Western sanctions cast a cloud over Russia-backed Bangladesh nuclear power plant

The West has deployed an arsenal of painful sanctions against Russia over its invasion of Ukraine targeting the country's financial and technology sectors, and the harsh measures have stoked fears in Bangladesh about the fate of its first nuclear power plant project backed by Moscow.

Analysts believe the global sanctions, especially Russia being cut off from the international financial system, may hurt the project, directly and indirectly. Even if the sanctions bite the project, they said, there should be alternative ways through which the work be taken forward.

Foreign Secretary Masud Bin Momen is not too worried as the sanctions have not directly targeted Russia's State Atomic Energy Corporation Rosatom just yet.

Rosatom, which is implementing the project, says it does not see disruption in any of the commitments and work schedules in the project.

Bangladesh signed $12.65 billion credit deal with Russia in 2015 for the construction of two units of the plant at Rooppur in Pabna’s Iswardi.

Nearly 25,000 local and foreign workers, engineers and experts are working at the 62,000-acre site. The government expects the experimental power supply to the national grid from the Rooppur Nuclear Power Plant’s first 1200MW unit to begin next year.

Bangladesh is building its first nuclear power plant with the help of Russia.

But Russia attacked Ukraine last week citing security concerns, drawing unprecedented financial sanctions against it from the United States, the European Union, the UK and their allies. Both sides have closed their airspace to each other.

Russia’s state development bank Vnesheconombank, or VEB, has been targeted by the US sanctions. VEB is involved in financing the Rooppur plant, so the harsh economic measures may directly hurt transactions for the project.

“If the bank needs to pay Russian suppliers for us and we get the services and machines, and the machines arrive properly, it may not affect Rooppur much,” said economist Zahid Hussain.

“But if financial transactions [between Bangladesh and Russia] need to be done, we won’t be able to do it in US dollar, euro, pound or yen. If it is done in (Russian currency) rouble, what will we do? No one other than Russia will accept rouble,” he said.

He believes Russia will face problems in producing and transporting the necessary equipment. “The sanctions are crippling Russia’s economy. There'll be problems if they cannot manufacture the equipment necessary for the plant. And even if they make the equipment, there will be sanctions on transit routes, shipping.”

The World Bank's former lead economist at its Dhaka office, Zahid pointed out that Russia will not be able to buy many high-tech goods from the US and Europe.

The executive director at the Policy Research Institute, Ahsan H Mansur thinks the large-scale economic sanctions will “certainly” disrupt Rooppur and Bangladesh’s trade.

“We'll need to see whether the organisations supporting us have been hit by the sanctions,” he said.

Informed that VEB is on the US sanctions list, the former IMF official said, “Then, no one will be able to take the money [from Russia].”

Both Zahid and Mansur have suggested the government undertake diplomatic efforts to thrash out the possible problems surrounding Rooppur.

The government can contact the US and the EU to partially lift the sanctions for only the project.

Ishwardi's Rooppur has transformed into a 'mini Russia' over the last few years. From shopping malls to small stalls, all the signboards are now written in Russian alongside Bangla and English. Photo: Habib Imran

Zahid advised the finance ministry, commerce ministry, and the foreign ministry to sit and do “homework” on the issue.

WHAT THE GOVT AND ROSATOM SAY

Although the Rooppur Nuclear Power Plant project is being implemented under the science and technology ministry, it is depending on the foreign ministry to get a sense of the current situation.

Secretary Momen said the full impact of the sanctions is not yet clear. “But if the financial transactions need to be routed to New York, there will surely be some impact. We still think the sanctions will not directly affect Rooppur.”

“Rosatom is playing a big role in Rooppur. If Rosatom faces sanctions, then it will be troubling for us. We're trying to figure out what sort of direct or indirect impacts we'll suffer.”

In an email response for comments, Rosatom told bdnews24.com: "No disruption is foreseen in any of the commitments and work schedules in the construction of the Rooppur Nuclear Power Plant."

Just as the people of Rooppur have embraced the Russian language and culture, the Russians there have also immersed themselves into the Bengali culture, fostering fraternal relations between the two groups. Photo: Reazul Bashar

Science and Technology Secretary Ziaul Ahsan told Deutsche Welle Bangla they do not foresee a crisis hitting the plant’s construction.

The project has 6,000 citizens of Russia, Ukraine and Kazakhstan working in it. The rest are Bangladeshis. The Russian authorities pay them and it may arrange an alternative method to pay wages and fees, said Ziaul.

Ruhul Quddus, site in-charge of the project, said 70 percent of the work in many sections of the plant is complete. And the work on the Russian credit has almost ended, so he does not see any problem in Russian banks being barred from the international payment system SWIFT.

Former Bangladesh Bank governor Salehuddin Ahmed said there are alternative ways that countries like Myanmar and North Korea follow amid harsh sanctions.

“Russia may continue transactions directly through its neighbours or allies, or use another currency,” he said.