installed nuclear capacity worldwide has
remained relatively flat throughout the 1990s. 2 Given the
intense competition for reactor sales, the scarcity of sales
opportunities, and the domination of the existing world market by
other reactor types, AECL cannot realistically expect to achieve
a large number of sales, or even to capture a significant market
share.
The likelihood of market success is further reduced by the
CANDU's worsening international performance. Contrary to the myth
of CANDU superiority, in 1995, the load factor for CANDU reactors
worldwide was 61.4% -- the worst of all the major reactor types.
3 The growing trend towards more competitive electricity
markets worldwide will also discourage CANDU sales, because
nuclear power is a high cost, high risk option.
Early CANDU sales involved concessionary financing, which
entailed some combination of low prices, outright grants, low or
no interest, and long repayment periods. Occasionally other
perquisites were made available, including outright bribes or
trade concessions. The full extent of hidden incentives and
subsidies for these past sales, as with current CANDU deals, may
never be known.
In the case of CANDU sales to China, Natural Resources Minister
Anne McLellan claims that financing for the CANDU sale to China
will be on a commercial basis. However, the loan, thought to be
about $1.5 billion, will go through a crown corporation (the
Export Development Corporation) on its "Canada Account", which is
carried on the books of the Department of Foreign Affairs and
International Trade. The reason for this is that the loan is too
big and too risky for the EDC alone, or for the private sector
financial community. The EDC typically provides cheaper loans
(i.e. at lower interest rates), for longer periods than
commercial banks. There is some doubt as to whether the rules of
the OECD 4 Consensus Agreement will be observed by AECL and its
partners in the sale of CANDUs to China. Indeed, in the recent
past, the OECD Consensus Agreement has been violated by one of
AECL's partners.
In addition, there are serious questions about:
- the absence of political risk insurance on the loans;
- the degree to which AECL will 'give away the store' through
technology transfer;
- the consequences of serious cost overruns; and
- the cost of possible performance guarantees or warranties.
On the other hand, CANDU deals with other financial structures,
such as Build-Own-Operate-Transfer (BOOT) potentially carry even
greater risks, as AECL would become the owner and operator,
relying on electricity sales to recoup its investment.
The minimum political requirement for CANDU deals should be
transparency and disclosure. AECL traditionally keeps its nuclear
financing deals secret, but if the China deal is strictly
commercial as the government claims, then the details should be
made public. AECL is after all a crown corporation, and CANDU
sales to China have the economic and political support of the
federal government.
CANDU and the Bomb
The explosion of an atomic bomb by India in 1974, using plutonium
from a Canadian-supplied reactor, demonstrated the very real
contribution that Canadian reactors can make to nuclear weapons
proliferation. Canada promptly discontinued nuclear cooperation
with India. Within a few years, Canada also broke off nuclear
cooperation with Pakistan because of that country's determination
to pursue a nuclear weapons program in response to India's
demonstrated capability.
Despite Canadian and international non-proliferation agreements,
CANDU sales carry an inherent risk of proliferation ~ purchasers
can simply ignore their commitments, as India did. All of our
past CANDU customers (India, Pakistan, Taiwan, Romania,
Argentina, and South Korea) have at one time or another pursued a
nuclear weapons program.
In recent years, without any public discussion or parliamentary
debate, Canada has allowed its non-proliferation policy to be
eroded. Since 1989, Canada's nuclear boycott of India and
Pakistan has been abrogated by quietly allowing AECL and other
Canadian companies to provide nuclear assistance to both
countries.
Because China has given aid to 'threshold' nuclear weapons states
like Pakistan, the United States government will not allow its
privately owned nuclear companies to sell reactors to China. The
Canadian government has no ethical compunctions about selling
reactors to China ~ it is eager and willing to take advantage of
the absence of American competition.
