Bonanza in the desert

The government under the Saudi monarchy does not have a typical structure. The Ministry of Economy and Planning is in charge of dealing with South Korea. Saudi Minister for Economy and Planning Adel bin Muhammad Fakeih has the same title as one of South Korea’s ministers.

Saudis became familiar with South Koreans in the 1970s when Korean builders were hired to work on a state-sponsored industrialization project in the eastern port city of Jubail. Hyundai Construction workers worked night and day to transform a rural fishing area into the largest industrial city on the Persian Gulf.

The Saudis were awed by the dexterity and productivity as well as excellent quality of Korean labor and technologies. That is why the minister in charge of economic planning addresses issues related to Korea instead of the foreign minister.

The Saudis are thinking about putting another massive industrial project in the hands of South Korea this month, marking the 55th year of normalization of diplomatic ties between the two countries. Prince Mohammad bin Salman, the 32-year-old heir-apparent to the throne, held a colossal conference dubbed “Davos in the Desert” in order to create a Silicon Valley on the Red Sea, a reef-fringed tourism destination. The country’s so-called Vision 2030 would use more than $500 billion of its oil riches to finance the NEOM project, meaning new future, by creating a biotech and digital hub on a stretch of desert that is 44 times bigger than Seoul and create new revenue sources in preparation for the country running out of oil.

In a recent interview, the newly-elevated crown prince said that a state entirely reliant on oil revenues over the last four decades cannot lead a country in which 70 percent of its population are 30 years and younger. Oil has become cheap and the world has gone digital, he said, championing his highly ambitious agenda.

Vision 2030 would name select countries, including South Korea, to get contracts in the gigantic project. Kwon Pyung-oh, Korean ambassador to Riyadh, accompanied the Saudi minister on a visit to Seoul. Kwon briefed the government on eight industrial fields the state council spearheading the Vision 2030 project proposes to include South Korea in. Hong Jang-pyo, senior presidential secretary for economic affairs, Paik Un-gyu, the minister of trade, industry and energy, and Kim Tae-nyeon, head of the policy committee of the ruling Democratic Party, were among those who were directly or indirectly briefed on the matter.

Fortunately, the project grabbed the attention of top policy makers. Kim of the DP said that there are two upsides in favor of Korea’s prospects for making its second Middle East export of its indigenous nuclear reactor technology to Saudi Arabia. First, Korea already has a deal with the Saudi state on transferring its technology in system-integrated modular advanced reactors (SMART), a type of small modular reactors that allow less on-site construction and offer greater safety. Saudi decided to import 100-megawatt modular reactors from South Korea and has its people learning the technology in Korea. Second, the Saudi crown prince is also close to his counterpart in the United Arab Emirates, which chose Koreas’ reactor technology for a $40 billion deal and recruited Koreans to run one of its four reactors upon completion.

Kim vowed to concentrate government energy on selling its reactor technology to the Saudis. With a goal of having 17.6-gigawatt nuclear power capacity as a part of the Vision 2030 project, Saudi will invite bids from Korea, China, France, Russia and the United States for its two first reactors. Korea is pitching the third-generation Advanced Power Reactor (APR) 1400, the same design that won the UAE deal and has been the base for the Shin Kori 5 and 6 reactors in Korea.

The construction of the reactors in Shin Kori was renewed after a three-month hiatus for canvassing of public opinion on whether to proceed with the reactor project, which goes against the new government’s policy of phasing out nuclear power. Seoul would be a fool to miss out on such a windfall.

The project could earn 20 trillion won ($17.8 billion) and create thousands of jobs for Koreans. Moreover, it could lead to the construction of 15 additional reactors to be built by 2030. Some 200 trillion won in revenue is at stake. If the government blows this opportunity, it would be doing a massive wrong to the nation.

I have been stunned by a government arguing that it would phase out nuclear power at home while promoting the technology abroad. But if the government pulls the Saudi deal off, I may think their idea was not so bizarre after all.

JoongAng Ilbo, Oct. 30, Page 34

*The author is a columnist of the JoongAng Ilbo.

Chun Young-gi