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2017 | OriginalPaper | Chapter

5. How did Spain Become the Major US Nuclear Client?

Authors: M. d. Mar Rubio-Varas, Joseba De la Torre

Published in: The Economic History of Nuclear Energy in Spain

Publisher: Springer International Publishing

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Abstract

How could the electric utilities of an underdeveloped country such as Spain afford the $500 millions or more required for a single nuclear plant? The Spanish government pursued nuclear development doggedly in order to achieve status on the international scenario and push the technological prowess for industrialization. But it could not do it alone. All the Spanish nuclear orders from the US came with an Eximbamk’s financial package offering below market interest rates and facilities to obtain credits from private banks. The dimension of the Spanish nuclear project, which exceeded the relative economic and political clout of the country at the time, responds to the combination of domestic and foreign interests in the economic, political, and security fields. By the mid 1970s, Spain became the largest nuclear client of the US, by at the same time turning into the largest Eximbank nuclear debtor. The financial facilities included, among other things, long maturities for the loans. Eventually, the electricity companies had to reimburse the credits in instalments that become increasingly burdensome from the early 1980s onwards, which contributed to the decision to declare the nuclear moratorium.
Footnotes
1
Joseba De la Torre and M.d. Mar Rubio-Varas, “Learning by Doing: The First Spanish Nuclear Plant,” Business History Review, (forthcoming)
 
2
This section summarizes sections 1 and 2 in M.d. Mar Rubio-Varas and Joseba De la Torre, “‘Spain—Eximbank’s Billion Dollar Client’. The Role of the US Financing the Spanish Nuclear Program,” in Electric Worlds/Mondes Électriques: Creations, Circulations, Tensions, Transitions (19th–21st C), ed. Alain Beltran et al. (Peter Lang, 2016), 245–70, doi:10.3726/978-3-0352-6605-4, while referring to the original sources in most cases.
 
3
Comptroller General’s Report to the Congress, “U.S. Nuclear Non-Proliferation Policy: Impact on Exports and Nuclear Industry Could Not Be Determined” (Washington, DC, 1980), 4; Mara Drogan, “The Nuclear Imperative: Atoms for Peace and the Development of U.S. Policy on Exporting Nuclear Power, 1953–1955,” Diplomatic History 40, no. 5 (November 2016): 948–74, doi:10.1093/dh/dhv049.
 
4
Comptroller General’s Report to the Congress, “U.S. Nuclear Non-Proliferation Policy: Impact on Exports and Nuclear Industry Could Not Be Determined,” 8–9.
 
5
The US sales went to Belgium, Italy, Japan, West Germany, India, France and Spain.
 
6
H. Stuart Burness, W. David Montgomery and James P. Quirk, “The Turnkey Era in Nuclear Power,” Source: Land Economics 56, no. 2 (1980): 188–202, http://​www.​jstor.​org
 
7
Rubio-Varas and De la Torre, “‘Spain—Eximbank’s Billion Dollar Client’. The Role of the US Financing the Spanish Nuclear Program,” table 1.
 
8
Steve Cohn, Too Cheap to Meter : An Economic and Philosophical Analysis of the Nuclear Dream (State University of New York Press, 1997), 127.
 
9
Later two consortia formed for the same purpose France, Italy, Belgium Iran and Spain formed EURODIF; the United Kingdom, The Netherlands and West Germany formed URENCO. Comptroller General’s Report to the Congress, “U.S. Nuclear Non-Proliferation Policy: Impact on Exports and Nuclear Industry Could Not Be Determined,” 10.
 
10
Ibid., 38.
 
11
EXIM: Eximbank Programs in Support of Nuclear Power Projects (Washington, DC, 1970), 3. Box J11, Folder 2347. Ex-Im Bank Archives.
 
12
EXIM: Eximbank, Press Release, February 17, 1970, Bound Press Releases, January 6, 1970–June 30, 1970, J6g, 2275, Ex-Im Bank Archives.
 
13
EXIM: Holliday, G. Eximbank’s Involvement in Nuclear Exports (Congressional Research Service, GPO: Washington, DC, March 2, 1981), 4. Box L1, Folder 277. Ex-Im Bank Archives. See also, R. Seiler, Budgeting for Eximbank: A Case Study of Credit Reform, United States, Congressional Budget Office (Washington, DC, 1990), 8.
 
14
EXIM: Eximbank Programs in Support of Nuclear Power Projects (Washington, DC, 1970), 3. Box J11, Folder 2347.
 
15
Oscar Calvo-González, “American Military Interests and Economic Confidence in Spain under the Franco Dictatorship,” Journal of Economic History 67, no. 3 (2007): 740–67.
 
