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At a time when the Council of Ministers is studying European Commission proposals to boost the scope and ceiling of Euratom loans, questions are being raised about their real motives.

A non-paper drawn up in the wake of a meeting involving financial advisors to the Member States' Permanent Representatives to the EU (COREPER) suggests that Euratom loans may be contemplated to complete construction work on a series of Russian reactor units in Kalinine, Balokovo, Rostov and Kursk. The Kursk site is the more worrying case, as it the only Chernobyl-style RBMK reactor in the series. It seems a bit paradoxical to ask Lithuania to close down its plant in Ignalina (also using RBMK reactors), whilst helping Russia to get another one started up.

The European Commission has been strongly denying that this is afoot, but who knows what to believe. The non-paper that at least 15 Member States have received, or the Commission, which is allowing all these doubts to persist.

The same sort of questions have been raised about the K2R4 project (financing of the completion and safety upgrade of two Ukrainian nuclear power plants - Khmelnitsky 2 and Rivne 4 - to replace the Chernobyl facility). This EBRD funding project has been turned down by Ukraine, although a lot of progress had been made with it. On the record, the Commission regards it as a "transaction", which allows it to refer to an overrun on a Euratom lending limit, thereby calling for the ceiling to be raised. Everything is intertwined. But to start with, what about the Ukraine loan? Does this mean going back to square one or is the idea to wait forever for Ukraine to give into the ERBD's basic requirements? Or alternatively are the requirements going to be relaxed so the lending operation can indeed go ahead.

The Commission is not really very clear about its Euratom lending policy. For example, the loans should be used for decommissioning projects, which theoretically rules out any profit making. How can the term "loan" be justified because the projects do not have any loan securities? Mountains of questions and molehills of answers from the Commission. Meanwhile, the Member States within the Council are cogitating endlessly about the majority support required to adopt the Commission proposals about raising the ceiling and extending the scope of Euratom loans. It might be just as well to set the record straight on this matter before proceeding to take decisions of such political or financial importance.

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Publication:Europe Energy
Date:Feb 25, 2003
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