Importing Insolvence

In the last three decades, developing countries have spent tens of billions of dollars to purchase nuclear reactors from Western vendors. To date, nuclear reactors are the single largest technological investment of the developing world.

With the collapse of nuclear demand in the industrial world, the United States. France, Canada and West Germany hope the developing world will provide the market for the bulk of their reactor exports through the year 2000.

But nuclear power, plagued with serious and persistent economic and safety problems, is proving to be a technological and economic failure for much of the developing world.

The major developing nations with nuclear power programs-Argentina, Brazil, and Mexico in Latin America; China, India, Pakistan, the Philippines, South Korea and Taiwan in Asia; and Egypt and Iran in the Middle East-share a similar history in the development of their nuclear power capabilities. Striking features of this history include:

• Provision of research reactors, mostly by the United States in the late 1950s and early 1960s.

• Publication in the late 1960s and early 1970s of highly ambitious nuclear cost studies by nuclear vendors and by the International Atomic Energy Association (IAEA).

• Projections since the early 1970s of unrealistically low costs for nuclear power, which, in conjunction with soaring oil costs, lead to calls by domestic nuclear agencies for unrealistically large reactor construction programs.

• Termination or sharp cutbacks of these nuclear programs since the late 1970s due to plant construction delays, sharply rising costs exacerbated by steep inflation, and mounting foreign debt burdens.

Latin America

The three major powers of Latin America-Argentina, Brazil and Mexico-installed research reactors by 1960. By the early 1970s, these nations were predicting large nuclear programs by the year 2000: up to 50,000 megawatts for Brazil, 30,000 megawatts for Argentina, and 25,000 megawatts for Mexico.¹ (By way of comparison, Britain now has 13,000 megawatts, Canada 9,000 megawatts, and Italy 1,400 megawatts of installed nuclear capacity.

Since the mid-1970s, these ambitious programs have been beset by cost overruns and long delays. Atucha II, Argentina's 698 megawatt plant, originally slated for completion in 1972, is not expected to be finished before 1992. The projected cost for this plant, driven up in part by inflation, has soared from a 1980 estimate of $1.6 billion to $4.2 billion (in current dollars).² At $6000 per installed kilowatt, this is the most expensive nuclear plant in the world.

Argentina's 600 megawatt Embalse plant was completed in 1983 at more than three times the original cost estimate. Similarly, projected cost for the unfinished, 250 metric ton per year Arroyito heavy water plant has quadrupled to $1 billion dollars.

Mexico, which has no operating commercial reactors, appears likely to press on and complete Laguna Verde I, now 85 percent complete. However, the recent drop in oil prices makes it unlikely that Mexico will allocate the resources necessary to finish Laguna Verde II, which is less than half completed.

Brazil's first plant, Angra I, a 626 megawatt West German reactor, was completed eight years late in 1985 for $1.8 billion, four and a half times the proposed cost of $320 million³ The 1245 megawatt Angra II and III reactors, originally scheduled to be completed in 1987 and 1988, are only 20 percent and one percent complete respectively.

The soaring cost of financing nuclear power has contributed significantly to the national debts of these three nations-Latin America's largest debtors. Nuclear reactors entail a larger expenditure of foreign exchange than any other form of electricity-generation. Between 1976 and 1983, nuclear energy outlays constituted at least 15 percent of Argentina's total public works expenditure.

By 1985, CNEA (Argentina's national nuclear organization) had accumulated $1.8 billion in foreign debt. At the end of 1983, Brazil's state-owned nuclear operating company, Furnas, had a total debt of $5.5 billion, equal to almost a tenth of the country's total foreign debt at that time. The cost of servicing Furnas's $2.4 billion foreign debt, estimated at $300 million in 1985, is expected to rise to $443 million per year by 1988.⁴

Since 1980, delays, sharply increased costs, and mounting foreign debt have prompted Argentina to slash its investment in nuclear energy. Argentina's 1985 nuclear budget of $430 million represents a drop in the normal level of funding to half the amount spent in previous years. Similarly, Brazil's nuclear budget, which ran about $1 billion per year in the early 1980s, has been cut to about $400 million. In September 1985, Brazil indefinitely postponed construction of Angra III and Iguape I and II nuclear plants.