16
Spain integrated successively in the International Monetary Fund (1958), the World Bank (1958), the Organization for European Economic Cooperation (1959) and the General Agreement on Tariffs and Trade (1963).
 
17
A survey about the literature and the impact of the Stabilisation Plan on the Spanish economy can be found in Leandro Prados de la Escosura, Joan R Rosés and Isabel Sanz-Villarroya, “Economic Reforms and Growth in Franco’s Spain,” Working Papers in Economic History (Getafe, 2011), http://​www.​uc3m.​es/​uc3m/​dpto/​HISEC/​working_​papers/​working_​papers_​general.​html
 
18
Memoria Nuclenor, 1959 & 1960.
 
19
De la Torre and Rubio-Varas, “Learning by Doing: The First Spanish Nuclear Plant.”
 
20
Ibid.
 
21
In the Orden de 27 de marzo 1963, BOE No. 8, 3 April 1963 the government argued that it could not attach specific conditions to an “authorization” given that the legislation to rule nuclear facilities was still under study, thus the government used an alternative formulation: “agreement in principle”.
 
22
Ibid.
 
23
None of the three exports of US reactors that was ordered before 1962 had commercial uses. The reactor for the nuclear plant of Taipur (India), which was also a turnkey project, was ordered in 1963 but it was connected by 1969, a year after the Spanish plant of Zorita was finished. EXIM: “Nuclear Power Plants—Export Orders since 1974.” Box H 116, Folder 524. Ex-Im Bank Archives, College Park, Maryland, US.
 
24
Esperanza García Molina, José Ruiz Osoro and Ignacio Fernández Bayo, 50 Años de Tecnatom : Medio Siglo de Tecnología Nuclear En España (Madrid: Divulga, SL, 2007), 50.
 
25
EXIM: Export–Import Bank of the US, “Authorizations for Nuclear Power Plants and Training Center from Inception thru March 31, 1983,” Exhibit B. [1959–1983]. Box H128, Folder 705. Ex-Im Bank Archives.
 
26
Núria Puig Raposo and Eugenio Torres Villanueva, Banco Urquijo, un Banco con Historia (Madrid: Turner, 2008).
 
27
De la Torre and Rubio-Varas, “Learning by Doing: The First Spanish Nuclear Plant.”
 
28
Ibid.
 
29
Adoración Alvaro Moya, “The Globalization of Knowledge Based Services: Engineering Consulting in Spain, 1956–1975,” Business History Review 88, no. 4 (2014): 681–707.
 
30
Paul L. Joskow and George A. Rozanski, “The Effects of Learning by Doing on Nuclear Plant Operating Reliability,” The Review of Economics and Statistics 61, no. 2 (May 1979): 161, doi:10.2307/1924583.
 
31
Nuclenor, Memoria 1959 to 1963.
 
32
Nuclenor, Memoria 1964 and 1965.
 
33
Joseba De la Torre and M.d. Mar Rubio-Varas, La financiación exterior del desarrollo industrial español a través del IEME (1950-1982), Estudios de Historia Economica No. 69 (Madrid: Banco de España, 2015), http://​www.​bde.​es/​f/​webbde/​SES/​Secciones/​Publicaciones/​PublicacionesSer​iadas/​EstudiosHistoria​Economica/​Fic/​roja69.​pdf
Iberduero was founded in 1944 joining two pre-existing companies. It became the first producer of electricity in Spain, with nearly 20% of the total. It owned a network of over one hundred hydroelectric plants and operated a dozen thermal plants, with a dominant market position in northern Spain. Josean Garrues, “Las estrategias productivas, financieras e institucionales de Iberduero” (Madrid: Iberdrola, 2006), 497–573.
 
34
Joseba De la Torre and M.d. Mar Rubio-Varas, La financiación exterior del desarrollo industrial español.
 
35
ABE, IEME, Operaciones financieras, Box 1885.
 
36
ABE, IEME, Control de Datos, Box 1973. Carta de 26/6/67. Chavarri had been Head of the Office for American Help in the Ministry of Commerce in Madrid (ABC, 3/1/58).
 
37
ABE, IEME, Control de Datos, Box 1973. De la Torre and Rubio-Varas (2015a).
 
38
See Chap. 2 in this volume.
 
39
Francisco Pascual, “Panorámica de La Energía Nuclear,” Energía Nuclear 62 (1969): 488.
 
40
Plan Electrico Nacional, Orden del Ministerio de Industria de 31 de Julio de 1969, BOE 30/8/1969.
 
41
Ibid.
 
42
Pascual, “Panorámica de La Energía Nuclear.” Fig. 4, p. 494.
 
43
ASEPI: Sevillana de Electricidad, Acta del Consejo de Administración, 18/12/1968. Box 4511, SEPI Archive.
 
44
ASEPI: Sevillana de Electricidad, Comite de Gerencia, 8/7/1970, Resumen enviado por el Consejero Gaztelu al INI. Box 4721, SEPI Archive.
 
