SOUTH AFRICA AND RUSSIA SIGN SECRET NUKE 'STITCH-UP'

From the Mail and Guardian - South Africa

Jacob Zuma's secret nuke 'stitch-up'

26 SEP 2014 00:00QAANITAH HUNTER, LIONEL FAULL

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As the government scrambles to limit fallout, we reveal how Jacob Zuma grabbed control of the R1tn deal and negotiated directly with Vladimir Putin.

President Jacob Zuma personally negotiated a nuclear deal with his Russian counterpart, Vladimir Putin, say highly placed government and ANC sources. This ensured that the intergovernmental agreement announced with fanfare this week took all but his most trusted and intimate inner circle by surprise.

A senior ANC leader, who Zuma entrusted with intimate details of the negotiation with Putin, said that Zuma had ironed out details directly with the Russian president on the sidelines of the Brics (Brazil, Russia, India, China and South Africa) summit in Brazil in July, and finalised details of the pact during his highly secretive visit to Moscow last month.

“It was simple. When Zuma came back from Brazil, it was done,” the senior ANC leader said.

The party leader and another well-placed ANC MP added that the details of the deal were finalised during Zuma’s trip to Russia in August.

The two sources said that Zuma subsequently instructed energy minister Tina Joemat-Pettersson to sign the deal with the Russians on the sidelines of the general conference of the International Atomic Energy Agency (IAEA) in Vienna.

A joint statement issued by the Russian state-owned nuclear company Rosatom and the South African energy department on Monday said that the agreement “lays the foundation for the large-scale nuclear power plants procurement and development programme of South Africa based on the construction in South Africa of new nuclear power plants with Russian VVER reactors with total installed capacity of up to 9.6GW (up to eight [reactor] units)”.

Deputy energy minister Thembisile Majola told Parliament’s energy portfolio committee, which met on Tuesday, that she had no knowledge of the nuclear deal and had first learned of it through the media.

The chairperson of the committee, Fikile Majola, said that he would call Joemat-Pettersson to explain herself to the committee. “We want her to tell us the details surrounding the deal,” he said.

Shrouded in secrecy 
Sources also said that the minister and Zuma did not take the ANC’s national executive committee (NEC) into their confidence over the matter. Four NEC members independently said that there was no mention of an impending nuclear agreement with Russia at last weekend’s meeting. 

One added that some senior party figures were unimpressed that Zuma, instead of resting in Russia as initially planned, had negotiated deals that had not been agreed to by the leadership. He said Zuma only gave details of the deal to his most trusted Cabinet ministers and MPs.

This week’s announcement also startled politically connected nuclear lobbyists and industry insiders, some of whom frantically exchanged calls in a bid to understand its significance.

A respected nuclear industry leader said the statement looked “pretty definitive”, and news that Russia had clinched a deal to build nuclear reactors blazed unchecked across radio and television bulletins, as well as social media.

The announcement was followed by an apparent damage control exercise. A rival to Rosatom said that they had received written assurances on Tuesday morning from a leading member of the South African delegation to the IAEA conference in Vienna that “there will be other intergovernmental agreements signed with the other vendors before the procurement process will start”.

A new statement issued solely by the department of energy on Tuesday evening said that the agreement “initiates the preparatory phase for the procurement for the new nuclear build programme”.

“Similar agreements are foreseen with other vendor countries that have expressed an interest in supporting South Africa in this massive programme,” it said. “Joemat-Pettersson will lead a delegation to visit France, where bilateral discussions will culminate with the signing of a co-operation agreement between the two countries [and] the South African government is also in discussions towards concluding an intergovernmental agreement with the Chinese government.”

Russia leads the race 
But Zuma’s personal involvement with Putin means that even if similar agreements are concluded with other states, the Russians must be considered clear frontrunners.

Rosatom told the Mail & Guardian that Monday’s joint statement was “intended to solely serve as information on the agreement and not necessarily position Rosatom as a preferred bidder”.

“The agreement stipulates the overall development of various fields of nuclear power industry, and supplementary agreements will be signed in each field stipulating all details,” added a spokesperson.

