Sunday, 9 September, 2007

by Vidya Ram
Forbes

Despite his government's less-than-stellar record on human rights Russian President Vladimir Putin has built a following among his country's voters. And its not just due to those photos of him fishing shirtless that have grabbed the electorate's imagination, but his very public efforts to further Russian interests internationally.

His latest coup came Friday, after the Australian prime minister John Howard said his country agreed to sell uranium to Russia for nuclear power generation, on condition that the material was not then sold to Iran.

"Any uranium that is sold to Russia will be sold under very strict safeguards," said Howard after a meeting with Putin in Sydney, according to the BBC. The meeting took place ahead of a summit of Pacific Rim leaders, who included President George W. Bush.

Though the use of nuclear power is currently forbidden under Australian law, the country controls approximately 40.0% of the world's uranium reserves.

"It's a very significant deal for Russia," said Mikhail Stiskin, an analyst at Russian investment bank Troika Dialog.

Russia has been trying to rapidly expand its nuclear power industry. One way the nation has done this is by forming Atomenergoprom, a state holding company, which brought the entire nuclear sector in Russia under one umbrella, in July. The company is responsible for everything nuclear in Russia, from uranium extraction and reactor development to disposal and decommissioning.

By boosting its nuclear industry, the country is hoping to free more of its natural gas for export and profit.

The country has tried to rapidly expand its nuclear power industry. Nuclear power currently accounts for 16.0% of electricity generated in Russia, though the country hopes to increase to 25.0%.

Russia's own domestic production of uranium--which is far outstripped by demand--could threaten its ability to reach this target, however.

"Uranium production is the weakest link in Russia's plans to expand its nuclear energy industry," said Stiskin. "We have pretty abundant uranium resources, but they are largely under-explored."

The country requires between 14 to 15 kilo tons of uranium a year to satisfy both home demand and foreign contracts, but only produces 3.2 kilo tons domestically.

The deal could have wider significance, in terms of Russia and Australia's relationship.

"This contract signifies much wider cooperation in the field of nuclear energy. For example it could lead to the construction of Russian nuclear power plants in Australia," said Stiskin. He added that though the use of nuclear energy is currently prohibited in Australia, there were chances that the legislation could soon be changed.

Coming less than a month after Putin announced that Russian bombers would be resuming long-range patrols, the latest development has fuelled concern's about the country's aggressive foreign policy. Speaking at the meeting with Howard, Putin stressed that the deal was an economic one, however.