Today, the outlook for nuclear power in Latin America is bleak. Restoration of civilian governments in Argentina and Brazil has allowed expression of widespread public opposition to nuclear power based on economic and safety concerns. The high cost and poor performance of nuclear plants, combined with rising foreign debts, have made domestic energy sources relatively more attractive. By 1985, the government of Argentina had made a fundamental shift from nuclear power toward the indigenous energy sources, natural gas and hydropower.

In January 1986, the Argentine nuclear trade union stated that the country's nuclear industry was `on the brink of collapse."⁵

Asia

In Asia, nuclear energy has garnered a mixed record. For South Korea and Taiwan, nuclear power has provided a relatively competitive, new source of electricity. Nuclear power's relative success in both countries is due to the centralized control, relatively advanced industrial capacity, and lack of alternate domestic electricity sources.

Yet even in these showcase nations, investment in nuclear power has slowed. Taiwan, with six operating reactors, now seems likely to defer its planned seventh and eighth units (see Taiwan) And South Korea, with four operational nuclear power plants, is cutting back investment in nuclear-generated electricity to concentrate on coal.

The four less industrialized nations in Asia with nuclear power are China, India, Pakistan and the Philippines. (Bangladesh received help from the IAEA in selecting from bids on 80 to 200 megawatt reactors, but due to lack of financing, the plant was never built, and ' no commercial reactors are planned there.)

China, which has no operating reactors, arranged for outside financing for 90 percent of the projected $4.6 billion cost of its first two 900 megawatt reactors. In March 1986, the president of the Chinese Nuclear Society projected installed capacity of 10,000 megawatts by the year 2000 and almost 40,000 megawatts by the year 2010. But by April of this year, the Chinese government had postponed its nuclear construction program for a decade in favor of the huge Three Gorges dam on the Yangtze river. China's only remaining nuclear projects are likely to be a small Chinese-designed plant and, unless cancelled, the two 900 megawatt reactors.

Nuclear energy in India has not been able to compete economically with hydropower and coal. In 1980, the chairman of India's Atomic Energy Commission H.N. Sethna stated that nuclear power in India would not be economical if less than a 75 percent production capacity was achieved. Actual capacity through 1985 was closer to 45 percent. In 1983, the chairman commented that, "viewed in the context of performance so far, this [India's public goal of adding 10,000 megawatts of nuclear power by the year 2000] appears as a very optimistic target."⁶

In 1974, in a market survey by the IAEA, Pakistan projected installation of eight nuclear plants between 1980 and 1990. By 1979 Pakistan reportedly planned to have 20 nuclear reactors by the year 2000, including fast breeder reactors. But in April 1984, after repeatedly extending the date for submission of bids on its Chasma reactor due to lack of financing, the Karachi government indefinitely postponed the bid submission date. It appears likely that Pakistan's only commercial reactor will remain its small, 125 megawatt Kanupp reactor, completed in 1972.

The Philippine's 620 megawatt reactor, originally scheduled to start up in 1982, is not yet in operation, and has increased in cost from $1 billion to $2.1 billion. Each year of delay adds about $130 million to the final cost. Largely financed by foreign loans, including $644 million from the U.S. Eximbank, the reactor has contributed significantly to the country's foreign debt problem. It has also become a favorite target of the insurgent New People's Army. NPA guerillas have repeatedly demonstrated their ability to destroy the electric lines connecting the plant to the national grid. If the plant ever begins to generate electricity, this vulnerability would make plant operation questionable.

The Aquino government in March 1986 informally repeated a campaign promise not to operate the reactor. According to the New York Times, Alberto Romulo, Philippine budget minister, said the country was considering filing suit against Westinghouse because they had been sold "badly damaged goods."

Middle East

Many of the nations of the Middle East have contemplated or actually begun ambitious nuclear programs, yet not a single large reactor has been completed. In the mid-1970s, Kuwait projected construction of six 600 megawatt reactors by 1999, but in 1979 shelved the plans indefinitely.