Senior government and industry sources have been telling amaBhungane for the past 18 months that Zuma has taken a personal interest in the government’s planned procurement of 9?600 megawatts (an estimated R1-trillion’s worth) of nuclear power, regarding it as one of his “presidential legacy projects”.

A senior government official said that Zuma and Putin made initial strides towards a nuclear deal at the Brics summit in Durban in March 2013, but hammered out the details during Zuma’s working visit to the Russian Black Sea resort of Sochi in May last year.

The M&G reported that Zuma had slipped into the driver’s seat the following month, replacing his deputy at the time, Kgalema Motlanthe, as chair of the national nuclear energy executive co-ordinating committee.

A month later, Zuma replaced energy minister Dipuo Peters with Ben Martins, in a move widely seen as being intended to tighten control over the nuclear procurement process and tie up a deal with the Russians.

Joemat-Pettersson took over from Martins in May this year.

Draft agreement
According to the official, a draft nuclear co-operation agreement began to circulate between the Russians and the South Africans in July last year. Initiated by the Russians, this apparently sought a commitment from the South Africans to deal exclusively with them. It allegedly contained four clauses that particularly alarmed South African government officials. They included:

·                        Limiting South Africa to acquiring Russian reactor technology;  

·                        Giving Russia exclusive say over the auxiliary construction contracts; 

·                        Giving Russia a 20-year veto on South Africa doing business with any other nuclear vendor countries; and 

·                        Making South Africa exclusively liable for all nuclear equipment procured from Russia as soon as it left that country. 

“These clauses either flouted sections of our Constitution, which guarantees an open, competitive and transparent bidding processes, or they were not in our national interest,” said the source.

The Russians were said to have pushed “aggressively” for the signing of the agreement, first at the G20 summit in St Petersburg in September last year and again before the Atomex nuclear conference, hosted by Rosatom, in Johannesburg in November. But South African concerns about the proposed exclusivity and liability clauses are said to have stymied an agreement.

At the two-day G20 summit, South African and Russian officials were unable to agree on key clauses in the nuclear co-operation treaty, including those relating to its financing.

The M&G has learned reliably that Zuma summoned then finance minister Pravin Gordhan, who had accompanied him to the summit, to a meeting and appealed to him for the necessary financial commitments. Gordhan apparently declined and warned Zuma such a step would be unwise.

Gordhan could not be reached for confirmation on Thursday.

Initial agreement
In October last year, ANC secretary general Gwede Mantashe and treasurer general Zweli Mkhize accompanied a delegation of ANC-aligned businesspeople from the Progressive Business Forum on a four-day visit to Russia. The ANC signed a memorandum of understanding with Russia’s ruling United Russia party.

The M&G has previously reported that, before the Atomex conference, Russian state-owned media claimed a nuclear reactor deal was a fait accompli. News agency RIA Novosti reported as fact that Rosatom “are to build eight nuclear electricity units in South Africa. Formal agreements about this are to be signed … on the fringes of Atomex”.

But what was released at Atomex was a memorandum of understanding between Rosatom and the South African Nuclear Energy Corporation.

A protester in front of a Rosatom building in Russia. (Alexander Nemenov, AFP)

Martins promised at the time that a co-operation agreement would be signed early this year, pending the finalisation of “legal procedures”.

After Atomex, a source said energy department officials had stopped answering Rosatom’s calls, suggesting that the Russians had overstepped the mark or that major South African government decisions were then placed on hold until after this year’s elections.

After the May poll, Zuma removed Martins, who had held the position for less than a year, and replaced him with Joemat-Pettersson.

Presidential loyalty
Several M&G and amaBhungane sources said that she was seen as being more loyal to the president than her predecessors and more likely to deliver the outcome required on the nuclear deal.

It is not clear whether the agreement signed on Monday differs materially from the draft haggled over by the Russians and South Africans last year.

Xolile Mabhongo, a member of the South African government delegation to Vienna, told Business Day on Thursday that the veto clause had been removed from the signed agreement. He also said that the text of the new agreement would not be made public.

