Why EU sanctions don't include Russian nuclear industry

Less than a week after the first Russian tanks rolled into Ukraine, an Ilyushin Il-76 cargo aircraft, belonging to Russian cargo airline Volga-Dnepr, flew across Belarus and Poland before landing in Slovakia.

The mysterious jet taking off from Russia took flight trackers by surprise as only a day ago the European Union had closed its airspace to Russian airlines and private jets in response to Moscow's invasion of Ukraine.

Soon, it became clear that the plane was exempted from the ban as it was shipping critical nuclear fuel for Slovakia's four Russian-designed nuclear reactors.

About a month later, a Russian aircraft of the same make flew even further into neighboring Hungary again to deliver nuclear fuel. Much like Slovakia, Hungary is fully dependent on atomic fuel from Russia to power its nuclear power plants.

The twin flights were yet another symptom of Europe's decadeslong binge on Russian energy. Nuclear fuel sourced from Russia's state-owned nuclear agency Rosatom and its units helps generate nearly half the total electricity produced in Slovakia and Hungary and more than a third in the Czech Republic and Bulgaria.

While the EU is on course to wean itself off Russian fossil fuels, it's struggling to kick its Russian nuclear habit. As a result, hundreds of millions of euros continue to flow into Moscow's coffers.

The bloc has found it politically unpalatable to impose sanctions on the Russian civil nuclear industry. Ukrainian President Volodymyr Zelenskyy has urged the EU to at least sanction Rosatom which is closely linked to Russia's military apparatus and has taken over the management of the Zaporizhzhia nuclear power plant in Ukraine.

"A year ago, I would have said Russian gas would be the most difficult for the EU to get rid of, but now it seems Russian nuclear may be the hardest one to get rid of," Niclas Poitiers from the Bruegel think tank told DW. "It has so many dependencies. It's very technical, very complicated. Then there's this whole thing about standards and safety."

The Rosatom leverage

The EU's foot-dragging stems from the outsized influence the Russian nuclear industry enjoys globally. Russia accounts for more than 45% of the world's uranium enrichment capacity, delivering atomic fuel to nuclear power plants in several countries, including in the US, which despite its harsh sanctions regime against Moscow continues to pay $1 billion (€912 million) a year to source fuel from Rosatom.

Almost 20% of raw uranium imported by the EU comes from Russia, Euratom Supply Agency data shows, with another 23% coming from Kazakhstan, where Rosatom is a major player. Russia also supplies a large proportion of the fuel rods for European nuclear power plants.

"Rosatom is one of the few companies in the world that has mastered the entire nuclear fuel cycle, i.e. enrichment, fuel production and also reprocessing," said Sonja Schmid, professor of science and technology studies at Virginia Tech and the author of "Producing Power: The Pre-Chernobyl History of the Soviet Nuclear Industry." 

Central and Eastern European countries are particularly reliant on Russian fuel. There are a total of 18 Russian-designed nuclear reactors — in Slovakia, Bulgaria, Hungary, the Czech Republic and Finland — that currently run exclusively on Russian fuel and rely on Russian technologies.

Additionally, Rosatom has had a long association with French utility EDF with the two signing a "long-term cooperation agreement" in 2021 to further boost ties.

The Russian firm is currently at the center of protests in the German town of Lingen where it is planning to manufacture nuclear fuel rods for Eastern European nuclear reactors in partnership with Framatome, an EDF unit.

Framatome declined to comment for this article. However, in a written statement to DW, a Rosatom spokesperson stressed that the company "rejects arbitrary restrictions" that impede its business in Europe.

Hungary doubles down

Russia exported over $1 billion (€890 million) worth of nuclear technology and materials globally between March and December last year, research by the Royal United Services Institute (RUSI) showed.

"In fact, not only has the value of Russian nuclear-related exports not shrunk since February 2022, the data reviewed by the author suggests that it may be expanding, with a handful of loyal customers still eager to do business with Russia's nuclear sector," RUSI said.

Among those "loyal customers" is Hungary. The value of Russian nuclear fuel exports to Hungary between March and December 2022 "far exceeded" that of any of the previous three years, the report found. In August 2022, Budapest controversially decided to move ahead with the construction of two more Russian nuclear reactors.

Unsurprisingly, Hungary was once again instrumental in keeping nuclear energy out of the EU's 11th sanctions package against Russia adopted in June. 

Bruegel's Poitiers says while Hungary's stance has annoyed many European diplomats in Brussels, there is also a sense that the costs of sanctioning the Russian nuclear sector far outstrip the benefits given the EU's overreliance on Rosatom.

"Any sanction by itself wouldn't make a material difference on the battlefield and on Russia's ability to wage this war," he said, adding that revenue from nuclear exports to the EU is only a fraction of the tens of billions that Moscow collected by selling oil and gas to the bloc.

Lack of alternatives to Russian nuclear sector

Still, EU countries, including the Czech Republic, Bulgaria and Slovakia, are making efforts to diversify away from Russian nuclear fuel. Rosatom's US rival Westinghouse, which already supplies nuclear fuel to Russian-designed reactors in Ukraine, has expressed interest to supply alternative fuel. 

In May, Finland's Fennovoima unilaterally terminated a contract for Rosatom to build a nuclear power plant.

Experts say while uranium from Russia could be relatively easily replaced by supplies from elsewhere, finding alternatives to Russian fuel enrichment capacity could take years.

"There's simply not enough capacity in other parts of the world to cut those ties and cut them quickly," Schmid said. "It's not a secretive technology, but it's a technology that involves a lot of capital investment. With the uncertainties surrounding the future of the nuclear industry, that's a hard sell to private industry to put up."

Edited by: Rob Mudge

This piece was updated on July 21 to include a comment from Rosatom.