Human Rights
Human rights violations are particularly severe in countries
which AECL has targeted as its highest priorities for CANDU
sales. China, Indonesia, Turkey and South Korea, among other AECL
customers, have consistently been identified as among the world's
worst human rights violators. The Canadian government has argued
that through a policy of 'constructive engagement', i.e. by
establishing even stronger commercial relations, Canada can
encourage improvements in human rights. However, such a policy of
appeasement is self-serving and hypocritical. If Canada is
serious about improving human rights (or discouraging
proliferation), it should impose trade sanctions, rather than
expanding trade.
Corruption
Corruption is particularly entrenched in countries such as China,
Indonesia, South Korea, and Turkey, all of which are CANDU
marketing targets. AECL already has a history of using bribes to
secure CANDU sales. Over $22 million in bribes -- disguised as
agent fees -- was paid by AECL to secure sales to Argentina and
South Korea. As recently as 1994, AECL's agent in South Korea was
arrested and jailed for paying bribes to the head of South
Korea's nuclear utility. Since AECL was first compelled to
disclose "Agent Fees" in 1977, about $60 million has been paid
out for dubious purposes. If bribery and corruption are the price
of CANDU sales, Canada should get out of the business.
Conclusion
AECL's most promising customers are all located in countries that
exhibit serious human rights problems, and suffer from extensive
corruption. Some are developing countries with oppressive and
dictatorial governments (eg. China, Indonesia). Some are
governments that have recently shifted to more democratic
systems, but still suffer from the heritage of a dictatorial past
(eg. South Korea, Romania, and Turkey). The absence of democracy,
or the existence of a fragile democracy replete with human rights
violations, invariably means that public debate and consultation
on nuclear programs are non-existent or severely limited. Even in
developed countries such as Canada the nuclear industry is
secretive, democratic processes are rare, and information is
often inaccessible. In developing countries these problems are
far worse.
Given the fact that the prospects for foreign sales of CANDUs are
minimal, the ongoing subsidization of the Canadian nuclear
industry cannot be justified. In particular, the financing of
CANDU sales should not be supported by the federal government.
Canadian taxpayers should not be expected to assume the risks of
reactor sales.
End Notes
1. A federal crown corporation that designs and markets the CANDU
reactor as well as other nuclear technology and services.
2. Safe Energy Communication Council, "International Nuclear
Power", Myth Busters # 10, Spring 1996.
3. 1995 average load factors were as follows:
PWR = 75.2%; BWR =76.6%; PHWR (CANDU) = 61.4%;
Magnox = 65.6%; and AGR = 69.5%.
See: Laurie Howles, "Load Factors: 1995 annual review", Nuclear
Engineering International, May 1996, p. 30.
4. Organization for Economic Co-operation and Development
Press Conference
END CHINA'S NUCLEAR TESTING:
CANADIANS SAY "NO CANDU!"
October 11, 1995, 11:30AM
Charles Lynch Press Conference Room
130S Centre Block
with:
Gordon Edwards, Canadian Coalition for Nuclear Reponsibility
Elizabeth May, Sierra Club of Canada
Kevin Jardine, Greenpeace
Kristen Ostling, Campaign for Nuclear Phaseout
Michelle Hseih, Formosan Association for Public Affairs
The Campaign for Nuclear Phaseout (CNP) and the Coalition Against Nuclear Testing (CANT) will be co-hosting a press conference on October 11th at 11:30 AM in the Charles Lynch Press Conference Room (130S Centre Block).
The conference will raise issues related to this week's visit to Canada by China's Premier Li Peng. Conference participants will discuss China's continued nuclear testing and Canada's proposed sale of CANDU reactors to China.
On the occasion of Li Peng's visit, the Campaign for Nuclear Phaseout will release an exerpt from a study in progress on Canada's nuclear industry. The exerpt is entitled "Feeding the Nuclear Dragon: CANDUs for China?" (Copies will be available at the press conference.) CNP will also issue its list of top ten reasons Jean Chrétien should say "NO CANDU" to Li Peng.
Following the press conference, an event on Parliament Hill at 12:00 noon will feature the unveiling of a message urging Li Peng to end China's nuclear testing and Chrétien to stop the sale of CANDUs to China. The Coalition Against Nuclear Testing's "Li Peng Welcoming Committee" will attempt to deliver the message to Li Peng in person.
