MUBARAK FOCUSES ON NUCLEAR ENERGY IN EGYPT'S FUTURE

C O N F I D E N T I A L CAIRO 006038 SIPDIS SIPDIS STATE FOR NEA/ELA, ISN/NESS AMMAN FOR WHITTLESEY NSC FOR R. WATERS LONDON FOR TSOU PARIS FOR WALLER E.O. 12958: DECL: 09/24/2016 TAGS: ENRG PGOV TSPL KNNP EG SUBJECT: MUBARAK FOCUSES ON NUCLEAR ENERGY IN EGYPT'S FUTURE REF: A. CAIRO 6016 ¶B. CAIRO 2350 ¶C. CAIRO 5430 Classified by Deputy Chief of Mission Stuart Jones for reasons 1.4 (b) and (d) ¶1. (C) Summary: At last week's National Democratic Party (NDP) conference, both President Mubarak and his son Gamal highlighted nuclear energy as an alternative to continued reliance on fossil fuels. Prime Minister Nazif convened the Supreme Council for Energy for the first time in 18 years to discuss nuclear energy options. Currently, 85% of Egypt's energy comes from oil or natural gas, which the government estimates will be depleted in the next thirty-five years. The Ambassador publicly supported nuclear power cooperation with Egypt, and the Embassy issued a press release drawing attention to the Global Nuclear Energy Partnership (GNEP) (see text below). Paragraph 7 outlines Post's near-term strategy for effectively fostering cooperation with the GOE on nuclear development. End Summary. -------------- NUCLEAR ENERGY: PILLAR OF DEVELOPMENT -------------- ¶2. (C) As reported in ref A, addressing delegates at last week's NDP conference, both Gamal Mubarak, Assistant Secretary General for Policies, and President Mubarak urged SIPDIS consideration of a nuclear energy plan. In his September 19 opening speech, Gamal, calling energy a pillar of development, urged exploration of energy options, including nuclear energy, eliciting strong applause. Citing Egypt's role as a signatory to the Nuclear Non-Proliferation Treaty (NPT),Gamal said Egypt has the right to develop and possess nuclear energy for peaceful purposes. President Mubarak reiterated these sentiments in closing remarks on September ¶21. "I call for a serious dialogue that takes into consideration the cheap clean sources of energy produced by nuclear technology, especially as we are not starting from scratch and we possess the knowledge of this technology." Some local analysts view these comments, made when tensions over Iran's nuclear program are high, were at least partially aimed at provoking displeasure from the United States and bolstering Egypt's image as a regional leader, therefore enhancing Gamal's image. -------------- NAZIF CONVENES NUCLEAR ENERGY COMMITTEE -------------- ¶3. (C) On September 24, Prime Minister Nazif convened the Supreme Council for Energy for the first time in eighteen years to discuss nuclear energy options. In a meeting later that day with the Ambassador, Minister of Investment Mahmoud Mohieldin estimated Egypt has thirty-five years of fossil fuel reserves and projected that development of a viable nuclear energy program would take twelve to fifteen years. Mohieldin cited population growth and increasing energy demands as factors in the decision to develop nuclear technology, adding that the GOE plans to emulate G-8 policies on nuclear regulation. He was pleased with the Ambassador's announcement of USG support for an Egyptian nuclear program. -------------- NUCLEAR ENERGY RESOURCES -------------- ¶4. (C) The Egyptian Atomic Energy Authority (EAEA),an arm of the Ministry of Electricity, has overseen Egypt's small-scale nuclear experiments since the 1960s; Minister of Electricity Hassan Younis will oversee the development of the nuclear energy program. Two other bodies, the Nuclear Power Plant Authority and the Nuclear Materials Authority, also under the MOE, will have smaller regulatory roles. In the early 1980's, the GOE was planning construction of full-scale nuclear power plant, but dropped the project after Chernobyl. Currently, the EAEA oversees the operation of two nuclear research facilities, both in Inshas in the Nile Delta. In 1997, scientists began research at the Abu Zabel Nuclear Research Center, whose 22-megawatt Argentinean built reactor allows for training and maintaining personnel needed to operate a nuclear facility. EAEA is maintains a 1950's Russian-built 2 megawatt research reactor. In February, 2005, the International Atomic Energy Authority (IAEA), audited all Egyptian nuclear facilities and concluded that the research centers did not appear to be developing nuclear weapons. For the past nine years, the U.S. Department of Energy, in conjunction with its