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O 041021Z DEC 09
FM AMEMBASSY PRAGUE
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UNCLAS SECTION 01 OF 02 PRAGUE 000705 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: TRGY ENRG BTIO PREL TNGD BEXP EZ
SUBJECT: RECOMMENDATION TO PURSUE NUCLEAR ENERGY TECHNOLOGY 
COOPERATION AGREEMENT WITH CZECH REPUBLIC 
 
PRAGUE 00000705  001.3 OF 002 
 
 
(U) This message is sensitive but unclassified.  Please treat 
accordingly.  Not for internet distribution. 
 
¶1. (SBU)  Summary:  In his October 21 letter to Czech PM 
Fischer, Energy Secretary Chu wrote that he "would welcome 
discussion on a bilateral technology agreement that would 
promote cooperation in nuclear energy research and 
development in areas such as next generation design."  The 
Government of the Czech Republic (GoCR) views the further 
development of nuclear energy as key to strengthening its 
energy independence and economic development, has a 
long-history of nuclear research, and treats both energy 
security and creating new research and development 
opportunities as key priorities.  Post strongly recommends 
that the USG begin this dialog on a bilateral technology 
agreement as soon as possible.  It would help the U.S. 
broaden its relationship with the Czech Republic post radar 
and demonstrate that the U.S.-Czech relationship is about 
more than defense. It would also help Westinghouse in its bid 
to win the semi-state electricity company CEZ's USD 27.5 
billion tender for up to five new nuclear reactors.  A 
Westinghouse win would also create an estimated 9,000 
high-paying U.S. jobs and position Westinghouse to capitalize 
on future opportunities in the region.  End summary. 
 
Czechs Have a Long History of Nuclear Research 
--------------- 
¶2. (SBU) The Czech Republic has a long history in nuclear 
research and is the home to two nuclear research reactors. 
It also hosts six commercial nuclear power plants at two 
sites, with plans to build more.  Currently, nuclear power 
accounts for roughly 30 percent of Czech electricity 
production.  The Czechs were the center of research on 
thorium-based molten salt reactors for the Soviet bloc, 
research that continues today.  To further this research, 
including the planned construction of a working molten salt 
reactor, the Czech Government recently established the 
Advanced Thorium Research Agency and is actively seeking 
international partners.  Australia, where around 60 percent 
of the world's known thorium reserves are located, is 
reportedly interested.  As part of this project, the REZ 
nuclear research reactor, majority owned by the semi-state 
electricity company CEZ, has developed a draft memorandum 
with UT-Battelle, the management contractor for DOE's Oak 
Ridge National Laboratory, on the transfer of excess Lithium 
7 from the U.S. to the Czech Republic. 
 
¶3. (SBU) Westinghouse has also had preliminary talks with REZ 
about joining Westinghouse's project to develop IRIS, an 
advanced "Generation III-Plus" small modular pressurized 
water reactor.  Westinghouse is also exploring with REZ the 
possibility of collaborating on several "Generation IV" 
reactor projects including a high-temperature gas reactor and 
fast reactor Generation IV technology.  Over the past two 
decades, DOE's National Nuclear Safety Administration has 
also worked closely with REZ and the research reactor at the 
Czech Technical University to improve their security, make 
the transition from the use of highly-enriched to 
low-enriched uranium, and to transfer used fuel to Russia for 
reprocessing. 
 
Public Support for Nuclear Energy 
--------------- 
¶4. (SBU) The Czech public is firmly behind the expansion of 
nuclear power.  Nuclear energy is supported by all political 
parties except for the small Green Party.  Even the 
Environment Ministry, whose political leadership is still 
from the Green Party, has recently come to embrace nuclear 
power as a low-emissions energy source.  The Ministry of 
Environment is now proposing a larger future share of nuclear 
production than even the Ministry of Industry and Trade.  A 
2008 European Commission EuroBarometer poll showed that 
Czechs are more in favor of nuclear energy than any of the 
other 26 EU countries, with 64 percent of Czechs indicating 
that they are either totally or fairly in support of nuclear 
power plants.  Some local opinion polls have shown that 
Czechs are even more supportive of nuclear power than of wind 
energy.  Most analysts believe that the 2009 January gas 
crisis has further strengthened support within Czech society 
for expanding domestic nuclear production as a way to enhance 
Czech energy security by lessening dependence on Russian gas 
and oil. 
 