45
Ibid.
 
46
Ibid.
 
47
It also happened in the case Iberduero’s project: originally Lemóniz had been pre-authorized in 1969 for a single reactor of 500 MWe later expanded in 1971 to two units of 900 MWe.
 
48
ASEPI: Sevillana de Electricidad, Comite de Gerencia, 8/7/1970, Resumen enviado por el Consejero Gaztelu al INI. Box 4721, SEPI Archive.
 
49
Ibid.
 
50
Ibid.
 
51
Ibid.
 
52
The summary of the trip of the CEOs of the Spanish utilities to the US in 1970s that we provide here comes from the report of the tour provided by the president of Sevillana to his Board. ASEPI: Sevillana de Electricidad, Acta del Consejo de Administración, 21/12/1970, Box 4900, SEPI Archive.
 
53
See the discussion on the “compulsory national participation” in Chap. 2 in this volume.
 
54
The literal sentence in Spanish is: “Es de esperar, sin embargo, que el Ministerio de Industria, llegado el momento, adopte las medidas necesarias para evitar estos posibles perjuicios,” ASEPI: Sevillana de Electricidad, Acta del Consejo de Administración, 21/12/1970, Box 4900, SEPI Archive.
 
55
BOE.
 
56
Eight years after the promulgation of the first nuclear law, in 1972, a new Decree on Nuclear and Radioactive Regulations was promulgated. For nuclear power plants the decree introduced a three-step process: siting, construction and operation. Each phase required authorization to be granted by the Ministry of Industry and Energy after the safety evaluation performed by the JEN. The 1964 law introduced the siting authorization, usually referred to as “pre-authorization” (autorización previa).
 
57
Comptroller General’s Report to the Congress, “U.S. Nuclear Non-Proliferation Policy: Impact on Exports and Nuclear Industry Could Not Be Determined,” 44–5.
 
58
See Chaps. 2 and 3 in this volume.
 
59
Iberduero applied for the two units in Punta Endata (Deba), two in Ea-Ispaster (Orguella), one more in Tudela–Vergara the 27th of September of 1973. See Appendix B.
 
60
The state had some minority shares in some of the private utilities (e.g. Sevillana, Unión Electrica). The public ownership of nuclear power plants was restricted to the participation of smaller public companies in Vandellós I (see Chap. 6 in this volume).
 
61
The projects that obtained pre-authorization, financing and contracts with reactors manufacturers but were discarded before the moratorium deserve a research project on their own, far beyond the scope of this chapter. It is unclear when, how, and why those projects were abandoned or cancelled.
 
62
Joseba De la Torre and María del Mar Rubio-Varas, “Nuclear Power for a Dictatorship: State and Business Involvement in the Spanish Atomic Program, 1950–1985,” Journal of Contemporary History 51, no. 2 (2016): 385–411, doi:0022009415599448.
 
63
Rubio-Varas and De la Torre, “‘Spain—Eximbank’s Billion Dollar Client’: The Role of the US Financing the Spanish Nuclear Program”.
 
64
There was no tender process for Vandellós I; see Chap. 6 in this volume. It was the same with the British “surrounded by great commercial secrecy in order to keep the Americans out” (UK Report 17/10/1968). Instead Otero “stressed that if there were ever any question of buying a nuclear reactor on a turnkey basis the order would go to the US, but Spain was very interested in a ‘marriage’ between its nuclear industry and that of an European partner”. Telegram (25/10/1968). FCO 52299.
 
65
Indirect collaboration of Eximbank with private banks was formalized with the birth of PEFCO (Private Funding Corporation) in 1970. Major US banks also participated in the nuclear loans to Spain such as the Chase Manhattan Bank and the Manufacturers Hanover Trust Company of New York. See Rubio-Varas and De la Torre “Spain—Eximbank’s Billon Dollar Client.”
 
66
EXIM: J.C Cruse, Memorandum Spanish Nuclear program Box H 116, Folder 524. Ex-Im Bank Archives.
 
67
Rubio-Varas and De la Torre “Spain—Eximbank’s Billon Dollar Client.”
 
68
NARA: 9 September 1975. Telegrams between Embassy in Madrid and Secretary of State in Washington. Document numbers Madrid 06260 091426z. NARA Archive.
 
69
NARA: 3 December 1975 Telegram from the US Consul in Bilbao to US State Department in Washington Document Number: 1975BILBAO00254. NARA Archive.
 
70
NARA: 25 Sept 1975: Telegram from the Secretary of State, Washington, to US Embassy in Madrid. Document number: 1975STATE229036. NARA Archive.
 
