France and Saudi Arabia Unveil Nuclear and Defence Co-operation Agreements

26 June 2015 FDI Team

Recently-unveiled nuclear agreements between France and Saudi Arabia mark a growing relationship between the two countries even though they are cautiously optimistic.

Background

France and Saudi Arabia announced several deals worth over US$12 billion on 24 June at the inaugural Franco-Saudi Joint Commission meeting in Paris. The deals include a Saudi purchase of 23 Airbus H145 multipurpose helicopters worth US$560 million, 50 Airbus passenger aircraft worth US$8 billion and general investment and trade agreements. French Foreign Minister Laurent Fabius also announced a commitment from Saudi Arabia to acquire around thirty patrol vessels for its navy. Most notably, however, France has agreed to explore the possibility of building two Areva-designed European Pressurised Reactors (ERPs) in Saudi Arabia.

Comment

Although the Saudi aviation and naval purchases are not significant in monetary terms (with the exception of the passenger aircraft), they are part of a strengthening bond between the two countries. As noted recently by FDI in the Strategic Weekly Analysis, France is committed to stepping up its presence and defence co-operation in the Middle East. France took a surprisingly similar stance to Saudi Arabia in the Iranian nuclear negotiations and, on 5 May 2015, President François Hollande was invited to be guest of honour at the summit of the Gulf Co-operation Council leaders – the first time such an invitation had been extended to a Western head of state. France also sold 24 Dassault Rafale fighter jets to Qatar on 4 May and restarted discussions with the United Arab Emirates over the sale of some sixty Rafale jets.

         

ERPs are considered to be one of the safest and most advanced nuclear reactors in the world and, if approved, will be a significant addition to the Saudi goal of having 17 GWe of installed nuclear capacity by 2040. While the signs are positive for Saudi-French nuclear co-operation, there are a number of concerns. First, the economic prospects for nuclear power in Saudi Arabia are not especially favourable, and it will struggle to compete with natural gas on a cost basis. According to Ali Ahmad and M.V. Ramana from the Nuclear Futures Laboratory and the Science and Global Security Programme at Princeton University, the total cost (taking into account a variety of factors including capital cost), of generated nuclear energy is US$76 per megawatt hour (MWh), whereas the total cost of that derived from natural gas is less than half, at US$34/MWh. This could impede future progress and push Riyadh towards alternative renewable energy sources, slowing nuclear co-operation with France. Second, it will be difficult to train a sufficient number of personnel to operate the nuclear reactors that Saudi Arabia aims to build. Although there is the option of foreign workers, and the French have agreed to fully train the Saudis on all aspects of the two reactors, Riyadh needs to increase its capacity to train Saudi scientists and researchers if it is to reach its long-term nuclear energy goals. Finally, France will need to compete with other countries for the Saudi nuclear energy market. In June 2015, Russian company Rosatom signed an agreement with Riyadh for co-operation in the field of nuclear energy, including the design, construction, operation and decommissioning of nuclear power and research reactors.

The agreements can certainly be seen as a sign of growing Franco-Saudi relations. The foundation for this relationship could be interpreted as part of a French strategic outlook that is aimed at increasing co-operation with the Sunni states in the Gulf that are concerned by Iran’s nuclear programme and perceptions of  Washington’s “weakening” ability to safeguard its traditional Arab allies from Tehran. Developing these relations through military ties, as was seen with Qatar, however, may have ramifications for the wider region even though they may achieve France’s shorter term objectives.

Jarryd de Haan
Research Analyst
Indian Ocean Research Programme

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