R and D Agreement Would Help Westinghouse 
--------------- 
¶5. (SBU) Earlier this year, CEZ, which is 70 percent owned by 
the Czech state, released a tender for two additional nuclear 
 
PRAGUE 00000705  002.3 OF 002 
 
 
power plants at the Temelin Nuclear Power Station, with 
options for three additional units elsewhere in the Czech 
Republic or Europe.  Should CEZ choose to build all five 
power plants, the contract would be worth roughly USD 27.5 
billion.  A Westinghouse win would create an estimated 9,000 
new highly-paid jobs in the U.S. and position it to 
capitalize on future growth opportunities in the region. The 
Department of Commerce has determined that USG advocacy on 
behalf of Westinghouse is in the national interest.  VP Biden 
raised Westinghouse's bid during his October 23 visit and 
Energy Secretary Chu has sent a letter of support. 
Westinghouse, however, faces significant competition from the 
Russian AtomStroyExport and the French Areva. 
 
¶6. (SBU) Conclusion of a U.S.-Czech research and development 
agreement would significantly help Westinghouse's chance to 
win this major tender.  In his meeting with VP Biden, Czech 
PM Fischer noted that selection criteria for the government 
included technology transfer and cooperation on research and 
development.  As already noted, Westinghouse is inviting REZ, 
which is majority owned by CEZ (the semi-state electricity 
company that is issuing the tender) to participate in the 
research and development of generation III-plus and 
generation IV reactors.  A U.S.-Czech nuclear research and 
development agreement can serve as an umbrella agreement to 
this and other U.S.-Czech cooperation that will make the 
Czech government more amenable to choosing U.S. technology 
for its future commercial reactors. 
 
Further Diversifying the U.S.-Czech Relationship 
--------------- 
¶7. (SBU) The Bush Administration's plan to construct a 
missile defense radar site in the Czech Republic became 
highly politicized and helped create the misperception that 
the U.S.-Czech relationship is mainly about defense.  The 
Obama administration's decision not to include the radar in 
its revised missile defense strategy has led part of the 
Czech elite to fear that the USG is abandoning central Europe 
as part of its "reset" with Russia.  Fostering increased 
opportunities for research and development in the Czech 
Republic is a key priority of all Czech political parties and 
is seen as essential in helping the Czech Republic transform 
itself from an assembly line economy, with an overreliance on 
manufacturing, to a modern knowledge-based economy.  A 
U.S.-Czech nuclear research and development agreement would 
help underscore the U.S. commitment to the Czech Republic and 
the region post radar.  It would also help demonstrate the 
diversity and depth of the U.S.-Czech relationship and that 
the relationship is about more than defense. 
 
Conclusion: 
----------- 
¶8. (SBU) Embassy Prague strongly recommends that the USG, led 
by the Department of Energy, begin discussions with the Czech 
Republic on concluding a nuclear energy technology 
cooperation agreement as soon as possible.  The recently 
signed U.S.-Italy Agreement for Cooperation in Civilian 
Nuclear Energy Research and Development can potentially serve 
as a model.  A U.S.-Czech nuclear energy research and 
development cooperation agreement will help increase 
Westinghouse's chances of winning the Czech Republic's USD 
27.5 billion tender for new commercial reactors.  It would 
also help expand the U.S.-Czech bilateral relationship post 
radar, into an area that is a priority for both of our 
countries.  An agreement would also help demonstrate the 
U.S.'s continuing commitment to engagement in this important 
region and that the U.S.-Czech relationship is about more 
than defense. 
Thompson-Jones