Probably the most influential of a series of nuclear cost studies in Israel found nuclear energy to be economically attractive. However, in 1984 the report's lead economist reversed his opinion and concluded that it would be economically unwise for Israel to build nuclear plants.⁷ Though debate is sure to continue, Israel seems unlikely to build a large commercial reactor. The two most ambitious nuclear power programs of the Middle East are in Iran and Egypt.

In 1974, an IAEA survey projected that Iran would have 10,000 megawatts of installed nuclear capacity by 1990. Two years later, the Iranian government published a twenty year energy plant survey that tripled the IAEA's estimate by 1994.

A year after the IAEA survey, a study by a Canadian consulting firm estimated the cost of constructing 23,000 megawatts of nuclear power in Iran by 1983 at $24 billion in 1974 dollars. According to Dr. Fereidun Fesharaki, Chairman of Iran's Independent Commission on Nuclear Power, the report used inflated gas prices for comparison, failed to consider infrastructure costs, and underestimated nuclear costs by $2,300 to $3,300 per kilowatt⁸, or roughly $2 to $3 billion per reactor (in 1980 dollars). Fesharaki later wrote that, "lack of information about the hazards of nuclear power as well as having no information on the economics of nuclear power plants led Iran to mistakes which cost the country at least $3 billion and a great deal of hardship."

In late 1977, after reports of major nuclear cutbacks elsewhere in the world, an Iranian commission called for a halt to all new nuclear activities to permit a full reassessment. A commission member later wrote, "suppliers systematically underestimated nuclear power costs in their approaches to the Iranian government and only put forward the substantially higher figures at the final stages of commercial negotiations. Having committed themselves to the purchases, the Iranian negotiators found it difficult for political reasons to pull out."⁹ In September 1979, work on the remaining two West German reactors was suspended at 50 and 80 percent completion.

Egypt had considered building commercial nuclear plants as early as the mid-1960s. In 1973, the IAEA estimated that a 700 megawatt reactor would cost Egypt $276 million, and by the late 1970s the Egyptian Ministry of Energy and Electricity was planning to build eight or ten large reactors. But by 1982, some Egyptian energy officials predicted that 8,000 megawatts of nuclear power might cost as much as $30 billion, or $3,750 per kilowatt. In 1984, an internal electricity report estimated the cost of a large reactor at roughly $4 billion, three times the current official public estimates.¹⁰

After much delay, reactor bids were officially opened in November 1982, and have been repeatedly delayed amid rising domestic and international doubts about the low, official cost estimates and about Egypt's ability to finance the plants. The recent drop in oil prices and consequent sharp decline in oil revenue and probably in workers' remittances from Gulf nations, suggest that Egypt may indefinitely postpone a decision to construct nuclear reactors.

On balance, nuclear power has fared worse in the developing world than in the developed world. In part, this is due to the degree of ambition involved in projecting the size of nuclear programs for developing countries. However, basic characteristics of nuclear plants-their size, complexity, and potential hazard-also create particular problems for less industrialized developing nations in the areas of infrastructure, personnel, and safety.

Infrastructure

The most systematic structural problem plaguing nuclear power programs in developing nations involves a country's electric grids. In order to safely and economically absorb both the peaks of electricity generation as well as reactor shutdowns, an electric grid must be relatively large. The IAEA has recommended that installation of a 600 megawatt reactor requires a grid of 9,200 megawatts, while a 1,000 megawatt reactor requires a grid of 20,000 megawatts. The few developing nations, including India and Brazil, with a total generating capacity of 10,000 megawatts usually have unconnected or poorly connected grids. For example, Rapp I, an Indian 202 megawatt reactor completed in 1972, was originally connected to a grid of only 400 megawatts, which collapsed with almost every nuclear outage. Now connected to India's 5,000 megawatt northern regional grid, output drops from Rapp I still cause severe grid instability. The IAEA reports that:

The availability of adequately qualified manpower is an essential condition of success of a nuclear power programme.... This is especially relevant for the developing countries with nuclear power programmes or intending to start such programmes.

