Yesterday the head of Iran’s Atomic Energy Agency, Mohammad Eslami, made the surprise announcement that Russia has agreed to continue developing two new reactors at the Buhshehr Nuclear Power Plant after a 22-month hiatus. Eslami had travelled to Moscow earlier in the week and made the disclosure on Wednesday after meeting with his Russian counterpart.
The fact that the project had even been so badly delayed was news to many. Alexey Likhachev, head of the Russian state-owned energy firm Rosatom, also confirmed the protracted off-period, adding: “We hope that with the schedule that we agreed, we’ll be able to prevent the extension of the 22-month delay and compensate for it."
The Islamic Republic considers Russia a strategic partner. But the joint nuclear collaboration presumably stalled because Moscow was honoring sanctions reimposed by the US after its withdrawal from the JCPOA. This prevents Iran from paying its financial obligations to Russia through official institutions and banks.
Earlier this year, officials from Iran’s Atomic Energy Agency warned the Islamic Republic's debts to Russia had reached such an extent that it might not be possible to keep fuelling Bushehr, leading to fears about a possible shutdown. At the time, Russian officials had assured the Islamic Republic they would keep supplying fuel even in the event of Iran not being able to pay.
"We talked about the conditions that need to be met in relation to our payments,” Mohammad Eslami said on Wednesday, “so that we can do better with the schedules we now agree on.” He added that Iran was also facing a foreign currency crisis, making it harder to cover the costs of day-to-day operations, maintenance and spare parts for the already-completed Bushehr 1.
War Gives Way to Decades of Stalling and Compromise
The original contract to build two nuclear reactors at Bushehr was signed with the German company Siemens in 1974, before the Islamic Revolution. But on the other side of February 1979, Iran’s new rulers described Mohammad Reza Shah’s nuclear program as a "betrayal" and the project came under extreme diplomatic pressure from the US. During the eight-year Iran-Iraq war, the site was also repeatedly bombed by Iraq in retaliation for an Iranian attack on Iraq's Osirak facility.
It was at that point that the German specialists left the plant. In 1994, during the presidency of Akbar Hashemi Rafsanjani, Iran signed a contract with Russia to complete the work. The project ended up being prolonged for more than two decades, with Bushehr 1 only starting to operate at low capacity in 2011, at a cost of one billion dollars.
Gholamreza Aghazadeh, who was head of the Atomic Energy Organization under Presidents Khatami and Ahmadinejad, has accused Russia of deliberately delaying the project’s completion. But he conceded that had Bushehr been built from scratch instead of half-finished, it would have taken less time due to the lack of need to adapt to German technology.
Bushehr currently has a maximum generation capacity of 1000MW: less than three percent of Iran's electricity consumption, despite all the costs involved to date. The Islamic Republic says the goal of its uranium enrichment program is to cater for people’s energy needs. But the P5+1 countries, which were the signatories to the JCPOA, contend that Iran currently doesn’t need to do this because it only has one nuclear reactor, for which Russia has agreed to provide the fuel.
One of the proposals put forward by the Islamic Republic during the nuclear talks was to establish a well-supervised regional fuel supply center at Bushehr, with Russia’s involvement and investment. But this bid to assure the world of the peaceful character of Iran’s nuclear program came to nothing. In his colossal new memoir The Sealed Secret, Mohammad Javad Zarif writes that Russian deputy foreign minister Sergei Ryabkov has reacted “coldly” to the proposal for a joint venture with the Islamic Republic. “There were various reasons and excuses,” Zarif said, “and... they finally made it clear they had a problem with Bushehr coming into the P5+1 talks."
There was no mention of Bushehr in the final text of the JCPOA when it was signed in 2015. Not long afterward, the Islamic Republic signed a fresh agreement with Russia to expand capacity at Bushehr by building two new reactors. It is this project that, according to officials on both sides, has been in the wilderness for the best part of two years.
In that time, Russia has accommodated its engineers, technicians and staff in an exclusively-run settlement on the shores of the Persian Gulf. It has all the amenities and recreation facilities the Islamic Republic bars its own population from enjoying, including alcohol, right next door to a facility Iranian officials proudly call “the first nuclear power plant in the Islamic world." Bushehr is a major source of income to Russia, which can impose any terms it likes on the contract because the Islamic Republic has no other partner to call on. It is a site of concessions.