But the announcement reveals the Russians have finally managed to get South Africans to put pen to paper, stretching their lead in the race for the trillion-rand nuclear tender.

Presidential spokesperson Mac Maharaj did not respond to questions. – Additional reporting by Sarah Wild & Pauli van Wyk

Qaanitah Hunter is an M&G political reporter and Lionel Faull is an investigator with the M&G Centre for Investigative Journalism.

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Long and winding road to a nuclear nation

Politically, South Africa and Russia seem determined to get a nuclear build deal done with unseemly haste. But there are many obstacles to it becoming a reality.

 Before South Africa can start building nuclear power plants, Parliament must ratify every step of the process, from the broad country-to-country agreement down to the allocation of money. 

Two regulators, those for electricity pricing and nuclear power respectively, must sign off on specific details, and they are bound by their own statutes and rules on fairness and justifiability. The flow of vast sums of money to foreign suppliers, and the accompanying currency hedges, are subject to financial regulations. 

There are stringent local requirements for environmental impact assessments and consultations with the communities involved (Bantamsklip and Duinefontein in the Western Cape and Thyspunt in the Eastern Cape are currently proposed sites for the nuclear stations). 

The fairness of tenders – to bidders, but also the citizens ultimately doing the buying – is a constitutional imperative, giving the courts broad powers to review processes if an interested party cries foul. 

Nuclear build and the manufacture and transport of nuclear fuel are subject to a tangle of international agreements on nonproliferation and safety. South Africa has agreed to adhere to the International Atomic Agency’s 19 milestones for a nuclear build, an anomaly for a country that has an existing nuclear programme. 

They include securing the money to deal with nuclear waste and the decommissioning of the power plants decades down the line, and having a human resources plan to make sure there are enough skilled people to run the proposed fleet.

 The guidelines also include a very practical (not to mention time-consuming and expensive) requirement about upgrading the electricity grid to deal with the start-up requirements and output of the new nuclear stations.   

Early this month, as the United States and the European Union moved to impose sanctions against Russia because of the conflict in the Ukraine, Russian nuclear company Rosatom argued that politics should play no part in decisions on nuclear energy. With safety and enormous sums of money involved, the company said “temporary disagreements” between countries should not be a factor. 

Between 1998, when South Africa started considering new nuclear build, and 2007, when Jacob Zuma ousted Thabo Mbeki as ANC leader, Russia was not considered a serious contender for any contracts. – Sarah Wild & Phillip de Wet

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DA demands full disclosure

The Democratic Alliance said on Thursday that it has applied for full access to all the documents relating to the nuclear deal. 

It said that under the Promotion of Access to Information Act, it would demand sight of everything related to the decision to co-operate with Russia’s Rosatom State Atomic Energy Corporation on the new nuclear fleet, including the minutes of the interministerial committee on energy security chaired by President Jacob Zuma. 

The party has also written to the parliamentary oversight committee on energy, requesting that it subpoena Energy Minister Tina Joemat-Pettersson to appear before it and produce a copy of the full agreement with Rosatom, and to clarify Rosatom’s statements. 

DA leader Helen Zille said that the “extraordinary and unprecedented” situation where both Rosatom and the department of energy issued identical statements made it clear that there was a deal to develop nuclear programmes in “South Africa driven by Rosatom and the Russian government”. 

Despite the department trying to reinterpret the statement retrospectively, “one can hardly believe that they would have issued the first statement, which is the identical version of Rosatom statement, if there wasn’t some validity to it”. 

She said there had been speculation for many months about a secret deal being reached between Zuma and Russian President Vladimir Putin concerning the nuclear programme, which will cost an estimated R1-trillion and have to be paid for by generations to come. 

“We have been very badly burned as a society in the past and with all the secrecy that surrounds this particular deal, we are absolutely determined to get to the bottom of it,” Zille said. – Andisiwe Makinana

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Lionel is a reporter at the Mail & Guardian Centre for Investigative Journalism, Amabhungane.

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