BRUSSELS---- Westinghouse, the Japanese-US atomic group, is pressing the EU tointroduce competition rules that will break eastern Europe's dependence onRussian nuclear fuel. While the crisis in Ukraine has focused attention onEurope's vulnerability to a cut in supplies of gas from Russia, Westinghouseargues that Brussels must also respond to similar security risks posed byMoscow's control of nuclear fuel in the eastern EU.

Westinghouse, the world's biggest supplier of nuclear fuel [a member of theU.S.-Ukraine Business Council (USUBC),,for many years], could stand to gain if the eastern European market was openedup but the company said it wished to highlight another aspect of the EU'senergy dependency on Russia.

Overall, Russia provides 36 per cent of the EU's uranium enrichment needs – butthese services could be carried out elsewhere in an emergency. Europe's morepressing strategic concern, according to Westinghouse, is that many reactors ineastern Europe are entirely reliant on tailor-made sets of fuel rods fromRussia.

Hungary, Slovakia, Bulgaria and the Czech Republic are wholly dependent onRussian atomic fuel and all rely heavily on reactors for their domesticelectricity. Finland is also a major consumer of Russian fuel.

Westinghouse says the EU's weak spot lies in Russian VVER reactors across theformer communist bloc and Finland, for which the Russian company TVEL is theonly supplier.

"There is a clear security of supply issue . . . you do not have asecond supplier," said Michael Kirst, Westinghouse's vice-president forstrategy. "The utilities that are entirely dependent on Russia are playing agame of gambling here." He added that a second supplier was needed in the caseof technical failures in the fuel supply as well as any political sanctions.

Mr Kirst said Westinghouse was pushing for Brussels to introduce a "security ofsupply mandate" that would force eastern European power companies to diversifysources. He stressed there was a precedent for this because the EU forcedFrance to open its nuclear fuel market in 2000.

The European Commission said it was encouraging the diversification of EUnuclear fuel supplies in an open market and added that an alternative supplierwould be desirable "for all stages of the fuel cycle". However, the commissionadded that it was not considering the use of quotas to achieve this.

But Westinghouse said the EU needed to do more because there was not a fullyopen market and many supply deals in eastern Europe were opaque. In many cases,Mr Kirst said government to government contracts "bundled" together a severaldifferent energy costs, sometimes even including gas prices from Russianpipelines.

Westinghouse has asked the commission to investigate whether Russia's bundledfuel deals could count as anti-competitive dumping or loss leaders. Commissionofficials, however, have not pursued the cases beyond a preliminary stage as afull investigation would require raids on Russian facilities, which would beimpossible.

Westinghouse is leading the call for diversification in easternEurope because it is the only potential alternative supplier of nuclear fuel toVVER-440 reactors. Westinghouse produced this fuel until 2007, when it was nolonger able to compete with the bundled Russian deals.

The Japanese-US company says it can reprise the production of the VVER-440 fuelwith an investment of $20m. However, it warned that the process of providingalternative fuel would probably take more than two years.

Mr Kirch said that, after the fall of communism, Brussels had given easternEuropean states permission to stick with Russia nuclear fuel and send theatomic waste back to Russia over the lifetime of the reactors. However, he saidthat arrangement was contingent on the understanding that no western companiescould manufacture the fuel.

Mr Kirch said it was "ironic" that Westinghouse had fared better in supplyingnuclear fuel to Ukraine, even before the latest conflict with Russia, than inthe eastern EU. "The Ukrainians and Russians have interdependent economies butthe Ukrainians are the ones who have diversified their fuel, not the EUstates."

USUBC NOTE: Michael Kirch, Westinghouse's vice-president for strategy (Brussels), is along-time member of the executive committee of the U.S.-Ukraine BusinessCouncil (USUBC) .  Westinghouse is one of USUBC's longest serving memberand has been a member of USUBC since the mid 1990's.