For further information, Contact:
Kristen Ostling, Campaign for Nuclear Phaseout (613) 789-3634
or The Coalition Against Nuclear Testing, (613) 241-7444.
- 30 -
Media Advisory
October 11, 1996
-- NO CANDU FOR CHINA --
The Campaign for Nuclear Phaseout calls on Prime Minister Jean Chrétien to stop the sale of CANDU reactors to China. China is an international outlaw in its nuclear policies, as well as in its abysmal record of human rights abuses. Mr. Chrétien implicitly condones China's deeds by refusing to condemn them.
China's Premier Li Peng will be arriving in Canada on October 12. He will meet with Jean Chrétien in Ottawa, and will dine with Mr. Chrétien and the provincial Premiers in Montreal on Friday evening. Part of the agenda will involve discussing and possibly finalizing the sale of two CANDU reactors.
Many Canadians are deeply ashamed to see their chief elected representatives granting respectability to one of the most repressive regimes on the earth by dining with Li Peng -- the butcher of Tiananmen Square -- and treating him as an honoured guest. Many Canadians resent the ignoble image of Canada being projected: that we judge profit for the Canadian nuclear industry as more important than human rights, nuclear proliferation, or world peace.
Here are CNP's top 10 reasons for Jean Chrétien to say "NO CANDU" to Li Peng:
10. Canada should not be using tax money to breathe life into this dying industry.
9. By exporting CANDU reactors, we burden others with our unsolved problems.
8. Making nuclear waste is inconsistent with a sustainable development strategy.
7. Ontario Hydro can't keep its CANDU reactors safe -- so how can China do it?
6. China has refused to repay hundreds of millions of dollars in legitimate debts.
5. China has imprisoned thousands of its citizens for advocating democracy.
4. China practices harsh repression, including sterilization and forced abortion.
3. We owe it to our own citizens and to the world not to honour cruel dictators.
2. China has sold nuclear reactors and guided missiles to Pakistan and Iran.
1. China continues to test nuclear weapons in defiance of global public opinion.
The Campaign has decided to release a particularly relevant excerpt from an ongoing review of Canada's Nuclear Industry that it has commissioned, even though the study is not yet completed. The excerpt, entitled "Feeding the Nuclear Dragon: CANDU exports for China?" documents why the pending CANDU deal is bad for both Canada and China. Copies have been sent to the Prime Minister and to the provincial Premiers, as well as to the Ministers of Environment, Natural Resources, and Foreign Affairs & International Trade. Copies will be made available to interested members of the press.
10. Canada should not be using tax money to breathe life into this dying industry.
if the Chinese deal exceeds the $3.5 billion estimated, who pays the balance?
Canada will finance up to 2/3 of the cost, which will require borrowing $2 billion;
why can't this industry finance its own deals if the terms are truly reasonable?
AECL currently receives about $200 million annually in federal subsidies;
any overseas sales will necessitate a continuation of these federal subsidies;
Ottawa has already given the CANDU industry over $13 billion since 1948;
economist George Lermer estimates another $70 billion in opportunity costs;
AECL will make at most $200 million over several years from the China deal.
9. By exporting CANDU reactors, we burden others with our unsolved problems.
official reports concede that catastrophic accidents in CANDUs are possible;
there is no proven solution to the problem of radioactive waste disposal;
routine emissions of radioactive tritium from CANDUs endangers health;
premature aging of reactor components can seriously compromise safety;
dismantling the radioactive structures of old reactors is a major problem;
use of heavy water or plutonium for military purposes cannot be prevented;
lengthy shutdowns and exorbitantly expensive repairs are a CANDU curse.
8. Making nuclear waste is inconsistent with a sustainable development strategy.
the radioactive wastes will remain dangerous for tens of thousands of years;
plutonium in the nuclear waste will be usable for atomic bombs for millenia;
dismantling old reactors will yield 1000 s of truckloads of radioactive rubble;
the high cost of nuclear prevents investments in sustainable energy options;
the future costs of nuclear will frustrate the hopes of generations to come;
acts of war directed against a reactor can precipitate a Chernobyl-like disaster;
nuclear power is the ultimate embodiment of the throwaway society.