During a 1976 IAEA symposium, however, an IAEA representative stated that, "One problem in developing countries is that awareness of the need for manpower appears somewhat late, usually after construction of the first unit has started."¹¹

An unexpected personnel cost for a nuclear program is the drain of trained personnel to other countries, a problem endemic to the developing world. In 1981, the Evening Post of Manila, Philippines, expressed this concern:

The moment we train a dozen or so [nuclear scientists], they will be lured away to other plants in other countries. We will be in exactly the same fix as the National Power Corporation when their power plant maintenance crew went after high paying jobs in Saudi Arabia.¹²

[m]any of our nuclear personnel are already working in Iraq and Canada. However, if the present plan to establish two 125 megawatt plants materializes, we will have to try and keep more engineers in the country, call others back from abroad, and recruit more of them.¹³

In Brazil, by November 1984, out of a group of 61 nuclear engineers who completed their two-year obligatory contract with the nuclear program, 31 had left due to a lack of motivation, the breaking up of teams, and low salaries. Each of the engineers had reportedly cost the country $400,000 in training and equipment.

High personnel turnover hinders the ability of developing nations to safely and efficiently run one of the world's most complex and demanding technical systems, and helps explain why developing countries have not demonstrated increased efficiency in constructing and operating nuclear reactors.

Safety

The specter of Chernobyl makes the issue of safety particularly sensitive. The IAEA's 1981 publication Current Nuclear Power Plant Safety Issues noted that in developed countries emergency measures in response to a nuclear accident are made much easier by the high quality of the communication and transportation networks. However,

[t]he situation is quite different in developing countries, where because of the lack of adequate communication and transportation networks and also in view of the low level of public education in the rural population, it would not be wise to depend heavily on evacuation measures.¹⁴

Because nuclear reactors are designed for use in the industrial nations that export them, they must be modified, often extensively, in order to be sited and operated safely in developing countries. However, the enormous complexity of nuclear reactors requires highly specialized expertise, which developing nations generally lack, in order to site, build, and safely operate reactors, and to design reactor modifications to suit the specific site characteristics. In Brazil, for example, poor plant siting required subsequent modification of the Angra II reactor foundation, involving sinking 88 massive new piles and reinforcing 202 old piles. This delayed construction two years and added $326 million to plant cost.¹⁵

Poor reactor siting complicates safety risks and increases necessary modifications. The 626 megawatt Philippine reactor is reportedly on or near an active earthquake belt, within 30 miles of an active volcano, and is on a flood plain, so the plant is regularly cut off due to landslides that block the access road.

Brazil's first two reactors are located fifteen miles from a geological fault, and built on reconstructed earth. Tropical rains sometimes produce landslides in the area. During one five month period in 1977, the Angra I site had 71 fires, including one that caused between $6 and $8 million in damage and delayed construction by four or five months. Following this episode, Jose Goldemberg, then President of the Brazilian Society of Physics commented, "If errors like this persist, we will inevitably have a repetition of a Hiroshima-type radiation catastrophe... we were lucky this time because the accident occurred during a non-nuclear phase of the work."¹⁶

Safety problems in India's nuclear plants have also prompted criticism.

• Every year since 1977 the average radiation exposure dose received by workers at Tarapur has been over four times the prescribed annual limit of 500 millirems."¹⁷

• The Tarapur plant has exposed over 300 people to radiation doses that exceed the maximum 5,000 millirem lifetime limit prescribed by the Indian Department of Energy and by the International Commission on Radiation Protection.¹⁸

• Two nuclear plants-Napp I and 11-are under construction on the bank of the Ganges River, and are only 50 kilometers from an active earthquake fault area. Some scientists are concerned about possible spillage of radioactivity that would contaminate the holy river.

Concern over safety has prompted reports of potential nuclear catastrophes, labor unrest, rising costs, and reduced plant operation. Tarapur II, built to generate 210 megawatts has to be operated at 105 to 110 megawatts, otherwise its gaseous radioactive discharge exceeds the maximum permissible level.

