East wins over West in UAE electricity expansion plans
Posted on 26 May 2010 with no comments from readers
Yesterday was a key moment in the development of the UAE electricity sector with Abu Dhabi Crown Prince, General Sheikh Mohammed bin Zayed Al Nahyan in South Korea to sign off a deal to build four nuclear power plants, and German Chancellor Angela Merkel in Abu Dhabi to witness the signing of a much smaller electrical equipment order from Siemens.
The nuclear power deal was hailed as ‘the largest deal in the history of the two countries’ by Sheikh Mohammed. ‘South Korea is one of the top key trading partners of the UAE,’ he added, noting that two-way trade rose by 43 per cent last year.
Korean technology
South Korean technology has long been popular in the UAE with Samsung and LG electronic equipment among the top selling brands. The new ultra-thin, 9-Series LED television from Samsung is presently awaiting distribution in the UAE.
But in choosing an Asian partner for nuclear power, and disappointing France and the USA, the UAE is acting both commercially and diplomatically. Few would doubt that South Korea offered the best price but there is also a diplomatic advantage of sourcing such controversial technology from a country without a military presence in the region.
The UAE is still something of an island of stability in a troubled region and it likes to avoid offending its neighbors whenever possible. All the better where commercial and diplomatic success can be intertwined.
Asian century
Of course, there is also a wider geopolitical consideration. If this is to be the century of Asia then the future customers for UAE hydrocarbons will increasingly lie in the East and not West, so this is the place to make friends and influence people, particularly when the price is right.
It is perhaps symbolic then that on the day Abu Dhabi awarded its biggest ever overseas contract to South Korea that a German company won a much smaller one. Asia seems to be rising while the Western economies are weakening. The UAE’s trade with Germany fell by eight per cent last year.
And while developing nuclear power might seem a nonsense with such huge hydrocarbon reserves, Abu Dhabi is also looking to a different future in which oil and gas are far too valuable on global markets to burn for fuel.