7. Ontario Hydro can't keep its CANDU reactors safe -- so how can others do it?
Ontario Hydro is $30 billion in debt, all of it related to nuclear investments;
Ontario Hydro can no longer afford to keep its reactors in prime condition;
Hydro is shutting down a large reactor this year, 20 years ahead of schedule;
Hydro may be forced to shut 8 Pickering reactors if safety doesn't improve;
serious unpredicted nuclear accidents happened at three reactors in 1994-95;
repairs to two Pickering reactors cost $700 million, during a 4-year shutdown;
Hydro has not put aside any money for waste disposal & dismantling.
6. China has refused to repay hundreds of millions of dollars in legitimate debts.
Chinese state enterprises have defaulted on $600 million in bank loans;
banks in Japan, Germany & Italy have been left "holding the bag" by China;
China International Trust & Investment Corp (CITICO) won't pay its debts;
CITICO owes $40 million to the London Metal Exchange, but refuses to pay;
two Chinese state companies owe $100 million in losses to Lehman Brothers;
huge cost overruns, typical of CANDU projects, may offer a pretext for default;
when Deng Xiao-Ping dies, a new regime may not feel bound by "his" debts.
5. China has imprisoned thousands of its citizens for advocating democracy.
Li Peng is the engineer of the Tiananmen Square massacre on June 4 1989;
he called out the tanks, and hundreds of peaceful demonstrators were killed;
he labelled the pro-democracy movement "a counter-revolutionary riot";
after the massacre, he had thousands of pro-democracy activists arrested;
many are still in prison because they embrace democracy & the rule of law;
Amnesty International says "dissent in any form continues to be repressed";
why should our elected representatives honour such a man & such a régime?
4. China practices harsh repression, including sterilization and forced abortion.
China routinely uses forced prison labour to manufacture goods for export;
will slave labour be used in China, as in Roumania, to build CANDU reactors?
torture & other forms of ill-treatment are reported by Amnesty International;
China dumps nuclear waste in Tibet, where atrocities are also frequent;
in 1994, Jean Chrétien said the world community must denounce such acts;
M. Chrétien wrote that China's "human rights violations are not acceptable";
M. Chrétien added, to get that message across, "words are clearly not enough".
3. We owe it to our own citizens and to the world not to honour cruel dictators.
experience has shown that tolerating injustice does not help to eliminate it;
Canada spoke out against apartheid, and thereby played a role in ending it;
when Canada acted to protect ocean fisheries, the world sat up and took note;
appeasement is a policy showing moral bankruptcy and political cowardice;
dictators thrive on pomp & privilege; they wither under exposure & censure;
Jean Chrétien is supposed to represent the electorate, not the nuclear industry.
China's hard line threatens not only its own citizens but the entire world;
2. China has sold nuclear reactors and guided missiles to Pakistan and Iran.
Canada can not turn a blind eye to the insidious spread of nuclear weapons;
Canada gave a nuclear reactor to India, who used it to make an atomic bomb;
Pakistan is developing its own nuclear weapons capability clandestinely;
Iran & Iraq have both revealed a determination to obtain nuclear weapons;
since we refuse nuclear exports to Pakistan & Iran, how can we sell to China?
if we sell nuclear reactors to China, how can we justify saying no to others?
selling CANDUs to China makes a farce of the Non-Proliferation Treaty (NPT).
1. China continues to test nuclear weapons in defiance of global public opinion.
Canada has promised that if the NPT were renewed nuclear testing would end;
maintaining silence on China's nuclear testing incites contempt for the NPT;
the message to other nations is that nuclear weapons confer respectability;
never has the world been closer to containing and eliminating nuclear arms;
how many countries will be nuclear-armed? all, or none? the choice is ours;
Canada, too small to be a military force, can become a leader for world peace;
if Canada can act to protect ocean fisheries, can we not act to protect the planet?
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