Cost increases of between 100 and 500 percent in nuclear reactors in Latin America, Asia and the Middle East over the past decade have made nuclear power an economically unattractive source of electricity for the developing world.

But the economics of nuclear power in the developing world is only one aspect of the problem. Once the money has been acquired and the plant is operating, many developing countries are faced with an inadequate infrastructure for power distribution.

The huge reactors are too large for the electric grids in most developing nations, and operation results in large transmission losses and grid instability or even collapse resulting from fluctuations in reactor output. Unmet personnel needs mean poor, often dangerous siting and low or unsafe plant operation which reduces plant output and raises radiation releases and the risk of a major nuclear accident.

In view of the relatively less sophisticated communication and transportation systems and lesser radiation treatment capability in the developing world, nuclear accidents, like that at Chernobyl, would pose a particularly severe threat.

Long construction periods and the very high cost of predominantly imported plants makes nuclear power a massive additional economic burden to the debt-ridden developing world. But sharp cutbacks in nuclear programs over the past five years throughout the developing world signal an unexpected collapse of this market for Western nuclear vendors. in fact, this is the largest and most dramatic rejection of a Western industrial technology to date.

Gregory Kats has worked as a freelance journalist in the Middle East and is currently at the Wodorous Wilson School in Princeton, New Jersey

NOTES:

1. John R. Reduce. Military Potential of Latin American Nuclear Programs, (California, Sage Publications. 1972). p 14. Slightly lower figures are cited in Nuclear Engineering International, Sept. 1971. pp. 750-751

2. Nucleonics Week. Oct. 10, 1985, p. 9

3. Nucleonics Week. Oct. 25, 1984, pp. 3-4

4. "O Estado De Sao Paulo," Nov. 18, 1984, p. 43, translated in FBIS. Nov. 24, 1985, pp. D1-2

5. Reported on Sao Paulo Radio network, 7 Sept. 1985, translated FBIS, 10 Sept, 1985, pp. D1-2

6. "AEC Chairman's Article," The Hindu, July 23, 1983, p. 17. Reaching 10,000 megawatts by the year 2000 would require commissioning nine 235 megawatt reactors between 1990 and 1995. Nucleonics Week. Feb 7, 1985, p. 11

7. Interview with Dr. Jonas Bargur, lead economist of the Horev Commission, at the Conference on Energy in Small and Medium Sized Countries, Tel Aviv, Israel, May 17, 1984. See "Planner Changes Mind on Nuclear Power," Jerusalem Post, May 17, 1984, p. 3

8. Dr. Fereidun Fesharaki, Revolution and Energy Policy in Iran (London: Economist Intelligence Unit, 1980), p. 91. Also see Daniel Poneman, Nuclear Power in the Developing World (London, I George Allen & Unwin, 1982) pp. 84-97

9. Bijan Mossavar-Rahmani, "Iran's Nuclear Power I Programme Revisited," Energy Policy, Sept 1980, p. 195

10. "Financial Requirements for the Nuclear Program," Al-Ahram Al-Iktisadi, May 28, 1984, p. 10, translated in Gregory H. Kats, "Egypt," Non Proliferation: The Why and the Wherefore, ed. Jozef Goldblat, (London, Taylor & Francis, 1985) p. 186. For discussion of implications of changes in energy subsidies on Egyptian demand for nuclear power, see Gregory H. Kats "Energy Subsidies: Time for a Rethink in Cairo," Middle East Economic Digest, (MEED) Aug 1984, pp. 16-17

11. Manpower Development for Nuclear Power, (Vienna, IAEA, 1980), p.28

12. IAEA Publications Catalogue 978/79, Second supplement, Sept 1980, p. 16. See also Gregory H. Kats, "Problems Associated With the Development of Nuclear Power in Less Developed Countries," International Journal of Energy Research, Vol. 7, 1983, pp., 295-298

13. Problems Associated with the Export of Nuclear Reactors, (Vienna, IAEA, 1978), p. 378

14. Current Nuclear Power Plant Safety Issues, Conference Proceedings, Stockholm, Oct. 20-24, 1980

15. "Nuclear Program in Decisive Period," 0 Estado de Sao Paulo, in Portuguese, Nov. 18, 1984, p. 43, translated in FBIS, Nov. 28, 1984, p. D2

