Korea may be better off with no Turkish nuclear deal

By Kim Tae-gyu

Many were disappointed after Korea failed to strike a mega deal on nuclear energy exports with Turkey in spite of last-ditch efforts by the Presidents of the two countries earlier this month.

To the dismay of the Korean government and nuclear-related industries, Turkey even said that the country might seek an alternative player like Japan to materialize the nuclear project.

But the failure of the talks might be blessing in disguise.

People tend to believe that the Turkish deal was as good as the United Arab Emirates’ (UAE) contract; but in reality this is not the case.

The failed Turkish deal is about the construction of a pair of nuclear reactors on the Black Sea in Sinop, whose value is expected to approach $10 billion.

The UAE deal is the $20 billion agreement under which the Korea Electric Power Corp. (KEPCO) will build four nuclear reactors by 2020.

At first glance, the Turkish project should be around half as good as the UAE one in terms of the amount. But a closer examination brings about a totally different picture.

The UAE agreement is 100 percent financed by the cash-rich UAE government and its value has a shot at growing twice as much, since KEPCO is expected to take charge of running the facilities.

In comparison, the Turkish endeavor involves project financing under which a contractor funds the project and the investment must be recouped afterwards by charging for the electricity.

Suppose that the construction hits a snag after the agreement, say, due to any political or social upheaval, Korean contractors would take the fall. Worse, it typically takes decades to recoup investments in nuclear projects.

Thus, there are few reasons that the Ministry of Knowledge Economy and Korean firms would make too many concessions in negotiations with their Turkish counterparts.

If Korea had got a contract under too unfavorable conditions, this would have been a headache for a long time. Based on the vigorous cost-benefit analysis, getting realistic is not easy.

``There won’t be something like the UAE project any more. It was an once-in-a-lifetime opportunity and we took it. We need to take a different perspective in the Turkish negotiations,’’ a source familiar with the issue said.

Early this month, Minister of Knowledge Economy Choi Kyung-hwan toasted the success of the nuclear deals.

Considering the blood-sealed ties between the two nations with Turkey helping Korea during the Korea War (1950-53), a consummation of the deal could have been better.

But one doesn’t do business for charity or friendship. When one does, the likelihood is that it runs aground. That is not for either Korea or its ally Turkey.