Ross Hendin, CFP contributer and Principal of Hendin Consultants, has provided below a new chapter to the case of the Ignalina Nuclear Power Plant, involving where and how Russia can be Russia and step in:

ITAR-TASS is reporting that the Russian State-owned nuclear power company, Rosatom, will build a new nuclear reactor in the Baltics to come online in 2016. While the article mentions that Rosatom will be looking for investment, I’m not going to focus on that right now. Let’s just keep in mind that they don’t yet have all the money they need.

Assuming Rosatom can find support, any company going forward on the bid will be competing indirectly with the Russian government, and the question now is which country is going to want to start a political battle with Russia over nuclear plants in the Baltic states? Some countries won’t mind as much as others, but I am sure this will be raising a few eyebrows in France.

On a more pragmatic geopolitical level, the Rosatom announcement is important for a few reasons:

Lithuania, Latvia, Estonia and Poland will all feel a significant pinch after the existing plant and power supply goes off-line. They are presently looking everywhere to try and find alternative ways to keep the lights on, and one of the most viable options is to buy power from the Russians. The existing Russian / Baltic system is dated however, and after what happened a few years ago with the Ukrainian gas supply and oil and gas supply disruption to the Lithuanian refinery, the Baltics are not excited to being dependent on Russian energy again.

Russia can see that the Baltic states have not yet been able to agree and start SWEDLIT, a Swedish / Baltic energy connection, and they know the area, and they are probably assuming that the same issues will plague the new nuclear plant.

Russia is working very hard to make and keep states dependent on their energy supplies, so that they can, as happened with the Ukraine, export foreign policy along with their energy. The Baltics crave energy independence from Russia, and Russia very much wants them to be dependent on Russian energy once again. Setting up a new plant that can service the market will make it very easy for the Baltics to fall back to using Russian energy, and will put Russia in the same place it would be if gas pipelines were flowing directly to the area - with more leverage over foreign policy.
Optically, this announcement is showing the area, and the world, that Russia is still in a position to act quickly and decisively when the EU states are dead-locked in bureaucracy, politics, studies and discussions.

The western-based corporations bidding for the new Lithuanian plant will need to consider all this, and will need to angle their new approaches accordingly. Over-supply in the area will erode the price and feasibility of building a new plant. However, the political dynamic also means that some long-shot hopefuls may be willing to work in the area while others may not.

Hendin Consultants is in Toronto and London, UK, and is on the web at www.hendinconsultants.com. Email Ross at ross@hendinconsultants.com.