16. Washington Post, March 29, 1978, p. 21

17. "Tarapur Reported Crippled By High Radioactivity," The Times of India (Bombay) May 9, 1983, pp. 1,9 reported in FBIS, June 13, 1983, p. 33-35. Also see Tomar Ravindra, "The Indian Nuclear Power Program: Myth and Mirages," Asian Survey, May 1980, p. 525. According to IAEA's Operating Experience with Nuclear Power States in 1979, 7,963,424 manhours were required to refuel Tap I.

18. India's AEC Chairman recognized at a press conference that 329 workers in the previous 13 years had received in excess of 5,000 millirems in a year. "Controversy Over Tarapur Radiation Level Persists," The Statesman (Calcutta), May 14, 1983, pp. 1,9, in FBIS, June 24, 1983, pp. 22-24. Also see "Tarapur Plant Poses Serious Safety Problems," Business Times (Kala Lumpur), Aug. 18, 1980, p. 6, in FBIS Oct. 2, 1980, p. 17.

The Subsidy Shuffle How the Eximbank Keeps the Nuclear Industry Afloat by Samantha Sparks The U.S. nuclear industry would be hard-pressed to sell its wares overseas without subsidies from the Export-Import Bank, a federal agency that provides low-interest loans to foreign buyers of U.S. products. Since 1959, the Eximbank has pledged over $7.6 billion in taxpayers' money to support the export of $8.8 billion in goods and services for 50 nuclear plants worldwide. Over the past decade, however, non-US vendors, especially Germany's Krafter Werk Union and France's Electricite de France (EDF) have captured a growing portion of a shrinking world nuclear market. Even though the Eximbank's outstanding loans to the nuclear industry make it the single largest source for financing nuclear power plants and equipment in the world, nuclear exports accounted for only 2 percent of the Eximbank's energy-related loans in 1985. Eximbank support for U.S. nuclear exports is essential since commercial creditors are reluctant to shoulder the large-scale risk associated with building a nuclear power plant. Nuclear plants on average take at least 8 years to construct. And once construction is complete, borrowers have fifteen years or more to repay loans. With a price tag of over $1 billion and a history of construction delays and cost overruns, a "nuclear power project involves vast amounts of money and very different risks," noted Michael Czinkota, chairman of the National Center for Export-Import Studies, an international trade research organization affiliated with Georgetown University in Washington, D.C. The risk that a project will be abandoned mid-way through completion because of cost overruns or delays "makes the typical, run-of-the-mill investor feel very uncertain about nuclear power," he added. The need for government backing of nuclear power export sparked a virtual export subsidy war in the late 1970s. Export finance agencies from different countries each sought to bolster sales by domestic vendors by a variety of means, including low- or no-interest loans, loan guarantees, absorption of research and development costs, preferential access to and pricing of fuel and reprocessing services. Arch Roberts, an energy analyst at the House Foreign Affairs Committee, believes financing has become the single most important element in making a nuclear export bid competitive. Since the "differences in technology are minimal" between industrial exporters of nuclear power, said Roberts, financing is the key to winning contracts. Making the case for U.S. nuclear sales to China, Eximbank Vice-President Raymond Albright underscored the importance of financing. "While we believe that U.S. experience and technology in the [nuclear power] field is still superior, these elements alone cannot win foreign sales if price and financing are not also competitive," he told the Senate Foreign Relations committee in early October 1985. Until 1980, U.S. vendors, primarily Westinghouse and General Electric, with Eximbank help generally outbid and outsold all foreign competitors, prompting a German nuclear official to complain in a leading German weekly, Die Zeit: Our strongest competitors are actually not Westinghouse or General Electric. The strongest competitor is the American Export-Import Bank... even when we try to lower the burden of interest through all sorts of tricks, the Eximbank comes in with two percent less. Large subsidies gave U.S. vendors the competitive edge they needed to win nuclear contracts that