national laboratories, has provided ongoing technical assistance to nuclear scientists at the EAEA. This assistance includes a "Sister Laboratory Arrangement" and cooperation on the International Management Program on Radioactive Sealed Sources (IMPRSS). -------------- OVERALL ENERGY SITUATION -------------- ¶5. (SBU) Egypt generates about 85% of its electric power using locally-produced natural gas; all oil-fired power plants have been converted to natural gas. A rapidly growing population, limited hydroelectric options, declining oil reserves in the mature fields of the Gulf of Suez, and increasing reliance on natural gas point to a need for alternative energy sources. Wind power projects have been tried on both the Mediterranean and Gulf of Suez coasts, but associated costs have limited their economic viability. A partial-solar plant is in the works as a BOOT enterprise, but local analysts generally don't believe that either solar or wind energy can cope with the rising demand fueled by population growth. Embassy contacts in the petroleum sector have encouraged the GOE to pursue the nuclear option to free up gas reserves for export. ¶6. (U) On September 21, the Embassy issued the following press statement: Begin text: Ambassador Ricciardone on a Peaceful Nuclear Power Program in Egypt: Speaking in Arabic to Egyptian Mehwar TV, Ambassador Ricciardone noted that the United States encourages the peaceful use of nuclear power for civilian purposes throughout the world. He drew attention to the U.S. Global Nuclear Energy Partnership (GNEP) and referred reporters for full details to the GNEP's web site (http://www.gnep.energy.gov) as well as to remarks made by Clay Sell, Deputy Secretary of Energy and Robert Joseph, Under Secretary of State for Arms Control and International Security at a Washington Foreign Press Center briefing, on February 16, 2006, which can be found at (http://fpc.state.gov/fpc/61808.htm). Under Secretary Joseph discussed the GNEP with Foreign Minister Aboul Gheit in April. (ref B) End text. (Note: Ambassador Schulte also discussed the GNEP in a meeting with FM Aboul Gheit in August (ref C). End note) -------------- NEXT STEPS -------------- ¶7. (C) Post proposes the following three-step strategy to engage the GOE on nuclear energy development and achieve effective long-term cooperation: -- In addition to Ambassadorial outreach to the Prime Minister and Minister of Electricity, the Embasssy Energy Officer will meet the week of October 1st with Undersecretary-level contacts at the Ministry of Electricity and the Egyptian Atomic Energy Authority in order to gauge current organizational preparedness and priorities. Such meetings will also allow post to pinpoint the individuals to whom the majority of the heavy lifting will fall. -- The Ambassador will seek meetings with the Prime Minister and Minister of Electricity for the week of October 29 (following the end of the Ramadan month of fasting) to check progress on the GOE side, re-affirm our commitment at the political level, and lay the groundwork for future cooperation. -- Post proposes a visit from a GNEP-focused delegation to Cairo, perhaps at the A/S level, sometime in the November/December timeframe. This should allow the Egyptians enough time to address organizational issues, achieve some degree of cabinet-level interagency agreement on next steps (to include the role of the MoD and security agencies) prior to a visit. Post believes that the effectiveness of a high-level visit to Cairo will be maximized if GOE interlocutors have had time to establish interagency coordination and determine what latitude they will have in decision-making. ¶8. (C) Comment: Though the GOE is in the very early planning stages, President Mubarak's comments appear to indicate a clear intent by the GOE to start a nuclear energy program despite a lack of clarity over costs and likely technical hurdles. Under current conditions of economic and population growth, combined with high fossil fuel prices, it is not surprising that the GOE is seriously considering other sources of energy. There are strong political reasons underlying the announcement as well, with its anticipated positive impact on national and Arab pride, and its affirmation of Egyptian "independence," certainly part of the calculus. We have heard directly from the German, South Korean and Australian embassies that their governments are also eager to assist Egypt with this initiative. RICCIARDONE