71
All the information of the Eximbank visit to Spain in 1976 comes from NARA: 22 May 1976, Telegram from the Secretary of State, Washington, to US Embassy in Madrid Document Number: 1976STATE125706. NARA Archive.
 
72
NARA:17 Sept 1976: Telegram from the US Embassy in Madrid to the Secretary of State, Washington Subject: French interest in Nuclear Power Reactor sales to Spain ref: MADRID 7101; 29 September 1976: Telegram from the US Embassy in Madrid to the Secretary of State, Washington.
 
73
Nonetheless, the report also observed that “US companies seeking business in Spain argue strongly that the US position on proliferation and the policies enacted to sustain that position have eroded the market position of the US and will affect future US business opportunities. It may be some time, however, before that hypothesis can be fully tested. Spain is unlikely to award any new plant orders in the near future”. Comptroller General’s Report to the Congress, “U.S. Nuclear Non-Proliferation Policy: Impact on Exports and Nuclear Industry Could Not Be Determined.”
 
74
De la Torre and Rubio-Varas, La financiación exterior del desarrollo industrial español, 95.
 
75
EXIM: George Holliday, Eximbank’s Involvement in Nuclear Exports. Congressional Research Service (Washington, DC: Congressional Research Service, GPO, March 2, 1981), 20. Box L1, Folder 277.Ex-Im Bank Archives.
 
76
Martin Gallego also formed part of the research team of Kindelan in the within the INI. See Chap. 2 in this volume.
 
77
Most of this section derives from M.d. Mar Rubio-Varas et al., “Spain Short Country Report,” in Validated Short Country Report. Consortium Deliverable 3.6, ed. HoNESt Consortium, 2017, 952–1025.
 
78
Gallego Málaga et al. (2010).
 
79
“Muchos piden un plebiscito popular,” El País, 27-04-1979.
 
80
In prime time, with only one TV channel, there was a debate in June 1979 about “nuclear danger” in which participated mostly actors, with the notable absence of the nuclear industry and the electricity companies. RTVE, 21 June 1979; available at: http://​www.​rtve.​es/​alacarta/​videos/​la-clave/​clave-peligro-nuclear/​3605246/​
 
81
Individual credit data can be found in appendix I in De la Torre and Rubio-Varas, La financiación exterior a través del IEME.
 
82
Comptroller General’s Report to the Congress, “U.S. Nuclear Non-Proliferation Policy: Impact on Exports and Nuclear Industry Could Not Be Determined,” 34.
 
83
De la Torre and Rubio-Varas, La financiación exterior del desarrollo industrial español a través del IEME, chap. 4.
 
84
Rubio-Varas and De la Torre, “Spain—Eximbank’s Billon Dollar Client.”
 
85
Interviews with Mestre Martin Gallego, and a government employee who was directly involved with the calculations who prefers to remain anonymous. From Rubio-Varas et al., Spain Short Country Report.
 
86
Ministry of Industry and Energy of October 14, 1983. The New Energy Plan passed in 1984, and so were the provisions establishing how the costs of the moratorium would translate on to electricity tariffs. It would take four more years to define the recognized costs of the moratorium (see BOE-A-1988-4778).
 
87
This formed the essence of the strategy by the Ministry of Power and Industry; see Cortes Generales: Congreso de los Diputados no. 12, ‘Acta de la Comisión de Industria, Obras Públicas y Servicios’ 22/02/1983, available at: http://​www.​congreso.​es/​portal/​page/​portal/​Congreso/​Congreso/​Publicaciones/​
 
88
The Spanish Confederation of Business Organizations (CEOE) and the Confederation of the Metal sector also expressed their fears for the nuclear manufacturing network. El País (October 15, 1983; November 6, 1983; December 6, 1983; December 17, 1983). See: an appraisal of the power company situation, in Emilio Ontiveros and Francisco José Valero, “El Programa Financiero Del Sector Electrico,” Economía Industrial 243 (1985): 45–52; an overview of the nuclear sector in Foro Nuclear, La Industria Nuclear Española (Madrid, 2011).
 
89
Rubio-Varas, et al., Spain Short Country Report.
 
90
The power companies’ view was expressed at the Unión Eléctrica-Fenosa General Assembly, held in May 1984. From Economía Industrial, 1984, no. 237.
 
91
ENDESA became eventually privatized in 1998. Gallego Málaga, “Mas cambios en el sector eléctrico,” El País 18/10/2000; Joan Majo, “¿Fue un error privatizar Argentaria y Endesa?” El País 17/3/2010.
 
Metadata
Title
How did Spain Become the Major US Nuclear Client?
Authors
M. d. Mar Rubio-Varas
Joseba De la Torre
Copyright Year
2017
DOI
https://doi.org/10.1007/978-3-319-59867-3_5

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