might otherwise have gone to non-U.S. vendors. In 1978, Westinghouse won a contract to supply two reactors to Korea through a low interest loan from the Eximbank. The Eximbank has also permitted U.S. vendors to make sales abroad that probably would not have occurred without U.S. subsidies. In 1975, for example, an Eximbank package of $644 million in long term loans (its largest at the time) with repayment beginning in 1992, plus guarantees, proved crucial to Westinghouse's sale of a reactor to the Philippines. At the time, an Eximbank representative told Congress that the Bank's unusually generous support was necessary because of the Philippines' "heavy external debt, rising debt service requirements, and large trade deficits." Nuclear vendors and foreign nuclear agencies alike benefit by projecting low costs for nuclear reactors. When prices rise, Eximbank or national export banks in other vendor nations step in with financing to continue the work. When the cost of Brazil's Angra I plant jumped from $320 million to $1.8 billion because of inflation and cost overruns, the Eximbank provided a $350 million loan, plus guarantees critical to further funding. Although Congress must approve all Eximbank loans related to the nuclear industry, the Bank is not appropriated money by Congress. Instead, the Eximbank borrows from the Treasury Department at government bond rates, repaying principal plus interest and dividends. For most of the 1970s, when interest rates were low and trade was booming the Bank returned a profit to the Treasury. As market rates began to climb, increasing the margin between the rate at which the Bank borrowed money from the government and its below-market lending rate, the strain on the Bank's resources grew. The Bank experienced its first operating loss in 1981. Incoming president William Draper III used his confirmation hearing before the Senate Banking Committee that year to plead for its continued survival despite the loss. The Reagan administration, coming to office ideologically opposed to market intervention through trade subsidies, initially sought to weaken if not eliminate the Eximbank. Ronald Reagan used his first appearance before a joint session of Congress to propose slashing the Eximbank's lending authority by a third, to $4.4 billion in 1982. Since then, however, a burgeoning trade deficit has caused the administration to reconsider its position on export issues. At the same time, the administration has worked hard to augment efforts to reduce market gaps. In August 1984, the United States reached an agreement with other members of the Organization for Economic Cooperation and Development (OECD) on special terms for financing nuclear power projects. The agreement, known as the Nuclear Sector Understanding, effectively sets a ceiling on the interest rate subsidy governments are allowed to provide exporters of nuclear power by tying the subsidy to the OECD's fixed rates of currency exchange. In spite of the Bank's willingness to finance nuclear power, U.S. companies have not received a new order to build a nuclear reactor since 1982. General Electric, which has 8 plants under construction overseas from old orders, has shifted its export focus to maintenance and fuel orders, which in 1985 netted more than $700 million. Nevertheless, said GE spokesman David Crowley, nuclear exports by his company were "at subsistence level" because "the market just isn't there." As far as nuclear reactor exports go, agreed Eximbank spokesman Colin Tuona, the U.S. industry "died four years ago."

Worldwide Nuclear Capacity
Country	Number of Commercial Nuclear Power Plants	Capacity in Operation (Megawatts)	Number Planned or Under Construction
United States	97	85,000	28
France	41	32,938	23
Soviet Union	51	26.099	35
Japan	34	23,370	9
West Germany	19	16,395	9
United Kingdom	37	11,130	5
Canada	17	10,025	6
Sweden	12	9,465	0
Taiwan	6	4,884	0
Spain	8	5,577	7
Belgium	7	4,469	1
Switzerland	5	2,882	0
Korea	4	2,685	5
Finland	4	2,310	0
East Germany	5	1,702	6
Czechoslovakia	4	1,570	9
Bulgaria	4	1,620	2
Italy	3	1,285	4
India	5	1,034	6
Argentina	2	935	1
South Africa	1	922	1
Netherlands	2	507	0
Hungary	3	1,224	1
Brazil	1	626	2
Yugoslavia	1	615	0
Pakistan	1	125	0
Poland	0	0	2
Rumania	0	0	3
China	0	0	1
Cuba	0	0	2
Mexico	0	0	2
Austria	0	0	1
Philippines	0	0	1
TOTAL	374	249,394	172
Source: Congressional Research Service